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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_______________
Commission File Number 0-16148
MULTI-COLOR CORPORATION
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(Exact name of registrant as specified in its charter)
OHIO 31-1125853
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
250 WEST FOURTH STREET, CINCINNATI, OHIO 45202
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(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (513) 381-1480
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
(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 registrants 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 [ ].
The aggregate market value of voting stock based on a closing price of $6.50 per
share held by nonaffiliates of the registrant is $8,971,300 as of June 24, 1996.
As of June 24, 1996, 2,276,429 shares of common stock, no par value, were issued
and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the fiscal year
ended March 31, 1996 which are furnished to the Commission pursuant to Rule
14a-3(b) are incorporated by reference in Part II.
Portions of the Registrant's definitive Proxy Statement for its 1996 Annual
Meeting of Shareholders are incorporated by reference in Part III.
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PART I
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ITEM 1. BUSINESS
GENERAL
Multi-Color is one of the largest producers of printed labels for branded
consumer products in the United States. Labels printed by the Company appear
principally on mass-marketed products for which label appearance is a
significant element of product marketing and merchandising. In its latest fiscal
year, Multi-Color produced labels for a variety of consumer products including
liquid detergents, fabric softeners, liquid soaps, anti-freeze, motor oil,
chewing gum and food products. Multi-Color currently produces labels for
approximately 60 customers.
In 1985, Multi-Color acquired the net assets of the label divisions of
Georgia-Pacific (the "Acquisition") for $14.3 million cash and a $1 million
secured subordinated note. The assets acquired consisted of working capital of
approximately $7.9 million and fixed assets having a net book value to
Georgia-Pacific of approximately $5.7 million. The Acquisition was financed by a
$1.4 million term loan, $6.4 million in borrowings under a line of credit and a
$6.5 million Industrial Revenue Bond.
Multi-Color established the Multi-Color Graphic Services division in 1987. This
division supplies color separations of labels and engraves cylinders. The
division was formed to improve the quality of separations and engravings
supplied to Multi-Color and its customers. This division completed an expansion
in fiscal 1991 that allows it to engrave cylinders for the Company's Scottsburg
and Cincinnati plants.
The Company constructed a rotogravure printing plant in Scottsburg, Indiana in
1990. This plant was built to provide additional printing capacity and
capabilities to meet the changing needs of the marketplace.
Both of the above facilities were primarily financed by $9.0 million in
industrial revenue bonds.
The Company closed its Lockport, Illinois plant in the quarter ended December
26,1993 as a part of the Company's restructuring. Certain printing and finishing
equipment was moved to the Cincin nati plant. The consolidation of the
manufacturing facilities was designed to improve profitability.
The Company's executive offices are located at 205 West Fourth Street,
Cincinnati, Ohio 45202, and its telephone number is (513)381-1480. Unless the
context otherwise requires, the
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"Company" and "Multi-Color" refer to Multi-Color Corporation and its
predecessors, including the label divisions of Georgia-Pacific.
PRODUCTS
The Company began producing paper labels in 1918 and has customer relationships
that have existed since that time. Multi-Color produces labels which are used to
wrap products or are affixed to finished product containers. These labels are
printed for chewing gum, bar soaps, canned food products, bottled (glass and
plastic) products, boxed food products and canned pet foods. In addition, the
Company produces gift wrap, printed plastic overwrap for paper towels and toilet
tissue and printed diaper backsheets.
In 1980, Multi-Color developed the in-mold label in response to the increasing
use of blow-molded plastic containers. Working in conjunction with a customer,
the Company and a leading supplier of blow-molded plastic containers developed
the in-mold label process which applies a label to a plastic container as the
container is being formed in the mold cavity. Multi-Color developed the label
and the method of applying the heat-activated adhesive to the label. The in-mold
label solves many of the quality problems associated with conventional labels
and produces a more attractive labeled container.
Multi-Color provides printed in-mold labels to consumer product companies and,
in addition, sells the unprinted in-mold label substrate to other label printing
companies. In-mold labels produced by Multi-Color are used on liquid consumer
product containers for laundry detergents, fabric softeners, fruit juices,
bleach, anti-freeze, dishwashing detergents and vegetable oils.
Based on the technological capabilities of its printing facilities, the Company
has introduced the following value added products in the growing markets listed
below:
(1) New plastic in-mold products for the personal care and
household chemical markets which should offer superior value
compared to current labeling techniques.
(2) New in-mold label product for injection molding in the ice
cream and food markets, new potential markets not previously
entered.
In addition, the Company is seeking to market the unique services of its
Graphics Division to customers other than its label customers and believes that
significant potential exists for this technology.
In addition, Multi-Color has expanded the reach of its products through exports
and licensing agreements in a number of countries.
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SALES AND MARKETING
Multi-Color receives annual or quarterly requirements estimates for labels from
its customers and ships against orders received, except in certain cases where
the Company has agreements with minimum purchase requirements. The following
list sets forth certain principal customers of the Company:
Campbell Soup Company Gibson Greetings, Inc.
Colgate-Palmolive Company Lever Brothers Company
The Clorox Company The Procter & Gamble Company
The Coca-Cola Company Wm. Wrigley Jr. Company
First Brands Corporation Tropicana
Reckitt & Colman Prestone Products
The Dial Corp. Dow Brands
Campbell Soup Company, and Wm. Wrigley Jr. Company have been customers of the
Company since at least 1921.
The Company's marketing efforts are directed toward obtaining new customers and
increasing the Company's share of existing customers' overall label requirements
by meeting their specialized and technical label needs. The Company's marketing
strategy is to emphasize those sectors where Multi-Color's equipment and
expertise distinguish the Company from other label producers. The Company
maintains a marketing staff of nine people who are responsible for developing
innovative solutions, including new labels, for customers' label needs.
Approximately 49% of the Company's total sales in fiscal 1996 were to three
customers: The Procter & Gamble Company, 23% (divided among six categories with
separate purchasing authority); Wm. Wrigley Jr. Company, 14%; and Alvin Press
12%. The loss or substantial reduction of the business of any of the major
customers would have a material adverse effect on the Company.
PRINTING OPERATIONS
Multi-Color's printing equipment includes rotogravure printing presses in its
Scottsburg and Cincinnati plants; flexographic, letterset printing presses and
lithographic presses in its Cincinnati plant. All of the Company's presses are
capable of multi-color, high-speed and high-quality graphic printing. The
Company also has a wide variety of cutting and finishing equipment used to
process printed material. The wide range of capabilities and versatility
provided by the Company's equipment permits it to respond rapidly to changing
customer needs, including the develop ment of new products.
Multi-Color currently uses its letterset printing capacity exclusively for
printing gum wrappers for Wm. Wrigley Jr. Company.
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The Company does not maintain backlogs of advance purchase commitments because
these figures are not necessarily a reliable indicator of long-term business
activity.
RESEARCH AND DEVELOPMENT
Multi-Color believes research and development of new products will help it
maintain its leading position in the in-mold label business. While the process
for making paper in-mold labels is not patented, Multi-Color believes its
experience and expertise related to the production of in-mold labels have
enabled it to maintain its leadership in the in-mold label and substrate market.
The Company's emphasis is to develop and market new products for applications
where superior technical characteristics are required. Multi-Color developed and
is successfully marketing a range of plastic in-mold labels for applications in
which plastic containers are subjected to more demanding physical requirements.
Multi-Color's research and development expenditures totaled $141,000 in fiscal
1996, $183,000 in fiscal 1995 and $256,000 in fiscal 1994.
RAW MATERIALS
Multi-Color purchases its raw materials such as papers, inks, coatings, resins,
adhesives and other materials from a broad range of alternate suppliers. The
Company currently relies on a sole qualified supplier of in-mold label adhesives
because that supplier has multiple physical locations in the U.S. and overseas.
The Company has tested several other potential sources of this material which it
believes could replace its current source. However, any difficulty in obtaining
in-mold adhesive would adversely affect in-mold label sales until a new adhesive
supplier was approved by Multi-Color and labels produced with the alternate
adhesive were qualified by Multi-Color's customers. The Company has not
experienced any difficulty in obtaining adequate supplies of raw materials and
does not anticipate any such difficulty in the future.
COMPETITION
The Company has a large number of competitors in its traditional label business
and three principal competitors in the in-mold label and substrate business.
Some of these competitors have greater financial and other resources than the
Company. Multi-Color could be adversely affected should a competitor develop
labels similar or technologically superior to the Company's in-mold label.
Although price is an important competitive factor in the Company's business, the
Company believes sales are principally dependent upon quality, service,
technical expertise and experience. Customer service,
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quality and qualification requirements present barriers to new entrants into
Multi-Color's markets.
EMPLOYEES
As of March 31, 1996, the Company had 277 employees, of whom 74 were salaried
and 203 were hourly. Hourly employees at its Cincinnati plant are represented by
national unions under contracts expiring on July 15, 1996. Multi-Color considers
its labor relations to be good and has not experienced any work stoppages since
the Acquisition.
REGULATION
The Company is subject to regulation by the Federal and State environmental
protection agencies.
The United States Food and Drug Administration regulates the raw materials used
in labels for food products. These regulations apply to the consumer products
companies for which Multi-Color produces labels. Multi-Color uses materials
specified by the consumer products companies in producing labels for food
products.
The increasing concern about disposal of plastics may result in regulatory
action which may adversely affect the Company's sales if the use of plastic
containers is limited. On the other hand, the increased recyclability of plastic
containers with plastic in-mold labels, a product the Company introduced, may
increase the market for the Company's products.
ITEM 2. PROPERTIES
Multi-Color operates three production facilities. The Company's Cincinnati plant
is housed in a 300,000 square foot building situated on seven acres of land. The
Scottsburg, Indiana plant has 56,300 square feet and is situated on 14 acres, 30
miles north of Louisville. The Boone County facility, housing its Multi-Color
Graphics division, has approximately 12,000 square feet and is located on
approximately 3 acres 10 miles south of Cincinnati. The Company owns the real
estate constituting all of its plant sites. The land and buildings of all the
plant sites are encumbered by mortgages in favor of PNC Bank, Ohio, National
Association, as agent under the Company's credit facility. The Company's
executive offices located at 250 West Fourth Street, Cincinnati, Ohio in
approximately 5,000 square feet of leased office space. The Company believes its
properties are adequate for its present and anticipated needs, are in good
condition, are well-maintained and are suitable for the Company's intended uses.
ITEM 3. LEGAL PROCEEDINGS
None.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders during the
fourth quarter of the fiscal year ending March 31, 1996.
PART II
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ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
Market Information and Dividend Policy on pages 1 and 21 of the 1996 Annual
Report to Shareholders are incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Selected Financial Data on page 1 of the 1996 Annual Report to Shareholders is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations on pages 4 through 8 of the 1996 Annual Report to Shareholders are
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and related notes together with the Report of
Independent Certified Public Accountants, appearing on pages 9 through 20 of the
1996 Annual Report to Shareholders, are incorporated herein by reference.
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Registrant's Report on Form 8-K filed May 10, 1996 is incorporated herein by
reference.
PART III
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the directors and executive officers of the Registrant is
contained on pages 5 and 6 of the Registrant's definitive proxy statement dated
June 28, 1996 for the 1996 annual shareholders' meeting. This proxy statement
was filed with the SEC pursuant to Regulation 14A and is incorporated herein by
reference.
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ITEM 11. EXECUTIVE COMPENSATION
Information concerning executive compensation is contained on pages 7 through 10
of the Registrant's definitive proxy statement dated June 28, 1996 for the 1996
annual shareholders' meeting. This proxy statement was filed with the SEC
pursuant to Regulation 14A and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners and Management is contained on
pages 2, 3 and 5 of the Registrant's definitive proxy statement dated June 28,
1996 for the 1996 annual shareholders' meeting. This proxy statement was filed
with the SEC pursuant to Regulation 14A and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Relationships and Related Transactions are contained on page 12 of the
Registrant's definitive proxy statement dated June 28, 1996 for the 1996 annual
shareholders' meeting. This proxy statement was filed with the SEC pursuant to
Regulation 14A and is incorporated herein by reference.
PART IV
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
The following financial statements of Multi-Color Corporation, the
related notes, and the Report of Independent Certified Public
Accountants, included in the 1996 Annual Report to Shareholders, are
incorporated herein by reference.
Statements of Operations for the years ended March 31, 1996, April 2,
1995 and April 3, 1994
Balance Sheets as of March 31, 1996 and April 2, 1995
Statements of Shareholders' Investment for the years ended March 31,
1996, April 2, 1995 and April 3, 1994
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Statements of Cash Flows for the years ended March 31, 1996, April 2,
1995 and April 3, 1994
Notes to Financial Statements
Report of Grant Thornton LLP, Independent Certified Public Accountants
(a)(2) Financial Statement Schedules
The report of the Registrant's predecessor accountant is set forth below. All
other schedules have been omitted because either they are not required or the
information is included in the financial statements and notes thereto.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Directors of
Multi-Color Corporation:
We have audited the accompanying balance sheet of Multi-Color Corporation (an
Ohio corporation) as of April 2, 1995 and the related statements of operations,
shareholders' investment and cash flows for each of the two fiscal years in the
period ended April 2, 1995. 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 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 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 Multi-Color Corporation as of
April 2, 1995 and the results of its operations and its cash flows for each of
the two fiscal years in the period ended April 2, 1995, in conformity with
generally accepted accounting principles.
June 16, 1996
Cincinnati, Ohio Arthur Andersen LLP
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(a)(3) List of Exhibits
<TABLE>
<CAPTION>
Exhibit Filing
Number Description of Exhibit Status
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<S> <C> <C>
3(i) Amended and Restated Articles of Incorporation h
3(ii) Amendment to Amended and Restated Articles of h
Incorporation
3(iii) Amended and Restated Code of Regulations a
10.1 Waiver, Amendment and Restatement of Credit, h
Reimbursement and Security Agreement dated
February 23, 1996
10.2 Irrevocable Letter of Credit dated July 19, b
1994 from PNC Bank, Ohio, National Association
covering $5,750,000 City of Scottsburg, Indi
ana Economic Development Revenue Bonds
10.3 Trust Indenture securing City of Scottsburg, e
Indiana Economic Development Revenue Series
1989 dated as of October 1, 1989
10.4 Patent and License Security Agreement dated e
November 6, 1989 by the Company and Barclays
Business Credit, Inc.
10.5 Bond Purchase Agreement for $5,750,000 City of e
Scottsburg, Indiana Economic Development Reve
nue Bonds Series 1989
10.6 Remarketing Agreement dated October 1, 1989 by e
and among the Company, The Ohio Company and
The PNC Bank (Formerly The Central Trust
Company, N.A.)
10.7 Loan Agreement between the Company and Port a
Authority of Cincinnati and Hamilton County
dated as of November 1, 1985
10.8 Amendment to Loan Agreement between the b
Company and Port Authority of Cincinnati and
Hamilton County
10.9 First Refusal Agreement among the Company's a
shareholders
10.10 Loan Agreement between City of Scottsburg, e
Indiana and Multi-Color dated October 1, 1989
for $5,750,000
10.11 Trust Indenture securing County of Boone, e
Kentucky Industrial Building Revenue Bonds,
Series 1989 dated as of December 1, 1989
</TABLE>
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<TABLE>
<CAPTION>
Exhibit Filing
Number Description of Exhibit Status
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<S> <C> <C>
10.12 Loan Agreement between County of Boone, e
Kentucky and Multi-Color for $3,250,000 dated
as of December 1, 1989
10.13 Remarketing Agreement dated as of December 1, e
1989 by and among the Company, The Ohio
Company and The PNC Bank (Formerly The Central
Trust Company, N.A.)
10.13 Remarketing Agreement dated October 1, 1989 by e
and among the Company, The Ohio Company and
The PNC Bank (Formerly The Central Trust Com
pany, N.A.)
10.14 Irrevocable Letter of Credit dated July 19, b
1994 from PNC Bank, Ohio, National Association
covering $3,250,000 County of Boone, Kentucky
Industrial Building Revenue Bonds
10.15 Bond Purchase Agreement for $3,250,000 County b
of Boone, Kentucky Industrial Building Revenue
Bonds Series 1989
10.16 Trust Indenture securing Port Authority of b
Cincinnati and Hamilton County, Ohio Industri
al Revenue Development Bonds dated November 1,
1985
10.17 Supplemental Trust Indenture to Trust Inden b
ture securing Port Authority of Cincinnati and
Hamilton County Ohio Industrial Development
Revenue Bonds
10.18 Irrevocable Letter of Credit dated July 19, b
1994 from PNC Bank, Ohio, National Association
covering $6,500,000 Port Authority of Cincin
nati and Hamilton County, Ohio Industrial Rev
enue Development Bonds
10.19 Substituted Revolving Note dated February 23, h
1996 made by the Company to PNC Bank, Ohio,
National Association, in the Principal amount
of $1,875,000
10.20 Substituted Revolving Note dated February 23, h
1996 made by the Company to Star Bank,
National Association, in the principal amount
of $1,875,000
</TABLE>
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<TABLE>
<CAPTION>
Exhibit Filing
Number Description of Exhibit Status
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<S> <C> <C>
10.21 First Amendment and Waiver Agreement dated h
May 2, 1996
MANAGEMENT CONTRACTS AND COMPENSATION PLANS
10.22 1985 Stock Option Plan a
10.23 1987 Stock Option Plan a
10.24 1992 Directors' Stock Option Plan a
10.25 Profit Sharing/401(k) Retirement Savings Plan a
and Trust
10.26 Deferred Compensation Rabbi Trust Agreement h
10.27 Multi-Color Employee Stock Purchase Plan as g
amended and restated dated March 4, 1992
10.28 Employment Agreement - William R. Cochran h
10.29 Severance Agreement - John C. Court h
10.30 Severance Agreement - John D. Littlehale h
10.31 Severance Agreement - John R. Voelker h
10.32 Severance Agreement - William R. Cochran h
11 Computation of Earnings Per Share h
13 Annual Report to Shareholders h
23.1 Consent of Grant Thornton LLP Independent h
Certified Public Accountants
23.2 Consent of Arthur Andersen LLP Independent h
Certified Public Accountants
27 Financial Data Schedule h
99 Form 8-K filed May 10, 1996 h
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<FN>
a Filed as an exhibit to Registration Statement #33-51772 and incorporated
herein by reference.
b Filed as an exhibit to the Form 10-K for the 1994 fiscal year and
incorporated herein by reference.
e Filed as an exhibit to the Form 10-K for the 1990 fiscal year and
incorporated herein by reference.
</TABLE>
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f Filed as an exhibit to the Form 10-K for the 1993 fiscal year and
incorporated herein by reference.
g Filed as an exhibit to the Form 8-K filed on March 16, 1992.
h Filed herewith.
(b) Reports on Form 8-K.
On March 2, 1996, the Registrant filed a Report on Form 8-K reporting
its execution of an Amended and Restated Loan Agreement with its
Lenders.
On March 9, 1996, the Registrant filed a Report on Form 8-K reporting
its engagement of Grant Thornton LLP as its independent auditors for the
fiscal year ended March 31, 1996 and the dismissal of its previous
independent accountants, Arthur Andersen LLP.
On May 10, 1996, the Registrant filed a Report on Form 8-K Reporting the
issuance of its Series A Convertible Preferred Stock and Series B
Convertible Preferred Stock.
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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.
MULTI-COLOR CORPORATION
Dated: June 28, 1996 (Registrant)
/s/John C. Court
-------------------------------
John C. Court
President, 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 in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
Name Capacity Date
<S> <C> <C>
/s/John C. Court President, Chief Exec June 28, 1996
- -----------------------
John C. Court utive Officer, Direc
tor
/s/John D. Littlehale Vice President, Secre June 28, 1996
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John D. Littlehale tary and Director
/s/William R. Cochran Vice President, Chief June 28, 1996
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William R. Cochran Financial Officer
(Principal Financial
Officer and
Principal Accounting
Officer)
/s/Burton D. Morgan Chairman of the Board June 28, 1996
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Burton D. Morgan of Directors
/s/Lorrence T. Kellar Director June 28, 1996
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Lorrence T. Kellar
/s/David H. Pease, Jr. Director June 28, 1996
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David H. Pease, Jr.
June 28, 1996
/s/Louis M. Perlman Director
Louis M. Perlman
</TABLE>
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MULTI-COLOR CORPORATION
EXHIBIT INDEX
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<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
-------------- ----------------------
<S> <C>
3(i) Amended and Restated Articles of
Incorporation
3(ii) Amendment to Amended and Restated
Articles of Incorporation
10.1 Waiver, Amendment and Restatement of
Credit, Reimbursement and Security
Agreement dated February 23, 1996
10.19 Substituted Revolving Note dated
February 23, 1996 made by the Company to
PNC Bank, Ohio, National Association, in
the Principal amount of $1,875,000
10.20 Substituted Revolving Note dated
February 23, 1996 made by the Company to
Star Bank, National Association, in the
principal amount of $1,875,000
10.21 First Amendment and Waiver Agreement
dated May 2, 1996
10.26 Deferred Compensation Rabbi Trust
Agreement
10.28 Employment Agreement - William R. Cochran
10.29 Severance Agreement - John C. Court
10.30 Severance Agreement - John D. Littlehale
10.31 Severance Agreement - John R. Voelker
10.32 Severance Agreement - William R. Cochran
11 Computation of Earnings Per Share
13 Annual Report to Shareholders
23.1 Consent of Grant Thornton LLP,
Independent Certified Public Accountants
23.2 Consent of Arthur Andersen LLP,
Independent Certified Public Accountants
27 Financial Data Schedule
99 Form 8-K filed May 10, 1996
</TABLE>
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EXHIBIT 3(i)
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
MULTI-COLOR CORPORATION
The undersigned, being the President of Multi-Color Corporation
("Corporation"), a corporation organized and existing under the laws of the
State of Ohio, being duly authorized by the shareholders of the Corporation to
file these Amended and Restated Articles of Incorporation by action of the
shareholders at a meeting held on July 1, 1987, does hereby certify as follows:
FIRST: The name of the Corporation shall be Multi-Color Corporation.
SECOND: The place in Ohio where its principal office is to be located is
4575 Eastern Avenue, Cincinnati, Hamilton County, Ohio 45226.
THIRD: The purpose for which the Corporation is organized shall be:
To manufacture, produce, sell, distribute, and otherwise deal in
paper and paper products, including labels, and to undertake all business
activities incidental to such purpose and to engage in any lawful act or acts
for which corporations may be formed under Sections 1701.01 to 1701.98,
inclusive, of the Ohio Revised Code.
FOURTH: The maximum number of shares which the Corporation is authorized
to have outstanding is:
A. 2,000 shares of Common Stock, without par value; and
B. 1,000 shares of Preferred Stock, without par value.
The holders of the Preferred Stock shall be entitled to receive
dividends out of any funds of the Corporation at the time legally available for
dividends when and as declared by the Board of Directors at such rate as shall
be fixed by the Board of Directors before any sum shall be set apart or applied
to the redemption or purchase of or any dividends shall be declared or paid upon
or set apart for any class or series of Common Stock. In the event of any
liquidation, dissolution, or winding up of the Corporation, the holders of
Preferred Stock shall be entitled to receive out of the assets of the
Corporation payment of any amount per share as determined by the Board of
Directors as a liquidation
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price (including accrued dividends, if any) before any distribution of assets
shall be made to the holders of any class or series of Common Stock.
The Board of Directors shall have the express authority from time to
time to adopt amendments to these Articles of Incorporation with respect to any
unissued or treasury shares of Preferred Stock and thereby to fix or change the
division of such shares into series and the designation and authorized number of
shares of each series and to provide for each such series: voting power, full or
limited or no voting power; dividend or distribution rate; dates of payment of
dividends or distributions; dates from which dividends or distributions are
cumulative; liquidation price; redemption rights and prices; sinking fund
requirements; conversion rights; restrictions on the issuance of shares of any
class or series; and such other designations, preferences and relative,
participating, optional or other special rights, powers and privileges of and
qualifications, limitations or restrictions on the rights of holders of shares
of any class or series as may be determined by the Board of Directors.
FIFTH: No holder of any shares of this Corporation shall have any
pre-emptive rights to subscribe for or to purchase any shares of this
Corporation of any class whether such shares or such class be now or hereafter
authorized or to purchase or subscribe for securities convertible into or
exchangeable for shares of any class or to which shall be attached or
appertained any warrants or rights entitling the holder thereof to purchase or
subscribe for shares of any class.
SIXTH: This Corporation, through its Board of Directors, shall have the
right and power to purchase any of its outstanding shares at such price and upon
such terms as may be agreed upon between the Corporation and any selling
shareholder.
SEVENTH: Upon the filing of these Amended and Restated Articles of
Incorporation, each share of common stock without par value of the Corporation
then outstanding shall remain outstanding as one share of common stock without
par value.
EIGHTH: No shareholder shall have the right to vote cumulatively in the
election of Directors.
NINTH: The affirmative vote of shareholders entitled to exercise a
majority of the voting power shall be required to amend these Articles of
Incorporation, approve mergers and to take any other action which by law must be
approved by a specified percentage of all outstanding shares entitled to vote.
<PAGE> 3
- 3 -
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his name this
first day of July, 1987.
/s/John C. Court
------------------------------------
John C. Court, President
ATTEST:
/s/John D. Littlehale
- -----------------------------
John D. Littlehale, Secretary
<PAGE> 4
AMENDMENT TO
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
MULTI-COLOR CORPORATION
John C. Court, who is President, and John D. Littlehale, who is Secretary
of the above-named Ohio corporation with its principal location at 4575 Eastern
Avenue, Cincinnati, Ohio do hereby certify that a meeting of shareholders was
duly called and held on July 1, 1987 at which meeting a quorum of the
shareholders was present in person and by the affirmative vote of the holders of
shares entitling them to exercise 100% of the voting power of the corporation,
the following resolution was adopted to amend the articles:
RESOLVED that Article Fourth of the Articles of Incorporation of the
Corporation is hereby amended and restated in its entirety to provide as
follows:
FOURTH. The maximum number of shares which the Corporation is
authorized to have outstanding is:
C. 10,000,000 shares of Common Stock, without par value.
D. 1,000,000 shares of Preferred Stock, without par value.
The holders of the Preferred Stock shall be entitled to receive
dividends out of any funds of the Corporation at the time legally
available for dividends when and as declared by the Board of Directors at
such rate as shall be fixed by the Board of Directors before any sum shall
be set apart or applied to the redemption or purchase or any dividends
shall be declared or paid upon or set apart for any class or series of
Common Stock. In the event of any liquidation, dissolution or winding up
of the Corporation, the holders of Preferred Stock shall be entitled to
receive out of the assets of the Corporation payment of any amount per
share as determined by the Board of Directors as a liquidation price
(including accrued dividends, if any) before any distribution of
<PAGE> 5
- 2 -
assets shall be made to the holders of any class or series of Common
Stock.
The Board of Directors shall have the express authority from time to
time to adopt amendments to these Articles of Incorporation with respect
to any unissued or treasury shares of Preferred Stock and thereby to fix
or change the division of such shares into series and the designation and
authorized number of shares of each series and to provide for each such
series: voting power, full or limited or no voting power; dividend or
distribution rate; dates of payment of dividends or distributions; dates
from which dividends or distributions are cumulative; liquidation price;
redemption rights and prices; sinking fund requirements; conversion
rights; restrictions on the issuance of shares any class or series; and
such other designations, preferences and relative, participating, optional
or other special rights, powers and privileges of and qualifications,
limitations or restrictions on the rights of holders of shares of any
class or series as may be determined by the Board of Directors.
Upon the filing of this amendment to such Articles with the Ohio
Secretary of State, each outstanding share of the Corporation's Common
Stock, without par value shall automatically and without further action by
the Corporation or any holder be converted into 1,820 shares of the
Corporation's Common Stock, without par value.
IN WITNESS WHEREOF, the above-named officers, acting for and on behalf of
the Corporation, have executed this Amendment this 24th day of August, 1987.
/s/John C. Court
----------------------------------
John C. Court, President
/s/John D. Littlehale
----------------------------------
John D. Littlehale, Secretary
<PAGE> 1
EXHIBIT 3(ii)
PRESCRIBED BY CHARTER NO. ____________________
BOB TAFT, SECRETARY OF STATE
30 EAST BROAD STREET, 14TH FLOOR APPROVED _______________________
COLUMBUS, OHIO 43266-0418
FORM C-107 (JANUARY 1991) DATE ___________________________
FEE_____________________________
CERTIFICATE OF AMENDMENT
By Directors of
Multi-Color Corporation
- -------------------------------------------------------------------------------
(Name of Corporation)
John C. Court, who is:
- -----------------
/ / Chairman of the Board /X/ President / / Vice President (check one)
and
John D. Littlehale, who is:
- ----------------------
/X/ Secretary / / Assistant Secretary (check one)
of the above named Ohio corporation for profit do hereby certify that:
/X/ a meeting of the Board of Directors called and held on the day
of May , 1996,
/ / in a writing signed by all the Directors pursuant to Section 1701.54 of the
Ohio Revised Code, the following resolution was adopted pursuant to Section
1701.70(B) ( ) (insert the proper paragraph number) of the Ohio Revised Code:
See Annex I hereto.
IN WITNESS WHEREOF, the above named officers, acting for and on behalf
of the corporation, have hereunto subscribed their names this
day of May , 1996.
BY:
--------------------------------------
John C. Court, President
BY:
--------------------------------------
John D. Littlehale, Secretary
NOTE: Ohio law does not permit one officer to sign in two capacities. Two
separate signatures are required, even if this necessitates the election of a
second officer before the filing can be made.
<PAGE> 2
ANNEX I
I. Pursuant to authority expressly conferred upon the Board of
Directors, the Board of Directors has duly authorized an issue of a series of
Preferred Stock, the designation of which shall be "Series A Convertible
Preferred Stock" (the "SERIES A PREFERRED STOCK"). The number of shares of
Series A Preferred Stock shall be 52,500. The preferences and relative
participating, optional and other special rights, and qualifications,
limitations and restrictions thereof, of the Series A Preferred Stock are hereby
fixed as follows:
SECTION 1. DIVIDENDS
1.1 The holders of shares of outstanding Series A Preferred Stock shall
be entitled to receive fully cumulative dividends, when, and as declared by the
Board of Directors of the Corporation out of funds legally available therefor
and in preference to any dividends payable to holders of Common Stock of the
Corporation or of any other class or series of the Corporation's capital stock
ranking junior as to liquidation rights to the Series A Preferred Stock, at a
rate per annum of $4.25, payable quarterly in arrears. The dividend rate is
subject to adjustment based upon stock splits, stock dividends or combinations.
Each quarterly dividend is payable for a quarterly dividend period. (Hereinafter
referred to as a "QUARTERLY DIVIDEND PERIOD" or "QUARTERLY DIVIDEND PERIODS"),
which Quarterly Dividend Periods shall commence on January 1, April 1, July 1
and October 1 of each year. Dividends for the Quarterly Dividend Period shall be
payable quarterly on the last day of each March, June, September and December
commencing on June 30, 1996 and shall be paid to holders of record on such
respective dates which, with respect to the initial quarterly dividend payment
date, shall not be earlier than the date on which shares of such series are
first issued and, with respect to subsequent quarterly dividend payment dates,
shall not exceed 50 days preceding such quarterly dividend payment dates, as may
be determined by the Board of Directors in advance of the payment of the
particular dividend. Dividends shall commence to accrue from the date of
original issuance of the Series A Preferred Stock. The initial dividend shall be
declared and paid only for that portion of the Quarterly Dividend Period for
which the Series A Preferred Stock is actually outstanding.
Holders of shares of outstanding Series A Preferred Stock shall not be
entitled to any dividends, whether payable in cash, property or stock, in excess
of full cumulative dividends, as provided in the immediately preceding
paragraph, on the Series A Preferred Stock.
<PAGE> 3
If at any time, the Corporation pays less than the total amount of
dividends then accrued upon the Series A Preferred Stock and any other stock
ranking on a parity as to dividends with the Series A Preferred Stock, dividends
declared upon shares of Series A Preferred Stock and such other stock shall be
declared pro rata so that in all cases the amount of dividends declared per
share on the Series A Preferred Stock and such other stock shall bear to each
other the same ratio that accumulated dividends per share on the shares of
Series A Preferred Stock and such other stock bear to each other.
In no event, so long as any Series A Preferred Stock shall remain
outstanding, shall the Corporation declare, pay or set aside any dividend on,
declare, make or set apart any other distribution of any kind (except
distributions in Common Stock or any other class or series of capital stock
ranking, as to dividends and liquidation rights, junior to the Series A
Preferred Stock (the "JUNIOR STOCK")), in respect of, or purchase, redeem or
otherwise acquire, the Common Stock or any Junior Stock, under any
circumstances, unless, on the date of such declaration, in the case of a
dividend, or on the date of such distribution, in the case of a distribution,
full cumulative dividends on all outstanding shares of Series A Preferred Stock
for all dividend payment periods terminating on or prior to the date of such
declaration or distribution shall have been paid or declared and funds set aside
for such payment and sufficient funds are set aside for the payment of the
dividend for the current dividend payment period, or pro-rata portion thereof;
provided, however, that nothing hereinabove shall prevent the Corporation from
exercising any rights it may have to purchase Common Stock from any employee,
consultant or director of the Corporation upon termination of their employment
with the Corporation or otherwise.
SECTION 2. LIQUIDATION PREFERENCE
2.1 LIQUIDATION. Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of the shares of
Series A Preferred Stock shall be entitled, before any distribution or payment
is made upon any share of Common Stock or any other class or series of the
Corporation's capital stock ranking junior as to liquidation rights to the
Series A Preferred Stock (but after preferential distributions or payments
required to be made on any other securities of the Corporation senior to the
Series A Preferred Stock) to be paid $50 per share out of the assets of the
Corporation available for distribution (subject to adjustment for stock splits,
stock combinations, stock dividends, reclassifications and similar other events
affecting the Series A Preferred Stock) plus any dividends on the Series A
Preferred Stock provided for by Section 1 hereof that have been declared by the
Board but are unpaid through the date of distribution to the holders of the
outstanding shares of Series A Preferred Stock in connection with such
liquidation, dissolution or winding up. If
<PAGE> 4
upon a liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the assets to be distributed among the holders of
Series A Preferred Stock (and all holders of other preferred stock of the
Corporation ranking on parity with the Series A Preferred Stock in the event of
a liquidation, dissolution or winding up of the Corporation) shall be
insufficient to permit payments in full to the holders of Series A Preferred
Stock of the Series A Liquidation Preference, then all assets of the Corporation
available for distribution to stockholders after the Corporation has made
preferential distributions or payments required to be made on any other
securities of the Corporation senior to the Series A Preferred Stock shall be
distributed ratably among the holders of Series A Preferred Stock and all
holders of other preferred stock of the Corporation ranking on parity with the
Series A Preferred Stock.
2.2 OTHER DISTRIBUTIONS. Upon any liquidation, dissolution or winding
up of the Corporation, immediately after the holders of Series A Preferred Stock
and any other series of Preferred Stock shall have been paid in full any
preferred stock liquidation preferences that they are respectively entitled to,
the remaining assets of the Corporation available for distribution shall be
distributed to the holders of the Common Stock.
2.3 NOTICE. Written notice of any liquidation, dissolution or winding
up and any related distribution, stating the payment date and the place where
said payments shall be made, shall be given by mail, postage prepaid, or by
telecopy to non-U.S. residents, not less than 20 days prior to the payment date
stated therein, to the holders of Series A Preferred Stock, such notice to be
addressed to each such holder as its address as shown on the records of the
Corporation.
SECTION 3. CONVERSION
3.1 RIGHT TO CONVERT
(a) Subject to Section 3.3, each share of Series A Preferred Stock
shall be convertible, at any time before a liquidating payment is made to the
holder of such Series A Preferred Stock pursuant to Section 2 hereof, at the
option of the holder thereof, at the office of the Corporation or any transfer
agent for such shares, into the number of fully paid and nonassessable shares of
Common Stock provided for below.
(b) Each share of Series A Preferred Stock shall be convertible into
such number of fully paid and nonassessable shares of Common Stock as is
determined by dividing $50.00 per share by the Series A Conversion Price,
determined as hereafter provided, in effect at the time of conversion. The
initial Series A Conversion Price shall be $5.00 per share; provided, however,
that such Conversion Price shall be subject to adjustment as set forth
<PAGE> 5
below.
3.2 MECHANICS OF CONVERSION. Before any holder of shares of Series A
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, such holder shall surrender the certificates for the shares of Series A
Preferred Stock, duly endorsed, at the office of the Corporation or of any
transfer agent for such shares, and shall give written notice by registered or
certified mail, postage prepaid, to the Corporation at its principal corporate
office, of the election to convert the same and shall state therein the name or
names in which the certificate or certificates for shares of Common Stock are to
be issued. (A holder of Series A Preferred Stock may not effect a transfer of
shares pursuant to conversion unless all applicable restrictions on transfer are
complied with.) The Corporation shall, as soon as practicable, issue and deliver
at such office to such holder of shares of Series A Preferred Stock, or to the
nominee or nominee of such holder, a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled as provided
above. Such conversion shall be deemed to have been made immediately prior to
the close of business on the date of such surrender of the certificate or
certificates representing the shares of Series A Preferred Stock being
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such date.
3.3 CONVERSION PRICE ADJUSTMENTS. The Series A Conversion Price shall
be subject to adjustment from time to time as follows:
(a) If the Corporation shall (A) pay a dividend or make a distribution
on its Common Stock in shares of Common Stock, (B) subdivide its outstanding
shares of Common Stock into a greater number of shares, (C) combine its
outstanding shares of Common Stock into a smaller number of shares or (D) issue
by reclassification of its Common Stock any shares of capital stock of the
Corporation, then in each such case the Series A Conversion Price in effect
immediately prior to such action shall be adjusted so that the holder of any
share of Series A Preferred Stock thereafter surrendered for conversion shall be
entitled to receive the number of shares of Common Stock or other capital stock
of the Corporation which he would have owned or been entitled to receive
immediately following such action had such share been converted immediately
prior to the occurrence of such event. An adjustment made pursuant to this
Subsection (a) shall become effective immedi ately after the record date, in the
case of a dividend or distribution, or immediately after the effective date, in
the case of a subdivision, combination or reclassification.
(b) If the Corporation shall, by dividend or otherwise, distribute to
all holders of its outstanding Common
<PAGE> 6
Stock, in respect of such Common Stock (and not to all holders of Series A
Preferred Stock, in respect of such Series A Preferred Stock), shares of capital
stock, other than Common Stock, evidences of its indebtedness or assets
(including securities and cash, but excluding (i) any regular periodic cash
dividends of the Corporation (provided that the Corporation is not then in
default in paying holders of the Series A Preferred Stock their fully cumulative
preferred dividend), (ii) dividends or distributions payable in stock for which
adjustment is made pursuant to Subsection (a) of this Section 3.3 and (iii)
distributions made as contemplated by Section 2.2 hereof), or rights or warrants
to subscribe for or purchase securities of the Corporation, then in each such
case the Series A Conversion Price shall be adjusted so that it shall equal the
price determined by multiplying the Series A Conversion Price in effect
immediately prior to the record date of such distribution by a fraction, the
numerator of which shall be the Current Market Value per share of the Common
Stock less the fair market value on such record date, as determined by the
Board, whose determination shall be described in the notice of adjustment of
Series A Conversion Price given as herein provided, of the portion of the
capital stock or assets or the evidences of indebtedness or assets so
distributed to the holder of one share of Common Stock or of such subscription
rights or warrants applicable to one share of Common Stock, and the denominator
of which shall be such Current Market Value per share of Common Stock. Such
adjustment shall become effective immediately after the record date for the
determination of stockholders entitled to receive such distribution. Such
adjustment shall be made successively whenever such a record date is fixed; and
in the event such distribution is not so made, the Conversion Price shall be
adjusted back to the Conversion Price which would then be in effect if such
record date had not been fixed.
(c) If, as a result of an adjustment made pursuant to Subsection (a) of
this Section 3.3, the holder of any share of Series A Preferred Stock thereafter
surrendered for conversion shall become entitled to receive any shares of the
Corporation other than shares of Common Stock, thereafter the Series A
Conversion Price of such other shares so receivable upon conversion of any
shares of Series A Preferred Stock shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to Common Stock contained in this Section.
(d) If at any time, the Corporation issues or sells, or is deemed to
have issued or sold, or issues any rights, options or convertible securities
permitting the acquisition of, any shares of its Common Stock for a
consideration per share less than the conversion price in effect immediately
prior to the time of such issue or sale (unless the provisions of Subsections
(a), (b), (c), (h), (i) or (j) shall be applicable, in which event this
Subsection (d) shall not apply), the conversion price will be recalculated by
dividing (i) the sum of (A) the product
<PAGE> 7
derived by multiplying the conversion price in effect immediately prior
to such issue or sale times the number of shares of Common Stock outstanding
immediately prior to such issue or sale, plus (B) the consideration, if any,
received by the Corporation upon such issue or sale, by (ii) the number of
shares of Common Stock outstanding immediately after such issue or sale.
(e) If the Corporation shall issue or sell its shares of Common Stock,
for the consideration per share which is below $5.00 per share (unless the
provisions of subsections (a), (b), (c), (d), (h), (i) or (j) shall be
applicable, in which event this subsection (e) shall not apply), the conversion
price will be recalculated by dividing (i) the sum of (A) the product derived by
multiplying $5.00 times the number of shares of Common Stock outstanding
immediately prior to such issue or sale, plus (B) the consideration, if any,
received by the Corporation upon such sale or issue, by (ii) the number of
shares of Common Stock outstanding immediately after such issue or sale.
(f) No adjustments shall be made pursuant to this Section 3.3 unless
such adjustment would require an increase or decrease of at least one percent
(1%) in the number of shares of Common Stock issuable upon the conversion of the
Series A Preferred Stock; provided, however, that any adjustments which by
reason of this subsection (f) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
shall be made to the nearest one-thousandth of a share.
(g) As used herein, the term "CURRENT MARKET VALUE" shall be the last
reported sales price or the latest closing bid and ask prices for the Common
Stock on any national securities exchange or the Nasdaq National Market. If the
Common Stock is not so listed or admitted to trading, the term "CURRENT MARKET
VALUE" shall be the fair market value on a going concern basis, disregarding any
control premiums and minority interest discounts, of one (1) share of Common
Stock as determined by the Board after consideration of (i) published valuations
of similar other companies in like industries, (ii) reports or valuations of one
or more independent qualified appraisers or investment banking concerns as
deemed appropriate and necessary by the Board, (iii) the purchase and sale
prices of Common Stock that has been sold by holders thereof in arm's-length
transactions with unaffiliated third parties, and (iv) such other information as
deemed appropriate by the Board.
(h) An equitable adjustment of the Series A Conversion Price shall be
made in the event of any fundamental transaction involving the reclassification
or modification of the Common Stock or extraordinary distributions with respect
to the Common Stock, whether or not such transaction is specifically mentioned
in the foregoing paragraphs.
(i) In case of any consolidation or merger of the
<PAGE> 8
Corporation into another corporation, or in the case of any merger of another
corporation into the Corporation, other than a merger with a corporation in
which merger the Corporation is the continuing corporation and which does not
result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock, or in case of any lease or transfer to
another corporation of all or substantially all of the assets of the
Corporation, the holder of each share of the Series A Preferred Stock then
outstanding shall have the right thereafter, subject to the terms and conditions
of this Section 3.3(f), to convert such share into the kind and amount of shares
of stock and other securities and property receivable upon such consolidation,
merger, lease or transfer by a holder of the number of shares of Common Stock
into which such share of Series A Preferred Stock might have been converted
pursuant to this Section 3.3(f) immediately prior to such consolidation, merger,
lease or transfer; and effective provision shall be made in the Certificate of
Incorporation or charter of the resulting or surviving corporation or otherwise
so that the provisions set forth in this Section 3.3(f) shall thereafter be
applicable, as nearly as practicable, to any such other shares of stock and
other securities and property deliverable upon conversion of the Series A
Preferred Stock pursuant to this Section 3.3(f) remaining outstanding or other
convertible preferred stock received by the holders in place thereof; and any
such resulting or surviving corporation shall expressly assume the obligation to
deliver, upon the exercise of the conversion privilege, such shares, securities
or property as the holders of the Series A Preferred Stock remaining
outstanding, or other convertible preferred stock received by the holders in
place thereof, may be entitled, and to make provisions for the protection of the
conversion right as herein provided, and the provisions of this Amendment to the
Articles of Incorporation shall remain outstanding after such reorganization. In
case securities or property other than shares of Common Stock shall be issuable
or deliverable upon conversion as aforesaid, then all reference in this Section
3.3(f) shall be deemed to apply, so far as appropriate and as nearly as
practicable, to such other securities or property. This provision of this
Section 3.3(f) shall similarly apply to successive reorganizations,
consolidations, mergers, leases or transfers.
(j) The Series A Conversion Price shall not be adjusted as a result of
any grant, sale or issuance of any security pursuant to any existing or future
employee benefit plan, including but not limited to any bonus, retirement,
pension, profit sharing, savings, stock option, stock appreciation, stock
purchase, incentive, deferred compensation or employment plan or agreement.
3.4 FRACTIONAL SHARES AND CERTIFICATE AS TO ADJUSTMENTS.
(a) In lieu of issuing fractional shares upon a conversion of Series A
Preferred Stock, the Corporation shall pay
<PAGE> 9
cash equal to the fraction multiplied by the then fair market value of a share
of Common Stock, as determined by the Board. Whether or not fractional shares
would be issuable upon such conversion shall be determined on the basis of the
total number of shares of Series A Preferred Stock the holder is at the time
converting into Common Stock and the number of shares of Common Stock issuable
upon such aggregate conversion.
(b) Upon the occurrence of each adjustment of the Series A Conversion
Price pursuant to this Section, the Corporation, at its expense, shall promptly
compute such adjustment in accordance with the terms hereof and prepare and
furnish to each holder of shares of Series A Preferred Stock a certificate
setting forth such adjustment and showing in detail the facts upon which such
adjustment is based.
3.5 NOTICE OF RECORD DATE, ETC. If the Corporation authorizes payment or
other distribution to stockholders of any dividend or other distribution, any
right or subscribe for, purchase or otherwise acquire any shares of any class or
any other securities or property, or to receive any other right, the Corporation
shall mail to each holder of shares of Series A Preferred Stock as promptly as
possible, and in each case where possible at least 20 days prior to the
applicable date hereinafter specified, a notice specifying the date on which a
record is to be taken for the purpose of such dividend, distribution or right or
if a record is not to be taken, the date as of which the holders to be entitled
to such dividend, distribution or right is to be determined, and the amount and
character of such dividend, distribution, or right. In case (i) the Corporation
shall take any other action which would require an adjustment in the Series A
Conversion Price pursuant to Section 3.3; or (ii) there shall be any
reorganization or reclassification of the Common Stock, other than a subdivision
or combination of the outstanding Common Stock and other than a change in the
par value of the Common Stock, or any consolidation or merger to which the
Corporation is a party or any statutory exchange of securities with another
corporation and for which approval of any stockholders of the Corporation is
required, or any sale or transfer of all or substantially all of the assets of
the Corporation; or (iii) there shall be a voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; then in each such case the
Corporation shall give to the holders of shares of Series A Preferred Stock, as
promptly as possible, and in each case where possible at least 20 days prior to
the applicable date hereinafter specified, a notice stating (i) the date on
which a record is to be taken for the purpose of such action or (ii) the date on
which such reorganization, reclassification, consolidation, merger, statutory
exchange, sale, transfer or liquidation, dissolution or winding up is expected
to become effective or occur, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities, cash or other property deliverable upon such
reorganization,
<PAGE> 10
reclassification, consolidation, merger, statutory exchange, sale, transfer or
liquidation, dissolution or winding up.
3.6 RESERVATION OF COMMON STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of Series A Preferred Stock, such number of shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of Series A Preferred Stock. If at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of Series A Preferred
Stock, the Corporation shall take such corporate action as may, in the opinion
of its counsel, be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purpose.
3.7 TRANSFER TAXES, ETC. The Corporation shall pay any and all
documentary stamp, issue or transfer taxes, and any similar taxes payable in
respect of the issue or delivery of shares of Common Stock upon conversions of
shares of Series A Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issue or delivery of shares of Common Stock in a
name other than that of the holder of the shares of Series A Preferred Stock to
be converted and no such issue or delivery shall be made unless and until the
person requesting such issue or delivery has paid to the Corporation the amount
of any such tax or has established, to the satisfaction of the Corporation, that
such tax has been paid.
3.8 NOTICES. Any notice required by the provisions of this Section to
be given to the holders of shares of Series A Preferred Stock shall be deemed to
be delivered when deposited in the United States mail, postage prepaid,
registered or certified, and addressed to each holder of record at the address
of such holder appearing on the stock transfer books of the Corporation.
SECTION 4.VOTING RIGHTS
The holders of the Series A Preferred Stock shall not be entitled to
vote except as provided in this Section and as otherwise provided by law.
a. If at any time the Corporation shall be in default in the payment of
dividends on any of the outstanding Series A Preferred Stock in an amount of
four full quarterly dividends, whether or not consecutive, the number of
directors constituting the Board of Directors of the Corporation shall
automatically without the necessity of undertaking any other corporate actions
be increased by two, and the holders of the outstanding Series A Preferred Stock
of the Corporation, voting as a separate class, shall be entitled to elect
immediately two directors to fill such
<PAGE> 11
newly created directorships. The Corporation shall use its best efforts to
immediately effectuate the intentions of this provision.
4.1.1 When all arrearages in dividends with respect to the Series
A Preferred Stock then outstanding shall have been paid and dividends
thereon for the current quarterly period shall have been paid, (i) the
right of holders of the outstanding Preferred Stock to elect directors
pursuant to paragraph 4.1 above shall cease, but subject to the same
provisions for vesting of such voting rights in the case of any
similar future arrearages in dividends; (ii) the term of the directors
then in office elected by holders of the outstanding Preferred Stock
as a class shall forthwith terminate; and (iii) the number of
directors constituting the Board of Directors shall be reduced by two.
4.1.2 If the Board of Directors of the Corporation shall be divided
into two or more classes, the directors elected by the holders of the
outstanding Preferred Stock shall be distributed among the several
classes of directors as nearly equally as possible.
4.2 In addition to the provisions regarding the election of directors
set forth in Section 4.1 above, the holders of the Series A Preferred Stock
shall have the right, voting separately as a class, to elect one member to the
Corporation's Board of Directors so long as (i) at least 20,000 shares of the
Series A Preferred Stock remain outstanding or (ii) holders of the Series A
Preferred Stock hold at least 200,000 shares of Common Stock that have been
issued upon conversion of the Series A Preferred Stock.
4.3 Whenever the right to elect directors by this Section 4 shall
vest, it may be exercised initially either at a special meeting of holders of
the outstanding Preferred Stock or at any meeting of shareholders, but
thereafter it shall be exercised only at annual shareholders' meetings. A
special meeting for the exercise of such right shall be called by the Secretary
of the Corporation within ten days after receipt of a written request therefor,
signed by the holders of record of at least 10% of the then outstanding shares
of Preferred stock; provided, however, no such special meeting shall be held
during the 90-day period preceding the date fixed for the annual meeting of
shareholders,
4.4 Any director who shall have been elected by holders of the
Preferred Stock as a class shall hold office for a term expiring (subject to the
earlier termination of the default in dividends) at the next annual meeting of
shareholders, and during such term may be removed by such holders for cause at
any time, but may be removed without cause by such holders only by the
affirmative votes of holders of record of a majority of the then outstanding
shares of Series A Preferred Stock given at a special meeting of such
Shareholders called for such purpose. Any
<PAGE> 12
vacancy created by such removal may also be filled at such special meeting. A
meeting for the removal without cause of a director elected by holders of the
outstanding Series A Preferred Stock as a class and the filling of the vacancy
created thereby shall be called by the Secretary of the corporation within ten
days after receipt of a written request therefor, signed by the holders of
record of at least 25% of the then outstanding shares of Series A Preferred
Stock. Such meeting shall be held at the earliest practicable date thereafter in
accordance with the Corporation's Articles of Incorporation, Code of Regulations
and applicable state law.
4.5 Any vacancy caused by the removal for cause or by the death,
disability or resignation of a director who shall have been elected by the
holders of the outstanding Series A Preferred Stock as a class may be filled
only by the holders of the outstanding Series A Preferred Stock at a meeting
called for such purpose. Such meeting of the holders of the outstanding Series A
Preferred Stock shall be called by the Secretary of the Corporation at the
earliest practicable date after any such removal, death, disability or
resignation and in any event within ten days after receipt of a written request
therefor, signed by the holders of record of at least 10% of the then
outstanding shares of Series A Preferred Stock.
4.6 If any meeting of the holders of the outstanding Series A
Preferred Stock required by this Section 4.6 to be called shall not have been
called within ten days after receipt of a written request therefor by the
Secretary of the Corporation as provided herein, or within fifteen days after
mailing the same within the United States of America by registered mail
addressed to the Secretary of the Corporation at its principal office, the
holders of record of at least 10% of the then outstanding shares of Series A
Preferred Stock may designate in writing one of their number to call such a
meeting at the expense of the Corporation, and such meeting may be called by
such person so designated upon the notice required for annual meetings of
shareholders. Any holder of the outstanding Series A Preferred Stock so
designated shall have access to the stock books of the Corporation for the
purpose of causing meetings of shareholders to be called pursuant to these
provisions.
4.7 Any meeting of holders of the outstanding Series A Preferred Stock
entitled to vote as a class for the election or removal of directors shall be
held at the place for the holding of the annual meeting of shareholders of the
Corporation. At such meeting, the presence in person or by proxy of holders of a
majority of the votes of the then outstanding shares of Series A Preferred Stock
shall be required to constitute a quorum; in the absence of a quorum, a majority
of the holders present in person or by proxy shall have the power to adjourn the
meeting from time to time without notice, other than announcement at the
meeting, until a quorum shall be present. In lieu of a meeting of the holders of
the Series A Preferred Stock, the holders of the
<PAGE> 13
outstanding Series A Preferred Stock may take action by a written consent of a
majority of the outstanding Series A Preferred Stock, and such holders may
waive all notice requirements hereunder.
4.8 So long as any shares of Series A Preferred Stock are outstanding,
the Corporation shall not, in any manner, whether by amendment to its Articles
of Incorporation or Code of Regulations, by merger (whether or not the
Corporation is the surviving corporation in such merger), by consolidation, or
otherwise, without the written consent or the affirmative vote at a meeting
called for that purpose of the holders of at least two-thirds of the votes of
the shares of Series A Preferred Stock then outstanding, voting separately as a
class, (i) amend, alter or repeal any of the provisions of any resolution or
resolutions establishing the Series A Preferred Stock so as to affect adversely
the powers, preferences or special rights of such Series A Preferred Stock or
(ii) authorize the issuance of, or authorize any obligation or security
convertible into or evidencing the right to purchase shares of, any additional
class or series of stock ranking prior to the Series A Preferred Stock in the
payment of dividends or the preferential distribution of assets.
4.9 Nothing in this Section 4.9 shall be deemed to require any vote or
consent of the holders of shares of Series A Preferred Stock in connection with
the authorization or issuance of any security ranking on a parity with or junior
to the Series A Preferred Stock as to dividends and/or distribution of assets.
SECTION 5. REDEMPTION
5.1 The Corporation may not redeem any shares of Series A Preferred
Stock until two years from the first date any such shares are issued.
Thereafter, the Series A Preferred Stock may be redeemed in whole or in part by
the Corporation at its election expressed by resolution of the Board of
Directors, upon not less than 30 days previous notice to the holders of record
of the Series A Preferred Stock to be redeemed, given by mail, upon payment of
the amount of any dividends accrued and unpaid thereon to the date fixed for
redemption plus a redemption price set forth below:
<TABLE>
<CAPTION>
<S> <C>
May 3, 1998 to May 2, 1999......................................$ 58.00
May 3, 1999 to May 2, 2000....................................... 54.00
May 3, 2000 to May 2, 2001....................................... 53.33
May 3, 2001 to May 2, 2002....................................... 52.67
May 3, 2002 to May 2, 2003....................................... 52.00
May 3, 2003 to May 2, 2004....................................... 51.33
May 3, 2004 to May 2, 2005....................................... 50.67
May 3, 2005
and thereafter ............................ 50.00
</TABLE>
<PAGE> 14
5.2 Any notice of redemption mailed to a holder of Series A Preferred
Stock at his address as the same shall appear on the books of the Corporation
shall be conclusively presumed to have been given whether or not the holder
receives the notice. Each such notice shall state the redemption date; the
redemption price applicable to the shares to be redeemed; the place or places
where such shares are to be surrendered; that dividends on shares to be redeemed
will cease to accrue on the redemption date; and that shares to be redeemed may
be converted at any time prior to the close of business on the business day next
preceding the redemption date as hereinafter provided (such notice to state the
Conversion Price, if any, at the time applicable). No immaterial defect in any
such notice to any holder of Series A Preferred Stock shall affect the validity
of the proceedings for the redemption of any other shares of such Series A
Preferred Stock.
5.3 From and after the redemption date (unless default shall be made
by the corporation in paying the redemption price of the shares called for
redemption, plus all accrued and unpaid dividends thereon), all dividends on the
Series A Preferred Stock called for redemption shall cease to accrue and all
rights of the holders thereof as shareholders of the corporation, except the
right to receive the redemption price as hereinafter provided, shall cease and
terminate. The respective holders of record of the Series A Preferred Stock to
be redeemed shall be entitled on and after the redemption date to receive the
redemption price at any time upon actual delivery to the Corporation of
certificates for the number of shares to be redeemed, duly endorsed in blank or
accompanied by proper instruments of assignment and transfer thereof duly
endorsed in blank.
5.4 Any shares of Series A Preferred Stock redeemed pursuant to the
provisions of this Section 5 shall be retired and given the status of authorized
and unissued Preferred Stock, undesignated as to series, subject to reissuance
by the corporation as shares of Preferred Stock of one or more series, as may be
determined from time to time by the Board of Directors, but such shares shall
not be reissued as Series A Preferred Stock.
SECTION 6. OTHER PROVISIONS
6.1 DEFAULT. If at any time the Corporation shall have failed to make
a required dividend payment, thereafter and until such dividend shall have been
paid, (i) the Corporation shall not declare or pay any dividends on or make any
distributions with respect to the Common Stock or shares of any other class or
series of the Corporation's capital stock ranking junior as to liquidation
rights to the Series A Preferred Stock; and (ii) neither the Corporation nor any
subsidiary shall purchase any Common Stock or shares of any other class or
series of the Corporation's capital stock ranking junior as to liquidation
rights to the Series A Preferred Stock.
<PAGE> 15
6.2 AMENDMENTS. So long as any of the Series A Preferred Stock is
outstanding, the Corporation will not:
(a) amend, alter or repeal, directly or indirectly, whether by merger,
consolidation or otherwise, any of the provisions applicable to the Series A
Preferred Stock so as to change the dividend payable thereon, the amount payable
thereon upon liquidation or any of the other provisions applicable thereto
without the affirmative vote or consent of the holders of at least two-thirds
thereof at the time outstanding, voting as a separate class, given in person or
by proxy, either in writing or by resolution adopted at a special meeting called
for the purpose; or
(b) create, directly or indirectly, whether by merger, consolidation or
otherwise, any other class or classes of stock ranking prior to or on a parity
with the Series A Preferred Stock as to dividends, or upon liquidation, or
increase the authorized number of shares of any other class or classes of stock
ranking prior to or on a parity with the Series A Preferred Stock without the
affirmative vote or consent, in addition to all other votes or consents required
hereby or by the laws of Ohio, of the holders of at least two-thirds of the
Series A Preferred Stock at the time outstanding voting together as a single
class separate from the holders of any other class, classes or series of stock
of the Company, given in person or by proxy, either in writing or by resolution
adopted at a special meeting called for the purpose.
6.3 PURCHASE RIGHTS. In the event the Corporation, after the date
hereof, shall make a public or private sale of its Common Stock or securities
exercisable or convertible into Common Stock ("CONVERTIBLE SECURITIES"), each
holder of the outstanding shares of the Series A Preferred Stock shall have the
right, but not the obligation, to purchase on the same terms and conditions as
the other purchasers, an amount of like securities, which when added to the
other Common Stock or Convertible Securities owned by the holder, equal that
percentage to which the number of shares of Common Stock and Convertible
Securities owned by the holder (excluding any securities other than the Series A
Preferred Stock and Common Stock issued upon conversion of the Series A
Preferred Stock) bears to 3,080,789. The rights granted herein to the holder
shall not apply to the original issuance of the Corporation's Series B
Convertible Preferred Stock, the conversion of the deferred compensation of John
Court into Common Stock and to any grant, sale or issuance of securities
pursuant to any existing or future employee benefit plan, including, but not
limited, to any bonus, retirement, pension, profit sharing, savings, stock
option, stock appreciation, stock purchase, incentive, deferred compensation or
employment plan or agreement. Furthermore, the rights granted hereby may not be
exercised by any holder of the Series A Preferred Stock who, in the reasonable
judgment of the Corporation is an owner, partner, stockholder, proprietor,
officer, director, manager, consultant or employee of
<PAGE> 16
any entity which engages in any business activity related to the Corporation's
business.
II. Pursuant to authority expressly conferred upon the Board of
Directors, the Board of Directors has duly authorized an issue of a series of
Preferred Stock, the designation of which shall be "Series B Convertible
PREFERRED STOCK" (the "Series B Preferred Stock"). The number of shares of
Series B Preferred Stock shall be 13,242. The preferences and relative
participating, optional and other special rights, and qualifications,
limitations and restrictions thereof, of the Series B Preferred Stock are
hereby fixed as follows:
SECTION 1. DIVIDENDS
a. The holders of shares of outstanding Series B Preferred Stock shall
be entitled to receive fully cumulative dividends, when, and as declared by the
Board of Directors of the Corporation out of funds legally available therefor
and in preference to any dividends payable to holders of Common Stock of the
Corporation or of any other class or series of the Corporation's capital stock
ranking junior as to liquidation rights to the Series B Preferred Stock (but
after preferential payments have been made on the Company's Series A Convertible
Preferred Stock), at a rate per annum of $4.25, payable quarterly in arrears.
The dividend rate is subject to adjustment based upon stock splits, stock
dividends or combinations. Each quarterly dividend is payable for a quarterly
dividend period. (Hereinafter referred to as a "QUARTERLY DIVIDEND PERIOD" or
"QUARTERLY DIVIDEND PERIODS"), which Quarterly Dividend Periods shall commence
on January 1, April 1, July 1 and October 1 of each year. Dividends for the
Quarterly Dividend Period shall be payable quarterly on the last day of each
March, June, September and December commencing on June 30, 1996 and shall be
paid to holders of record on such respective dates which, with respect to the
initial quarterly dividend payment date, shall not be earlier than the date on
which shares of such series are first issued and, with respect to subsequent
quarterly dividend payment dates, shall not exceed 50 days preceding such
quarterly dividend payment dates, as may be determined by the Board of Directors
in advance of the payment of the particular dividend. Dividends shall commence
to accrue from the date of original issuance of the Series B Preferred Stock.
The initial dividend shall be declared and paid only for that portion of the
Quarterly Dividend Period for which the Series B Preferred Stock is actually
outstanding.
Holders of shares of outstanding Series B Preferred Stock shall not be
entitled to any dividends, whether payable in cash, property or stock, in excess
of full cumulative dividends, as provided in the immediately preceding
paragraph, on the Series B Preferred Stock.
If at any time, the Corporation pays less than the total
<PAGE> 17
amount of dividends then accrued upon the Series B Preferred Stock and any other
stock ranking on a parity as to dividends with the Series B Preferred Stock,
dividends declared upon shares of Series B Preferred Stock and such other stock
shall be declared pro rata so that in all cases the amount of dividends declared
per share on the Series B Preferred Stock and such other stock shall bear to
each other the same ratio that accumulated dividends per share on the shares of
Series B Preferred Stock and such other stock bear to each other.
In no event, so long as any Series B Preferred Stock shall remain
outstanding, shall the Corporation declare, pay or set aside any dividend on,
declare, make or set apart any other distribution of any kind (except
distributions in Common Stock or any other class or series of capital stock
ranking, as to dividends and liquidation rights, junior to the Series B
Preferred Stock (the "JUNIOR STOCK")), in respect of, or purchase, redeem or
otherwise acquire, the Common Stock or any Junior Stock, under any
circumstances, unless, on the date of such declaration, in the case of a
dividend, or on the date of such distribution, in the case of a distribution,
full cumulative dividends on all outstanding shares of Series B Preferred Stock
for all dividend payment periods terminating on or prior to the
date of such declaration or distribution shall have been paid or declared and
funds set aside for such payment and sufficient funds are set aside for the
payment of the dividend for the current dividend payment period, or pro-rata
portion thereof; provided, however, that nothing hereinabove shall prevent the
Corporation from exercising any rights it may have to purchase Common Stock from
any employee, consultant or director of the Corporation upon termination of
their employment with the Corporation or otherwise.
SECTION 2. LIQUIDATION PREFERENCE
2.1 LIQUIDATION. Upon any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of the shares of
Series B Preferred Stock shall be entitled, before any distribution or payment
is made upon any share of Common Stock or any other class or series of the
Corporation's capital stock ranking junior as to liquidation rights to the
Series B Preferred Stock (but after preferential distributions or payments
required to be made on the Company's Series A Convertible Preferred Stock and
any other securities of the Corporation senior to the Series B Preferred Stock)
to be paid $40.00 per share out of the assets of the Corporation available for
distribution (subject to adjustment for stock splits, stock combinations, stock
dividends, reclassifications and similar other events affecting the Series B
Preferred Stock) plus any dividends on the Series B Preferred Stock provided for
by Section 1 hereof that have been declared by the Board but are unpaid through
the date of distribution to the holders of the outstanding shares of Series B
Preferred Stock in connection with such liquidation, dissolution or winding up.
If upon a liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the assets to be distributed among the holders of
Series B Preferred Stock (and all holders of other preferred stock of the
Corporation ranking on parity with the Series B Preferred Stock in the event of
a liquida-
<PAGE> 18
tion, dissolution or winding up of the Corporation) shall be insufficient to
permit payments in full to the holders of Series B Preferred Stock of the Series
B Liquidation Preference, then all assets of the Corporation available for
distribution to stockholders after the Corporation has made preferential
distributions or payments required to be made on any other securities of the
Corporation senior to the Series B Preferred Stock shall be distributed ratably
among the holders of Series B Preferred Stock and all holders of other preferred
stock of the Corporation ranking on parity with the Series B Preferred Stock.
2.2 OTHER DISTRIBUTIONS. Upon any liquidation, dissolution or winding
up of the Corporation, immediately after the holders of Series B Preferred Stock
and any other series of Preferred Stock shall have been paid in full any
preferred stock liquidation preferences that they are respectively entitled to,
the remaining assets of the Corporation available for distribution shall be
distributed to the holders of the Common Stock.
2.3 NOTICE. Written notice of any liquidation, dissolution or winding
up and any related distribution, stating the payment date and the place where
said payments shall be made, shall be given by mail, postage prepaid, or by
telecopy to non-U.S. residents, not less than 20 days prior to the payment date
stated therein, to the holders of Series B Preferred Stock, such notice to be
addressed to each such holder as its address as shown on the records of the
Corporation.
SECTION 3. CONVERSION
3.1 RIGHT TO CONVERT
(a) Subject to Section 3.3, each share of Series B Preferred Stock
shall be convertible, at any time before a liquidating payment is made to the
holder of such Series B Preferred Stock pursuant to Section 2 hereof, at the
option of the holder thereof, at the office of the Corporation or any transfer
agent for such shares, into the number of fully paid and nonassessable shares of
Common Stock provided for below.
(b) Each share of Series B Preferred Stock shall be convertible
into such number of fully paid and nonassessable shares of Common Stock as is
determined by dividing $50.00 per share by the Series B Conversion Price,
determined as hereafter provided, in effect at the time of conversion. The
initial Series B Conversion Price shall be $5.00 per share; provided, however,
that such Conversion Price shall be subject to adjustment as set forth
<PAGE> 19
below.
3.2 MECHANICS OF CONVERSION. Before any holder of shares of Series B
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, such holder shall surrender the certificates for the shares of Series B
Preferred Stock, duly endorsed, at the office of the Corporation or of any
transfer agent for such shares, and shall give written notice by registered or
certified mail, postage prepaid, to the Corporation at its principal corporate
office, of the election to convert the same and shall state therein the name or
names in which the certificate or certificates for shares of Common Stock are to
be issued. (A holder of Series B Preferred Stock may not effect a transfer of
shares pursuant to conversion unless all applicable restrictions on transfer are
complied with.) The Corporation shall, as soon as practicable, issue and deliver
at such office to such holder of shares of Series B Preferred Stock, or to the
nominee or nominee of such holder, a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled as provided
above. Such conversion shall be deemed to have been made immediately prior to
the close of business on the date of such surrender of the certificate or
certificates representing the shares of Series B Preferred Stock being
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such date.
3.3 CONVERSION PRICE ADJUSTMENTS. The Series B Conversion Price shall be
subject to adjustment from time to time as follows:
(a) If the Corporation shall (A) pay a dividend or make a
distribution on its Common Stock in shares of Common Stock, (B) subdivide its
outstanding shares of Common Stock into a greater number of shares, (C) combine
its outstanding shares of Common Stock into a smaller number of shares or (D)
issue by reclassification of its Common Stock any shares of capital stock of the
Corporation, then in each such case the Series B Conversion Price in effect
immediately prior to such action shall be adjusted so that the holder of any
share of Series B Preferred Stock thereafter surrendered for conversion shall be
entitled to receive the number of shares of Common Stock or other capital stock
of the Corporation which he would have owned or been entitled to receive
immediately following such action had such share been converted immediately
prior to the occurrence of such event. An adjustment made pursuant to this
Subsection (a) shall become effective immedi ately after the record date, in the
case of a dividend or distribution, or immediately after the effective date, in
the case of a subdivision, combination or reclassification.
(b) If the Corporation shall, by dividend or otherwise, distribute
to all holders of its outstanding Common
<PAGE> 20
Stock, in respect of such Common Stock (and not to all holders of Series B
Preferred Stock, in respect of such Series B Preferred Stock), shares of capital
stock, other than Common Stock, evidences of its indebtedness or assets
(including securities and cash, but excluding (i) any regular periodic cash
dividends of the Corporation (provided that the Corporation is not then in
default in paying holders of the Series B Preferred Stock their fully cumulative
preferred dividend), (ii) dividends or distributions payable in stock for which
adjustment is made pursuant to Subsection (a) of this Section 3.3 and (iii)
distributions made as contemplated by Section 2.2 hereof), or rights or warrants
to subscribe for or purchase securities of the Corporation, then in each such
case the Series B Conversion Price shall be adjusted so that it shall equal the
price determined by multiplying the Series B Conversion Price in effect
immediately prior to the record date of such distribution by a fraction, the
numerator of which shall be the Current Market Value per share of the Common
Stock less the fair market value on such record date, as determined by the
Board, whose determination shall be described in the notice of adjustment of
Series B Conversion Price given as herein provided, of the portion of the
capital stock or assets or the evidences of indebtedness or assets so
distributed to the holder of one share of Common Stock or of such subscription
rights or warrants applicable to one share of Common Stock, and the denominator
of which shall be such Current Market Value per share of Common Stock. Such
adjustment shall become effective immediately after the record date for the
determination of stockholders entitled to receive such distribution. Such
adjustment shall be made successively whenever such a record date is fixed; and
in the event such distribution is not so made, the Conversion Price shall be
adjusted back to the Conversion Price which would then be in effect if such
record date had not been fixed.
(c) If, as a result of an adjustment made pursuant to Subsection
(a) of this Section 3.3, the holder of any share of Series B Preferred Stock
thereafter surrendered for conversion shall become entitled to receive any
shares of the Corporation other than shares of Common Stock, thereafter the
Series B Conversion Price of such other shares so receivable upon conversion of
any shares of Series B Preferred Stock shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to Common Stock contained in this Section.
(d) If at any time, the Corporation issues or sells, or is deemed
to have issued or sold, or issues any rights, options or convertible securities
permitting the acquisition of, any shares of its Common Stock for a
consideration per share less than the conversion price in effect immediately
prior to the time of such issue or sale (unless the provisions of Subsections
(a), (b), (c), (h), (i) or (j) shall be applicable, in which event this
Subsection (d) shall not apply), the conversion price will be recalculated by
dividing (i) the sum of (A) the product
<PAGE> 21
derived by multiplying the conversion price in effect immediately prior to such
issue or sale times the number of shares of Common Stock outstanding immediately
prior to such issue or sale, plus (B) the consideration, if any, received by the
Corporation upon such issue or sale, by (ii) the number of shares of Common
Stock outstanding immediately after such issue or sale.
(e) If the Corporation shall issue or sell its shares of Common
Stock, for the consideration per share which is below $5.00 per share (unless
the provisions of subsections (a), (b), (c), (d), (h), (i) or (j) shall be
applicable, in which event this subsection (e) shall not apply), the conversion
price will be recalculated by dividing (i) the sum of (A) the product derived by
multiplying $5.00 times the number of shares of Common Stock outstanding
immediately prior to such issue or sale, plus (B) the consideration, if any,
received by the Corporation upon such sale or issue, by (ii) the number of
shares of Common Stock outstanding immediately after such issue or sale.
(f) No adjustments shall be made pursuant to this Section 3.3
unless such adjustment would require an increase or decrease of at least one
percent (1%) in the number of shares of Common Stock issuable upon the
conversion of the Series B Preferred Stock; provided, however, that any
adjustments which by reason of this subsection (f) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations shall be made to the nearest one-thousandth of a share.
(g) As used herein, the term "CURRENT MARKET VALUE" shall be the
last reported sales price or the latest closing bid and ask prices for the
Common Stock on any national securities exchange or the Nasdaq National Market.
If the Common Stock is not so listed or admitted to trading, the term "CURRENT
MARKET VALUE" shall be the fair market value on a going concern basis,
disregarding any control premiums and minority interest discounts, of one (1)
share of Common Stock as determined by the Board after consideration of (i)
published valuations of similar other companies in like industries, (ii) reports
or valuations of one or more independent qualified appraisers or investment
banking concerns as deemed appropriate and necessary by the Board, (iii) the
purchase and sale prices of Common Stock that has been sold by holders thereof
in arm's-length transactions with unaffiliated third parties, and (iv) such
other information as deemed appropriate by the Board.
(h) An equitable adjustment of the Series B Conversion Price shall
be made in the event of any fundamental transaction involving the
reclassification or modification of the Common Stock or extraordinary
distributions with respect to the Common Stock, whether or not such transaction
is specifically mentioned in the foregoing paragraphs.
(i) In case of any consolidation or merger of the
<PAGE> 22
Corporation into another corporation, or in the case of any merger of another
corporation into the Corporation, other than a merger with a corporation in
which merger the Corporation is the continuing corporation and which does not
result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock, or in case of any lease or transfer to
another corporation of all or substantially all of the assets of the
Corporation, the holder of each share of the Series B Preferred Stock then
outstanding shall have the right thereafter, subject to the terms and conditions
of this Section 3.3(f), to convert such share into the kind and amount of shares
of stock and other securities and property receivable upon such consolidation,
merger, lease or transfer by a holder of the number of shares of Common Stock
into which such share of Series B Preferred Stock might have been converted
pursuant to this Section 3.3(f) immediately prior to such consolidation, merger,
lease or transfer; and effective provision shall be made in the Certificate of
Incorporation or charter of the resulting or surviving corporation or otherwise
so that the provisions set forth in this Section 3.3(f) shall thereafter be
applicable, as nearly as practicable, to any such other shares of stock and
other securities and property deliverable upon conversion of the Series B
Preferred Stock pursuant to this Section 3.3(f) remaining outstanding or other
convertible preferred stock received by the holders in place thereof; and any
such resulting or surviving corporation shall expressly assume the obligation to
deliver, upon the exercise of the conversion privilege, such shares, securities
or property as the holders of the Series B Preferred Stock remaining
outstanding, or other convertible preferred stock received by the holders in
place thereof, may be entitled, and to make provisions for the protection of the
conversion right as herein provided, and the provisions of this Amendment to the
Articles of Incorporation shall remain outstanding after such reorganization. In
case securities or property other than shares of Common Stock shall be issuable
or deliverable upon conversion as aforesaid, then all reference in this Section
3.3(f) shall be deemed to apply, so far as appropriate and as nearly as
practicable, to such other securities or property. This provision of this
Section 3.3(f) shall similarly apply to successive reorganizations,
consolidations, mergers, leases or transfers.
(j) The Series B Conversion Price shall not be adjusted as a result
of any grant, sale or issuance of any security pursuant to any existing or
future employee benefit plan, including but not limited to any bonus,
retirement, pension, profit sharing, savings, stock option, stock appreciation,
stock purchase, incentive, deferred compensation or employment plan or
agreement.
3.4 FRACTIONAL SHARES AND CERTIFICATE AS TO ADJUSTMENTS.
(a) In lieu of issuing fractional shares upon a conversion of
Series B Preferred Stock, the Corporation shall pay
<PAGE> 23
cash equal to the fraction multiplied by the then fair market value of a share
of Common Stock, as determined by the Board. Whether or not fractional shares
would be issuable upon such conversion shall be determined on the basis of the
total number of shares of Series B Preferred Stock the holder is at the time
converting into Common Stock and the number of shares of Common Stock issuable
upon such aggregate conversion.
(b) Upon the occurrence of each adjustment of the Series B
Conversion Price pursuant to this Section, the Corporation, at its expense,
shall promptly compute such adjustment in accordance with the terms hereof and
prepare and furnish to each holder of shares of Series B Preferred Stock a
certificate setting forth such adjustment and showing in detail the facts upon
which such adjustment is based.
3.5 NOTICE OF RECORD DATE, ETC. If the Corporation authorizes payment or
other distribution to stockholders of any dividend or other distribution, any
right or subscribe for, purchase or otherwise acquire any shares of any class or
any other securities or property, or to receive any other right, the Corporation
shall mail to each holder of shares of Series B Preferred Stock as promptly as
possible, and in each case where possible at least 20 days prior to the
applicable date hereinafter specified, a notice specifying the date on which a
record is to be taken for the purpose of such dividend, distribution or right or
if a record is not to be taken, the date as of which the holders to be entitled
to such dividend, distribution or right is to be determined, and the amount and
character of such dividend, distribution, or right. In case (i) the Corporation
shall take any other action which would require an adjustment in the Series B
Conversion Price pursuant to Section 3.3; or (ii) there shall be any
reorganization or reclassi fication of the Common Stock, other than a
subdivision or combination of the outstanding Common Stock and other than a
change in the par value of the Common Stock, or any consolidation or merger to
which the Corporation is a party or any statutory exchange of securities with
another corporation and for which approval of any stockholders of the
Corporation is required, or any sale or transfer of all or substantially all of
the assets of the Corporation; or (iii) there shall be a voluntary or
involuntary liquidation, dissolution or winding up of the Corporation; then in
each such case the Corporation shall give to the holders of shares of Series B
Preferred Stock, as promptly as possible, and in each case where possible at
least 20 days prior to the applicable date hereinafter specified, a notice
stating (i) the date on which a record is to be taken for the purpose of such
action or (ii) the date on which such reorganization, reclassification,
consolidation, merger, statutory exchange, sale, transfer or liquidation,
dissolution or winding up is expected to become effective or occur, and the date
as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reorganization,
<PAGE> 24
reclassification, consolidation, merger, statutory exchange, sale, transfer or
liquidation, dissolution or winding up.
3.6 RESERVATION OF COMMON STOCK ISSUABLE UPON CONVERSION. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of Series B Preferred Stock, such number of shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series B Preferred Stock. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of Series B Preferred Stock, the
Corporation shall take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.
3.7 TRANSFER TAXES, ETC. The Corporation shall pay any and all documentary
stamp, issue or transfer taxes, and any similar taxes payable in respect of the
issue or delivery of shares of Common Stock upon conversions of shares of Series
B Preferred Stock pursuant hereto; provided, however, that the Corporation shall
not be required to pay any tax which may be payable in respect of any transfer
involved in the issue or delivery of shares of Common Stock in a name other than
that of the holder of the shares of Series B Preferred Stock to be converted and
no such issue or delivery shall be made unless and until the person requesting
such issue or delivery has paid to the Corporation the amount of any such tax or
has established, to the satisfaction of the Corporation, that such tax has been
paid.
3.8 NOTICES. Any notice required by the provisions of this Section to be
given to the holders of shares of Series B Preferred Stock shall be deemed to be
delivered when deposited in the United States mail, postage prepaid, registered
or certified, and addressed to each holder of record at the address of such
holder appearing on the stock transfer books of the Corporation.
SECTION 4. VOTING RIGHTS
The holders of the Series B Preferred Stock shall not be entitled to
vote except as provided by law.
SECTION 5. REDEMPTION
5.1 The Corporation may not redeem any shares of Series B Preferred
Stock until two years from the first date any such shares are issued.
Thereafter, the Series B Preferred Stock may be redeemed in whole or in part by
the Corporation at its election expressed by resolution of the Board of
Directors, upon not less than 30 days previous notice to the holders of record
of the Series B Preferred Stock to be redeemed, given by mail, upon payment of
the amount of any dividends accrued and unpaid thereon
<PAGE> 25
to the date fixed for redemption plus a redemption price set forth below:
<TABLE>
<CAPTION>
<S> <C>
May 3, 1998 to May 2, 1999..........................$ 46.40
May 3, 1999 to May 2, 2000........................... 43.20
May 3, 2000 to May 2, 2001........................... 42.66
May 3, 2001 to May 2, 2002........................... 42.14
May 3, 2002 to May 2, 2003........................... 41.60
May 3, 2003 to May 2, 2004........................... 41.06
May 3, 2004 to May 2, 2005........................... 40.54
May 3, 2005
and thereafter ................ 40.00
</TABLE>
5.2 Any notice of redemption mailed to a holder of Series B Preferred
Stock at his address as the same shall appear on the books of the Corporation
shall be conclusively presumed to have been given whether or not the holder
receives the notice. Each such notice shall state the redemption date; the
redemption price applicable to the shares to be redeemed; the place or places
where such shares are to be surrendered; that dividends on shares to be redeemed
will cease to accrue on the redemption date; and that shares to be redeemed may
be converted at any time prior to the close of business on the business day next
preceding the redemption date as hereinafter provided (such notice to state the
Conversion Price, if any, at the time applicable). No immaterial defect in any
such notice to any holder of Series B Preferred Stock shall affect the validity
of the proceedings for the redemption of any other shares of such Series B
Preferred Stock.
5.3 From and after the redemption date (unless default shall be made by
the corporation in paying the redemption price of the shares called for
redemption, plus all accrued and unpaid dividends thereon), all dividends on the
Series B Preferred Stock called for redemption shall cease to accrue and all
rights of the holders thereof as shareholders of the corporation, except the
right to receive the redemption price as hereinafter provided, shall cease and
terminate. The respective holders of record of the Series B Preferred Stock to
be redeemed shall be entitled on and after the redemption date to receive the
redemption price at any time upon actual delivery to the Corporation of
certificates for the number of shares to be redeemed, duly endorsed in blank or
accompanied by proper instruments of assignment and transfer thereof duly
endorsed in blank.
5.4 Any shares of Series B Preferred Stock redeemed pursuant to the
provisions of this Section 5 shall be retired and given the status of authorized
and unissued Preferred Stock, undesignated as to series, subject to reissuance
by the corporation as shares of Preferred Stock of one or more series, as may be
determined from time to time by the Board of Directors, but such shares shall
not be reissued as Series B Preferred Stock.
<PAGE> 26
SECTION 6. OTHER PROVISIONS
6.1 DEFAULT. If at any time the Corporation shall have failed to make a
required dividend payment, thereafter and until such dividend shall have been
paid, (i) the Corporation shall not declare or pay any dividends on or make any
distributions with respect to the Common Stock or shares of any other class or
series of the Corporation's capital stock ranking junior as to liquidation
rights to the Series B Preferred Stock; and (ii) neither the Corporation nor any
subsidiary shall purchase any Common Stock or shares of any other class or
series of the Corporation's capital stock ranking junior as to liquidation
rights to the Series B Preferred Stock.
6.2 AMENDMENTS. So long as any of the Series B Preferred Stock is
outstanding, the Corporation will not:
(a) amend, alter or repeal, directly or indirectly, whether by
merger, consolidation or otherwise, any of the provisions applicable to the
Series B Preferred Stock so as to change the dividend payable thereon, the
amount payable thereon upon liquidation or any of the other provisions
applicable thereto without the affirmative vote or consent of the holders of at
least two-thirds thereof at the time outstanding, voting as a separate class,
given in person or by proxy, either in writing or by resolution adopted at a
special meeting called for the purpose; or
(b) create, directly or indirectly, whether by merger,
consolidation or otherwise, any other class or classes of stock ranking prior to
or on a parity with the Series B Preferred Stock as to dividends, or upon
liquidation, or increase the authorized number of shares of any other class or
classes of stock ranking prior to or on a parity with the Series B Preferred
Stock without the affirmative vote or consent, in addition to all other votes or
consents required hereby or by the laws of Ohio, of the holders of at least
two-thirds of the Series B Preferred Stock at the time outstanding voting
together as a single class separate from the holders of any other class, classes
or series of stock of the Company, given in person or by proxy, either in
writing or by resolution adopted at a special meeting called for the purpose.
<PAGE> 1
EXHIBIT 10.1
WAIVER, AMENDMENT AND RESTATEMENT
MULTI-COLOR CORPORATION, an Ohio corporation (the "Company"), PNC BANK,
OHIO, NATIONAL ASSOCIATION and STAR BANK, NATIONAL ASSOCIATION (each
individually a "Lender" and collectively the "Lenders") and PNC BANK, OHIO,
NATIONAL ASSOCIATION, as agent for the Lenders (the "Agent"), hereby agree as
follows effective as of February 23, 1996 ("Effective Date"):
1. RECITALS.
1.1 On July 15, 1994, the Company, the Lenders and the Agent entered into
a Credit, Reimbursement and Security Agreement which has been amended by a
First, Second, Third and Fourth Amendment and Waiver Agreement (as amended, the
"Credit Agreement").
1.2 The Company has requested that the Lenders waive certain Events of
Default under the Credit Agreement and amend and restate the Credit Agreement
and the Lenders are willing to do so subject to and in accordance with the terms
of the attached Amended and Restated Credit, Reimbursement and Security
Agreement (the "Restated Credit Agreement").
2. WAIVERS.
2.1 In addition to those Events of Default expressly waived under the
First, Second, Third and Fourth Amendment and Waiver Agreements, the Lenders and
the Agent hereby waive any Event of Default or Default that occurred prior to
the Effective Date from the Company's failure to comply with Sections 9.3, 9.10,
10.4, 10.5 and 10.6 of the Credit Agreement.
2.2 The waivers set forth in Section 2.1, above, will relate only to the
specific matters covered by such Sections and do not constitute a waiver of any
other Events of Default which may exist under the Credit Agreement on the
Effective Date. In no event will the Lenders and the Agent be under any
obligation to provide additional waivers or enter into any amendments to the
Credit Agreement with regard to any other provision of the Credit Agreement or
the Restated Credit Agreement.
3. AMENDMENT AND RESTATEMENT. Effective February 23, 1996, the Credit
Agreement will be amended and restated in its entirety as follows:
<PAGE> 2
AMENDED AND RESTATED
CREDIT, REIMBURSEMENT AND SECURITY AGREEMENT
ORIGINAL DATED AS OF JULY 15, 1995
RESTATED AS OF FEBRUARY 23, 1996
AMONG
MULTI-COLOR CORPORATION
THE COMPANY
AND
PNC BANK, OHIO, NATIONAL ASSOCIATION
AND
STAR BANK, NATIONAL ASSOCIATION
THE LENDERS
AND
PNC BANK, OHIO, NATIONAL ASSOCIATION
THE AGENT
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
1. Definitions................................................................... 3
1.1 Defined Terms.......................................................... 3
1.2 Other Accounting Definitional Provisions............................... 20
1.3 Other Definitional Provisions.......................................... 20
2. Credit Facilities............................................................. 21
2.1 Revolving Credit Facility.............................................. 21
2.2 [Intentionally Omitted]................................................ 21
2.3 Manner of Borrowing.................................................... 21
2.3.1 Revolving Borrowings.......................................... 21
2.3.2 [Intentionally Omitted]....................................... 22
2.4 Additional Provisions Regarding Funding................................ 22
2.5 Conversions and Continuation of Advances............................... 23
2.5.1 Optional Conversion........................................... 23
2.5.2 Continuation.................................................. 23
2.5.3 Automatic Conversion.......................................... 24
2.6 Prepayment of Revolving Credit Facility................................ 24
2.6.1 Optional Prepayment........................................... 24
2.6.2 Mandatory Prepayment.......................................... 24
2.7 Interest on the Advances............................................... 25
2.7.1 Interest Rates on Revolving Credit Loans...................... 25
2.7.2 [Intentionally Omitted]....................................... 25
2.7.3 [Intentionally Omitted]....................................... 25
2.7.4 Revolving Credit Loans Interest Payment Dates................. 25
2.7.5 Default Rate.................................................. 25
2.8 Termination or Reduction of Revolving Commitment and Standby Letter
of Credit Commitment by the Company.................................... 25
2.9 Records................................................................ 26
2.10 Letter of Credit Facilities............................................ 26
2.10.1 Issuance of Scottsburg Alternate Letter of Credit...... 26
2.10.2 Issuance of Boone Alternate Letter of Credit........... 26
2.10.3 Issuance of Port Authority Alternate Letter of Credit.. 27
2.10.4 [Intentionally Omitted]................................ 27
2.10.5 Reimbursement and Other Payments....................... 27
2.10.6 Transfer; Reduction; Reinstatement..................... 29
2.10.6.1 Transfer; Fee...................................... 29
2.10.6.2 Reduction.......................................... 29
2.10.6.3 Reinstatement...................................... 29
2.10.7 Obligations Absolute................................... 30
2.10.8 Indemnification........................................ 30
2.10.9 Liability of Agent..................................... 31
</TABLE>
i
<PAGE> 4
TABLE OF CONTENTS CONTINUED
<TABLE>
<CAPTION>
Page
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<S> <C>
2.11 Standby Letter of Credit Facility...................................... 32
2.11.1 Standby Letter of Credit Commitment......................... 32
2.11.2 Terms of Standby Letters of Credit.......................... 32
2.11.3 Procedure for Letters of Credit............................. 32
2.11.4 Drawing and Reimbursement................................... 33
2.11.5 Reimbursement Obligation of Company for Standby Letter
of Credit Disbursements..................................... 33
2.11.6 Company's Obligations Absolute.............................. 34
2.11.7 Collateral in the Event of Default.......................... 35
2.11.8 Liability and Indemnification of the Agent.................. 36
2.11.9 General Provisions.......................................... 37
2.12 Assumptions Regarding Notices.......................................... 39
2.12.1 Authorized Employees........................................ 39
2.12.2 No Liability................................................ 39
2.12.3 Notice Irrevocable.......................................... 39
2.13 Computations, Fees, Payments, Etc...................................... 39
2.13.1 Computations................................................ 39
2.13.2 Fees........................................................ 40
a. Amendment and Waiver Fee.................................... 40
b. Commitment Fee.............................................. 40
c. Agent Closing Expenses...................................... 40
d. Agency Fees................................................. 40
e. Letter of Credit and Standby Letter of Credit Fees.......... 40
f. Audit Fees.................................................. 41
g. Lock Box Fees............................................... 41
2.13.3 Payments.................................................... 41
2.13.4 Charge to Accounts.......................................... 41
2.13.5 Failure to Make Payments by Company......................... 42
2.14 Taxes.................................................................. 42
2.15 Additional Costs....................................................... 42
2.15.1 Taxes, Reserve Requirements, Etc............................ 42
2.15.2 Capital Adequacy............................................ 43
2.15.3 Certificate of Lender....................................... 43
2.16 Inability to Determine Rate; Inadequacy of Pricing; Illegality......... 44
2.16.1 Rate Inability; Pricing Inadequacy.......................... 44
2.16.2 Illegality; Termination of Commitments...................... 44
2.17 Obligation to Indemnify................................................ 44
2.17.1 Events...................................................... 44
2.17.2 Statement................................................... 45
2.17.3 Survival.................................................... 45
2.18 [Intentionally Omitted]................................................ 45
2.19 Use of Proceeds........................................................ 45
</TABLE>
ii
<PAGE> 5
TABLE OF CONTENTS CONTINUED
<TABLE>
<CAPTION>
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----
<S> <C>
3. Lock Box; Cash Collateral Account....................................... 46
3.1 Lock Box......................................................... 46
3.2 Cash Collateral Account.......................................... 48
4. Sinking Fund............................................................ 49
5. Collateral.............................................................. 49
6. Security and Subrogation Under Indenture................................ 50
6.1 Security......................................................... 50
6.2 Pledge of Rights to Certain Funds and Investments................ 50
6.3 Pledged Bonds.................................................... 51
6.3.1 Pledge................................................... 51
6.3.2 Pledged Bond Payments.................................... 51
6.3.3 Release of Pledged Bonds................................. 51
6.3.4 Liability of Agent....................................... 52
6.3.5 Representations; Rights and Remedies..................... 52
7. Conditions Precedent.................................................... 52
7.1 Initial Advances................................................. 52
7.1.1 Loan Documents........................................... 52
7.1.2 Opinion Letters.......................................... 53
7.1.3 Resolutions.............................................. 53
7.1.4 Good Standing............................................ 53
7.1.5 Designation of Authorized Employees of Company........... 53
7.1.6 Title Insurance.......................................... 53
7.1.7 Survey................................................... 53
7.1.8 Insurance................................................ 54
7.1.9 Wetlands................................................. 54
7.1.10 Appraisal........................................... 54
7.1.11 Environmental Requirements.......................... 54
7.1.12 Full Syndication.................................... 54
7.1.13 UCC Searches........................................ 55
7.1.14 Consents............................................ 55
7.1.15 Borrowing Base Certificate and Reports.............. 55
7.1.16 Fees................................................ 55
7.1.17 Waivers Obtained.................................... 55
7.1.18 Delivery of the Bond Documents and Security
Documents................................................ 55
7.1.19 No Default.......................................... 55
7.1.20 Representations and Warranties...................... 55
7.1.21 Certificates........................................ 55
7.1.22 Opinion of Bond Counsel............................. 55
</TABLE>
iii
<PAGE> 6
TABLE OF CONTENTS CONTINUED
<TABLE>
<CAPTION>
Page
----
<S> <C>
7.1.23 Collateral Evaluation........................ 56
7.1.24 Documentation and Proceedings................ 56
7.1.25 Other Documents.............................. 56
7.1.26 Other Conditions............................. 56
7.2 Each Advance............................................. 56
7.2.1 No Defaults..................................... 56
7.2.2 Accuracy........................................ 56
7.2.3 Notices......................................... 56
7.2.4 Other Documents................................. 56
7.3 Represent................................................ 56
8. Representations and Warranties.................................. 56
8.1 Organization............................................. 57
8.2 Latest Financials........................................ 57
8.3 Recent Adverse Changes................................... 57
8.4 Recent Actions........................................... 57
8.5 Title.................................................... 57
8.6 Litigation, Etc.......................................... 58
8.7 Taxes.................................................... 58
8.8 Authority................................................ 58
8.9 Other Defaults........................................... 58
8.10 Conflicts................................................ 58
8.11 Patents, Licenses, Etc................................... 59
8.12 ERISA.................................................... 59
8.13 Regulation U............................................. 59
8.14 Environmental Matters.................................... 59
8.15 Investment Company Act................................... 60
8.16 Governmental Consents.................................... 60
8.17 Disclosure............................................... 60
8.18 Registered Office........................................ 60
9. Affirmative Covenants........................................... 61
9.1 Sinking Fund............................................. 61
9.2 Books and Records; Access................................ 61
9.3 Monthly Statements....................................... 61
9.4 Borrowing Base Certificates.............................. 61
9.5 [Intentionally Omitted].................................. 62
9.6 Quarterly Statements..................................... 62
9.7 Quarterly Audits......................................... 62
9.8 Annual Statements........................................ 62
9.9 Auditor's Letters........................................ 62
9.10 Annual Budgets, Forecasts and Comparisons................ 63
9.11 Notices of Default....................................... 63
</TABLE>
iv
<PAGE> 7
TABLE OF CONTENTS CONTINUED
<TABLE>
<CAPTION>
Page
----
<S> <C>
9.12 Payment of Charges.............................................. 63
9.13 Existence; Operations........................................... 63
9.14 Insurance....................................................... 63
9.15 Compliance with Laws............................................ 64
9.16 Environmental Violations........................................ 64
9.17 Environmental Audit and Other Environmental Information......... 64
9.18 Business Names and Locations.................................... 65
9.19 Accounts........................................................ 65
9.20 ERISA Compliance................................................ 65
9.21 Further Assurances.............................................. 66
9.22 Compliance With Agreements...................................... 66
9.23 Private Placement............................................... 66
9.24 Equity Infusion/Sale of Business................................ 66
9.25 Sale of Equipment............................................... 66
9.26 Excess Cash Flow................................................ 66
9.27 Cash Flow Forecast.............................................. 66
9.28 Receivables and Payables Aging.................................. 66
10. Negative Covenants....................................................... 67
10.1 Debt............................................................ 67
10.2 Leases.......................................................... 67
10.3 Liens........................................................... 67
10.4 Cash Flow Coverage Ratio........................................ 67
10.5 Current Ratio................................................... 68
10.6 Leverage Ratio.................................................. 68
10.7 Minimum Tangible Net Worth...................................... 69
10.8 EBITDA.......................................................... 69
10.9 Guarantees...................................................... 69
10.10 Corporate Changes............................................... 69
10.11 Redemptions..................................................... 69
10.12 Dividends....................................................... 69
10.13 Investments, Loans and Advances................................. 69
10.14 Merger or Sale of Assets........................................ 70
10.15 Capital Expenditures............................................ 70
10.16 Acquisitions.................................................... 70
10.17 Transfer of Collateral.......................................... 70
10.18 Sale and Leaseback.............................................. 70
10.19 Line of Business................................................ 70
10.20 Waivers......................................................... 71
10.21 Payments to Shareholders and Affiliates......................... 71
10.22 Salaries and Deferred Compensation.............................. 71
10.23 Transactions with Affiliates.................................... 71
10.24 Post-Closing Matters............................................ 71
</TABLE>
v
<PAGE> 8
TABLE OF CONTENTS CONTINUED
<TABLE>
<CAPTION>
Page
----
<S> <C>
10.25 Bond Documents........................................ 71
10.26 Limitation on Optional Calls.......................... 71
10.27 Excess Borrowing...................................... 71
11. Events of Default.............................................. 71
11.1 Payment............................................... 71
11.2 Bond Documents........................................ 72
11.3 Covenants............................................. 72
11.4 Representations and Warranties........................ 72
11.5 Obligations........................................... 72
11.6 Execution, Attachment, Etc............................ 72
11.7 Loss, Theft or Substantial Damage to the Collateral... 72
11.8 Judgments............................................. 73
11.9 Bankruptcy, Etc....................................... 73
11.10 Impairment of Security................................ 73
11.11 [Intentionally Omitted]............................... 73
11.12 Other Indebtedness.................................... 73
11.13 Amendment............................................. 73
12. Intercreditor Lien and Payment Provisions...................... 75
12.1 Lien Priority......................................... 75
12.2 Participation in Letters of Credit.................... 75
12.3 Sharing of Payments, Etc.............................. 75
12.4 Receipt of Payments by Lenders........................ 76
12.5 Distributions, Etc.................................... 77
12.6 Benefit............................................... 77
13. Representations and Warranties to Survive...................... 77
14. Environmental Indemnification.................................. 78
15. The Agent...................................................... 78
15.1 Authorization and Action.............................. 78
15.2 Agent's Reliance, Etc................................. 78
15.3 The Agent and Its Affiliates.......................... 79
15.4 Lender Credit Decision................................ 79
15.5 Indemnification....................................... 80
15.6 Successor Agent....................................... 80
15.7 Relations Among Lenders............................... 81
15.8 Benefit............................................... 81
16. General........................................................ 81
16.1 Waiver................................................ 81
</TABLE>
vi
<PAGE> 9
TABLE OF CONTENTS CONTINUED
<TABLE>
<CAPTION>
Page
----
<S> <C>
16.2 Notices................................................ 82
16.3 Successors and Assigns................................. 83
16.4 Modifications.......................................... 84
16.5 Illegality............................................. 84
16.6 Gender, Etc............................................ 84
16.7 Headings............................................... 84
16.8 Purpose................................................ 84
16.9 Ratification........................................... 85
16.10 Claims and Release of Claims by the Company............ 85
16.11 Execution in Counterparts.............................. 86
16.12 Remedies Cumulative.................................... 86
16.13 Costs, Expenses and Legal Fees......................... 86
16.14 Indemnity.............................................. 86
16.15 Continuing Agreement................................... 87
16.16 Complete Agreement..................................... 87
16.17 No Third Party Beneficiaries........................... 87
16.18 No Partnership or Joint Venture........................ 87
16.19 Governing Law and Jurisdiction; Waiver of Jury Trial... 87
</TABLE>
vii
<PAGE> 10
LIST OF EXHIBITS
EXHIBIT A List of Lenders, Addresses and Commitments
EXHIBIT B Disclosure Schedule
EXHIBIT C [Intentionally Omitted]
EXHIBIT D Substituted Revolving Credit Notes
EXHIBIT E Notice of Borrowing
EXHIBIT F Notice of Continuation
EXHIBIT G Notice of Conversion
EXHIBIT H Request for Draw
EXHIBIT I Scottsburg Alternate Letter of Credit
EXHIBIT J Boone Alternate Letter of Credit
EXHIBIT K Port Authority Alternate Letter of Credit
EXHIBIT L Collateral Assignment of Note, Loan Agreement and Mortgage
EXHIBIT M Collateral Assignment of Mortgage
EXHIBIT MM Conditional Assignment of Repurchase Contract
EXHIBIT N Security Agreement: Inventory, Receivables, Equipment,
Intangibles, Etc.
EXHIBIT O Ohio Mortgage
EXHIBIT P Kentucky Mortgage
EXHIBIT Q Indiana Mortgage
EXHIBIT R Pledge and Security Agreement - Agency or Custodian Account
EXHIBIT S Compliance Certificate
EXHIBIT T Borrowing Base Certificate
viii
<PAGE> 11
AMENDED AND RESTATED
CREDIT, REIMBURSEMENT AND SECURITY AGREEMENT
MULTI-COLOR CORPORATION, an Ohio corporation (the "Company"), PNC BANK,
OHIO, NATIONAL ASSOCIATION and STAR BANK, NATIONAL ASSOCIATION (each
individually a "Lender" and collectively the "Lenders"), and PNC BANK, OHIO,
NATIONAL ASSOCIATION, as agent for the Lenders (the "Agent"), hereby agree as
follows:
RECITALS:
A. The Port Authority of Cincinnati and Hamilton County ("Hamilton
County") has issued its Variable Rate Demand Industrial Development Revenue
Bonds (Multi-Color Corporation Project) in the principal amount of $6,500,000
(hereinafter collectively referred to as the "Port Authority Bonds"), under a
Trust Indenture dated as of November 1, 1985 (the "Port Authority Indenture")
between Hamilton County and PNC Bank, Ohio, National Association, formerly known
as The Central Trust Company, N.A., as Trustee ("Trustee").
B. In order to facilitate the issuance and sale of the Port Authority
Bonds and to enhance the marketability of the Port Authority Bonds and thereby
achieve interest cost savings and other savings to the Company, Mellon Bank,
N.A. ("Mellon") issued its irrevocable letter of credit to the Trustee, for the
account of the Company. Subsequently, Barclays Bank, PLC, New York Branch
("Barclays") issued its irrevocable letter of credit to replace the letter of
credit issued by Mellon authorizing the Trustee to make one or more draws on
Barclays up to an aggregate of $6,700,343, of which (i) $6,500,000 was in
respect of principal of the Port Authority Bonds and (ii) $200,343 was in
respect of accrued interest on the Port Authority Bonds.
C. The City of Scottsburg, Indiana ("Scottsburg") has issued its Economic
Development Revenue Bonds (Multi-Color Corporation Project) in the principal
amount of $5,750,000 (hereinafter collectively referred to as the "Scottsburg
Bonds"), under a Trust Indenture dated as of October 1, 1989 (the "Scottsburg
Indenture") between Scottsburg and the Trustee.
D. In order to facilitate the issuance and sale of the Scottsburg Bonds
and to enhance the marketability of the Scottsburg Bonds and thereby achieve
interest cost savings and other savings to the Company, Barclays issued its
irrevocable letter of credit (the "Scottsburg Letter of Credit") to the Trustee,
for the account of the Company, authorizing the Trustee to make one or more
draws on Barclays up to an aggregate of $6,303,733, of which original amount (i)
$5,750,000 was in respect of principal of the Scottsburg Bonds, (ii) $496,233
was in respect of accrued interest on the Scottsburg Bonds and (iii) $57,500 was
to support the payment of a premium upon a redemption as a result of a
Determination of Taxability as set forth in the Scottsburg Indenture.
E. The County of Boone, Kentucky ("Boone County") has issued its
Industrial Building Revenue Bonds (Multi-Color Corporation Project) in the
principal amount of
<PAGE> 12
$3,250,000 (hereinafter collectively referred to as the "Boone Bonds"), under a
Trust Indenture dated as of December 1, 1989 (the "Boone Indenture") between
Boone County and the Trustee.
F. In order to facilitate the issuance and sale of the Boone Bonds and to
enhance the marketability of the Boone Bonds and thereby achieve interest cost
savings and other savings to the Company, Barclays issued its irrevocable letter
of credit (the "Boone Letter of Credit") to the Trustee, for the account of the
Company, authorizing the Trustee to make one or more draws on Barclays up to an
aggregate of $3,566,875 of which original amount (i) $3,250,000 was in respect
of principal of the Boone Bonds, (ii) $284,375 was in respect of accrued
interest on the Boone Bonds and (iii) $27,500 was to support the payment of a
premium upon a redemption as a result of a Determination of Taxability as set
forth in the Boone Indenture.
G. With respect to the Port Authority Bonds, the Company requested the
Agent to issue an irrevocable letter of credit to secure the Port Authority
Bonds and to replace the letter of credit issued by Barclays with respect
thereto. Such letter of credit was issued as an irrevocable alternate letter of
credit (the "Port Authority Alternate Letter of Credit") to the Trustee, in
substitution for the letter of credit issued by Barclays, subject to a reduction
of the ratings of the Port Authority Bonds with the unanimous consent of the
holders of such Bonds. The Port Authority Alternate Letter of Credit authorized
the Trustee to make one or more draws on the Agent up to an aggregate of
$6,700,343, of which original amount (i) $6,500,000 is in respect of principal
of the Port Authority Bonds and (ii) $200,343 is in respect of accrued interest
on the Port Authority Bonds.
H. With respect to the Scottsburg Bonds, the Company requested the Agent
to issue an irrevocable alternate letter of credit (the "Scottsburg Alternate
Letter of Credit") to the Trustee in substitution for the Scottsburg Letter of
Credit. Pursuant to Section 6.04(b) of the Scottsburg Indenture, the issuance of
the Scottsburg Alternate Letter of Credit caused the Scottsburg Bonds to be
subject to the right of the holders of the Scottsburg Bonds to require the
redemption of the Scottsburg Bonds pursuant to Section 3.01(b)(ii) of the
Scottsburg Indenture and the Trustee provided notice in accordance with Section
6.05 of the Scottsburg Indenture to the holders of the Scottsburg Bonds of their
right to require such purchase. The Scottsburg Alternate Letter of Credit
authorized the Trustee to make one or more draws on the Agent up to an aggregate
of $6,303,733, of which original amount (i) $5,750,000 is in respect of
principal of the Scottsburg Bonds and (ii) $496,233 is in respect of accrued
interest on the Scottsburg Bonds, (iii) $57,500 is in respect to the premium
upon redemption as a result of a Determination of Taxability as set forth in the
Scottsburg Indenture.
I. With respect to the Boone Bonds, the Company requested the Agent to
issue an irrevocable alternate letter of credit (the "Boone Alternate Letter of
Credit") to the Trustee in substitution for the Boone Letter of Credit. Pursuant
to Section 6.04(b) of the Boone Indenture, the issuance of the Boone Alternate
Letter of Credit caused the Boone Bonds to be subject to the right of the
holders of the Boone Bonds to require the redemption of the Boone Bonds pursuant
to Section 3.01(b)(ii) of the Boone Indenture and the Trustee provided notice in
accordance with Section 6.05 of the Boone Indenture to the holders of the Boone
Bonds of their right to require such purchase. The Boone Alternate Letter of
Credit authorized the Trustee to make one or
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<PAGE> 13
more draws on the Agent up to an aggregate of $3,566,875 of which original
amount (i) $3,250,000 is in respect of principal of the Boone Bonds, (ii)
$284,375 is in respect of accrued interest on the Boone Bonds, and (iii) $27,500
is in respect to the premium upon redemption as a result of a Determination of
Taxability as set forth in the Boone Indenture.
J. The Company has requested that the Lenders extend a $3,750,000 secured
revolving credit facility to the Company.
K. The Company has requested that the Lenders extend a standby letter of
credit facility to the Company to be included as a $500,000 sub-limit to the
revolving credit facility.
L. The Agent is willing to issue the above referenced letter of credit
facilities and the Agent and the Lenders are willing to make available the
secured revolving credit facility on the terms and conditions hereinafter set
forth.
1. DEFINITIONS.
1.1 DEFINED TERMS. In this Restated Credit Agreement (except as otherwise
expressly provided for or unless the context otherwise requires), defined terms
may be used in the singular or plural, the use of any gender includes all other
genders and the following terms have the meanings specified in the foregoing
recitals:
Agent Port Authority Bonds
Barclays Port Authority Alternate Letter of Credit
Boone Alternate Letter of Credit Port Authority Indenture
Boone Bonds Scottsburg
Boone County Scottsburg Alternate Letter of Credit
Boone Indenture Scottsburg Bonds
Boone Letter of Credit Scottsburg Indenture
Company Scottsburg Letter of Credit
Hamilton County Trustee
Lender
Lenders
Mellon
In addition, the following terms shall have the following meanings, unless
the context requires otherwise:
1.1.1 "Acquisitions" will have the meaning given that term in
Section 10.16, below.
1.1.2 "Advance" or "Advances" will mean Revolving Credit Loans.
1.1.3 "Affiliate" will mean, with respect to any Person (a) any
other Person directly or indirectly controlling, controlled by or under common
control with such
3
<PAGE> 14
Person, or (b) any Person who is a director or officer of such Person or any
Subsidiary thereof. A Person will be deemed to control another Person if such
Person possesses, directly or indirectly, the power to (i) vote ten percent
(10%) or more of the voting equity of such other Person, or (ii) direct or cause
the direction of the management and policies of such other Person, whether
through voting securities, by contract or otherwise.
1.1.4 "Agency Fee" will have the meaning given that term in Section
2.13.2(d), below.
1.1.5 "Agent's Account" will mean the account of the Agent
maintained by the Agent at its office at 201 East Fifth Street, Cincinnati, Ohio
45201-1198, Account Number 4110349324, Attention: Special Assets, or such other
account maintained by the Agent and designated by the Agent in a written notice
to the Lenders and the Company.
1.1.6 [Intentionally Omitted].
1.1.7 "Aggregate Outstanding Revolving Credit" will mean an amount
equal to the sum of the aggregate unpaid principal amount of all Revolving
Credit Loans.
1.1.8 "Alternate Letter of Credit" will mean the Boone Alternate
Letter of Credit, the Port Authority Alternate Letter of Credit and the
Scottsburg Alternate Letter of Credit collectively and individually as the
context requires.
1.1.9 "Applicable Lending Office" will mean the office for each
Lender set forth in Exhibit A.
1.1.10 "Applicable Margin" will mean:
a. As to any Revolving Loan Base Rate Advance:
<TABLE>
<CAPTION>
Leverage Ratio Applicable Margin
-------------- -----------------
<S> <C>
less than or equal to 2.50 0.25%
greater than 2.50 less than or equal to 3.50 0.50%
greater than 3.50 less than or equal to 4.00 0.75%
greater than 4.00 1.25%
</TABLE>
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<PAGE> 15
b. As to any Revolving Loan Eurodollar Rate Advance:
<TABLE>
<CAPTION>
Leverage Ratio Applicable Margin
-------------- -----------------
<S> <C>
less than or equal to 2.50 2.00%
greater than 2.50 less than or equal to 3.50 2.25%
greater than 3.50 less than or equal to 4.00 2.75%
greater than 4.00 3.25%
</TABLE>
1.1.11 "Authorized Employee" will mean any person designated in
the notice required pursuant to Section 7.1.5, below, which designation shall
continue in full force and effect until revoked by the Company in a subsequent
written notice delivered to the Agent.
1.1.12 "Available Commitment" will mean, as to any Lender at any
time, an amount equal to the excess, if any, of (a) such Lender's Revolving
Commitment over (b) the sum of (i) the then outstanding Revolving Credit Loans
made by such Lender and (ii) such Lender's Ratable Portion of all outstanding
Letter of Credit Obligations (without duplication for any amount thereof
included under clause (i), above).
1.1.13 "Bank Interest Rate" will mean, at any time that sums are
due and payable to the Agent under Section 2.10.5.4, below, the Prime Rate plus
three percent (3%).
1.1.14 "Base Rate" will mean the Prime Rate in effect from time
to time.
1.1.15 "Base Rate Advance" will mean any Advance as to which the
Company has elected (or is deemed to have elected) an Interest Rate that is
based upon the Base Rate.
1.1.16 "Bond Counsel" will mean Taft, Stettinius & Hollister as
to the Boone Bonds and the Scottsburg Bonds and Peck, Shaffer & Williams as to
the Port Authority Bonds.
1.1.17 "Bond Documents" will mean the Bonds, the Indenture, the
Reimbursement Agreement, the Security Documents, the Remarketing Agreement and
any other agreements or instruments relating thereto.
1.1.18 "Bonds" will mean the Boone Bonds, Port Authority Bonds
Scottsburg Bonds and Refunding Bonds, collectively and individually as the
context requires.
1.1.19 "Borrowing" will mean a borrowing consisting of all
Advances made on a given Borrowing Date.
1.1.20 "Borrowing Base" will equal the lesser of (a) the sum of
eighty percent (80%) of the Eligible Accounts Receivable plus fifty percent
(50%) of Eligible
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<PAGE> 16
Inventories, less $1,500,000, less the aggregate face amount of all outstanding
Standby Letters of Credit, or (b) the Total Revolving Commitment.
1.1.21 "Borrowing Base Certificates" will mean the certificates
to be provided to the Agent by the Company pursuant to Section 9.4 of this
Restated Credit Agreement.
1.1.22 "Borrowing Date" will mean the date on which an Advance is
made.
1.1.23 "Business Day" will mean a day of the year on which banks
are not required or authorized to close in Pittsburgh, Pennsylvania or
Cincinnati, Ohio and, if the applicable Business Day relates to any Eurodollar
Rate Advance, on which dealings are carried on in dollar deposits in the London
interbank market.
1.1.24 "Cash Collateral Account" will mean Account No. 4110349324
at the Agent.
1.1.25 "Cash Flow Coverage Ratio" will mean the ratio of (i) the
sum of net income plus or minus non-cash items as determined in accordance with
GAAP, excluding the Amendment and Waiver Fee required under Section 2.13.2(a),
below, to (ii) the sum of principal payments on long term debt including
capitalized lease payments and required quarterly deposits made to the Sinking
Fund Account, capital expenditures, permitted Acquisitions, permitted dividends
and redemptions of capital stock and tax payments. The denominator specifically
excludes deposits of payments on the BKS Enterprises, Inc. Promissory Note,
proceeds from the sale of assets or equity contributions.
1.1.26 "Closing Date" will mean the date on which this Restated
Credit Agreement and the other Loan Documents are executed.
1.1.27 "Code" will mean the Internal Revenue Code of 1986, as
amended or supplemented from time to time.
1.1.28 "Collateral" will mean any property, real or personal,
tangible or intangible, referred to in this Restated Credit Agreement or the
Security Documents or now or in the future securing any of the Obligations.
1.1.29 "Commitment" or "Commitments" will mean the Revolving
Commitment, Standby Letter of Credit Commitment and Letter of Credit Commitment,
as adjusted from time to time pursuant to Section 2.8, below.
1.1.30 "Commitment Fee" will have the meaning given to that term
in Section 2.13.2(b), below.
1.1.31 [Intentionally Omitted].
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<PAGE> 17
1.1.32 [Intentionally Omitted].
1.1.33 [Intentionally Omitted].
1.1.34 "Continuation Date" will mean the date on which an Advance
is continued as the same Type of Advance for a successive Interest Period upon
expiration of the preceding Interest Period (subject to Section 2.5, below).
1.1.35 "Conversion Date" will mean the date on which an Advance
is converted into a different Type of Advance (subject to Section 2.5, below).
1.1.36 [Intentionally Omitted].
1.1.37 "Credit Facilities" will mean the Revolving Credit
Facility and the Letter of Credit Facilities evidenced by this Restated Credit
Agreement as described in Section 2, below.
1.1.38 "Current Assets" will mean cash, short term investments,
accounts receivable, inventory and prepaids, as determined in accordance with
GAAP, specifically excluding balances deposited into the Sinking Fund, notes
receivable and deferred taxes.
1.1.39 "Current Debt" will mean any obligation for borrowed money
payable on demand or within a period of one (1) year from the date of
determination.
1.1.40 "Current Liabilities" will include Current Debt, accounts
payable, accruals, tax liabilities and all other current liabilities, as
determined in accordance with GAAP specifically excluding barter liabilities,
borrowings under the Revolving Credit Facility and convertible subordinated
debt. Excess Cash Flow payments into the Sinking Fund Accounts will be deducted
from Current Liabilities.
1.1.41 "Current Ratio" will mean the ratio of (i) Current Assets
to (ii) Current Liabilities.
1.1.42 "Date of Issuance" will mean the respective dates the
Boone Alternate Letter of Credit, the Port Authority Alternate Letter of Credit
or the Scottsburg Alternate Letter of Credit were issued and delivered to the
Trustee.
1.1.43 "Default" will mean any event or condition which, with the
passage of time, the giving of notice or the determination by the Agent or any
of the Lenders, or any combination of the foregoing, would constitute an Event
of Default.
1.1.44 "Default Rate" will mean four percent (4%) per annum plus
the existing interest rate in effect, from time to time while an Event of
Default exists, but not more than the highest rate permitted by applicable law.
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<PAGE> 18
1.1.45 "Disclosure Schedule" will mean the updated schedules to
be provided by the Company that are attached hereto as Exhibit B.
1.1.46 "Dollars" will mean lawful money of the United States of
America.
1.1.47 "EBITDA" will mean net income (or loss) before interest,
taxes, depreciation and amortization expenses.
1.1.48 "Eligible Accounts Receivable" will mean, at any time of
determination thereof, all receivables of the Company which meet the following
criteria for an Eligible Receivable at the time of creation and continue to meet
the same at all times to the satisfaction of the Agent: (a) all payments due on
the Receivable have been invoiced to the account debtor, are due not more than
thirty (30) days after the date of the invoice rendered by the Company and the
Receivable is not more than sixty (60) days past the due date thereof (or, if
earlier, ninety (90) days past the invoice date); (b) the Receivable arose from
a bona fide outright sale of goods by the Company, or from services performed by
the Company, and such goods have been shipped to the account debtor or its
designees (or the sale has otherwise been consummated), or the services have
been performed for the account debtor; (c) the Receivable is based upon an
enforceable order or contract, written or oral, for goods shipped or held or for
services performed, and the same were shipped, held, or performed in accordance
with such order or contract; (d) the amount shown on the books of the Company
and on any invoice or statement delivered to the Agent in respect to the
Receivable is owing to the Company; (e) the Receivable is not subject to any
claim of reduction, counterclaim, setoff, recoupment, or any claim for credits,
allowances, or adjustments by the account debtor because of returned, inferior,
or damaged goods or unsatisfactory services, or for any other reason, except for
customary discounts allowed in the ordinary course of the Company's business and
trade for prompt payment; (f) the account debtor has not returned or refused to
retain, or otherwise notified the Company of any dispute concerning, or claimed
nonconformity of, any of the goods or services from the sale of which the
Receivable arose; (g) the account debtor has not asserted, and the Company is
not aware, that the Receivable is subject to any other setoff, net-out contract,
offset, deduction, dispute, credit, counterclaim or other defense arising out of
the transactions represented by the Receivable or independently thereof and the
account debtor has not objected to its liability thereon; (h) the Receivable
does not arise out of a contract with, or order from, an account debtor that, by
its terms, forbids or makes void or unenforceable the assignment by the Company
to the Agent of the Receivable arising with respect thereto; (i) the Receivable
is free and clear of all security interests, liens, charges and encumbrances of
any nature whatsoever other than any security interest deemed to be held by the
Company, or any security interest created pursuant to the Security Documents or
Permitted Liens; (j) the Receivable constitutes an "account", "chattel paper",
"contract right", "instrument" or "general intangible" within the meaning of the
Uniform Commercial Code of the state in which the Receivable is located; (k) the
Company has not received any note, trade acceptance, draft or other instrument
with respect to, or in payment of, the Receivable, nor any chattel paper with
respect to the goods giving rise to the Receivable, unless, if any such
instrument or chattel paper has been received, the Company immediately notified
the Agent and, at the latter's request, endorsed or assigned and delivered the
same to the Agent; (l) the Company is not aware of the death of the account
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<PAGE> 19
debtor, the dissolution, termination of existence, insolvency, business failure,
appointment of a receiver for any part of the property of, assignment for the
benefit of creditors by, or the filing of a petition in bankruptcy or the
commencement of any proceeding under any bankruptcy or insolvency laws by or
against, the account debtor; (m) the account debtor is not a Subsidiary or other
Affiliate of the Company; (n) the account debtor is not the United States of
America; (o) the account debtor is not incorporated in or primarily conducting
business in any jurisdiction located outside the United States; (p) the
Receivable complies with all material requirements of all applicable Laws and
regulations, whether Federal, state or local (including, without limitation,
usury laws and laws, rules and regulations relating to truth in lending, fair
credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy); (q) to the knowledge of the Company after
reasonable investigation, the Receivable, when invoiced, will be in full force
and effect and will constitute a legal, valid and binding obligation of the
account debtor enforceable in accordance with its terms; (r) the account is
denominated in and provides for payment by the account debtor in Dollars; (s)
the Receivable has not been and is not required to be charged off or written off
as uncollectible in accordance with GAAP or the customary business practice of
the Company to which it is owed; (t) the Agent possesses a valid, perfected,
first priority security interest in such Receivable as security for payment of
the Obligations and such Receivable is subject to no liens other than Permitted
Liens; (u) not more than 50% of the Receivable(s) of the respective account
debtor have remained due or unpaid for more than sixty (60) days from the due
date thereof or more than ninety (90) days after the date of the original
invoice issued by the Company with respect to the sale giving rise thereto; (v)
there shall be deducted from the face amount of each Receivable all payments,
adjustments and credits applicable thereto; (w) the Agent has not deemed the
Receivable ineligible because of reasonable uncertainty as to the
creditworthiness of the account debtor or because the Agent otherwise reasonably
considers the collateral value thereof to the Agent to be impaired or its
ability to realize such value to be insecure; and (x) the Receivable is not a
contra account, government receivable, intercompany account or a reserve or
discount. In the event of any dispute under the foregoing criteria, as to
whether a Receivable is, or has ceased to be, an Eligible Account Receivable,
the decision of the Agent shall control. Any Receivable which is at any time an
Eligible Account Receivable, but which subsequently fails to meet the criteria
for an Eligible Account Receivable, shall immediately cease to be an Eligible
Account Receivable.
1.1.49 "Eligible Inventory" or "Eligible Inventories" will mean
at the time of any determination thereof, the book value (calculated in
accordance with GAAP) of such Inventory of raw materials and finished goods of
the Company, not to exceed the lesser of (i) 80% of Eligible Accounts
Receivables or (ii) $2,500,000, as the Agent, in its reasonable discretion,
shall elect to consider Eligible Inventory for purposes of this Restated Credit
Agreement (such value to be determined by the Agent in its reasonable discretion
taking into consideration, among other factors, the lower of its cost or market
value, and appropriate reserves, including but not limited to reserves and
adjustments as appearing in the Company's general ledger with the exception of
LIFO), but in each case only to the extent the Agent possesses a valid,
perfected, first priority security interest in such Inventory as security for
payment of the Obligations and such Inventory is subject to no liens other than
Permitted Liens. Without limiting the generality of the foregoing, Eligible
Inventory will not include (a) any
9
<PAGE> 20
Inventory located outside of the United States, (b) any Inventory not in the
actual possession of the Company or any Inventory in the possession of a bailee,
warehousemen, consignee, subcontractor or similar third party, (c) any Inventory
subject to lien or claim of title of a Governmental Authority under 32 C.F.R.
Section 7-104.35(b)/FAR 52.232.16, (d) any Inventory consisting of work in
process, packing, packaging and/or shipping supplies or materials, including but
not limited to solvents, melts and plastic film inventories, (e) any Inventory
located on a leasehold as to which the lessor has not entered into a consent and
agreement with the Agent providing the Agent with the right to receive notice of
default and/or termination of the lease and the right to repossess such
Inventory and enter upon such premises at any time and such other rights as may
be required by the Agent, (f) any Inventory that is evidenced by a Receivable or
the subject of any advance payment or progress payment, and (g) any Inventory
which the Agent reasonably determines at any time and in good faith to be
defective, in poor condition, unmerchantable or obsolete. Inventory which is at
any time Eligible Inventory, but which subsequently fails to meet the criteria
for Eligible Inventory, shall immediately cease to be Eligible Inventory for the
purpose of determining the Borrowing Base under this Restated Credit Agreement.
Notwithstanding the foregoing, plastic film inventory subject to a repurchase
agreement with the seller, conditionally assigned to the Lenders in form and
substance acceptable to the Agent may be included in Eligible Inventory at the
Lenders' sole discretion.
1.1.50 "Eligible Investments" means (i) obligations issued or
guaranteed by any state or political subdivision thereof rated A higher by
Moody's Investors Services Inc. or by Standard and Poor's Corporation, or their
successor; (ii) shares of a money market mutual fund the assets of which are
exclusively invested in obligations of the type described in (i) above; and
(iii) investments expressly approved by Bond Counsel in writing; provided that
any such investment or deposit is not prohibited by law.
1.1.51 [Intentionally Omitted].
1.1.52 [Intentionally Omitted].
1.1.53 [Intentionally Omitted].
1.1.54 [Intentionally Omitted].
1.1.55 [Intentionally Omitted].
1.1.56 [Intentionally Omitted].
1.1.57 [Intentionally Omitted].
1.1.58 "ERISA" will mean the Employee Retirement Income Security
Act of 1974, or any successor statute, as amended or supplemented from time to
time.
1.1.59 "ERISA Affiliate" will mean any person (as defined in
Section 3(a)) of ERISA including each trade or business (whether or not
incorporated) that together with the
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<PAGE> 21
Company, or any Subsidiary thereof, would be deemed to be a "single employer" or
member of the same "controlled group" within the meaning of Section 414 of the
Code.
1.1.60 "Eurocurrency Liabilities" will have the meaning given
such term in Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
1.1.61 "Eurodollar Rate" will mean, with respect to any
Eurodollar Rate Advance and its related Eurodollar Interest Period, the interest
rate per annum equal to the rate per annum (rounded upwards, if necessary, to
the nearest 1/8 of 1%), determined by the Agent by dividing (a) the rate per
annum at which deposits in Dollars are offered in the London interbank market at
approximately 11:00 a.m. (London time) two Business Days before the first day of
such Eurodollar Interest Period for delivery on the first day of such Eurodollar
Interest Period,in an amount substantially equal to such Eurodollar Rate Advance
and for a period equal to such Eurodollar Interest Period by (b) a percentage
equal to 100% minus the Eurodollar Rate Reserve Percentage for such Eurodollar
Interest Period. The Eurodollar Rate will be adjusted automatically on the
effective date of any change in the Eurodollar Rate Reserve Percentage, such
adjustment to affect any Eurodollar Rate Advance outstanding on such effective
date.
1.1.62 "Eurodollar Rate Advance" will mean any Advance as to
which the Company has elected an Interest Rate that is based upon the Eurodollar
Rate.
1.1.63 "Eurodollar Rate Reserve Percentage" will mean for any
day, the maximum reserve percentage (rounded upward if necessary, to the next
higher 1/100 of 1%), as determined by the Agent, which is in effect on such day
as prescribed from time to time by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental, marginal, special
or other reserve requirements) for a member bank of the Federal Reserve System
in New York City with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
Eurodollar Rate Advances is determined) having a term equal to the term of the
relevant Eurodollar Rate Advance.
1.1.64 "Event of Default" will mean any of the events listed in
Section 11 of this Restated Credit Agreement.
1.1.65 "Excess Cash Flow" will mean Operating Cash Flow less the
sum of principal payments on long term debt (excluding scheduled Optional
Redemptions of the Bonds) including capitalized lease payments, capital
expenditures, permitted Acquisitions, permitted dividends, taxes and quarterly
deposits to the Sinking Fund Accounts.
1.1.66 "Federal Funds Rate" will mean, for any period, a
fluctuating interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business
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<PAGE> 22
Day, for the next preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for such day for such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by it.
1.1.67 "Fiscal Quarter" means each three (3) month fiscal period
of the Company.
1.1.68 "Fiscal Year" means each annual fiscal period of the
Company ending on or about March 31.
1.1.69 "Fixed Rate" will mean the Treasury Rate plus the
Applicable Margin.
1.1.70 "GAAP" will mean generally accepted accounting principles.
1.1.71 "Governmental Authority" will mean any nation or
government, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including, without limitation, any
department, commission, board, bureau, agency, administration, service or other
instrumentality of the United States of America, of any state, the District of
Columbia, municipality or any other governmental entity.
1.1.72 "Hazardous Wastes", "hazardous substances" and "pollutants
or contaminants" will mean any substances, waste, pollutant or contaminant now
or hereafter included with any respective terms under any now existing or
hereinafter enacted or amended federal, state or local statute, ordinance, code
or regulation designed to protect the environment, including but not limited to
the Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. Section 9601 et seq. ("CERCLA").
1.1.73 "Indebtedness" will mean, for any Person, without
duplication, the following: (a) all obligations (including capitalized lease
obligations) which in accordance with GAAP would be shown on a balance sheet as
a liability; (b) all obligations for borrowed money or for the deferred purchase
price of property or services; (c) all guarantees, reimbursement, payment or
similar obligations, absolute, contingent or otherwise, under acceptance, letter
of credit or similar facilities; and (d) all Indebtedness of any other Person
secured by (or for which the holder of such Indebtedness has a right, contingent
or otherwise, to be secured by) any lien of any kind upon or in property or
assets owned by such Person, whether or not such Person has assumed or become
liable for the payment of any such Indebtedness.
1.1.74 "Indenture" will mean the Boone Indenture, the Scottsburg
Indenture, the Port Authority Indenture or, if the Port Authority Bonds are
refunded, the Trust Indenture between the Trustee and the Port Authority of
Cincinnati and Hamilton County securing the Refunding Bonds, collectively and
individually as the context requires.
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<PAGE> 23
1.1.75 "Interest Draft" will mean a drawing under Exhibit A to
any Letter of Credit to be used for payment of interest due on the applicable
Bonds.
1.1.76 "Interest Period" will mean, with respect to any (a) Base
Rate Advance, a period commencing on the Borrowing Date or Conversion Date
thereof, as applicable, and ending on a date designated by the Company in the
related Notice of Conversion; (b) Eurodollar Rate Advance, a period commencing
on the Borrowing Date, Conversion Date or Continuation Date thereof, as
applicable, and ending on a date thirty (30), sixty (60) or ninety (90) days
thereafter, as designated by the Company in the related Notice of Borrowing,
Notice of Conversion or Notice of Continuation; provided, however, that:
a. the Company may not select any Interest Period that
ends after the Termination Date;
b. whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day
of such Interest Period shall be extended to occur on the next
succeeding Business Day; provided, however, that such extension
would cause the last day of such Interest Period to occur in the
next following calendar month, the last day of such Interest
Period shall occur on the next preceding Business Day;
c. whenever the first day of any Interest Period occurs
on the last Business Day of a calendar month (or on a day of an
initial calendar month for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period), such Interest Period shall end on the last
Business Day of such calendar month; and
d. in the case of immediately successive Interest
Periods, each successive Interest Period shall commence on the
day on which each preceding Interest Period expires.
1.1.77 "Interest Portion" will have the meaning ascribed to such
term in the Letters of Credit.
1.1.78 "Interest Rate" will mean the applicable rates under
Section 2.7, below.
1.1.79 "Inventory" will have the meaning given that term in the
Security Documents.
1.1.80 "Issuer" will mean Hamilton County, Boone County and
Scottsburg, individually or collectively as applicable.
1.1.81 "Items" will have the meaning given that term in Section
3.1 of this Restated Credit Agreement.
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1.1.82 "Letter of Credit" or "Letters of Credit" will mean the
Scottsburg Alternate Letter of Credit, the Port Authority Alternate Letter of
Credit and the Boone Alternate Letter of Credit individually and collectively as
the context requires.
1.1.83 "Letter of Credit Amount" or Letter of Credit Amounts"
will mean the Boone Alternate Letter of Credit Amount, the Scottsburg Alternate
Letter of Credit Amount and the Port Authority Alternate Letter of Credit
Amount, as applicable.
1.1.84 "Letter of Credit Commitment" will mean the commitment of
the Agent on behalf of the Lenders to issue Letters of Credit pursuant to
Section 2.10, below.
1.1.85 "Letter of Credit Documents" will mean the respective
applications and agreements with respect to Letters of Credit and Standby
Letters of Credit on the Agent's standard forms thereof (or such other form as
the Agent and the Company or the Company may agree) signed at the time of
issuance or renewal of such Letters of Credit or Standby Letters of Credit.
1.1.86 "Letter of Credit Facilities" will mean the Credit
Facilities described in Sections 2.10 and 2.11 of this Restated Credit
Agreement.
1.1.87 "Letter of Credit Obligations" will mean an amount equal
to the sum of (a) the aggregate then undrawn and unexpired amount of the then
outstanding Letters of Credit and Standby Letters of Credit, plus (b) the
aggregate amount of drawings under Letters of Credit and Standby Letters of
Credit that have not then been reimbursed by the Company.
1.1.88 "Leverage Ratio" will mean the ratio of (i) total
liabilities less the Sinking Fund Account balance to (ii) Tangible Net Worth.
1.1.89 "Levies" will have the meaning given that term in Section
2.14 of this Restated Credit Agreement.
1.1.90 "Liquidity Period" will mean the period beginning on the
date hereof and terminating on the first to occur of (i) the date the Letters of
Credit terminate, (ii) the first date on which there are no longer any Bonds
Outstanding other than Bonds secured by an Alternate Letter of Credit, and (iii)
the date the Liquidity Period is terminated pursuant to Section 11.
1.1.91 "Loan Documents" will mean this Restated Credit Agreement,
the Notes, the Security Documents, the Notices, the Letter of Credit Documents
and such other agreements, instruments and documents, including but not limited
to subordination and intercreditor agreements, powers of attorney, consents,
reimbursement agreements, notices, certificates and all other written matter now
or hereafter executed by or on behalf of the Company, and delivered to the Agent
or Lenders in connection with this Restated Credit Agreement, together with all
agreements, instruments and documents referred to therein or contemplated
thereby.
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1.1.92 "Long Term Rate" will have meaning ascribed to such term
in the Boone Indenture, the Port Authority Indenture and the Scottsburg
Indenture.
1.1.93 [Intentionally Omitted].
1.1.94 "Multiemployer Plan" will mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA to which the Company or any ERISA
Affiliate (other than one considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Code Section 414) is making or accruing an obligation
to make contributions, or has within any of the preceding five (5) plan years
made or accrued an obligation to make contributions.
1.1.95 "Notes" will mean the Substituted Revolving Credit Notes,
which shall be in the form attached to this Restated Credit Agreement as Exhibit
D, and will include any amendments, extensions and renewals made thereto from
time to time.
1.1.96 "Notice of Borrowing" will mean the notice required under
Section 2.3, below, in the form attached to this Restated Credit Agreement as
Exhibit E.
1.1.97 "Notice of Continuation" will mean the notice required
under Section 2.5, below, in the form attached to this Restated Credit Agreement
as Exhibit F.
1.1.98 "Notice of Conversion" will mean the notice required
under Section 2.5, below, in the form attached to this Restated Credit Agreement
as Exhibit G.
1.1.99 "Notice of Prepayment" will mean the notice required
under Section 2.6, below.
1.1.100 "Notices" will mean all Notices of Borrowing, Notices of
Continuation, Notices of Conversion, Notices of Prepayment, or any notice under
Section 2.8, below, of termination or reduction.
1.1.101 "Obligations" will mean and include all loans, advances,
debts, liabilities, obligations, covenants and duties owing to the Agent and/or
any or all of the Lenders from the Company of any kind or nature arising under
this Restated Credit Agreement, the Letters of Credit, the Standby Letters of
Credit, the Letter of Credit Documents, the Notes or any of the Loan Documents,
whether direct or indirect, absolute or contingent, joint or several, due or to
become due, now existing or hereafter arising, and all charges, expenses, fees,
including but not limited to attorneys' fees, and any other sums chargeable to
the Company under any of the Obligations.
1.1.102 "Operating Cash Flow" will mean the sum of net income,
plus or minus non-cash items as determined in accordance with GAAP.
1.1.103 "Outstanding" when applied to the Bonds will have the
meaning ascribed to such term in the Indenture.
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1.1.104 "PBGC" will mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.
1.1.105 "Permitted Liens" will mean:
a. liens securing the payment of taxes, either not yet
due or the validity of which is being contested by the Person
being charged in good faith by appropriate proceedings, and as to
which it has set aside on its books adequate reserves to the
extent required by GAAP;
b. deposits under workers' compensation, unemployment
insurance and social security laws, or to secure the performance
of bids, tenders, contracts (other than for the repayment of
borrowed money) or leases, or to secure statutory obligations or
surety or appeal bonds, or to secure indemnity, performance or
other similar bonds in the ordinary course of business;
c. liens imposed by law, such as carriers' warehousemen's
or mechanics' liens, incurred by it in good faith in the ordinary
course of business;
d. liens in favor of Agent for the benefit of the Lenders
under this Restated Credit Agreement or the Security Documents;
and
e. liens disclosed on the updated Disclosure Schedule.
1.1.106 "Person" will mean an individual, partnership,
corporation (including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
1.1.107 "Plan" will mean any pension plan subject to the
provisions of Title IV of ERISA or Section 412 of the Code and which is
maintained for employees of the Company or any ERISA Affiliate.
1.1.108 "Potential Default" will mean any event or condition
which may with lapse of time or notice or both constitute a Default or Event of
Default.
1.1.109 "Prime Rate" will mean the rate established by the Agent
from time to time based on its consideration of various factors, including money
market, business and competitive factors, and is not necessarily Agent's most
favored interest rate. Subject to any maximum or minimum interest rate
limitations specified herein or by applicable law, if and when the Prime Rate
changes while any indebtedness, principal or interest or any other amount
remains outstanding under this Restated Credit Agreement, then in each such
event, any rate of interest payable under this Restated Credit Agreement, the
Notes or any of the other Loan
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Documents based on the Prime Rate will change automatically without notice to
the Company effective the date of such change.
1.1.110 "Principal Portion" will have the meaning ascribed to
such term in the Letters of Credit.
1.1.111 [Intentionally Omitted].
1.1.112 "Ratable Portion" will mean, with respect to any Lender,
a fraction (expressed as a percentage), the numerator of which will be the
amount of such Lender's Revolving Commitment and the denominator of which will
be the aggregate amount of all of the Lenders' Revolving Commitments, as the
case may be; provided, however, that as to any Lender that fails or refuses to
make its Ratable Portion of any Advance (or to pay any required participation
payment relative to any Letter of Credit or Standby Letter of Credit), such
Lender's Ratable Portion of payments distributable to Lenders shall be adjusted
accordingly.
1.1.113 [Intentionally Omitted].
1.1.114 "Redemption Draft" will mean a drawing under Exhibit C to
any Letter of Credit to be used for payment of the portion of the redemption
price of the applicable Bonds corresponding to the principal amount thereof to
be redeemed and cancelled by the Issuer pursuant to the Indenture, or payment of
the principal amount of such Bonds at their stated maturity or upon acceleration
of payments due on such Bonds pursuant to the Indenture.
1.1.115 "Remarketing Agent" will mean with respect to the Port
Authority Bonds, Citicorp Investment Bank and with respect to the Boone Bonds
and the Scottsburg Bonds, The Ohio Company.
1.1.116 "Remarketing Agreement" means the Remarketing Agent's
agreement to perform its duties under the Indenture.
1.1.117 "Reportable Event" will mean any reportable event as
defined in Section 4043(b) of ERISA or the regulations issued thereunder with
respect to a Plan (other than a Plan maintained by an ERISA Affiliate which is
considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Code
Section 414).
1.1.118 [Intentionally Omitted].
1.1.119 "Responsible Officer" will mean, with respect to any
Person, any of its financial officers, or its chairman, chief executive officer,
president or any vice president.
1.1.120 "Restated Credit Agreement" will mean this Amended and
Restated Credit, Reimbursement and Security Agreement and any amendments or
supplements thereto made from time to time in accordance with Section 16.4,
below.
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1.1.121 "Revolving Commitment" will mean, as to any Lender, the
dollar amount set forth opposite its name on Exhibit A hereto under the heading
Revolving Commitment, as such amount may be reduced from time to time pursuant
to Section 2.8, below.
1.1.122 "Revolving Conditions" will mean the conditions specified
in Section 2.1, below.
1.1.123 "Revolving Credit Facility" will mean the Credit Facility
described in Section 2.1, below.
1.1.124 "Revolving Credit Loans" will mean the advances made
pursuant to Section 2.1. below.
1.1.125 "Revolving Credit Notes" will mean the notes evidencing
the Revolving Credit Loans, which shall be in the form attached hereto as
Exhibit D, and will include all amendments, extensions and renewals made thereto
from time to time.
1.1.126 "Security Documents" will mean the security agreements,
pledges, mortgages or other documents delivered by the Company to the Agent for
the benefit of the Lenders now or in the future to encumber the Collateral in
favor of the Agent for the benefit of the Lenders.
1.1.127 "Sinking Fund Accounts" will mean the accounts described
in Section 4 of this Restated Credit Agreement.
1.1.128 "Standby Letter of Credit" or "Standby Letters of Credit"
will mean Standby Letters of Credit issued pursuant to Section 2.11 of this
Restated Credit Agreement to support the contingent obligation of the Company to
pay a supplier amounts due under a purchase contract or for such other corporate
purpose to which the Agent consents in its sole discretion.
1.1.129 "Standby Letter of Credit Commitment" will mean the
Commitment of the Agent on behalf of the Lenders to issue Standby Letters of
Credit in the aggregate not exceeding (a) the Available Commitment or (b)
$500,000.
1.1.130 "Standby Letter of Credit Conditions" will mean the
conditions specified in Section 2.11.1 of this Restated Credit Agreement.
1.1.131 "Standby Letter of Credit Disbursements" will have the
meaning given that term in Section 2.11.5 of this Restated Credit Agreement.
1.1.132 "Standby Letter of Credit Facility" will mean the Credit
Facility described in Section 2.11 of this Restated Credit Agreement.
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1.1.133 "Subsidiary" will mean, as to any Person, any
corporation, partnership, trust or other entity of which a fifty percent (50%)
or more of the stock (or equivalent ownership or controlling interest) having by
the terms thereof ordinary voting power to elect a majority of the directors (if
a corporation) or to select the trustee or exercise equivalent controlling
interest (irrespective of whether or not at the time stock of any class or
classes of such corporation or other interest of such entity shall have or might
have voting power by reason of the happening of any contingency), is at any
relevant time directly or indirectly owned or controlled by such Person or one
or more other Subsidiaries of such Person or any combination thereof.
1.1.134 "Tangible Net Worth" at any particular time, with respect
to any particular Person, will mean (i) the sum of the amounts appearing on the
balance sheet of such Person as (a) the stated value of all outstanding stock
and (b) capital, paid-in and earned surplus; less (ii) the sum of (a) the
deficit in any surplus or capital account, including treasury stock, (b) any
amounts at which shares of the capital stock of such Person appear on the asset
side of such balance sheet, (c) any amounts by which patents, trademarks, trade
names, organizational expenses and other intangible items of similar nature and
good will appear on the asset side of such balance sheet, all as of the last day
of the month previous to such particular time, and (d) equity resulting from
conversion of Indebtedness. In calculating Net Worth, FASB 87 pension
adjustments after Fiscal Year end 1994 will be excluded.
1.1.135 "Taxes" will have the meaning given that term in Section
2.14 of this Restated Credit Agreement.
1.1.136 "Tender Agent" will mean PNC Bank, Ohio, National
Association.
1.1.137 "Tender Draft" will mean a drawing or drawings under
Exhibit B to any Letter of Credit to be used for payment of the purchase price
of the applicable Bonds tendered to the Tender Agent in accordance with the
Indenture and not remarketed.
1.1.138 "Termination Date" will mean July 31, 1997; provided,
however, that the Termination Date will in no event be later than the date on
which all of the Commitments for the Credit Facilities will have been terminated
in whole, whether by expiration or upon acceleration.
1.1.139 [Intentionally Omitted].
1.1.140 "Total Revolving Commitment" will mean the aggregate of
the Revolving Commitments.
1.1.141 "Treasury Rate" will mean the weekly average rate for
United States Treasury Notes with maturities of five (5) years (computed on a
constant maturity basis) as published in the most current version of the Federal
Reserve Board Publication HR.15 as determined by the Agent on any date of
determination.
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1.1.142 "Trustee" shall mean PNC Bank, Ohio, National
Association, as Trustee.
1.1.143 "Type of Advance" refers to the distinction between
Advances bearing interest at the Base Rate or Eurodollar Rate.
1.1.144 "Unremarketed Tendered Bonds" means Bonds which (a) have
been tendered for purchase pursuant to optional or mandatory tender provisions
of the Bonds and Indenture, and (b) have not been successfully remarketed by the
Remarketing Agent prior to 11:00 a.m. or the date of purchase thereof pursuant
to such tender.
1.1.145 "Withdrawal Liability" will mean liability to a
Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title
IV of ERISA.
1.2 OTHER ACCOUNTING DEFINITIONAL PROVISIONS. Unless otherwise
specified, all accounting terms used herein and all accounting determinations
made hereunder shall be made in accordance with GAAP, applied consistently with
the audited financial statements of the Company for the fiscal year ended April
2, 1995, except for any inconsistency resulting from any change in accounting
principles or methods adopted by the Company with the agreement of its
independent certified public accountants; provided, however, that if any change
in GAAP or its application occurs hereafter or if the Company adopts a change to
its accounting principles or methods with the agreement of its independent
certified public accountants, and such change results in a change in the
calculations of any financial covenants or restriction set forth in this
Restated Credit Agreement, then the parties hereto agree to enter into and
diligently pursue negotiations in order to amend such financial covenant or
restriction so as to equitably reflect such change, with the desired result
being that the criteria for evaluating the financial condition and results of
operations of the Company shall be the same after such change as if such change
had not been made. Pending the resolutions of any such negotiations, the Company
will provide to each Lender such unaudited financial statements and proforma
statements using the accounting methods and principles used in the preparation
of the audited financial statements for the year ended March 28, 1995 as are
necessary to enable the Lenders to test the financial covenants and restrictions
contained herein.
1.3 OTHER DEFINITIONAL PROVISIONS. All terms defined in this Restated
Credit Agreement in the singular will have comparable meanings when used in the
plural and vice-versa. The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Restated Credit Agreement will mean this
Restated Credit Agreement as a whole and not any particular provision of this
Restated Credit Agreement.
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2. CREDIT FACILITIES.
2.1 REVOLVING CREDIT FACILITY.
2.1.1 Each Lender severally agrees to make, subject to the terms and
conditions herein set forth, Revolving Credit Loans to the Company on any
Business Day during the period from the Closing Date to the Business Day
preceding the Termination Date upon the request of the Company in an amount not
to exceed the Available Commitment of such Lender; provided that:
a. such Lender's Ratable Portion of the Aggregate Outstanding
Revolving Credit shall not exceed at any time such Lender's Revolving
Commitment;
b. the Aggregate Outstanding Revolving Credit shall not exceed
at any time the Borrowing Base; and
c. no Event of Default exists.
2.1.2 Within the above-described limits, the Company may borrow under
this Section 2.1, prepay pursuant to Section 2.6.1, below, and reborrow under
this Section 2.1.
2.1.3 The Revolving Credit Loans will be evidenced by the Substituted
Revolving Credit Notes and will bear interest and be payable in the manner set
forth herein and therein. The Company will pay to the Agent for the account of
the Lenders the outstanding principal amount of, and all accrued and unpaid
interest on, all Revolving Credit Loans on the Termination Date.
2.1.4 The initial term of the Revolving Credit Loans and the
Substituted Revolving Credit Notes will commence on the Closing Date and expire
on July 31, 1997. On each anniversary date of the Substituted Revolving Credit
Notes, the Substituted Revolving Credit Notes and the Revolving Credit Loans may
be extended, in the sole discretion of the Lenders, for additional periods of
one (1) year each upon the request of the Company by written notice given to the
Agent at least sixty (60) days prior to the anniversary date.
2.2 [INTENTIONALLY OMITTED].
2.3 MANNER OF BORROWING.
2.3.1 REVOLVING BORROWINGS. Except as otherwise provided herein, the
Company will give the Agent a Notice of Borrowing with respect to each Borrowing
under the Revolving Credit Facilities, not later than 11:00 a.m. (Cincinnati
time) on (a) the Business Day of the proposed Borrowing Date in the case of a
Borrowing consisting of Base Rate Advances and (b) two (2) Business Days prior
to the proposed Borrowing Date, in the case of a Borrowing consisting of
Eurodollar Rate Advances. The Agent will give to each Lender prompt notice
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thereof by telex, telecopier or cable. Each Notice of Borrowing shall be by
telecopier (or by telephonic notice confirmed in writing by a Notice of
Borrowing delivered no later than the close of business on the day on which such
telephonic notice is given), specifying therein all matters required by such
Notice, including but not limited to the requested (i) Borrowing Date, (ii)
Credit Facility under which such Borrowing is to be made, (iii) the amount and
Type of Advances comprising such Borrowing, (iv) aggregate amount of such
Borrowing, and (v) in the case of a Borrowing consisting of Eurodollar Rate
Advances the initial Interest Period for each such Advance. In the case of a
proposed Borrowing comprised of Eurodollar Rate Advances, the Agent shall
promptly notify each Lender of the applicable Eurodollar Rate. Each Revolving
Loan that is a Base Rate Advance shall be in an aggregate principal amount of
$250,000 or in integral multiples of $50,000 in excess thereof. Each Revolving
Loan that is a Eurodollar Rate Advance shall be in an aggregate principal amount
of $500,000 or in integral multiples of $100,000 in excess thereof. The Lenders
will have no obligation to make Eurodollar Rate Advances if thereafter there
would be outstanding Eurodollar Rate Advances with Interest Periods that end on
more than five (5) different dates. If the Company fails to specify an Interest
Period with respect to a Eurodollar Rate Advance, or fails to specify the Type
of any Advance, or fails to provide any other information required by such
Notice as to an Advance, the Company shall be deemed to have selected a
Borrowing that is a Base Rate Advance. Each Lender shall, before 11:00 a.m.
(Cincinnati time) on the Borrowing Date, make available for the account of its
Applicable Lending Office to the Agent at the Agent's Account, in same day
funds, such Lender's Ratable Portion of such Borrowing. After the Agent's
receipt of such funds and upon fulfillment of the applicable conditions set
forth in Section 7 hereof, the Agent will make such funds available to the
Company by crediting the Cash Collateral Account.
2.3.2 [INTENTIONALLY OMITTED].
2.4 ADDITIONAL PROVISIONS REGARDING FUNDING.
2.4.1 As to all Advances, the Agent may assume that each Lender will
make its Advances available to the Agent on the Borrowing Date in accordance
with this Restated Credit Agreement and the Agent may, but shall not be
obligated to, advance to the Company on such Lender's behalf such Lender's
Advance, or any portion of such share, for the account of such Lender unless
such Lender shall have notified the Agent in writing (a) in the case of a Base
Rate Advance, prior to 2:00 p.m. (Cincinnati time) on the Borrowing Date, or (b)
in the case of any other Advance, prior to 2:00 p.m. (Cincinnati time) on the
Business Day prior to the Borrowing Date, that funds will not be made available
by such Lender for such Advance, in which case the Agent promptly shall notify
the Company of such fact. If any such funds are so advanced by the Agent, such
Lender and the Company severally agree to pay such amount to the Agent,
forthwith on demand, but no later than the Wednesday following the date such
funds are advanced, together with interest thereon for each day from the date
such amount is made available to the Company until the date such amount is paid
to the Agent, at (i) in the case of the Company, a rate per annum equal to the
interest rate payable by the Company with respect to such Loan in effect from
time to time while such Advance is outstanding and (ii) in the case of such
Lender, two percent (2%) in excess of the Federal Funds Rate. If such Lender
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shall pay to the Agent such amount, such amount so paid shall constitute such
Lender's Advance as part of such Borrowing.
2.4.2 No Lender's obligation to make any Advance shall be affected by
any other Lender's failure to make funds available for the same or any other
Borrowing, nor shall any Lender be liable for the failure of any other Lender to
fulfill an obligation to make any Advance.
2.5 CONVERSIONS AND CONTINUATION OF ADVANCES.
2.5.1 OPTIONAL CONVERSION. Subject to the terms and conditions of
this Restated Credit Agreement and provided that no Default or Event of Default
shall have occurred and be continuing, upon delivery to the Agent of a Notice of
Conversion, the Company (a) may convert any Eurodollar Rate Advance under the
Revolving Credit Facility upon expiration of the applicable Interest Period, or
may convert any Base Rate Advance under the Revolving Credit Facility at any
time, to a Eurodollar Rate Advance or a Base Rate Advance, as the case may be,
under the same Credit Facility. Any such Notice of Conversion shall be delivered
to the Agent prior to 11:00 a.m. (Cincinnati time) two (2) Business Days prior
to the proposed Conversion Date (which must, except for conversions to Base Rate
Advances, be the last day of the applicable Interest Period). The Agent will
give to each Lender prompt notice thereof by telex, telecopier or cable. Each
Notice of Conversion shall be by telex, telecopier or cable (or by telephone
notice confirmed in writing by a Notice of Conversion delivered no later than
the close of business on the day on which such telephonic notice is given),
specifying therein all matters required by such Notice, including but not
limited to the following: (a) the requested Conversion Date (which must be a
Business Day), (b) the amount and Type of Advances to be converted and (c) if
such conversion is to a Eurodollar Rate Advance, the initial Interest Period for
such Advance. Notwithstanding the foregoing, each converted Advance that is a
Eurodollar Rate Advance shall be in an aggregate principal amount of $500,000 or
in integral multiples of $100,000 in excess thereon or in the full remaining
principal amount thereof; and after giving effect to any such conversion there
shall not be outstanding, under the Revolving Credit Facility, Eurodollar Rate
Advances with Interest Periods that end on more than four (4) different dates;
and no Advance shall be converted to an Advance under a Credit Facility other
than the Credit Facility under which such Advance originally was made.
2.5.2 CONTINUATION. Subject to the terms and conditions of this
Restated Credit Agreement and provided that no Default or Event of Default shall
have occurred and be continuing, the Company may elect to continue any
Eurodollar Rate Advance under a Credit Facility as such under such Credit
Facility (at the Interest Rate applicable to such Type of Advance determined as
of the new Interest Period) upon expiration of the applicable Interest Period by
delivering to the Agent a Notice of Continuation prior to 11:00 a.m. (Cincinnati
time) two (2) Business Days prior to the last day of the then current Interest
Period applicable to such Advance. The Agent will give to each Lender prompt
notice thereof by telex, telecopier or cable. Each Notice of Continuation shall
be by telex, telecopier or cable (or by telephone notice confirmed in writing by
a Notice of Continuation delivered no later than the close of business on the
day on which such telephonic notice is given), specifying therein all matters
required by
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such Notice, including but not limited to the following: (a) the requested
Continuation Date (which must be a Business Day), (b) the amount and Type of
Advances to be continued and (c) the Interest Period for such continued Advance.
Notwithstanding the foregoing, each such continued Advance shall be in an
aggregate principal amount of $500,000 or in integral multiples of $100,000 in
excess thereof or in the full remaining principal amount thereof; and after
giving effect to any such continuation there shall not be outstanding under the
Revolving Credit Facility Eurodollar Rate Advances with Interest Periods that
end on more than four (4) different dates.
2.5.3 AUTOMATIC CONVERSION. If the Company shall fail to give a
timely and complete Notice of Conversion or Notice of Continuation with respect
to an outstanding Advance in accordance with this Restated Credit Agreement, or
any requested conversion or continuation otherwise fails to satisfy the
applicable requirements of this Restated Credit Agreement, the Company shall be
deemed to have elected to convert such outstanding Advance to a Base Rate
Advance on the last day of the applicable Interest Period. Advances also are
subject to automatic conversion under the circumstances set forth in Section
2.16, below.
2.6 PREPAYMENT OF REVOLVING CREDIT FACILITY.
2.6.1 OPTIONAL PREPAYMENT. Subject to the terms and conditions of
this Restated Credit Agreement, the Company may elect to prepay all or any part
of an Advance (except for Eurodollar Rate Advances) at any time by delivering to
the Agent a Notice of Prepayment prior to the proposed prepayment in the case of
a Base Rate Advance, and at least three (3) Business Days prior to the proposed
date of prepayment in the case of a Eurodollar Rate Advance, provided that each
such partial prepayment of any Advance other than a Base Rate Advance shall be
in an aggregate principal amount of $250,000 or an integral multiply of $50,000
in excess thereof and provided further that each prepayment of any Advance shall
be accompanied by payment of the accrued interest to the date of prepayment on
the principal amount prepaid and any amounts payable pursuant to Section 2.17
hereof as a result of such prepayment. Each Notice of Prepayment must specify,
as to each Advance being prepaid, the proposed prepayment date, the Advance
being prepaid and the aggregate principal amount of the prepayment. All
prepayments shall be paid to the Agent.
2.6.2 MANDATORY PREPAYMENT. In the event that the Aggregate
Outstanding Revolving Credit would in whole or in part exceed any applicable
Revolving Conditions, whether after giving effect to any reduction or
termination of the applicable Total Revolving Commitment or otherwise, the
Company immediately shall make a prepayment of principal in an amount sufficient
to eliminate the excess, plus all accrued interest thereon and any amounts
payable pursuant to Section 2.17 hereof. In addition, the Company will make at
least a $1,000,000 prepayment at such time as cash equity is raised as set forth
in Section 9.24, below.
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2.7 INTEREST ON THE ADVANCES.
2.7.1 INTEREST RATES ON REVOLVING CREDIT LOANS. Each Revolving Loan
shall bear interest from the Borrowing Date thereof on the principal amount
thereof from time to time outstanding until due and payable (whether at the
stated maturity, by acceleration or otherwise) as follows: (a) in the case of a
Base Rate Advance, at a fluctuating rate per annum equal to the Base Rate as
from time to time in effect plus the Applicable Margin and (b) in the case of a
Eurodollar Rate Advance, at a rate per annum equal to the Eurodollar Rate for
the Interest Period applicable to such Eurodollar Rate Advance plus the
Applicable Margin. The Applicable Margin will change if the Company maintains
the specified Leverage Ratio for two consecutive Fiscal Quarters.
2.7.2 [INTENTIONALLY OMITTED].
2.7.3 [INTENTIONALLY OMITTED].
2.7.4 REVOLVING CREDIT LOANS INTEREST PAYMENT DATES.
2.7.4.1 Accrued interest under the Revolving Credit Loans shall
be payable (i) monthly on the first day of each month, (ii) on the date any such
Advance is converted or continued (if applicable) or paid in full, (iii) on the
Termination Date, and (iv) after maturity, on demand.
2.7.4.2 [Intentionally Omitted].
2.7.5 DEFAULT RATE. Upon the occurrence and during the continuance of
any Event of Default, the unpaid principal amount of each Advance, and to the
extent not paid when due, the unpaid amount of all interest, fees, expenses and
other amounts payable hereunder, shall bear interest at the Default Rate in
effect from time to time. The waiver by the Agent of the right to charge the
Default Rate, the failure of the Agent to charge the Default Rate or the
acceptance by the Agent of any payment bearing interest at the Default Rate, in
any instance, shall not prejudice any of the Agent's rights or remedies
contained herein or be deemed to extend the applicable cure period for the
Default in question or to create any cure period for any default for which this
Restated Credit Agreement does not specifically provide a cure period.
2.8 TERMINATION OR REDUCTION OF REVOLVING COMMITMENT AND STANDBY LETTER OF
CREDIT COMMITMENT BY THE COMPANY. The Company shall have the right from time to
time to terminate the Standby Letter of Credit Commitment and/or Revolving
Commitment, or reduce the Standby Letter of Credit and/or Revolving Commitment
upon not less than thirty (30) Business Days' prior notice by the Company to the
Agent in writing or by telecopy or facsimile transmission, which notice shall
(a) specify the Commitment being terminated or the Commitment being reduced, (b)
specify the effective date of such termination or reduction, (c) be irrevocable
and effective only upon receipt by the Agent and (d) be signed by an Authorized
Employee of the Company; provided, however, that after giving effect to any such
termination or reduction, all applicable Standby Letter of Credit Conditions
and/or Revolving
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Conditions must be satisfied. Any optional reduction of the Revolving Commitment
shall be in the amount of $500,000 or in integral multiples of $100,000 in
excess thereof or in the full amount of the Commitment as then in effect. Any
termination or reduction pursuant to this Section 2.8 shall be permanent. The
Agent promptly shall give notice to each Lender of any termination or reduction
hereunder. Any such termination or reduction shall be accompanied by a payment
of accrued but unpaid interest, principal in an amount sufficient to eliminate
the excess over the Commitment as reduced or terminated, the accrued but unpaid
Commitment Fee with respect to the amount of the Commitment that is terminated
or reduced and any amounts payable pursuant to Section 2.17, below.
2.9 RECORDS. Each Lender is hereby authorized by the Company to record on
the schedule attached to the Notes or in its books and records, the date,
amount, Interest Rate, and applicable Interest Period, if any, of each Advance
made to the Company, the date and amount of each payment of principal or
interest thereon, and the other information provided for on such schedule, which
schedule or books and records, as the case may be, will constitute prima facie
evidence of the accuracy of the information so recorded, provided, however, that
failure of any Lender to record, or any error in recording, any such information
will not relieve the Company of its obligation to repay the outstanding
principal amount of the Advances, all accrued interest thereon, and other
amounts payable with respect thereto in accordance with the terms of the Notes
and this Restated Credit Agreement.
2.10 LETTER OF CREDIT FACILITIES.
2.10.1 ISSUANCE OF SCOTTSBURG ALTERNATE LETTER OF CREDIT. The Company
has requested the Agent, as agent and for the account of the Lenders, to issue
the Scottsburg Alternate Letter of Credit to the Trustee. Subject to the
conditions precedent hereinafter set forth, the Agent has issued, and the
Lenders hereby confirm the authority of the Agent to issue, to the Trustee
pursuant to the request of the Company, as of the date of execution and delivery
of the Credit Agreement, the Scottsburg Alternate Letter of Credit in the
Scottsburg Alternate Letter of Credit Amount and substantially in the form
attached hereto as Exhibit I. The Interest Portion of the Scottsburg Alternate
Letter of Credit Amount has been established on the basis of two hundred ten
(210) days' interest on the Scottsburg Bonds, at an assumed maximum interest
rate of 15% per annum. The Scottsburg Alternate Letter of Credit shall expire at
5:00 p.m. on July 31, 1997, or if such day is not a Business Day, on the next
succeeding Business Day, subject to renewal as provided therein. The Scottsburg
Alternate Letter of Credit is subject to prior automatic termination as provided
therein. The payment of all drawings honored under the Scottsburg Alternate
Letter of Credit will be made with the Agent's own funds. Draws under the
Scottsburg Alternate Letter of Credit are not available to pay any amounts due
under the Boone Alternate Letter of Credit or the Port Authority Alternate
Letter of Credit.
2.10.2 ISSUANCE OF BOONE ALTERNATE LETTER OF CREDIT. The Company has
requested the Agent, as agent and for the account of the Lenders, to issue the
Boone Alternate Letter of Credit to the Trustee. Subject to the conditions
precedent hereinafter set forth, the Agent has issued, and the Lenders hereby
confirm the authority of the Agent to issue, to the
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Trustee pursuant to the request of the Company, as of the date of execution and
delivery of the Credit Agreement, the Boone Alternate Letter of Credit in the
Boone Alternate Letter of Credit Amount and substantially in the form attached
hereto as Exhibit J. The Interest Portion of the Boone Alternate Letter of
Credit Amount has been established on the basis of two hundred ten (210) days'
interest on the Boone Bonds, at an assumed maximum interest rate of 15% per
annum. The Boone Alternate Letter of Credit shall expire at 5:00 p.m. on July
31, 1997, or if such day is not a Business Day, on the next succeeding Business
Day, subject to renewal as provided therein. The Boone Alternate Letter of
Credit is subject to prior automatic termination as provided therein. The
payment of all drawings honored under the Boone Alternate Letter of Credit will
be made with the Agent's own funds. Draws under the Boone Alternate Letter of
Credit are not available to pay any amounts due under the Scottsburg Alternate
Letter of Credit or the Port Authority Alternate Letter of Credit.
2.10.3 ISSUANCE OF PORT AUTHORITY ALTERNATE LETTER OF CREDIT. The
Company has requested the Agent, as agent and for the account of the Lenders, to
issue the Port Authority Alternate Letter of Credit to the Trustee. Subject to
the conditions precedent hereinafter set forth, the Agent has issued, and the
Lenders hereby confirm the authority of the Agent to issue, to the Trustee
pursuant to the request of the Company, as of the date of execution and delivery
of the Agreement, the Port Authority Alternate Letter of Credit in the Port
Authority Alternate Letter of Credit Amount and substantially in the form
attached hereto as Exhibit K. The Interest Portion of the Port Authority
Alternate Letter of Credit Amount has been established on the basis of
seventy-five (75) days' interest on the Port Authority Bonds, at an assumed
maximum interest rate of 15% per annum. The Port Authority Alternate Letter of
Credit shall expire at 5:00 p.m. on July 31, 1997, or if such day is not a
Business Day, on the next succeeding Business Day, subject to renewal as
provided therein. The Port Authority Alternate Letter of Credit is subject to
prior automatic termination as provided therein. The payment of all drawings
honored under the Port Authority Alternate Letter of Credit will be made with
the Agent's own funds. Draws under the Port Authority Letter of Credit are not
available to pay any amounts due under the Boone Alternate Letter of Credit or
the Scottsburg Alternate Letter of Credit.
2.10.4 [INTENTIONALLY OMITTED].
2.10.5 REIMBURSEMENT AND OTHER PAYMENTS. The Company hereby agrees to
pay or cause to be paid to the Agent:
2.10.5.1 a sum equal to each amount drawn under the Letters of
Credit by an Interest Draft, on the same Business Day that such amount is so
drawn after such draw is honored by the Agent;
2.10.5.2 a sum equal to each amount drawn against the Interest
Portion of the Letter of Credit Amounts by a Tender Draft (a) in the case of any
such amount drawn on an Interest Payment Date (as defined in the Indenture) of
the Bonds being purchased with the proceeds of such Tender Draft, the same
Business Day that such amount is so drawn after such draw is honored by the
Agent, and (b) in all other cases, on the first to
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occur of (i) the first Business Day of the first calendar month following the
calendar month in which such amount is so drawn, (ii) the date on which the
Bonds purchased with the proceeds of such Tender Draft are remarketed by the
Remarketing Agent and the proceeds thereof delivered to the Trustee, (iii) the
date on which the Bonds purchased with the proceeds of such Tender Draft are
redeemed or otherwise paid in full, or (iv) the date the Liquidity Period
terminates;
2.10.5.3 a sum equal to each amount drawn against the
Principal Portion of the Letter of Credit Amounts by a Tender Draft (for the
purpose of this subparagraph 2.10.5.3 the "Principal Draft Amount") payable as
follows:
a. Subject to the terms set forth in this Section
2.10.5, the Agent will hold Unremarketed Tendered Bonds for up to
four hundred fifty-eight (458) days. During the period, if any,
that Unremarketed Tendered Bonds are held by the Agent, the Company
will continue to make all Sinking Fund Account payments and
principal and interest payments on such Bonds. Upon payment in full
of all sums due the Agent in connection with any Tender Draft, the
Agent will deliver any Bonds held by the Agent, or its agent, in
connection with such Tender Draft to such person or persons as the
Trustee or Company may direct. In the event that there shall be a
Tender Draft on or after four hundred fifty-eight (458) days after
the first Tender Draft, the Company will pay to the Agent on each
day after any payment is made under any of the Letters of Credit
pursuant to any Tender Draft an amount equal to such amount so paid
under the Letters of Credit. On the first to occur of (i) the
termination of a Letter of Credit in accordance with its terms, or
(ii) four hundred fifty-eight (458) days after any Bond subject to
a Tender Draft has been delivered to the Agent and has not been
remarketed, the Company will pay to the Agent an amount equal to
the principal amount of and interest on all Bonds subject to such
Tender Draft;
b. anything contained in subparagraph 2.10.5.3(a), above
notwithstanding, the Principal Draft Amount shall be immediately
due and payable from time to time on the first to occur of (i) the
date on which the Bonds purchased with the proceeds of such Tender
Draft are remarketed by the Remarketing Agent and the proceeds
thereof are delivered to the Trustee, (ii) the date on which the
Bonds purchased with the proceeds of such Tender Draft are redeemed
or otherwise paid in full, or (iii) the date the Liquidity Period
terminates; and
2.10.5.4 a sum equal to each amount drawn under the Letters of
Credit by a Redemption Draft, on the same Business Day that such amount is so
drawn after such draw is honored by the Agent.
All sums payable to the Agent under this Section 2.10.5 shall bear
interest, from the date the corresponding amount is drawn against and paid by
the Agent under the Letters of Credit
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until such sums are paid in full (it being understood and agreed that any sum
paid after 3:00 p.m. on a Business Day shall bear interest as if it was paid at
9:00 a.m. on the next following Business Day), at a fluctuating rate per annum
(computed for the actual number of days elapsed, based on a three hundred sixty
(360) day year) equal to the Bank Interest Rate; provided that if any sum or
interest thereon payable to the Agent under this Section 2.10.5 is not paid on
the date such sum or interest is due and payable to the Agent under this
Agreement, or if any other Event of Default as defined herein has occurred and
is continuing, then all such sums shall thereafter bear interest at a
fluctuating rate per annum (computed for the actual number of days elapsed,
based on a three hundred sixty (360) day year, as the case may be) equal to the
Default Rate until such sum or interest and all other amounts due and payable
under this Restated Credit Agreement have been paid in full. Interest payable
under this Section 2.10.5 shall be reduced by amounts paid to the Agent as the
holder of Bonds pledged to it hereunder.
Interest accruing on sums payable to the Agent pursuant to this Section
2.10.5 shall be due and payable on the first Business Day of each calendar month
after the date the corresponding amount is drawn under the Letter of Credit and
on the date the respective sum is paid. All payments under this Section 2.10.5
shall be applied first to the payment of interest due and payable under this
Section 2.10.5 and then to the reduction of the principal balance of sums due
and payable under this Section 2.10.5.
2.10.6 TRANSFER; REDUCTION; REINSTATEMENT.
2.10.6.1 TRANSFER; FEE. The Letters of Credit may be
transferred in accordance with the provisions set forth in the applicable Letter
of Credit. The Company will pay to the Agent upon each transfer of a Letter of
Credit in accordance with its terms the greater of $1,000 plus all out-of-pocket
expenses or such other amount which is at the time of transfer the charge that
the Agent is making for transfers of similar letters of credit.
2.10.6.2 REDUCTION. The Letter of Credit Amounts and the
respective Principal Portion and Interest Portion of the Letters of Credit shall
be automatically reduced as specified in the applicable Letter of Credit. With
respect to any reductions of the Letter of Credit Amounts pursuant to the terms
of the Letters of Credit as a result of Bonds ceasing to be Outstanding, the
Agent shall have the right, at its option, to require the Trustee to promptly
surrender the respective outstanding Letter of Credit to the Agent and to accept
in substitution therefor a substitute letter of credit in the form of Exhibit J
attached hereto if the Boone Alternate Letter of Credit, or Exhibit K if the
Port Authority Alternate Letter of Credit, or Exhibit I if the Scottsburg
Alternate Letter of Credit dated the date of such substitution, for an amount
equal to the Letter of Credit Amount as so reduced, but otherwise having terms
identical to the then outstanding Boone Alternate Letter of Credit, the Port
Authority Alternate Letter of Credit or the Scottsburg Alternate Letter of
Credit, as the case may be.
2.10.6.3 REINSTATEMENT. In the event of a drawing under any
Letter of Credit with an Interest Draft, the Interest Portion of the Letter of
Credit Amount shall, as provided in the applicable Letter of Credit and subject
to the conditions therein set forth, be
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automatically reinstated by an amount equal to the amount of such drawing. In
the event of a drawing under a Letter of Credit with a Tender Draft, the
Principal Portion and Interest Portion of the Letter of Credit Amount shall, as
provided in the applicable Letter of Credit, be reinstated with respect to such
drawing when and to the extent that the Agent has received reimbursement for
such drawing in immediately available funds (or the Trustee has received
immediately available funds which, pursuant to the Indenture, the Trustee will
immediately remit to the Agent as reimbursement for such drawing).
2.10.7 OBLIGATIONS ABSOLUTE. The obligations of the Company under
this Restated Credit Agreement shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms of this Agreement,
under all circumstances whatsoever, including without limitation the following
circumstances: (i) any lack of validity or enforceability of the Letters of
Credit, the Bond Documents, the Loan Documents or any other agreement or
document relating thereto; (ii) any amendment or waiver of or any consent to or
departure from the Letters of Credit, the Bond Documents, or any document
relating thereto; (iii) the existence of any claim, set off, defense or other
right which the Company may have at any time against the Trustee (or any persons
or entities for whom the Trustee may be acting), the Remarketing Agent, the
Agent, the Lenders or any other person or entity, whether in connection with
this Agreement, the transactions described herein or any unrelated transaction;
or (iv) any of the circumstances contemplated in clauses (i) through (vii),
inclusive, of Section 2.10.9 of this Restated Credit Agreement. The Company
understands and agrees that no payment by it under any other agreement (whether
voluntary or otherwise) shall constitute a defense to its obligations hereunder,
except to the extent that the Agent has been indefeasibly paid in full.
2.10.8 INDEMNIFICATION. To the extent permitted by applicable law,
the Company hereby indemnifies and holds harmless the Agent (and its directors,
officers, employees and agents) from and against any and all claims, damages,
loss, liabilities, costs or expenses (including reasonable attorneys' fees for
counsel of the Agent's choice) whatsoever which the Agent may incur (or which
may be claimed against the Agent by any person or entity whatsoever) by reason
of or in connection with (A) the issuance or transfer of, or payment or failure
to pay under, the Letters of Credit, (B) any breach by the Company of any
representation, warranty, covenant, term or condition in, or the occurrence of
any default under, this Restated Credit Agreement or the Bond Documents,
including all reasonable fees or expenses resulting from the settlement or
defense of any claims or liabilities arising as a result of any such breach or
default, and (C) involvement of the Agent in legal suit, investigation,
proceeding, inquiry or action as a consequence, direct or indirect, of the
Agent's issuance of the Letters of Credit, its entering into this Restated
Credit Agreement or any other event or transaction contemplated by any of the
foregoing; provided the Company shall not be required to indemnify the Agent for
any claims, damages, losses, liabilities, costs or expenses to the extent, but
only to the extent, caused by (i) the willful misconduct or gross negligence of
the Agent or (ii) the Agent's failure to pay under the Letters of Credit after
the presentation to it by the Trustee of a draft and certificate strictly
complying with the terms and conditions of the Letters of Credit, unless the
Agent in good faith believes that it is prohibited by law from making such
payment. Nothing in this Section is intended to limit the Company's
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reimbursement obligations contained in Section 2.10.5 of this Restated Credit
Agreement. The obligations of the Company under this Section shall survive the
termination of this Restated Credit Agreement.
2.10.9 LIABILITY OF AGENT. As between the Company and the Agent,
the Company assumes all risks of the acts or omissions of the Trustee with
respect to the Trustee's use of the Letters of Credit. Neither the Agent nor any
of its officers or directors shall be liable or responsible for: (i) the use
which may be made of the Letters of Credit or for any acts or omissions of the
Trustee in connection therewith; (ii) the form, validity, sufficiency, accuracy
or genuineness of any documents (including without limitation any documents
presented under the Letters of Credit), or of any statement therein or
endorsement thereon, even if such documents, statements or endorsements should
in fact prove to be in any or all respects invalid, insufficient, fraudulent,
forged, inaccurate or untrue; (iii) the payment by the Agent against
presentation of documents which do not comply with the terms of the Letters of
Credit, including failure of any documents to bear any reference to or adequate
reference to the Letters of Credit, or any other failure by the Trustee to
comply fully with conditions required in order to effect a drawing under the
Letters of Credit; (iv) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any of the Letters
of Credit or the rights or benefit thereunder or proceeds thereof, in whole or
in part, which may prove to be invalid or ineffective for any reason; (v)
errors, omissions, interruptions, losses or delays in transmission or delivery
of any message by mail, cable, telegraph, telex, telephone or otherwise; (vi)
any loss or delay in the transmission or otherwise of any document or draft
required in order to make a drawing under the Letters of Credit; or (vii) any
other circumstances whatsoever in making or failing to make payment under any of
the Letters of Credit; except only that the Company shall have a claim against
the Agent, and the Agent shall be liable to the Company, to the extent, but only
to the extent, of any direct, as opposed to consequential, damages suffered by
the Company which the Company proves were caused by (A) the Agent's willful
misconduct or gross negligence or (B) the Agent's failure to pay under any of
the Letters of Credit after the presentation to it by the Trustee of a draft and
certificate strictly complying with the terms and conditions of any of the
Letters or Credit, unless the Agent in good faith believes that it is prohibited
by law from making such payment. In furtherance and not in limitation of the
foregoing, the Agent may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary; provided that if the Agent shall receive
written notification from both the Trustee and the Company that documents
conforming to the terms of the Letters of Credit to be presented to the Agent
are not to be honored, the Agent agrees that it will not honor such documents.
Except for the Agent's obligations under the Letters of Credit, the Agent
shall have no liability to the Company or any other person as a result of any
reduction of the credit rating of the Agent or any deterioration in the Agent's
financial condition. No reduction of the credit rating shall reduce or in any
way diminish the obligations of the Company to the Agent under this Restated
Credit Agreement, including without limitation the Company's obligation to pay
Letter of Credit Fees to the Agent and to reimburse the Agent for any drawing
under the Letters of Credit.
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2.11 STANDBY LETTER OF CREDIT FACILITY.
2.11.1 STANDBY LETTER OF CREDIT COMMITMENT. The Agent agrees to
issue and renew, and the other Lenders hereby authorize the Agent to issue and
renew, subject to the terms and conditions set forth in this Section 2.11,
Standby Letters of Credit for the account of the Company from time to time on
any Business Day from the Closing Date until thirty (30) days before the
Termination Date; provided that (a) at the time of, and after giving effect to,
any such requested Standby Letter of Credit, all Revolving Conditions are
satisfied; (b) the requested amount of such Standby Letter of Credit after
taking into account, and aggregating therewith, the face amount of all other
Standby Letters of Credit theretofore issued, does not exceed the Standby Letter
of Credit Commitment; (c) the term of such Standby Letter of Credit does not
exceed one hundred eighty (180) days; and (d) the requested Standby Letter of
Credit satisfies the requirements of Section 2.11.2, below. Each Lender's
Revolving Commitment shall be deemed utilized by an amount equal to such
Lender's Ratable Portion (based on such Lender's Revolving Commitment) of the
maximum amount available to be drawn under each Standby Letter of Credit
(assuming compliance with all conditions to drawing the maximum amount available
under such Standby Letter of Credit). Immediately upon the issuance of each
Standby Letter of Credit, the Agent shall be deemed to have sold and transferred
to each Lender, and each Lender shall be deemed to have purchased and received
from the Agent, in each case irrevocably and without any further action by any
party, an undivided interest and participation in such Standby Letter of Credit,
each drawing thereunder and the Obligations of the Company under this Credit
Agreement related to such Standby Letter of Credit in an amount equal to the
Ratable Portion of such Lender therein (based on such Lender's Revolving
Commitment), to the end that all of the Lenders shall share the obligations and
risks as to Standby Letters of Credit in accordance with their respective
Ratable Portions (based on their Revolving Commitments). Each Lender irrevocably
agrees to pay to the Agent upon demand at any time that Agent is required to
make a Standby Letter of Credit Disbursement (prior to the making of a Revolving
Loan in refunding of any Letter of Credit Obligations) the amount of such
Lender's participation in such Standby Letter of Credit Obligation.
2.11.2 TERMS OF STANDBY LETTERS OF CREDIT. All Standby Letters of
Credit shall be issued on the Agent's standard forms therefor (or in such other
form as the Agent and the Authorized Employee may agree) for the account of the
Company and shall be, unless otherwise agreed by the Agent in its discretion,
determined in Dollars. Unless all the Lenders otherwise agree, no Standby Letter
of Credit shall be issued or renewed unless its expiration date shall be no
later than the earlier of (a) one hundred eighty (180) days after the date of
issuance or renewal thereof or (b) thirty (30) days prior to the Termination
Date. The Standby Letters of Credit shall be governed by the terms of this
Credit Agreement and of the Letter of Credit Documents.
2.11.3 PROCEDURE FOR LETTERS OF CREDIT. An Authorized Employee
shall give the Agent written notice (or telephone advice thereof promptly
confirmed in writing but in no event later than 5:00 p.m. (Cincinnati time) on
the day on which such telephonic notice is given) at least two (2) Business Days
prior to the date on which a Standby Letter of Credit is
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requested to be issued of its request for a Standby Letter of Credit. Such
notice shall be accompanied by all Letter of Credit Documents required by the
Agent, duly executed, and shall specify: (a) the name and address of the
beneficiary of the Standby Letter of Credit, (b) the amount of the Standby
Letter of Credit, such supporting information regarding the related contract,
payments and similar matters as the Agent may require, (c) whether the Standby
Letter of Credit is revocable or irrevocable, (d) the Business Day on which the
Standby Letter of Credit is to be issued and the date on which the Standby
Letter of Credit is to expire, (e) the terms of payment of any draft or drafts
which may be drawn under the Standby Letter of Credit, and (f) any other terms
or provisions the Company desires to be contained in the Standby Letter of
Credit. In the event of any conflict between the provisions of this Credit
Agreement and the provisions of any applicable Letter of Credit Documents, the
provisions of this Credit Agreement shall prevail and control unless otherwise
expressly provided in the Letter of Credit Documents. If the requested form of
such Standby Letter of Credit is acceptable to the Agent in its sole discretion,
the Agent will, subject to the terms and conditions of this Credit Agreement,
make such Standby Letter of Credit available to the Company at the Agent's
office.
2.11.4 DRAWING AND REIMBURSEMENT. The payment by the Agent of a
draft drawn under any Standby Letter of Credit shall constitute for all purposes
of this Agreement the making by the Agent of a Revolving Credit Loan, which
shall be a Base Rate Advance, in the amount of such draft (but without any
requirement for compliance with the provisions of Sections 2.1 or 7 hereof). On
the first Business Day following a drawing under a Standby Letter of Credit, the
Agent shall promptly notify each other Lender. Upon receipt of such notice each
such Lender shall immediately (but in any event not later than the first
Business Day following such notification) make a Revolving Loan, which shall be
a Base Rate Advance, in an amount equal to the amount of its participation in
such drawing for application to reimburse the Agent (but without any requirement
for compliance with the provisions of Sections 2.1 or 7 hereof; provided that
the making of such Revolving Loan shall not constitute a waiver of any such
provision) and shall make available for the account of its Applicable Lending
Office to the Agent for the account of the Agent, by deposit to the Agent's
Account, in same day funds, the amount of such Revolving Loan. If and to the
extent that any Lender shall not have so made the amount of such Revolving Loan
available to the Agent, such Lender and the Company severally agree to pay to
the Agent forthwith on demand such amount together with interest thereon, for
each day from the date of such notification by the Agent (in the case of such
Lender) or the dates such drawing was paid by the Agent (in the case of the
Company) until the date such amount is paid to the Agent, at (i) in the case of
the Company, the Default Rate and (ii) in the case of such Lender, two percent
(2%) in excess of the Federal Funds Rate. If such Lender shall pay to the Agent
such amount, such amount so paid shall constitute such Lender's Advance for
purposes of this Agreement.
2.11.5 REIMBURSEMENT OBLIGATION OF COMPANY FOR STANDBY LETTER OF
CREDIT DISBURSEMENTS. The Company hereby promises to pay to the order of the
Agent in Dollars the following (each a "Standby Letter of Credit Disbursement"
and which are herein called collectively the "Standby Letter of Credit
Disbursements") immediately upon or before notification by the Agent to the
Authorized Employee of the amount of a Standby Letter of Credit Disbursement:
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(a) the amount which the Agent has paid or will be required
to pay in respect of any Standby Letter of Credit;
(b) any and all reasonable charges and expenses (including,
without limitation, reasonable attorneys' fees and expenses) which
the Agent may pay or incur relative to any Standby Letter of Credit
and/or drafts related thereto, or the prosecution or defense of any
action growing out of, or in connection with, any Standby Letter of
Credit, including, without limitation, any and all costs and
expenses in connection with the defense of any and all actions to
enjoin full or partial payment of any draft drawn or purported to
be drawn under the Standby Letter of Credit; and
(c) interest on the amounts described in (a) and (b), above,
not paid by the Company as and when due and payable under the
provisions of (a) and (b), above, from the day paid or incurred by
the Agent until reimbursed in full at the Default Rate in effect
from time to time.
2.11.6 COMPANY'S OBLIGATIONS ABSOLUTE.
(a) The Company's obligations to pay Standby Letter of
Credit Disbursements to the Agent shall be absolute, unconditional
and irrevocable under any and all circumstances and irrespective
of:
(i) any lack of validity or enforceability of any
Standby Letter of Credit;
(ii) the existence of any claim, setoff, defense or
other right which the Company or any other Person may at any time
have against the beneficiary of any Standby Letter of Credit or the
Agent (other than the defense of payment in accordance with the
terms of this Credit Agreement or a defense based on the gross
negligence or wilful misconduct of the Agent), each other, or any
other Person in connection with this Credit Agreement or any other
agreement or transaction;
(iii) any draft or other document presented under a
Standby Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect; provided that payment by the
Agent under such Standby Letter of Credit against presentation of
such draft or document shall not have constituted gross negligence
or wilful misconduct;
(iv) payment by the Agent under a Standby Letter of
Credit against presentation of a draft or other document which
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<PAGE> 45
does not comply with the terms of such Standby Letter of Credit;
provided that such payment shall not have constituted gross
negligence or wilful misconduct; and
(v) any other circumstance or event whatsoever, whether
or not similar to any of the foregoing; provided that such other
circumstance or event shall not have been the result of gross
negligence or wilful misconduct of the Agent.
(b) It is understood that in making any payment under a
Standby Letter of Credit (x) the Agent's exclusive reliance on
the documents presented to it under such Standby Letter of Credit
as to any and all matters set forth therein, including, without
limitation, reliance on the amount of any draft presented under
such Standby Letter of Credit, whether or not the amount due to
the beneficiary equals the amount of such draft and whether or
not any document presented pursuant to such Standby Letter of
Credit proves to be insufficient in any respect, if such document
on its face appears to be in order, and whether or not any other
statement or any other document presented pursuant to such
Standby Letter of Credit proves to be forged or invalid or any
statement therein proves to be inaccurate or untrue in any
respect whatsoever and (y) any noncompliance in any immaterial
respect of the documents presented under a Standby Letter of
Credit with the terms thereof shall, in each case, not be deemed
wilful misconduct or gross negligence of the Agent.
(c) The Agent may accept or honor as complying with any
Standby Letter of Credit any draft or other document otherwise in
order which has been signed or issued by or to the administrator,
executor or trustee in bankruptcy of or any receiver for any of
the property of any party designated in any of the Standby
Letters of Credit or in any of Company's instructions, in the
place of the name, signature or act of such party.
2.11.7 COLLATERAL IN THE EVENT OF DEFAULT. If the Credit Facilities
terminate or expire for any reason or the Agent accelerates the entire
principal and interest and all other amounts due from the Company
pursuant to this Credit Agreement as a result of any Event of Default,
then the Company shall, on demand of the Agent, deposit with the Agent
in cash, for deposit in the Cash Collateral Account, an amount equal to
the Standby Letter of Credit Obligations as of such date. The Agent
shall have no obligation to make any of such funds available to the
Company pursuant to Section 3.2, below. The Agent may also deposit to
the Cash Collateral Account any payments received by it from the
collection of the Obligations and the sale or other disposition of the
Collateral which the Agent, in its discretion, designates as being held
against Standby Letter of Credit Obligations and other Obligations
related thereto.
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2.11.8 LIABILITY AND INDEMNIFICATION OF THE AGENT.
(a) Any action taken or omitted by the Agent, any Affiliate
of the Agent, or any branch or correspondent bank or confirming
bank, under or in connection with the Standby Letters of Credit or
drafts or documents relating thereto, if taken or omitted without
gross negligence or willful misconduct, will be binding upon the
Company and will not result in the Agent, any Affiliate, any branch
or any correspondent or confirming bank being under any liability
to the Company. The Agent, any Affiliate, branch, correspondent
bank or confirming bank or any of their officers, directors or
employees will not be liable or responsible for: (a) the use which
may be made of the Standby Letters of Credit or for any acts or
omissions of any beneficiaries or any transferees in connection
therewith; (b) the validity, sufficiency or genuineness of
documents, or of any endorsement(s) thereon, even if such documents
should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; (c) if through the actions of
shippers or any other party, any documents fail to reach their
destination in due time; (d) the kind, quality, quantity, delivery
or existence of property represented by any documents; (e) the
sufficiency, coverage or validity of any insurance, the financial
standing or responsibility of any insurer, or any other risk
associated with insurance on any property; (f) delay in giving or
the failure to give notice of arrival or any other notice; (g)
failure of any draft to bear any reference or adequate reference to
any of the Standby Letters of Credit; (h) any delay or deviation
from instructions in regard to shipment or payment; (i) any
variation between invoices and insurance documents or between
invoices and bills of lading, warehouse receipts or other
documents; (j) any negligence or fraud of any shipper, inspector,
forwarding agent or other party; (k) errors, omissions,
interruptions or delays in transmission or delivery of any messages
or documents by mail, telex or other means; or (l) any other
circumstances whatsoever in making or failing to make payment under
any of the Standby Letters of Credit, except only damages which the
Company proves were caused by the Agent, any Affiliate, branch,
correspondent bank or confirming bank or any of their officers,
directors or employees under either of the following circumstances
in those cases the Company will have a claim only against the
entity or its officers, directors or employees that actually
committed the acts giving rise to such claim: (i) gross negligence
or willful misconduct in determining whether a draft or other
documents presented under any Standby Letter of Credit complies
with the terms of the Standby Letter of Credit or (ii) the willful
or grossly negligent failure to pay under a Standby Letter of
Credit after the presentation to it by any beneficiary or
transferee of a draft and documents strictly complying with the
terms and conditions of the Standby Letter of Credit. In
furtherance of and not in limitation of the foregoing, (a) the
Agent, its Affiliates, branches, correspondent banks and confirming
banks may accept documents that appear on their face to be in
order, without responsibility for further investigation,
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regardless of any notice or information to the contrary and any
action taken or omitted in good faith in connection with any of the
Standby Letters of Credit or any documents or property related to
any of the Standby Letters of Credit will be binding on the Company
and will not result in any liability of the Agent, its Affiliates,
branches, correspondent banks and confirming banks, and (b) the
Agent and its Affiliates, branches, correspondent banks and
confirming banks will not be liable for any failure or inability to
perform in accordance with the terms of any of the Standby Letters
of Credit by reason of any censorship, law, control or restriction
rightfully or wrongfully exercised by any de facto or de jure
government or group exercising or exerting governmental powers, or
for any other act or omission for which banks are relieved of
responsibility under applicable law and/or the Uniform Customs, as
that term is defined below.
(b) The Company hereby agrees at all times to indemnify,
defend and hold harmless the Agent and its Affiliates, branches,
correspondent banks and confirming banks, all directors, officers,
employees, agents and attorneys thereof, from and against any and
all claims, suits and other legal proceedings, and from and against
any and all demands, liabilities, judgments, losses, claims,
liabilities, damages, attorney fees, court costs, interest and
penalties, costs and other expenses which the Agent or any such
indemnified party jointly or severally may, at any time, sustain or
incur by reason of or in consequence of or arising out of this
Credit Agreement or any of the Standby Letters of Credit or the use
(or the proposed or potential use) of the proceeds of any drawing
under any of the Standby Letters of Credit, or any act hereunder or
thereunder, including but not limited to any of the foregoing
arising out of any legal proceeding seeking to enjoin or require
any payment under any of the Standby Letters of Credit; provided
that the Company is not required to indemnify the Agent,
Affiliates, branches, correspondent banks or confirming banks for
any claims, damages, losses, liabilities, costs or expenses to the
extent, but only to the extent, caused by (a) the willful
misconduct or gross negligence of such entity in determining
whether a draft or other documents presented under any of the
Standby Letters of Credit complied with the terms of the Standby
Letter of Credit or (b) the willful or grossly negligent failure of
such entity to pay under any of the Standby Letters of Credit after
the presentation to it by the beneficiary or any transferee of a
draft and documents strictly complying with the terms and
conditions of any of the Standby Letters of Credit.
2.11.9 GENERAL PROVISIONS.
(a) Any Standby Letter of Credit may be amended, modified or
revoked only upon the receipt by the Agent from the Company and the
beneficiary (including any transferee(s) and/or assignee(s) of the
original
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beneficiary), of a written consent and request therefor, and then
only such terms and conditions as the Agent may prescribe.
(b) If any law, order of Court and/or ruling or regulation
of any agency of government of the United States (or any state
thereof) and/or any country other than the United States, requires
or permits a beneficiary under a Standby Letter of Credit to
require the Agent and/or its branches, affiliates and/or
correspondents to pay drafts under or purporting to be under a
Standby Letter of Credit after the expiration date of the Standby
Letter of Credit, the Company immediately shall reimburse the Agent
for any such payment (and such obligation will be deemed to be
included within the meaning of the term "Standby Letter of Credit
Disbursement(s)").
(c) Except as may otherwise be specifically provided in a
Standby Letter of Credit or Standby Letter of Credit Document, the
Standby Letters of Credit are issued and subject to the Uniform
Customs and Practices for Documentary Credits published by the
International Chamber of Commerce (the "Uniform Customs"), and the
version of the Uniform Customs applicable to any particular Standby
Letter of Credit shall be the most current revision in effect on
the date of issuance of such Standby Letter of Credit. In the event
of a conflict between the Uniform Customs and Practice for
Documentary Credits and the Laws of the State of Ohio, the Laws of
the State of Ohio shall prevail.
(d) The Company hereby irrevocably consents and agrees to,
at its expense, being joined, impleaded or otherwise brought in as
third-party defendants in any action or proceeding brought by any
Person against the Agent or any of the Lenders or otherwise naming
the Agent or any of the Lenders as a party as a result of, arising
out of or in connection with, any Standby Letter of Credit and/or
any of the provisions of any Standby Letter of Credit Document,
including, but not limited to, any action brought by a beneficiary,
their successors, assigns or transferees against the Agent or any
of the Lenders as a result of any dishonor by the Agent or any of
the Lenders of drafts under or purporting to be under a Standby
Letter of Credit.
(e) Equivalent Dollar amounts, to the extent applicable,
will be determined at the selling rate of exchange then offered by
the Agent at the time of payment for cable transfers to the place
of payment, plus any payments made by the Agent to comply with any
applicable governmental exchange regulations.
(f) The Company will insure against the usual risks, as the
Agent may reasonably require, all goods shipped under any of the
Standby Letters of Credit, which insurance will be with companies
and under policies meeting the requirements of Section 9.14 hereof
and in all respects
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satisfactory to the Agent. On the demand of the Agent, the Company
will deposit with the Agent policies or certificates of such
insurance. The Company will sign and deliver to the Agent upon the
request of the Agent trust receipts or similar instruments,
financing statements or other documents reasonably requested by the
Agent to perfect any liens or security interests granted by the
Company to the Agent in connection with Standby Letters of Credit.
The Company will promptly procure any necessary licenses for the
importing, exporting or shipping of all property in connection with
the Standby Letters of Credit, comply will all governmental laws
and regulations affecting the shipment or financing of such
property and furnish to the Agent such documents as the Agent may
reasonably require.
2.12 ASSUMPTIONS REGARDING NOTICES.
2.12.1 AUTHORIZED EMPLOYEES. Any Authorized Employee of the Company
may submit a Notice on behalf of the Company as to any of the Credit Facilities.
The Agent and each Lender shall be entitled to rely conclusively on each
Authorized Employee's authority to submit a Notice on behalf of the Company
until the Agent receives written notice from the Company to the contrary. The
Agent shall have no duty to verify the authenticity of the signature appearing
on any written Notice and, with respect to an oral Notice, the Agent shall have
no duty to verify the identity of any Person representing himself as one of the
Authorized Employees entitled to make such a request on behalf of the Company.
2.12.2 NO LIABILITY. Neither the Agent nor any Lender shall incur
any liability to the Company in acting upon any Notice which the Agent or such
Lender believes in good faith to have been given by an Authorized Employee or
for otherwise acting in good faith in accordance with this Section 2 and, upon
the Agent's accepting any Notice in accordance with this Section 2 pursuant to
any such Notice, the Company shall have effectively elected the Borrowing,
conversion, continuation, prepayment, reduction or termination thereunder.
2.12.3 NOTICE IRREVOCABLE. Any Notice (whether telephonic,
telecopy, or facsimile or otherwise) given or deemed to have been given pursuant
to this Section 2 shall be irrevocable.
2.13 COMPUTATIONS, FEES, PAYMENTS, ETC.
2.13.1 COMPUTATIONS. Except as otherwise set forth herein, all
computations of interest and of fees hereunder will be made by the Agent on the
basis of a year of three hundred sixty (360) days, in each case for the actual
number of days (including the first day but excluding the last day) occurring in
the period for which such interest or fees are payable. Each determination by
the Agent of an Interest Rate or fee hereunder will be conclusive and binding
for all purposes, absent manifest error. Whenever any payment to be made by the
Company hereunder or under any of the other Loan Documents is stated to be due
on a day other than a Business Day, such payment will be made on the next
succeeding Business Day, and such extension of time will in such case be
included in the computation of payment
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of interest or fees, as the case may be; provided, however, that if such
extension would cause payment of principal or interest on Eurodollar Rate
Advances to be made in the next following calendar month, such payment shall be
made on the next preceding Business Day.
2.13.2 FEES. The fees described in this Section 2.13.2 represent
compensation for services rendered and to be rendered separate and apart from
the lending of money or the provision of credit and do not constitute
compensation for the use, detention or forbearance of money, and the obligation
of the Company to pay such fees will be in addition to and not in lieu of the
obligation of the Company to pay interest, other fees and expenses otherwise
described herein or in the other Loan Documents. The following fees shall be
paid by the Company:
a. AMENDMENT AND WAIVER FEE. The Company shall pay to the
Agent, for the account of the Lenders, on the Closing Date a
nonrefundable amendment and waiver fee in an amount equal to
$65,000 to be shared pro rata by the Lenders.
b. COMMITMENT FEE. The Company shall pay to the Agent, for
the account of Lenders, a commitment fee (the "Commitment Fee")
from and including the Closing Date to the Termination Date,
computed at the rate of .625% per annum, on the average daily
unused portion of the Revolving Commitment, such Commitment Fee to
be payable quarterly in arrears on the last day of each June,
September, December and March and upon the Termination Date and to
be shared pro rata by the Lenders.
c. AGENT CLOSING EXPENSES. All out-of-pocket expenses and
legal expenses incurred by the Agent in connection with the
preparation, negotiation, execution and delivery of this Restated
Credit Agreement and the other Loan Documents and attendant
documents and the closing of the Credit Facilities, including but
not limited to environmental assessments and Collateral audits and
appraisals, shall be paid by the Company to the Agent for the
account of the Agent on the Closing Date.
d. AGENCY FEES. The Company shall pay to the Agent for its
own account a nonrefundable agency fee (the "Agency Fee") equal to
$25,000 per annum payable on the first Business Day of August of
each year.
e. LETTER OF CREDIT AND STANDBY LETTER OF CREDIT FEES. The
Company will pay to the Agent a fee computed at a rate per annum
equal to the following percentages of the aggregate Letter of
Credit Amounts and, in the case of Standby Letters of Credit, the
aggregate Standby Letter of Credit stated amounts (the "Letter of
Credit Fees"), which fees will be computed and payable quarterly in
advance beginning on the date of issuance and on the first Business
Day of each quarter thereafter:
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<TABLE>
<CAPTION>
Leverage Ratio Letter of Credit Fees
-------------- ---------------------
<S> <C>
less than or equal to 2.50 2.00%
greater than 2.50 less than or equal to 4.00 2.25%
greater than 4.00 2.50%
</TABLE>
The Agent will pay to each Lender, promptly and upon receipt from
the Company, an amount equal to such Lender's Ratable Portion of
the Letter of Credit Fees, less 0.125% which will be retained by
the Agent. The applicable Letter of Credit Fee will change if the
Company maintains the specified Leverage Ratio for two consecutive
Fiscal Quarters.
f. AUDIT FEES. The Company shall pay to the Agent, for its
own account, on demand, $3,000.00 for each quarterly audit
performed by or on behalf of the Agent with respect to Inventory
and/or receivables and payables of the Company.
g. LOCK BOX FEES. The Company shall pay to the Agent, for
its own account, on demand, the Agent's fees and charges for the
services described in Section 3 hereof at the customary rates of
the Agent in effect from time to time.
2.13.3 PAYMENTS. The Company will make each payment hereunder and
under the Notes, as the case may be, not later than 3:00 p.m. (Cincinnati time)
on the day when due by deposit to the Agent's Account in same day funds. Amounts
received by the Agent after 3:00 p.m. (Cincinnati time) on any Business Day will
be deemed to have been received on the next Business Day. Subject to the
foregoing, the Agent will cause to be distributed to each Lender on the Business
Day of receipt by the Agent an amount equal to the amount of such payment then
due such Lender.
2.13.4 CHARGE TO ACCOUNTS. If the Company fails to make any payment
of principal, interest, fees, expenses or other Obligations specified or
referred to in this Restated Credit Agreement or the Loan Documents to the Agent
or any Lender when due, the Agent is hereby authorized to make such payments on
the Company's behalf by charging any or all of the Cash Collateral Account,
and/or the Sinking Fund Accounts and/or drawing a Revolving Loan (which shall be
a Base Rate Advance, subject to application of the Default Rate), in the
appropriate amount and each such draw shall constitute a Revolving Loan and a
Borrowing hereunder and part of the Obligations, secured by all of the
Collateral; provided, however, that the Agent will not be obligated to make any
such charge or draw. The Agent may, in the Agent's discretion, either (a) so
charge the Cash Collateral Account for such amount and/or draw an Advance or (b)
require the Company to pay such amount; provided that if the Company does not
pay such amount upon demand therefor by the Agent, such amount shall bear
interest at the Default Rate. The Company also does hereby authorize each
Lender, if and to the extent payment of any of the Obligations owed to such
Lender by the Company is not made when due
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hereunder, to charge any amount so due from time to time against any or all
accounts of any or all of the Company with such Lender.
2.13.5 FAILURE TO MAKE PAYMENTS BY COMPANY. Unless the Agent will
have received notice from the Company prior to the date on which any payment is
due to the Agent hereunder that the Company will not make such payment in full,
the Agent may assume that the Company has made such payment in full to the Agent
on such date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent the Company will not have so made such
payment in full to the Agent, each Lender will repay to the Agent forthwith on
demand such amount distributed to such Lender together with interest thereon,
for each day from the date such amount is distributed to such Lender until the
date such Lender repays such amount to the Agent, at the Federal Funds Rate. If
and to the extent the Company makes only partial payment to the Agent, each
Lender will repay to the Agent, in accordance with this Section, only the amount
distributed to such Lender by the Agent, with interest thereon, that exceeds the
Lender's Ratable Portion of the partial payment received by the Agent from the
Company.
2.14 TAXES. Any and all payments by the Company hereunder or under the
Security Documents will be made free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, other than any tax on or
measured by the net income of a Lender pursuant to the income tax laws of the
United States or any state or political subdivisions thereof (all such
non-excluded items being hereinafter referred to as the "Taxes"). The Company
agrees to pay any present or future stamp, recording or documentary taxes or
similar levies which arise from any payment made hereunder or under the Security
Documents or from the execution, delivery or registration of, or otherwise with
respect to, this Restated Credit Agreement or the Security Documents
(hereinafter referred to as the "Levies"). The Company will indemnify each
Lender and the Agent for the full amount of Taxes or Levies paid by such Lender
or the Agent (as the case may be) and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Levies were correctly or legally asserted.
A certificate of a Lender as to any additional amounts payable to any Lender
under this Section 2.14 submitted to the Company shall be conclusive absent
manifest error. The Company will pay to the Agent for the account of such Lender
the amount shown as due on any such certificate within thirty (30) days after
receipt of the same. The agreements and obligations contained in this Section
2.14 will survive the payment in full of the Obligations and any termination of
this Restated Credit Agreement.
2.15 ADDITIONAL COSTS.
2.15.1 TAXES, RESERVE REQUIREMENTS, ETC. In the event that any
applicable law, rule or regulation now or hereafter in effect and whether or not
presently applicable to any of the Lenders, or any interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by the Lenders with any
guideline, request or directive of any such authority (whether or not
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having the force of law), will (i) subject any Lender to any tax or affect the
basis of taxation of payments to any of the Lenders of any amounts payable by
the Company under this Restated Credit Agreement (other than taxes imposed on
the overall net income of any of the Lenders, by the jurisdiction, or by any
political subdivision or taxing authority of any such jurisdiction, in which any
Lender has its principal office), or (ii) will impose, modify or deem applicable
any reserve, special deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by any of the Lenders (including
but not limited to a request or requirement which affects the manner in which
any of the Lenders allocates capital resources to its commitments or
obligations, including without limitation its obligations under this Restated
Credit Agreement, the Loans, Letters of Credit and other obligations) or (iii)
will impose any other condition affecting this Restated Credit Agreement, any of
the Obligations or any of the Loan Documents, and the result of any of the
foregoing is to increase the direct or indirect cost of making, funding or
maintaining the Loans, Letters of Credit or other Obligations or to reduce the
amount of any sum received or receivable by any of the Lenders thereon, then the
Company will pay to such Lenders from time to time, upon request by any of such
Lenders, with a copy of such request to be provided to the Agent, additional
amounts sufficient to compensate such Lenders for such increased cost or reduced
sum receivable.
2.15.2 CAPITAL ADEQUACY. If either (i) the introduction of, or any
change in, or in the interpretation or administration of, any United States or
foreign law, rule or regulation, or (ii) compliance with any directive,
guidelines or request from any central bank or other governmental authority
(whether or not having the force of law) promulgated, made, or that becomes
effective (in whole or in part) after the date hereof affects or would affect
the amount of capital required or expected to be maintained by any of the
Lenders or any corporation directly or indirectly owning or controlling any of
the Lenders and any Lender will have determined that such introduction, change
or compliance has or would have the effect of reducing the rate of return on the
Lender's capital or on the capital of such owning or controlling corporation as
a consequence of its obligations hereunder or under any of the Loans, Letters of
Credit or other Obligations or any commitment to lend thereunder or relating
thereto to a level below that which any Lender or such owning or controlling
corporation could have achieved but for such introduction, change or compliance
(after taking into account such Lender's policies or the policies of such owning
or controlling corporation, as the case may be, regarding capital adequacy) by
an amount deemed by such Lender (in its sole discretion) to be material, then,
from time to time, the Company will pay to the Lender such additional amount or
amounts as will compensate the Lender for such reduction.
2.15.3 CERTIFICATE OF LENDER. A certificate of a Lender setting
forth such amount or amounts as will be necessary to compensate the Lender as
specified in Sections 2.15.1 and/or 2.15.2, above, will be delivered to the
Company and will be conclusive absent manifest error. The Company will pay the
Agent for the account of the Lenders the amount shown as due on any such
certificate within thirty (30) days after its receipt of the same. Failure on
the part of any Lender to deliver any such certificate will not constitute a
waiver of such Lender's rights to demand compensation for any particular period
or any future period. The protection of this Section will be available to any
Lender regardless of any possible contention of invalidity or inapplicability of
the law, regulation, etc. that results in the claim for compensation under this
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<PAGE> 54
Section. The agreements and obligations contained in Section 2.15 will survive
the payment in full of the Obligations and any termination of this Restated
Credit Agreement.
2.16 INABILITY TO DETERMINE RATE; INADEQUACY OF PRICING; ILLEGALITY.
2.16.1 RATE INABILITY; PRICING INADEQUACY. In the event that (a)
the Agent shall have determined (which determination shall be conclusive and
binding) that by reason of circumstances affecting the interbank eurodollar
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate, or (b) the Agent shall have determined that the Eurodollar Rate
will not adequately and fairly reflect the cost to the Agent of maintaining or
funding Eurodollar Rate Advances, the Agent promptly shall give notice of such
determination and the basis therefor to the Company. If such notice is given,
and until such notice has been withdrawn by the Agent, no additional Advances
which are Eurodollar Rate Advances shall be made and no additional conversions
to or continuations of Eurodollar Rate Advances shall be permitted.
2.16.2 ILLEGALITY; TERMINATION OF COMMITMENTS. Notwithstanding any
other provisions herein, if any law, treaty, rule or regulation, or
determination of a court, governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof (whether or not
having the force of law), or any change therein or in the interpretation or
application thereof, shall make it unlawful or impossible for any Lender to make
or maintain Eurodollar Rate Advances, the obligation of the Lenders hereunder to
make or maintain Eurodollar Rate Advances shall forthwith be canceled, and
outstanding Eurodollar Rate Advances shall be converted to Base Rate Advances on
either (a) the last day of the applicable Interest Period for such Advance if
the Lenders may continue to maintain such Advances until such day or (b)
immediately if any Lender may not continue to maintain such Advances. Each
Lender which becomes aware of any such event which makes it unlawful or
impossible for such Lender to make or maintain Eurodollar Rate Advances promptly
shall notify the Company and the Agent of such event; provided, however, that
the failure to provide any such notice shall not affect the applicability of the
preceding sentence or the obligations of the Company hereunder or under any of
the other Loan Documents.
2.17 OBLIGATION TO INDEMNIFY.
2.17.1 EVENTS. In the event of (a) the Company's failure to accept
the proceeds from (or to convert to or continue) an Advance after making a
request therefor, or (b) any payment, prepayment or conversion (whether
mandatory, by acceleration, voluntary or otherwise) of any Fixed Rate Advance or
Eurodollar Rate Advance prior to the expiration of the applicable Interest
Period, as a result of which any Lender shall incur any loss, liability, claim
or expense (other than a loss, liability, claim or expense which directly
resulted from such Lender's breach of its obligation to make funds available),
the Company shall pay to such Lender, within five (5) Business Days following
delivery of the statement referred to below, and indemnify and hold harmless
such Lenders from and against any such loss, liability, claim or expense
(including, without limitation, any loss or expense incurred by reason of the
liquidation or redeployment of deposits or other funds required for the account
of any such Lender to fund
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or maintain any such Advances). The losses of any Lender (as differentiated from
any other liabilities, claims or expenses) shall be conclusively deemed to
consist of any amount equal to:
a. the interest that would have been received (at the
Interest Rate that was applicable to such Advance) on the funds to
be redeployed during the applicable Interest Period (or remaining
portion thereof), less
b. the return which the Lenders could have obtained had such
funds been reinvested at the Federal Funds Rate on the date of such
prepayment, repayment, failure to borrow or continue or convert, as
the case may be, and such funds had remained so invested until the
end of the relevant Interest Period: (i) with respect to any Fixed
Rate, in a Treasury Security with maturity similar to the remaining
portion of the Interest Period, present-valued at a discount rate
equal to the yield on such Treasury Security and (ii) with respect
to any Eurodollar Advance, in Dollar denominated deposits with
prime banks on the Agent's interbank Dollar market.
2.17.2 STATEMENT. Each Lender which has incurred any loss,
liability, claim or expense compensable pursuant to this Section 2.17 promptly
shall deliver to the Company a written statement of the nature and amount
thereof and the basis of calculation thereof, which statement shall be
conclusive absent manifest error.
2.17.3 SURVIVAL. The obligations of the Company under this Section
2.17 will survive the payment in full of the Obligations and any termination of
this Restated Credit Agreement.
2.18 [INTENTIONALLY OMITTED].
2.19 USE OF PROCEEDS.
2.19.1 The proceeds of the Revolving Credit Loans will be used
exclusively for working capital purposes.
2.19.2 Draws on the Letters of Credit will be used to pay
principal, interest and any premiums when due on the Bonds.
2.19.3 Draws on the Standby Letters of Credit will be used
exclusively to pay the obligations of the Company to pay suppliers amounts due
under purchase contracts or other corporate purposes.
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3. LOCK BOX; CASH COLLATERAL ACCOUNT.
3.1 LOCK BOX.
3.1.1 Until the expiration of this Restated Credit
Agreement, the Company will instruct its customers to forward all payments,
receipts and remittances in favor of the Company, whether in the form of checks,
drafts or other orders for the payment of money ("Items") to the Lock Box as set
forth in this Section 3. The Company authorizes the Agent to act as its agent
and to have exclusive and unrestricted access to its incoming mail for the
purpose of processing remittances therein.
3.1.2 As the agent for the Company, the Agent will:
a. Collect mail from the Post Office at various times
each Business Day in accordance with the Agent's regular
collection schedule. The relationship of a Company to the Agent
as a depositor will commence only when the Items are credited
to the Cash Collateral Account. Prior to such time, the Agent
will be considered to be a bailee as to the Items in its
possession.
b. Open such mail and remove the contents thereof.
The Items contained in the envelope will be inspected for
validity and handled accordingly. All Items contained therein,
which appear to be for deposit to a Company's credit will be
endorsed:
"Credit to the Account of the Within Named Payee
Absence of Endorsement Guaranteed "
Should any Item be returned to the Company by the
drawee bank with the request for personal
endorsement, the Company authorizes the Agent to
endorse the Item:
"Pay to the Order of Multi-Color Corporation"
c. Prepare a photocopy of each Item processed and
attach the copy to the proper envelope together with any
correspondence or other material accompanying the remittance,
if necessary.
d. Deposit such Items to the Cash Collateral Account,
it being understood that the credit and collection of such
Items should be subject to the same terms and conditions as
would apply to deposits received by the Agent directly from the
Company. Deposits should be made in anticipation of major check
clearing deadlines in order to maximize funds availability.
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e. Mail each Business Day an advice of credit listing
the processed Items, total amount deposited and all original
Items that are not accepted for deposit and all associated
remittance detail to the Company at the address listed in
Section 16.2 of this Restated Credit Agreement.
f. Telephone advice to the Company (Contact Person:
VP of Finance or his designee) of the total amount of each
deposit on a daily basis at the telephone number: (513)
321-5381.
g. Maintain a microfilm record of each Item deposited
in processing sequence for reference purposes for at least two
(2) years. The Company may receive photocopies of the
microfilmed Items if they provide the deposit date, the account
number and the deposit total. Charges will be imposed for
furnishing the photocopies to the Company at the Agent's
customary rates.
h. Handle irregular Items as follows:
(i) The Agent will use its best efforts to examine
the front and back sides of Items to detect
handwritten or typed "paid in full" or similar
language but will not be liable for any failure to do
so and will not be responsible for any loss relating
to deposit of such Items. Where the Agent's personnel
observe that such language has been handwritten or
typed on the Item, the Item will not be deposited
into a Cash Collateral Account and the Agent will
notify the Company by telephone advice to the contact
person and at the telephone number listed in this
Section 3.1.2.
(ii) Postdated Items may be processed in
accordance with the Agent's policy.
(iii) Undated Items may be processed in accordance
with the Agent's policy.
(iv) If legible, the amount in words will always
be accepted provided it agrees with the accompanying
remittance forms. If the words are not legible, the
amount in figures will be guaranteed if it agrees
with the remittance forms. If the amount is not
legible, is missing or if the figures do not agree
with the remittance forms, the Item will not be
deposited in a Cash Collateral Account.
(v) Deposit Items returned for insufficient or
uncollected funds will be automatically redeposited.
If an Item is returned for "Account Closed or Payment
Stopped" or if an Item is returned
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unpaid a second time for insufficient or uncollected
funds, it should be charged back to the Cash
Collateral Account and advice mailed to the Company
at the address listed in Section 16.2 of this
Restated Credit Agreement. Charges will be imposed
for such Items at the Agent's customary rates. The
Company understands that it is the practice of the
Agent to notify customers on the return of Items in
an amount above certain limits set by the Agent from
time to time and agrees that the Agent will notify
the Company by telephone advice to the contact person
and at the telephone number listed in this Section
3.1.2(f).
(vi) Items denominated in a foreign currency and
drawn on a foreign bank will not be deposited, but
will be submitted for collection only. An appropriate
advice will be forwarded to the Company. The Agent
will not be responsible for the fluctuation in
exchange rates.
3.1.3 The Agent will have the right to credit or debit the
Cash Collateral Account to correct processing mistakes which are capable of
correction. Copies of credit or debit advices will be sent to the Company. If
the Company does not object to entries appearing on any Cash Collateral Account
statement within eighteen (18) months of the transaction date, the Agent's
accounting thereon shall become final and binding.
3.1.4 The Agent will have no duty to perform services not
enumerated in this Section 3 and the Agent's responsibility under this Section 3
shall be limited, except as otherwise specifically set forth herein, to the
exercise of ordinary care. Failure to exercise ordinary care shall not be
inferable by reason of loss of an Item, without in addition thereto a showing of
negligence on the part of the Agent. Establishment of and substantial compliance
with the procedures set forth in this Section 3 by the Agent shall be deemed to
constitute the exercise of ordinary care. The Company agrees that occasional
unintentional deviations by the Agent from the procedures set forth in this
Section 3 shall not be deemed a failure to exercise ordinary care. The Agent
shall not be liable to the Company for failure to perform under this Restated
Credit Agreement if such failure is due to the occurrence of any event beyond
the control of the Agent, provided that Agent exercises reasonable diligence
under the circumstances. THE AGENT MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY
KIND, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF
COLLECTABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
3.2 CASH COLLATERAL ACCOUNT.
3.2.1 Until the expiration of this Restated Credit
Agreement, all Items from the Lock Box will be deposited into the Cash
Collateral Account pursuant to the terms of Section 3.1 and all accounts
receivable and other funds generated and received by the Company and all other
receipts of each Company that are received by the Company through methods other
than by deposit into the Lock Box, regardless of origin, will be deposited by
the Company into
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the Cash Collateral Account. Subject to the limitations, terms and conditions of
this Restated Credit Agreement, all funds deposited to the Cash Collateral
Account will be available for use by the Company immediately upon receipt by the
Agent of collected funds from the payor bank.
3.2.2 The Agent will automatically charge the Cash
Collateral Account daily to reduce the amount outstanding under the Credit
Facilities whenever the collected funds balance in the Cash Collateral Account
is greater than zero. The reduction will be equal to the positive collected
funds balance and will be applied first to the payment of amounts advanced by
the Agent on behalf of the Company or due for insurance, taxes, attorneys' fees
and any other charges due from the Company hereunder, then (in such order and
manner as the Agent may determine) to accrued interest under Advances
outstanding under the Revolving Credit Facility and last (in such order and
manner as the Agent may determine) to the unpaid principal amount under Advances
outstanding under the Revolving Credit Facility (but not to any Advance under
any such Credit Facility, other than a Base Rate Advance, unless the applicable
Interest Period for such Advance has expired). Funds remaining after such
application on any day will remain on deposit in the Cash Collateral Account
until such time as such funds are transferred or applied pursuant to this
Section 3.2, above.
3.2.3 The Agent will not be obligated to make any charge to
or transfer from the Cash Collateral Account with respect to sums received which
the Agent, in its discretion, designates as held against Letter of Credit
Obligations and other Obligations related thereto.
4. SINKING FUND. The Company will maintain depository accounts with each of the
Lenders (collectively, the "Sinking Fund Accounts"). On the first Business Day
of each Fiscal Quarter the Company will continue to deposit $100,000 into each
Sinking Fund Account until June 30, 1996. On such date and on the first Business
Day of each Fiscal Quarter thereafter, such deposits will be increased to
$125,000. The Company also will deposit $500,000 into each Sinking Fund Account
upon receipt of the cash equity referred to in Section 9.24, below. In addition,
all proceeds from the sale of assets permitted in accordance with the terms of
Section 9.25, below, and payments received on the BKS Enterprises, Inc.
Promissory Note, will be deposited into the Sinking Fund Accounts. The funds
deposited into the Sinking Fund Accounts will be invested in Eligible
Investments and, provided no Default or Event of Default shall have occurred and
be continuing, such funds and the interest thereon will be used to redeem the
Bonds upon mandatory or, with the Lenders' prior written approval, optional,
redemption.
5. COLLATERAL. The Collateral for the repayment of the Obligations will include,
but not be limited to the following:
5.1 A Collateral Assignment of Note, Loan Agreement and Mortgage in the form
of the attached Exhibit L, assigning the BKS Enterprises, Inc. loan from the
Company to BKS Enterprises, Inc. to the Agent on behalf of the Lenders.
5.2 A Collateral Assignment of Mortgage in the form of the attached Exhibit
M, assigning the Mortgage from BKS Enterprises, Inc. to the Company covering the
real estate of
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BKS Enterprises, Inc. located in Will County, Illinois, and the rents, issues
and profits thereof and other property described therein.
5.3 A Conditional Assignment of Repurchase Contract in the form of the
attached Exhibit MM assigning Repurchase Contracts between the Company and
sellers for repurchase of plastic film inventories at an agreed price to the
Agent on behalf of the Lenders.
5.4 A Security Agreement executed by the Company in the form of the attached
Exhibit N, covering, as to the Company, all inventory, receivables, equipment,
general intangibles, instruments and other property described therein.
5.5 An Open-End Mortgage, Assignment of Rents and Leases and Security
Agreement in the form of the attached Exhibit O, covering the real estate of the
Company located in Hamilton County, Ohio, and the rents, issues and profits
thereof and other property described therein.
5.6 An Open-End Mortgage, Assignment of Rents and Leases and Security
Agreement in the form of the attached Exhibit P, covering the real estate of the
Company located in Boone County, Kentucky, and the rents, issues and profits
thereof and other property described therein.
5.7 An Open-End Mortgage, Assignment of Rents and Leases and Security
Agreement in the form of the attached Exhibit Q, covering the real estate of the
Company located in Scott County, Indiana, and the rents, issues and profits
thereof and other property described therein.
5.8 A Pledge and Security Agreement - Agency or Custodian Account executed by
the Company in the form of the attached Exhibit R, covering the Sinking Funds
Accounts.
6. SECURITY AND SUBROGATION UNDER INDENTURE.
6.1 SECURITY. To further secure the Company's Letter of Credit Obligations
under this Restated Credit Agreement, the Company and the Agent intend that (i)
the Agent will have the security and benefit of the Bond Documents as provided
in the Indenture and (ii) in the event of one or more draws under the Letters of
Credit and the application thereof to the payment of Bonds, the Agent will be
subrogated pro tanto to the rights of the Trustee and the holders of such Bonds
in and to all funds and security held by the Trustee under the Indenture for the
payment of the principal of and interest on such Bonds, including without
limitation all loan funds, construction funds, escrow funds, revenue funds,
operation funds, debt service funds, reserve funds, redemption funds and other
funds and securities and other instruments comprising investments thereof. In
addition, the Agent shall have any and all other subrogation rights available to
the Agent at law or in equity.
6.2 PLEDGE OF RIGHTS TO CERTAIN FUNDS AND INVESTMENTS. To secure the
Company's Letter of Credit Obligations to the Agent under this Agreement, the
Company hereby
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pledges to the Agent, and grants to the Agent a security interest in, all of the
Company's right, title and interest in and to all funds and investments thereof
now or hereafter held by the Trustee under the Indenture as security for the
payment of the Bonds, including without limitation any and all loan funds,
construction funds, escrow funds, revenue funds, operations funds, debt service
funds, reserve funds, redemption funds and other funds and securities and other
instruments comprising investments thereof and interest and other income derived
therefor as held as security for the payment of the Bonds, such pledge,
assignment and grant being under and subject only to the rights of the Trustee
under the Indenture. The Company covenants and agrees that it will defend the
Agent's rights and security interests created by this Section against the claims
and demands of all persons except the Trustee. In addition to its other rights
and remedies under this Restated Credit Agreement and the Bond Documents, the
Agent shall have all the rights and remedies of a secured party under the
Uniform Commercial Code of the State or other applicable law with respect to the
security interests created by this Section. The Agent's rights under this
Section are in addition to, and not in lieu of, its rights described in Section
6.1.
6.3 PLEDGED BONDS.
6.3.1 PLEDGE. To secure the Company's obligations to the Agent under this
Agreement, the Company hereby pledges and assigns to the Agent, and grants to
the Agent a security interest in, all of the Company's right, title and
interest, now owned or hereafter acquired, in and to any and all Unremarketed
Tendered Bonds (together with all income therefrom and proceeds thereof)
purchased pursuant to the Indenture with the proceeds of a Tender Draft
presented under the Letters of Credit for which neither (i) full reimbursement
has been made to the Agent nor (ii) the Trustee holds sufficient funds which,
pursuant to the Indenture, the Trustee is required to apply on behalf of the
Company to reimburse the Agent in full for such Tender Draft on the date such
Tender Draft is paid by the Agent. Such Unremarketed Tendered Bonds shall be
pledged to the Agent, registered in its name as pledgee of the Company and
delivered to and held by the Trustee as agent for the Agent under this Section
6.3 or, at the option of the Agent by written notice to the Company and the
Trustee, the Unremarketed Tendered Bonds specified in such notice shall be
delivered to and pledged and held by the Agent. Unremarketed Tendered Bonds
which are so held by the Trustee as agent for the Agent or by the Agent are
herein referred to as "Pledged Bonds."
6.3.2 PLEDGED BOND PAYMENTS. Any principal of, premium on and interest on
Pledged Bonds which becomes due and payable (including any due-bills received
upon purchases thereof pursuant to the record date provisions of the Indenture
or the Bonds) shall be paid to the Agent. All sums of money so paid to the Agent
in respect of Pledged Bonds shall be credited against the obligation of the
Company to reimburse the Agent, with interest under Section 2.10.5 for the
amount drawn with a Tender Draft to fund the purchase of such Pledged Bonds
pursuant to the Indenture.
6.3.3 RELEASE OF PLEDGED BONDS. If the Company pays or causes to be paid
in full its obligation under Section 2.10.5 for the reimbursement of the amount
(or allocable portion thereof) drawn with a Tender Draft to fund the purchase of
Pledged Bonds pursuant to
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the terms of the Indenture (or if the Trustee has received immediately available
funds which, pursuant to the terms of the Indenture, the Trustee is required to
pay over promptly to the Agent in an amount sufficient to pay the Company's
reimbursement obligation under Section 2.10.5 hereof with respect to the amount
drawn with such Tender Draft to fund the purchase of such Pledged Bonds), and
provided no Event of Default has occurred and is continuing, the Agent will
release from the pledge of this Restated Credit Agreement and will deliver, or
cause its agent to deliver, such Pledged Bonds to such person or persons as the
Company may direct. An amount equal to the principal of, plus accrued interest
on, such Pledged Bonds shall be presumed (absent notice to the contrary) to be
an "amount sufficient" for the purposes of this Section 6.3.3 and, upon receipt
of such amount by the Trustee for payment to the Agent as aforesaid, the Trustee
shall be automatically authorized to deliver such Pledged Bonds as aforesaid
free from the pledge of this Agreement, unless the Trustee has received from the
Agent written notice or telephonic notice (which shall thereafter be confirmed
in writing) that such release shall not occur.
6.3.4 LIABILITY OF AGENT. The Agent shall not be liable for failure to
collect or realize upon the obligations secured by the Pledged Bonds or any
collateral security guarantee therefor, or any part thereof, or for any delay in
so doing, and the Agent shall not be under any obligation to take any action
whatsoever with regard thereto.
6.3.5 REPRESENTATIONS; RIGHTS AND REMEDIES. The Company represents and
warrants to the Agent that the pledge, assignment and delivery of Pledged Bonds
pursuant to this Section 6.3 will create a valid first lien on and a first
perfected security interest in, all right, title and interest of the Company in
and to the Pledged Bonds, and the proceeds thereof. The Company covenants and
agrees that it will defend the Agent's right, title and security interest in and
to the Pledged Bonds and the proceeds thereof against the claims and demands of
all persons. In addition to its other rights and remedies under this Restated
Credit Agreement and the Bond Documents, the Agent shall have all the rights and
remedies of a secured party under the Uniform Commercial Code of the State or
other applicable law with respect to the security interests created by this
Section.
7. CONDITIONS PRECEDENT. Notwithstanding anything to the contrary contained
herein, the Agent's and Lenders' obligation and commitment to continue to make
the Credit Facilities available to the Company pursuant to this Restated Credit
Agreement will terminate in the event that all of the conditions set forth in
Sections 7.1 and 7.2 are not satisfied by the Company on or before the Closing
Date.
7.1 INITIAL ADVANCES. The Lenders' obligations to make the initial Advances
and issue the Letters of Credit pursuant to Section 2 of this Restated Credit
Agreement are subject to the fulfillment of each of the following conditions:
7.1.1 LOAN DOCUMENTS. The Agent has received, on behalf of the Lenders,
all amended Loan Documents duly executed by the Company, together with all
instruments, Uniform Commercial Code Financing Statements and other documents as
are necessary to continue in the Agent a perfected first priority security
interest in the Collateral.
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7.1.2 OPINION LETTERS. The Agent and each Lender has received an opinion
of counsel for the Company directed to the Agent and the Lenders in form and
substance and from counsel acceptable to the Agent.
7.1.3 RESOLUTIONS. The Agent has been furnished copies, certified by the
secretary or assistant secretary of the Company, of the resolutions of the Board
of Directors of the Company authorizing execution, delivery and performance of
the amended Loan Documents, together with a certificate of such secretary or
assistant secretary certifying the names, titles, incumbency and signatures of
the officers of such corporation authorized to execute any amended Loan
Documents.
7.1.4 GOOD STANDING. The Agent has received, as to the Company, long-form
certificates of good standing of the Secretary of State of the jurisdiction in
which it is incorporated and each jurisdiction in which it is qualified to do
business.
7.1.5 DESIGNATION OF AUTHORIZED EMPLOYEES OF COMPANY. The Company shall
have delivered to the Agent a written designation of Authorized Employees. The
foregoing Condition Precedent initially was fulfilled on or about July 15, 1994.
7.1.6 TITLE INSURANCE. The Agent has been issued, with respect to each of
the properties described in Sections 5.5, 5.6 and 5.7, above (collectively the
"Mortgaged Properties"), a commitment for the issuance of an ALTA mortgagee's
policy of title insurance, in form and substance and issued by a company or
companies acceptable to the Agent (with appropriate reinsurance or co-insurance
agreements, where required by the Agent), in an amount per policy of not less
than $1,400,000, $570,000 and $1,850,000, respectively, showing fee simple title
to such Mortgaged Properties to be vested in the Company, and showing and
insuring the Mortgage on each such Mortgaged Property to be a good and valid
first lien on the Company's interest in such property, subject only to such
title exceptions as may be approved by the Agent. Complete and legible copies of
all documents affecting title shall be included in each such commitment. Each
policy must insure against, in addition to other items, mechanic's liens and
eliminate survey and other standard "pre-printed" exceptions, shall provide for
affirmative insurance coverage with respect to such easements and other matters
as the Agent may require, and shall include such revolving credit, zoning and
other endorsements as the Agent may require. Any restrictions, parking
agreements, access or utility easements, common maintenance and service
agreements, and other similar documents or agreements shall be subject to the
Agent's review and approval. The foregoing Condition Precedent initially was
fulfilled on or about July 15, 1994.
7.1.7 SURVEY. The Company has provided the Agent with a survey (dated not
more than thirty (30) days prior to the Closing Date) of each of the Mortgaged
Properties, prepared by a licensed surveyor acceptable to the Agent with
adequate errors and omissions insurance, showing, through the use of course
bearings and distances, the boundaries of each Mortgaged Property and location
of the building located on each Mortgaged Property in relation thereto and all
dimensions thereof, and all easements, set-back lines, deviations between survey
lines and title lines, rights of way, encroachments, bench marks, etc. The
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survey shall contain a full legal description of adjacent and contiguous streets
as well as measurement to the nearest intersection or other adequate checkpoint
in form and substance satisfactory to the Agent. Such survey shall be certified
to the Agent, the title insurance companies and any other party required by the
Agent and shall otherwise be reasonably acceptable to the Agent and sufficient
to the title insurance companies to remove the survey exceptions from the title
insurance policies. The foregoing Condition Precedent initially was fulfilled on
or about July 15, 1994.
7.1.8 INSURANCE. The Company shall provide to the Agent evidence of all
required insurance coverage under Section 9.14 hereof.
7.1.9 WETLANDS. The Company shall provide the Agent with evidence,
satisfactory to the Agent, that (a) none of the Mortgaged Properties contain any
areas that constitute wetlands (as defined in 40 C.F.R. Section 122.2 and 33
C.F.R. Section 328.3), and (b) there has been no unpermitted filling of wetlands
at any of such Mortgaged Properties.
7.1.10 APPRAISAL. The Agent has received an appraisal of each Mortgaged
Property, in form and content satisfactory to the Agent, prepared by an MAI
appraiser selected or approved by the Agent. The foregoing Condition Precedent
initially was fulfilled on or about July 15, 1994.
7.1.11 ENVIRONMENTAL REQUIREMENTS. The Company shall provide the Agent
with an environmental engineer's report for each of the Mortgaged Properties, in
form and substance acceptable to the Agent. Such environmental engineer must be
approved by the Agent. Such report shall indicate, among other things, that the
Mortgaged Properties are not and have not been affected by the presence of any
toxic or hazardous substance or waste, or underground storage tanks, or any
other pollutants that could be detrimental to any of the Mortgaged Properties,
human health, or the environment, that the Mortgaged Properties are not in
violation of any local, state or federal laws or regulations except as set forth
on the Disclosure Schedule and that no environmental problems exist with respect
to the Mortgaged Properties. Such report also shall (i) indicate that the
engineers have made written inquiry of the appropriate regional office of the
United States Environmental Protection Agency ("EPA"), and the appropriate
agency or authority, requesting any information held by the EPA or the
appropriate state agency indicating whether or not any of the Mortgaged
Properties are or have been identified as a site containing toxic or hazardous
substance or waste or underground storage tanks, and (ii) provide the Agent with
a history of the use of the Mortgaged Properties giving particular attention to
possible past military, industrial or land-fill use and as to the presence of
any and all underground storage tanks. With certain exceptions, the foregoing
Condition Precedent initially was fulfilled on or about July 15, 1994.
7.1.12 FULL SYNDICATION. The Agent shall have received written
commitments from the Lenders to assume the lending responsibility for the
Commitments. The foregoing Condition Precedent initially was fulfilled on or
about July 15, 1994.
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7.1.13 UCC SEARCHES. The Agent shall be provided with current UCC
searches with respect to the Company and such other parties and in such
locations as the Agent may require showing that all personal property which is
required to be Collateral for the Credit Facilities is free from all liens and
security interests except for Permitted Liens.
7.1.14 CONSENTS. The Agent has received copies of all consents which the
Company must obtain in connection with the transactions contemplated hereby.
7.1.15 BORROWING BASE CERTIFICATE AND REPORTS. The Agent has received a
Borrowing Base Certificate dated as of the Closing Date, and the Reports
described under Section 9.4 hereof for the month most recently ended.
7.1.16 FEES. The Agent and the Lenders have received full payment of all
fees, expenses and other amounts then due under this Restated Credit Agreement.
7.1.17 WAIVERS OBTAINED. The Company has obtained written waivers from
the holders of all of the Port Authority Bonds waiving the holders' rights under
Section 6.06 of the Indenture and consenting to the substitution of the Agent as
letter of credit bank and to any reduction in ratings of the Port Authority
Bonds that may result from such substitution. The foregoing Condition Precedent
initially was fulfilled on or about July 15, 1994.
7.1.18 DELIVERY OF THE BOND DOCUMENTS AND SECURITY DOCUMENTS. The Bond
Documents and Security Documents have been executed and delivered by the parties
thereto, each in form and substance satisfactory to the Agent, and the Agent has
received an executed or conformed copy of each of the Bond Documents and
Security Documents. The foregoing Condition Precedent initially was fulfilled on
or about July 15, 1994.
7.1.19 NO DEFAULT. No Default or Event of Default exists.
7.1.20 REPRESENTATIONS AND WARRANTIES. All representations and warranties
of the Company contained in this Restated Credit Agreement or in the Bond
Documents are true and correct with the same force and effect as though such
representations and warranties had been made on and as of such time.
7.1.21 CERTIFICATES. There has been delivered to the Agent a certificate
of the Company dated the Closing Date, to the effect that all of the conditions
specified in Sections 7.1.19 and 7.1.20 have been satisfied as of such date.
7.1.22 OPINION OF BOND COUNSEL. There has been delivered to the Agent an
opinion of Bond Counsel, dated the Date of Issuance and in form and substance
satisfactory to the Agent, to the effect that the Bonds are legal, valid and
binding obligations of the Issuer and that interest on the Bonds are exempt from
Federal income taxes under existing statutes, and court decisions (with such
exceptions as are satisfactory to the Agent), and covering such other matters as
the Agent may reasonably request. The foregoing Condition Precedent initially
was fulfilled on or about July 15, 1994.
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7.1.23 COLLATERAL EVALUATION. The Agent shall have completed its audit of
the accounts receivable, inventory and account payable and the results of such
audit shall be acceptable to the Lenders.
7.1.24 DOCUMENTATION AND PROCEEDINGS. All instruments in connection with
the transactions contemplated by this Restated Credit Agreement and the Bond
Documents are satisfactory in form and substance to the Agent and its counsel
and the Agent has received all information and copies of all documents,
including governmental approvals, which it may have reasonably requested in
connection with the transactions contemplated by this Restated Credit Agreement
and the Bond Documents, such documents where appropriate to be certified by
authorized officers of the Company or proper governmental authorities.
7.1.25 OTHER DOCUMENTS. The Lenders have received such other documents as
they may have reasonably required in connection with the transactions provided
for in this Restated Credit Agreement, all in form and substance satisfactory to
the Agent.
7.1.26 OTHER CONDITIONS. The conditions set forth in Section 7.2, below,
shall have been fully satisfied.
7.2 EACH ADVANCE. The obligation of each Lender to make any Advance is
subject to the fulfillment of each of the following conditions to the
satisfaction of the Agent:
7.2.1 NO DEFAULTS. There does not exist any Potential Default, Default or
Event of Default either before or after giving effect thereto.
7.2.2 ACCURACY. The representations and warranties contained in this
Restated Credit Agreement and in the other Loan Documents as amended are true,
correct and complete in all respects on and as of the day of any Request for
Advance or making of any Borrowing.
7.2.3 NOTICES. The Agent shall have received all required Notices.
7.2.4 OTHER DOCUMENTS. The Agent shall have received such other documents
or items of information as it may reasonably require, in form and substance
satisfactory to it.
7.3 REPRESENTATION. Each Borrowing, each conversion or continuation of an
Advance shall constitute a representation and warranty by the Company as of such
Borrowing Date, Conversion Date, Continuance Date or issuance or renewal date,
as applicable, that the conditions specified in Sections 7.1 and 7.2 above, have
been satisfied.
8. REPRESENTATIONS AND WARRANTIES. To induce the Lenders to continue to extend
the Credit Facilities herein contemplated, the Company hereby represents and
warrants as follows:
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8.1 ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state in which it is
incorporated, has the power and authority to own, lease and operate its assets
and to conduct its business as is now done and is duly qualified to do business
as a foreign corporation and in good standing under the laws of all
jurisdictions where required by the conduct of its business or ownership or
leasing of its assets, except such jurisdictions, if any, where the failure to
be so qualified and in good standing, whether considered individually or in the
aggregate with all other such failures, would not have a material adverse effect
on the ability of the Company to pay or perform the Obligations or on its
assets, liabilities, business, prospects, operations or condition (financial or
otherwise).
8.2 LATEST FINANCIALS. The balance sheet of the Company as of April 2, 1995
and related statement of income and retained earnings and statement of cash
flows as of April 2, 1995, and the interim balance sheets and statements of
income and retained earnings and cash flows of the Company for the nine (9)
month period ending December 31, 1995, as delivered to the Lenders, are true,
complete and accurate in all respects and fairly present the financial
condition, assets and liabilities, whether accrued, absolute, contingent or
otherwise and the results of operations of such Persons for the periods ended as
of April 2, 1995 and December 31, 1995, respectively, on a basis. Such financial
statements have been prepared in accordance with GAAP applied consistently with
preceding periods, subject to any comments and notes contained therein (and
subject in the case of such interim statements to normal year-end audit
adjustments).
8.3 RECENT ADVERSE CHANGES. Since April 2, 1995, the Company has not suffered
any damage, destruction or loss which has materially adversely affected its
business or assets and, except as previously disclosed in writing to the
Lenders, no event or condition of any character has occurred which has
materially and adversely affected its assets, liabilities, business, operations,
prospects or condition (financial or otherwise), and neither the Company nor any
of its officers or directors has any knowledge of any event or condition which
may materially adversely affect the assets, liabilities, business, operations,
prospects, or condition (financial or otherwise) of the Company.
8.4 RECENT ACTIONS. Since April 2, 1995, the business of the Company has been
conducted in the ordinary course and the Company has not: (i) incurred any debt
or other obligations or liabilities, whether accrued, absolute, contingent or
otherwise, other than debt and liabilities incurred and obligations under
contracts entered into in the ordinary course of business; (ii) discharged,
satisfied, paid or cancelled any debt or any obligations, absolute or
contingent, other than current liabilities shown on the financial statements
referred to in Section 8.2, above, and current liabilities incurred since April
2, 1995 in the ordinary course of business; or (iii) made any loans or otherwise
conducted its business other than in the ordinary course.
8.5 TITLE. Since April 2, 1995 and except for other immaterial assets
disposed of since that date and described on the Disclosure Schedule, the
Company has good and marketable title to the assets reflected on the balance
sheets or notes thereon referred to in Section 8.2, above, free and clear from
all liens and encumbrances except for Permitted Liens.
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8.6 LITIGATION, ETC. Except as set forth in the Disclosure Schedule, there
are no actions, suits, proceedings or governmental investigations pending or, to
the knowledge of the Company, its directors or officers, threatened before any
court, grand jury, arbitrator, regulatory commission, board, administrative
agency or other governmental authority against or affecting the Company or any
of its respective Subsidiaries, or any of its or their properties, which (a)
could, either individually or in the aggregate, result in any material adverse
change in the condition (financial or otherwise), business, operations, assets
or prospects of the Company or (b) questions the validity or enforceability of
any of the Loan Documents or Obligations; and there is no basis known to the
Company, its officers or directors for any such actions, suits, proceedings or
investigations.
8.7 TAXES. Except as to taxes not yet due and payable, the Company has timely
filed all returns and reports to be filed by it in connection with any federal,
state, local or other tax, duty or charge levied, assessed or imposed upon it,
or its property, including but not limited to income, franchise, unemployment,
social security and similar taxes; and all of such taxes have been either paid
or adequate reserve or other provision has been made therefor.
8.8 AUTHORITY. The Company has full corporate power and authority to enter
into the transactions provided for in this Restated Credit Agreement and has
been duly authorized to do so by appropriate action of its board of directors.
This Restated Credit Agreement, the Notes and the other Loan Documents as
amended, when executed and delivered by the Company, constitute the legal, valid
and binding obligations of the Company, enforceable in accordance with its
terms.
8.9 OTHER DEFAULTS. There does not now exist any material default or
violation by the Company of or under any of the terms, conditions or obligations
of: (i) its Articles of Incorporation or Code of Regulations; (ii) any
indenture, or deed of trust or mortgage to which it is a party or by which it is
bound; (iii) any agreement or instrument evidencing debt to which it is a party
or by which it is bound; (iv) any other franchise, permit, contract, agreement
or other instrument to which it is a party or by which it is bound; or (v) any
material law, regulation, ruling, order, injunction, decree, condition or other
requirement applicable to or imposed upon it or affecting any of its assets by
any law or by any governmental authority, court or agency.
8.10 CONFLICTS. Neither the execution, delivery and performance of this
Restated Credit Agreement nor the consummation of any of the transactions herein
contemplated (a) will result in any default or violation by the Company of or
under any of the terms, conditions or obligation of (i) its Articles of
Incorporation or Code of Regulations; (ii) any indenture, or deed of trust or
mortgage to which it is a party or by which it is bound; (iii) any agreement or
instrument evidencing debt to which it is a party or by which it is bound; (iv)
any other franchise, permit, contract, agreement or other instrument to which it
is a party or by which it is bound; or (v) any law, regulation, ruling, order,
injunction, decree, condition or other requirement applicable to or imposed upon
it or affecting any of its assets by any law or by any governmental authority,
court or agency or (b) result in or require the creation of any Lien
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(except as contemplated by this Restated Credit Agreement) upon any of the
assets of the Company.
8.11 PATENTS, LICENSES, ETC. The Company has any and all licenses, permits,
franchises or other governmental authorizations necessary for the ownership or
leasing of its respective properties and the conduct of its business. The
Company possesses adequate licenses, patents, patent applications, copyrights,
trademarks, trademark applications, and trade names to continue to conduct its
business as heretofore conducted, without any conflict with the rights of any
other person or entity.
8.12 ERISA. The Company and each of its ERISA Affiliates are in compliance in
all material respects with the applicable provisions of ERISA and the
regulations and published interpretations thereunder. No Reportable Event has
occurred as to which the Company or any such ERISA Affiliate was required to
file a report with the PBGC, and, as of the Closing Date, the present value of
all benefit liabilities under all the Plans (based on those assumptions used to
fund such Plans) did not, as of the last audited annual valuation date
applicable thereto, exceed by more than $500,000 the aggregate value of the
assets of such Plans. Neither the Company nor any such ERISA Affiliate has
incurred any Withdrawal Liability that materially adversely affects the
financial condition of the Company and its ERISA Affiliates taken as a whole.
Neither the Company nor any such ERISA Affiliate have received any notification
that any Multiemployer Plan is in reorganization or has been terminated, within
the meaning of Title IV of ERISA, and no Multiemployer Plan is reasonably
expected to be in reorganization or to be terminated, where such reorganization
has resulted or can reasonably be expected to result in an increase in the
contributions required to be made to such Plan that would materially and
adversely affect the financial condition of the Company and its ERISA Affiliates
taken as a whole.
8.13 REGULATION U. The Company is not engaged principally in, nor does the
Company have as one of its principal activities, the business of extending
credit for the purpose of purchasing or carrying Margin Stock (as defined in
Reg. U, 12 C.F.R. 221). No part of the Advances will be used to purchase or
carry any Margin Stock, to extend credit to others for the purpose of purchasing
or carrying any Margin Stock or to retire Indebtedness which was incurred to
purchase or carry any Margin Stock.
8.14 ENVIRONMENTAL MATTERS.
8.14.1 Except as set forth on the Disclosure Schedule, there have been
no material claims, notices, orders or directives on environmental grounds made
or delivered to, pending or served on the Company, any of its Subsidiaries or
its agents, (i) issued by a governmental department or agency having
jurisdiction over the assets of any such Person, real or personal, owned or
leased, affecting such assets or any part thereof, requiring any work to be done
upon or about such assets or any part thereof, including but not limited to
clean up orders, or (ii) issued or claimed by any private agency or individual
affecting such assets or any part thereof.
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8.14.2 To the best knowledge of the Company, except those stored, held
and used in accordance with all applicable laws and regulations, there have not
been, are not now and will be no solid waste, hazardous waste, hazardous
substances, toxic substances, toxic chemicals, pollutants, wastes or
contaminants, underground storage tanks, purposeful dumps, nor any accidental
spills of such in, on or about any of the assets of the Company or any of its
Subsidiaries, real or personal, owned or leased, and no solid waste, hazardous
waste, hazardous substances, pollutants, contaminants, wastes or toxic substance
have ever been stored on any real property owned or leased either by any such
Person or by any of their lessees, licensees, invitees or predecessors.
8.14.3 To the best knowledge of the Company, there has been no, is not
now and will be no filtering into ground water or transmission by seepage or
other draining or transfer any solid waste, hazardous substances, hazardous
waste, pollutants or contaminants, or toxic substances which have affected, is
now affecting or will affect any of the real property owned or leased by the
Company or any of its Subsidiaries or any sites adjoining such property.
8.14.4 To the best knowledge of the Company, the Company and each of its
Subsidiaries have obtained all necessary approvals or satisfactory clearances
for use of its assets from all governmental authorities, utility companies, or
development-related entities, in regard to the use of its assets, the discharge
of chemicals, liquids and emissions, if any, and other chemicals into the
atmosphere, ground water or surface water, from its operations.
8.15 INVESTMENT COMPANY ACT. The Company is not directly or indirectly
controlled by, or acting on behalf of, a person which is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
8.16 GOVERNMENTAL CONSENTS. No consent, licenses, permits, approvals or
authorizations of, exemptions by, notices or reports to, or registrations,
filings or declarations with, any governmental authority or agency are required
to authorize the execution, delivery or performance by the Company of any
amended Loan Documents or any of the transactions contemplated thereby, or are
otherwise required to ensure the validity or enforceability of any of the
amended Loan Documents, which have not been obtained or made.
8.17 DISCLOSURE. Neither this Restated Credit Agreement, any of the other
amended Loan Documents or any certificate, instrument, document or other
information furnished in writing to the Agent or any Lender in connection
herewith contains any untrue statement of a material fact or omits to state a
material fact necessary to keep the statements herein or therein not misleading.
8.18 REGISTERED OFFICE. The Company's registered office for doing business in
Kentucky is located in Jefferson County, Kentucky and the Company does not
maintain and has not maintained a registered office in any other county in
Kentucky.
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9. AFFIRMATIVE COVENANTS. The Company covenants and agrees that from the date of
execution of this Restated Credit Agreement until all Obligations to the Lenders
have been fully paid and this Restated Credit Agreement terminated:
9.1 SINKING FUND. The Company will maintain the Sinking Fund Accounts with
each of the Lenders and make timely deposits therein pursuant to the terms of
this Restated Credit Agreement.
9.2 BOOKS AND RECORDS; ACCESS. The Company will maintain, and cause each of
its Subsidiaries to maintain, proper books of account and other records and
enter therein complete and accurate entries and records of all of its
transactions in accordance with GAAP; give representatives of the Agent access
to the books, records and premises of the Company and its Subsidiaries at all
reasonable times, including permission to examine, copy and make abstracts from
any of such books and records, and to audit the Collateral, and provide such
other information as the Agent may from time to time reasonably request; and
furnish to the Agent for examination copies of any reports, statements or
returns which the Company may make to or file with any governmental department,
bureau or agency, federal or state and any letter, other than routine
correspondence, directed to the management of the Company or their auditors or
independent accountants relating to its or their financial statements,
accounting procedures, tax returns, financial condition or the like; and make
their officers and independent certified public accountants available to the
Agent from time to time upon reasonable notice to discuss their businesses,
operations, assets, liabilities and condition (financial or otherwise) and any
statements, records or documents furnished or made available to the Agent or any
of the Lenders.
9.3 MONTHLY STATEMENTS. The Company will furnish the Agent within thirty (30)
days after the end of each calendar month financial statements of the Company,
which financial statements shall be (a) in reasonable detail and in form
reasonably satisfactory to the Agent, (b) certified by a Responsible Officer of
the Company that such statements are true and correct to the best of his/her
knowledge and are prepared in accordance with GAAP applied on a basis consistent
with the preceding month's statements, if any, and (c) contain a certificate by
such officer (i) stating that to the best of such officer's knowledge, no
Default or Event of Default has occurred during such period and that as of the
date of the certificate, no Default or Event of Default exists, except as
specified in such certificate, and (ii) setting forth computations in reasonable
detail and satisfactory to the Agent that demonstrate compliance with the
financial covenants contained in Section 10 hereof. Such certificate will be in
the form of the attached Exhibit S. Those financial statements will include a
balance sheet as of the end of such month and statements of income and retained
earnings and changes in financial position (or cash flow statements) for such
month. The Agent will promptly send a copy of such statements and certificate to
each Lender.
9.4 BORROWING BASE CERTIFICATES. The Company will furnish the Agent upon the
request from time to time of the Agent but in no event less often than weekly, a
Borrowing Base Certificate in the form of the attached Exhibit T. The Borrowing
Base Certificate will update
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accounts receivable weekly and will update raw materials and finished goods
inventory monthly. The Agent will promptly send a copy of such certificate to
each Lender.
9.5 [INTENTIONALLY OMITTED].
9.6 QUARTERLY STATEMENTS. The Company will furnish the Agent within
forty-five (45) days after the end of each Fiscal Quarter copies of financial
statements for the Company and its Subsidiaries, which financial statements
will: (a) be in reasonable detail and in form reasonably satisfactory to the
Agent; (b) be certified by a Responsible Officer of the Company that such
statements are true and correct to the best of his/her knowledge and are
prepared in accordance with GAAP applied on a basis consistent with the
preceding quarter's statements, if any; and (c) contain a certificate by each
such officer (i) covering the matters described in Section 9.3(c), above, and
(ii) stating that to the best of such officer's knowledge, at the end of and
during such period the Company have observed or performed or satisfied all
agreements, orders, decrees or other requirements applicable to or imposed upon
them by any federal or state department or agency regulating their government
contracting activities, except as specified in such certificate. Such
certificates will be in the form of the attached Exhibit S. Those financial
statements will include a balance sheet as of the end of such quarter, a
statement of income, retained earnings and cash flow for such quarter, setting
forth in each case in comparative form the corresponding figures for the
corresponding periods in the preceding fiscal year. The Agent will promptly send
a copy of such financial statements and certificates to each Lender.
9.7 QUARTERLY AUDITS. The Company will permit the Agent, at the Company's
expense, to perform quarterly audits with respect to Inventory and/or
receivables and payables of the Company.
9.8 ANNUAL STATEMENTS. The Company will furnish the Agent (i) within
forty-five (45) days after the end of each fiscal year, copies of internally
prepared annual financial statements of the Company which will include a balance
sheet of the Company as of the end of such year, and a statement of income,
retained earnings and cash flow for such year and (ii) within ninety (90) days
after the end of each fiscal year, with copies of annual audited financial
statements for the Company, which will include a balance sheet of the Company as
of the end of such year, and a statement of income, retained earnings and cash
flow for such year. The audited financial statements will contain the
unqualified opinion of an independent certified public accountant acceptable to
the Agent and a certificate stating that in making their audit they obtained no
knowledge of the existence of any Default or Event of Default and its
examination will have been made in accordance with GAAP applied on a basis
consistent with the preceding years' statements. Concurrently with the delivery
of the foregoing financial statements, a Responsible Officer of the Company will
deliver to the Agent certificates with respect to such annual statements in the
form required by Section 9.3, above. The Agent will promptly send a copy of such
financial statements and certificates to each Lender.
9.9 AUDITOR'S LETTERS. The Company shall furnish copies of any letter, other
than routine correspondence or communications, directed to the management of the
Company by its
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auditors or independent accountants, relating to its financial statements,
accounting procedures, financial condition, tax returns, or the like, since
December 31, 1995.
9.10 ANNUAL BUDGETS, FORECASTS AND COMPARISONS. At Agent's request, within
thirty (30) days of such request, the Company will submit to the Agent a copy of
the Company's annual budget and financial forecast for the succeeding fiscal
year, at a minimum, including a summary of the Company's strategic operating
plan together with key assumptions underlying the forecast, all in form and
content acceptable to Agent. With each of the financial statements delivered in
accordance with Sections 9.3, 9.6 and 9.8, above, the Company will deliver
statements for each division of the Company comparing actual performance to
projected and prior year's performance for such period.
9.11 NOTICES OF DEFAULT. Promptly after the Company obtains knowledge
thereof, the Company will notify the Agent of any Default, Event of Default or
Potential Default, the nature thereof, period of existence thereof and action
the Company proposes to take with respect thereto.
9.12 PAYMENT OF CHARGES. The Company will pay and discharge when due all tax,
assessments and governmental charges and levies imposed upon it, its income,
profit, business or assets, and all other lawful claims of any kind which, if
unpaid, might become a lien or charge upon all or any part of its assets, except
those which currently are being contested in good faith by appropriate
proceedings and for which the Company has set aside adequate reserves in
accordance with GAAP, but any such disputed item will be paid forthwith upon the
commencement of any proceeding for the foreclosure of any lien which may have
attached with respect thereto, unless the Agent will have received an opinion in
form and substance and from legal counsel of the Company acceptable to it that
such proceeding is without merit.
9.13 EXISTENCE; OPERATIONS. The Company will maintain and preserve its
corporate existence and right to carry on its business; maintain and preserve
all material rights, powers, privileges and franchises; continue in operation in
substantially the same manner as at present, except where such operation is
rendered impossible by a fire, strike or other events beyond their control; keep
its real and personal properties in good operating condition and repair; make
all necessary and proper repairs, renewals, replacements, additions and
improvements thereto and comply with the provisions of all leases to which it is
a party or under which it occupies or holds real or personal property so as to
prevent any loss or forfeiture thereof or thereunder.
9.14 INSURANCE. The Company will keep its insurable real and personal
property insured with responsible insurance companies reasonably satisfactory to
the Agent against loss or damage by fire, windstorm and other hazards which are
commonly insured against with an extended coverage endorsement in an amount
equal to not less than eighty percent (80%) of the insurable value thereof on a
replacement cost basis (or, if greater, the amount necessary so that the insured
will not be deemed a co-insurer under any coinsurance provisions of any such
policy) and also maintain public liability insurance and flood insurance in a
reasonable amount. In addition, the Company will and will cause its Subsidiaries
to maintain extended liability
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insurance covering their operations in a reasonable amount considering the type
of business operations of such Persons and the amount and form of such insurance
and the companies issuing such insurance shall be consistent with the quality,
form and amount of insurance presently maintained by such parties. All such
policies shall provide that thirty (30) days' prior written notice must be given
to the Agent before such policy is altered or cancelled. All casualty policies
shall name the Agent as lender loss payee and additional insured (for the
benefit of Lenders) (or, if applicable, a standard mortgagee clause and waiver
of insurer's right of subrogation against funds paid under the standard
mortgagee endorsement). The right to adjust all claims under such policies and
all amounts recoverable under such policies hereby are assigned to the Agent
(for the benefit of the Lenders); and the amounts collected by the Agent, at the
option of the Agent, may be used in any one or more of the following ways: (a)
applied to the payment of any sums then in default under the Obligations; (b)
used to fulfill any Obligations that the Company has failed to perform; (c)
unless the insurer denies liability to any insured, used to restore the
applicable property to a condition satisfactory to the Agent on such terms and
conditions as the Agent may determine; (d) released to the Company; and/or (e)
applied to any of the Obligations, whether matured or unmatured. Schedules of
all insurance of the Company and its Subsidiaries will be submitted to the Agent
upon request. Such schedules will contain a description of the risks covered,
the amounts of insurance carried in each risk, the name of the insurer and the
cost of such insurance to the insured. Such schedules will be supplemented by
the Company from time to time to reflect any change in insurance coverage. The
Company will deliver to Agent certificates representing such insurance policies
on the Closing Date and thereafter updated certificates at least thirty (30)
days prior to the expiration of each insurance policy date as reflected in the
prior certificates evidencing that the premiums for such policies have been paid
in full.
9.15 COMPLIANCE WITH LAWS. The Company will comply with all laws, regulations
and court and governmental orders applicable to it, any of its assets or the
operation of its business, including without limitation those relating to
environmental, insurance, health and employee benefit matters, the failure to
comply with which, whether considered individually or in the aggregate, could
materially adversely affect the ability of the Company to pay or perform any of
the Obligations or the business, operations, assets, prospects or condition
(financial or otherwise) of the Company.
9.16 ENVIRONMENTAL VIOLATIONS. The Company will immediately notify the Agent
of any violation of any rule, regulation, statute, ordinance, or law relating to
public health or the environment.
9.17 ENVIRONMENTAL AUDIT AND OTHER ENVIRONMENTAL INFORMATION. The Company
will provide copies of all environmental reports, audits, studies, data,
results, and findings obtained by the Company or any of its Subsidiaries from
work conducted by the Company or any Subsidiaries thereof or any other person or
entity (including, but not by way of limitation, the United States Environmental
Protection Agency and any state Environmental Protection Agency and their
agents, representatives, and contractors) on any property of the Company or any
Subsidiary thereof or property adjacent thereto. Copies of all such existing
reports, audits, studies, data, results and data will be delivered to the Agent
on or before the
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Closing Date, and any and all such materials hereafter obtained will be
delivered to the Agent as soon as such reports, audits, studies, data, results,
and findings become available to any of the Company. If the submissions are
considered inadequate or insufficient in order for the Agent to adequately
consider the status of environmental compliance or if the submissions are in
error, then the Agent may require the Company, at the Company's sole expense, to
engage an independent engineering firm acceptable to the Agent to conduct a
complete environmental report, study, finding or audit in as timely a fashion as
is reasonably possible. In addition, the Company will provide the Agent with
information related to remedial action at any property, the Company or any
Subsidiary thereof or adjacent to such property as soon as such information
becomes available to the Company or any Subsidiary thereof (such information
will include but not be limited to a copy of the Remedial
Investigation/Feasibility Study for that property).
9.18 BUSINESS NAMES AND LOCATIONS. The Company will immediately notify the
Agent of any change in the name under which the Company conducts its business
and, unless the Agent otherwise consents in writing pursuant to this Restated
Credit Agreement, keep and maintain all of the Collateral only at the addresses
listed in the Disclosure Schedule (and, as to any address disclosed therein as a
subcontractor location for Inventory, not permit at any time the value of such
Inventory at any such location to exceed $100,000) and keep the principal places
of business of each Company at the addresses specified in the Disclosure
Schedule. The Company will notify the Agent immediately upon the opening or
closing of any place from which the Company conducts business.
9.19 ACCOUNTS. So long as any of the Credit Facilities are in effect, the
Agent will remain the primary bank of account of the Company.
9.20 ERISA COMPLIANCE. The Company will (a) comply in all material respects
with the applicable provisions of ERISA and (b) furnish to the Agent (i) as soon
as possible, and in any event within thirty (30) days after any Responsible
Officer of the Company or any ERISA Affiliate knows or has reason to know that
any Reportable Event has occurred that alone or together with any other
Reportable Event could reasonably be expected to result in liability of the
Company to the PBGC in an aggregate amount exceeding $500,000 a statement of a
financial officer of the Company, setting forth details as to such Reportable
Event and the action that the Company proposes to take with respect thereto,
together with a copy of the notice of such Reportable Event, if any, given to
the PBGC, (ii) promptly after receipt thereof, a copy of any notice the Company
or any ERISA Affiliate may receive from the PBGC relating to the intention of
the PBGC to terminate any Plan or Plans (other than a Plan maintained by an
ERISA Affiliate which is considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Code Section 414) or to appoint a trustee to administer
any such Plan, (iii) within ten (10) days after the due date for filing with the
PBGC pursuant to Section 412(n) of the Code of a notice of failure to make a
required installment or other payment with respect to a Plan, a statement of a
financial officer of the Company setting forth details as to such failure and
the action that the Company proposes to take with respect thereto together with
a copy of any such notice given to the PBGC and (iv) promptly and in any event
within thirty (30) days after receipt thereof by the Company or any ERISA
Affiliate from the sponsor of a Multiemployer Plan, a copy of each notice
received by the Company or any ERISA Affiliate concerning (A) the imposition of
Withdrawal Liability
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in an amount exceeding $500,000 or (B) a determination that a Multiemployer Plan
is, or is expected to be, terminated or in reorganization, both within the
meaning of Title IV of ERISA, and which, in each case, is expected to result in
an increase in annual contributions of the Company or an ERISA Affiliate to such
Multiemployer Plan in an amount exceeding $500,000.
9.21 FURTHER ASSURANCES. The Company will execute and deliver, or cause to be
executed and delivered, all such additional documents, agreements and
instruments (including but not limited to Uniform Commercial Code financing
statements) as the Agent or the Lenders may reasonably request in order to
effectuate the transactions contemplated hereby or by the Security Documents or
to preserve, protect, or perfect the rights of the Agent, or the Lenders
hereunder, with respect to the Collateral.
9.22 COMPLIANCE WITH AGREEMENTS. The Company will observe, or cause to be
observed, all obligations, covenants and agreements applicable to the Company or
any Subsidiary thereof under the Loan Documents.
9.23 PRIVATE PLACEMENT. The Company will use its best efforts to distribute
its final private placement memorandum by March 31, 1996 which, at a minimum,
will include an executive summary, key investment considerations, industry
description, description of the Company, financial information and the amount
and type of equity to be raised.
9.24 EQUITY INFUSION/SALE OF BUSINESS. The Company will use its best efforts
to raise at least $3,000,000 cash equity or recapitalize the Company on terms
acceptable to the Lenders in their sole discretion.
9.25 SALE OF EQUIPMENT. The Company will use its best effort to sell
obsolete, under-utilized or idle assets. Proceeds from the sale of such assets
will be deposited into the Sinking Fund Accounts.
9.26 EXCESS CASH FLOW. At the end of each Fiscal Quarter, the Company will
deposit 25% of Excess Cash Flow into the Sinking Fund Accounts within thirty
(30) days of the end of each Fiscal Quarter.
9.27 CASH FLOW FORECAST. At the Agent's request, the Company will furnish to
the Agent each week a cash flow forecast for the next succeeding 12 week period
in form satisfactory to the Agent, the form of which will be substantially
similar to that attached hereto as Schedule 2.
9.28 RECEIVABLES AND PAYABLES AGING. The Company will furnish to the Agent
upon the request from time to time of the Agent, but in no event less often than
monthly within thirty (30) days after the end of each calendar month, an aging
report of receivables and payables, in form satisfactory to the Agent.
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10. NEGATIVE COVENANTS. The Company covenants and agrees that from the date of
execution of this Restated Credit Agreement until all of the Obligations have
been fully paid and this Restated Credit Agreement terminated it will not:
10.1 DEBT. Incur any Indebtedness other than: (a) the Credit Facilities; (b)
the existing Indebtedness described in the Disclosure Schedule; (c) open account
obligations incurred in the ordinary course of business having maturities of
less than seventy-five (75) days; and (d) rental and lease payments as described
in Section 10.2.
10.2 LEASES. Enter into or permit to remain in effect any rental or lease
agreement for real or personal property whose term (including renewal options)
exceeds five (5) years or if aggregate annual rental payments under all lease
agreements for real and personal property on an annual basis would exceed
$400,000.
10.3 LIENS. Incur, create, assume, become or be liable in any way, or suffer
to exist any mortgage, pledge, lien, charge or other encumbrance of any nature
whatsoever on any of their respective assets, now or hereafter owned, other than
Permitted Liens; be bound by or subject to any agreement or option to do so; or
be bound by or subject to any agreement (other than this Agreement) not to do so
(including but not limited to any agreement that imposes a requirement that
equal and ratable security be given in connection therewith or attaches any
other condition to any such matter.
10.4 CASH FLOW COVERAGE RATIO. During the following periods, permit the Cash
Flow Coverage Ratio to be less than:
<TABLE>
<CAPTION>
Cash Flow Coverage Ratio At the end of each Fiscal Quarter during the period
- ------------------------ ---------------------------------------------------
<S> <C>
0.95 January 1, 1996 through March 31, 1996
1.05 April 1, 1996 through June 30, 1996
1.10 July 1, 1996 through September 29, 1996
1.25 September 30, 1996 and thereafter
</TABLE>
For the fourth Fiscal Quarter of Fiscal Year 1996, the Cash Flow Coverage Ratio
will be calculated on a trailing two quarter basis. For the first Fiscal Quarter
of Fiscal Year 1997, the Cash Flow Coverage Ratio will be calculated on a
trailing three quarter basis. Thereafter, the Cash Flow Coverage Ratio will be
calculated each Fiscal Quarter on a trailing four quarter basis.
10.5 CURRENT RATIO. During the following periods, permit the Current Ratio
to be less than:
Current Ratio 1.00
- -------------
0.35
0.90
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At the end of each
month during the
period
January 1, 1996
through March 31,
1996
April 1, 1996 through
March 30, 1997
March 31, 1997 and
thereafter
10.6 LEVERAGE RATIO. During the following periods, permit the Leverage Ratio
to be greater than:
<TABLE>
<CAPTION>
Leverage Ratio At the end of each month during the period
- -------------- ------------------------------------------
<S> <C>
8.05 January 1, 1996 through March 31, 1996
7.50 April 1, 1996 through June 30, 1996
7.00 July 1 1996 through September 29, 1996
6.50 September 30, 1996 through December 29, 1996
6.00 December 30, 1996 through March 30, 1997
5.50 March 31, 1997 and thereafter
</TABLE>
After such time as the Company has raised the cash equity described in Section
9.24, above:
<TABLE>
<CAPTION>
Leverage Ratio At the end of each month during the period
- -------------- ------------------------------------------
<S> <C>
3.80 April 1, 1996 through June 30, 1996
3.70 July 1, 1996 through September 29, 1996
3.50 September 30, 1996 through December 29, 1996
3.30 December 30, 1996 through March 30, 1997
3.00 March 31, 1997 and thereafter
</TABLE>
10.7 MINIMUM TANGIBLE NET WORTH. Permit Tangible Net Worth for all periods
after December 31, 1995 calculated on a cumulative basis at the end of each
month to be less than $3,000,000 plus 75% of positive net income, plus 100% of
any equity contribution or conversion of debt to equity, less dividends
permitted under Section 10.12, below.
10.8 EBITDA. Permit EBITDA measured at the end of each Fiscal Quarter to be
less than $600,000.
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10.9 GUARANTEES. Except in connection with the endorsement and deposit of
checks in the ordinary course of business for collection, guarantee, endorse,
assume or otherwise in any way be or become contingently liable or responsible
for, directly or indirectly, the obligation of any Person.
10.10 CORPORATE CHANGES. Amend or change its Articles of Incorporation or
Code of Regulations, recapitalize or otherwise change or adjust its capital
stock other than the preferred stock issued in accordance with Sections 9.23 and
9.24, above, and the conversion of Indebtedness to equity upon terms
satisfactory to the Lenders.
10.11 REDEMPTIONS. Purchase, retire, redeem or otherwise acquire for value,
directly or indirectly, any shares of its capital stock now or hereafter
outstanding, or set aside any funds or other property for any such purpose.
10.12 DIVIDENDS. Declare or pay dividends of any kind on any shares of
capital stock now or hereafter outstanding or make any other distribution of
cash or property to its shareholders, or authorize or set aside any funds or
other property for any such purpose; provided, however, that the Company may pay
dividends on preferred stock so long as at the time of making or declaring such
dividends and after giving effect thereto no Default or Event of Default exists.
No dividend may be paid if a Default or Event of Default has been waived by the
Lenders, but not cured by the Company.
10.13 INVESTMENTS, LOANS AND ADVANCES. Make or commit to make any loan,
extension of credit, advance or contribution of capital to any Person, or
purchase, acquire or hold any stock, equity interest, other securities or
evidences of indebtedness of, or make any investment or purchase, acquire or
hold any interest whatsoever in, any other Person other than (a) advances to
employees of the Company not to exceed $10,000 per employee or $100,000 in the
aggregate when cumulated with all other such employee advances to cover
reasonable expenses of employees, such as travel expenses; and (b) short term
investments of excess working capital invested in one or more of the following:
(i) investments (of one (1) year or less) in direct or guaranteed obligations of
the United States, or any agencies thereof; and (ii) investments (of one (1)
year or less) in certificates of deposit of banks or trust companies organized
under the laws of the United States or any jurisdiction thereof, provided that
such banks or trust companies are insured by the Federal Deposit Insurance
Corporation and have capital in excess of $150,000,000.
10.14 MERGER OR SALE OF ASSETS. Merge or consolidate with or into any other
Person, dissolve or sell, lease or otherwise dispose of any of its assets (or
enter into an agreement to do any of the foregoing), or permit any of its
Subsidiaries to do any of the foregoing, except for: (i) sale of Inventory in
the ordinary course of business; and (ii) other dispositions of obsolete,
under-utilized or idle equipment with the prior written consent of the Agent.
10.15 CAPITAL EXPENDITURES. Make capital expenditures or acquisitions,
including the capitalized value of any leases, which, when calculated in
accordance with GAAP and added
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to all other capital expenditures and acquisitions of the Company, or any of
them, would exceed $1,500,000 during Fiscal Year 1996 and during any Fiscal Year
thereafter. Unexpended amounts from a prior Fiscal Year may not be carried
forward to the next Fiscal Year.
10.16 ACQUISITIONS. Purchase, lease or otherwise acquire all or any
substantial part of the assets of any Person, or create any Subsidiary, or enter
into any joint venture or partnership, or permit any Subsidiary to do any of the
foregoing (collectively, "Acquisitions") without the Lenders' prior written
consent.
10.17 TRANSFER OF COLLATERAL. Transfer, or permit the transfer, to another
location of any of the Collateral or the books and records related to any of the
Collateral; provided, however, that the Company may transfer Collateral or the
books and records related thereto to another location with the prior written
consent of the Agent and if the Company has provided to the Agent prior to such
transfer an opinion addressed to the Agent in the form and substance and written
by counsel acceptable to the Agent to the effect that the perfection and
priority of the Agent's security interest in the Collateral will not be affected
by such move or if it will be affected, setting forth the steps necessary to
continue the perfection and priority of the Agent's security interest together
with the commencement of such steps by the Company at its expense.
10.18 SALE AND LEASEBACK. Directly or indirectly enter into any arrangement
to sell or transfer all or any part of its fixed assets and thereupon or within
one (1) year thereafter rent or lease (or permit any Subsidiary to rent or
lease) any assets so sold or transferred.
10.19 LINE OF BUSINESS. Enter into any line or area of business
substantially different from the business or activities in which it is presently
engaged, or permit any Subsidiary to do so.
10.20 WAIVERS. Waive any right or rights of substantial value which, singly
or in the aggregate, is or are material to the condition (financial or
otherwise), properties, business or operations of the Company.
10.21 PAYMENTS TO SHAREHOLDERS AND AFFILIATES. Except for payments permitted
by Sections 10.12 and 10.13 and except for reasonable and customary salaries and
bonuses made in accordance with Section 10.22, below, make any payment or
distribution (including, without limitation, debt repayment, payment for goods
or services, or otherwise) to its shareholders or to any Affiliate without the
prior written consent of the Agent.
10.22 SALARIES AND DEFERRED COMPENSATION. Pay any deferred compensation to
any officers of the Company or increase the compensation of its officers or
senior management without the prior written consent of the Agent, which consent
will not be withheld unreasonably.
10.23 TRANSACTIONS WITH AFFILIATES. Enter into any transaction, including,
without limitation, any purchase, sale, transfer, lease or exchange of property
or the rendering of any service, with any Affiliate, unless such transaction is
otherwise permitted under this Restated Credit Agreement, is in the ordinary
course of the Company's business and is on fair and
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reasonable terms no less favorable to the Company than it would obtain in a
comparable arm's length transaction with a non-Affiliate.
10.24 POST-CLOSING MATTERS. Fail to deliver to the Lender the documents, if
any, noted as post-closing items on the Closing Document List of even date
herewith. Such documents will be delivered on or before the date specified in
the Closing Document List and will be in form and substance satisfactory to the
Lenders.
10.25 BOND DOCUMENTS. Amend or otherwise modify, or agree to the amendment
or modification of, the Bond Documents to which the Company is a party or to
which the Company shall have a right to consent to any amendment or
modification, and fail to obtain the consent of the Lenders whenever required
under the Indentures.
10.26 LIMITATION ON OPTIONAL CALLS. Exercise its rights under the Bond
Documents to direct the Issuer to call the Bonds for any optional redemption
thereof or convert the interest rate thereon to the Long Term Rate, unless the
Company first demonstrates to the reasonable satisfaction of the Lenders and
their legal counsel that at the time of such redemption or conversion the
Lenders will be fully reimbursed for all drawings on the Letters of Credit in
connection with such redemption or conversion.
10.27 EXCESS BORROWING. Permit the Advances to violate any of the applicable
Revolving Conditions.
11. EVENTS OF DEFAULT. Upon the occurrence of any of the following events:
11.1 PAYMENT. The non-payment of (a) any principal amount of any of the
Advances, (b) any mandatory prepayment pursuant to this Restated Credit
Agreement, (c) any amounts due under this Restated Credit Agreement as
reimbursement for a drawing under the Letters of Credit or Standby Letters of
Credit, Letter of Credit Fees, or interest on any such drawing or Letter of
Credit Fees, (d) any interest, fees or other amounts owing hereunder or under
any of the other Loan Documents within ten (10) days of when the same is due, or
(e) payments into the Sinking Fund Accounts; or
11.2 BOND DOCUMENTS. Any of the events of default specified in the Bond
Documents; or
11.3 COVENANTS. The default in the due observance of any other covenant or
agreement to be kept or performed by the Company under the terms of this
Restated Credit Agreement or any of the Security Documents and the failure or
inability of the Company to cure such default within thirty (30) days of the
occurrence thereof; provided that such thirty (30) day grace period will not
apply to: (a) any default which in the Agent's good faith determination is
incapable of cure, (b) any default that has previously occurred, (c) any default
in any negative covenants, (d) any payment default, (e) any failure to maintain
insurance or to permit inspection of the Collateral or the books and records, or
(f) any failure to provide any notice required hereunder; or
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11.4 REPRESENTATIONS AND WARRANTIES. Any representation, warranty or
statement made by or on behalf of the Company in this Restated Credit Agreement,
in any other Loan Document or in any report, certificate, opinion (including any
opinion of counsel to the Company), financial statement or other instrument
furnished at any time under or in connection with this Restated Credit Agreement
or any of the Obligations is false or erroneous in any material respect on or as
of the date made or any material breach thereof has been committed; or
11.5 OBLIGATIONS. Except as provided in Sections 11.1, 11.2 or 11.3, above,
the default by the Company in the due observance of any other covenant or
agreement to be kept or performed by the Company under the terms of any of the
Obligations to any Lender and the lapse of any applicable cure period provided
in such Obligations with respect to such default, or, if so defined therein, the
occurrence of any Event of Default or Default and the Company's failure to cure
such Event of Default or Default within any applicable cure period (as such
terms are defined in the Obligations) under any of such obligations; or
11.6 EXECUTION, ATTACHMENT, ETC. The commencement of any foreclosure
proceedings, proceedings in aid of execution, attachment actions, levies
against, or the filing by any taxing authority of a lien against, any of the
Collateral; or
11.7 LOSS, THEFT OR SUBSTANTIAL DAMAGE TO THE COLLATERAL. In addition to the
rights of the Agent to deal with proceeds of insurance as provided herein, the
loss, theft or substantial damage to Collateral if the result of such occurrence
(singly or in the aggregate) is the failure or inability of the Company to
resume substantially normal operation of its business within ninety (90) days of
the date of such occurrence; or
11.8 JUDGMENTS. Unless in the opinion of the Agent adequately insured or
bonded, the entry of a final judgment for the payment of money involving more
than $500,000 against the Company and the failure by the Company to discharge
the same, or cause it to be discharged, within ninety (90) days from the date of
the order, decree or process under which or pursuant to which such judgment was
entered, or to secure a stay of execution pending appeal of such judgment; or
the entry of one or more final non-monetary judgment(s) or order(s) which,
singly or in the aggregate, does or could reasonably be expected to (i) cause a
material adverse change in the value of the Collateral or the condition
(financial or otherwise), operations, properties or prospects of the Company, or
(ii) have a material adverse effect on the ability of the Company to perform its
obligations under this Restated Credit Agreement or any of the other Loan
Documents or any of the Obligations, or (iii) have a material adverse effect on
the rights and remedies of the Agent under this Restated Credit Agreement or any
of the other Loan Documents or any of the Obligations and the failure by the
Company to secure a stay of execution pending appeal of such judgment or order;
or
11.9 BANKRUPTCY, ETC. The Company (a) dissolves or is the subject of any
dissolution, winding up or liquidation; (b) becomes insolvent; (c) makes a
general assignment for the benefit of creditors; or (d) files or has filed
against the Company a petition in bankruptcy, for a reorganization or an
arrangement, or for a receiver, trustee or similar
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creditors' representative for the property or assets of the Company or any part
thereof, or any other proceeding under any federal or state insolvency law (and
if filed against the Company without its acquiescence, the same is not contested
by the Company within ninety (90) days thereof and has not been dismissed or
discharged within ninety (90) days thereof); or
11.10 IMPAIRMENT OF SECURITY. The validity or effectiveness of any Loan
Document or the transfer, grant, pledge, mortgage or assignment by the Company
of any lien hereunder or thereunder to the Agent is impaired or contested; or
any Security Document is amended, hypothecated, subordinated, terminated or
discharged, or if any Person is released from any of its covenants or
obligations of such person thereunder any Security Document except to the extent
that the Agent expressly consents in writing; or
11.11 [INTENTIONALLY OMITTED].
11.12 OTHER INDEBTEDNESS. A default in payment with respect to any
Indebtedness in excess of $250,000 in principal amount singly or in the
aggregate of or guaranteed by the Company (other than to a Lender pursuant to
the Credit Facilities); or any other breach or default or event occurs with
respect to any such Indebtedness if the effect of such breach, default or event
is to accelerate the maturity of such Indebtedness (or otherwise allow the
holders to cause such Indebtedness to become due prior to its stated maturity),
whether or not such breach, default or event is waived; provided, however, that
a material adverse change default of the Lease Agreement between PNC Leasing
Corp. and the Company in and of itself will not be deemed an Event of Default
under this Restated Credit Agreement; or
11.13 AMENDMENT. Any amendment is made to the Bond Documents or any waiver
of the terms thereof is granted, or any action is taken pursuant to the Bond
Documents which requires the prior written consent of the Agent and such consent
is not obtained; then in any such event ("Event of Default"), the Agent may, or
upon the request of the Lenders shall, take any or all of the following actions
(provided that if any Event of Default specified in Section 11.9, above, occurs,
the results described in clauses (a) and (b), below, shall occur automatically):
(a) declare the Commitments terminated,
(b) declare all principal, interest and other amounts due and payable
hereunder and under the Loan Documents, and the maximum amount available to
be drawn under all outstanding Letters of Credit, to be immediately due and
payable whereupon all such amounts shall immediately be due payable, without
presentment, demand, protest or notice of any kind, all of which hereby are
waived by the Company and require the immediate purchase by the Company of
all Bonds held by the Agent and/or the deposit by the Company with the Agent
in a cash collateral account of an amount equal to the Letter of Credit
Amounts,
(c) exercise all rights and remedies under the Bond Documents,
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(d) notify the Trustee of such Event of Default, direct the Trustee to
declare an Event of Default, as defined in the Indenture, and accelerate the
Bonds, direct the Paying Agent to draw on the Letter of Credit, and direct
the Trustee to exercise remedies under the Bond Document,
(e) by written notice to the Company, the Trustee, the Tender Agent
and the Remarketing Agent, terminate the Liquidity Period, and
(f) exercise any other rights and remedies provided hereunder, under
any of the Loan Documents and/or by applicable law. After the occurrence of
any Event of Default the Lenders are authorized at any time and from time to
time without notice to the Company to offset, appropriate and apply to all
or any part of the Obligations all moneys, credits, deposits (general or
special, demand or time, provisional or final) and other property of any
nature whatsoever of the Company now or at any time hereafter in the
possession of, in transit to or from, under the control or custody of, or on
deposit with (whether held by the Company individually or jointly with
another party) any of the Lenders and any or all indebtedness at any time
owing by such Lender to or for the credit or account of the Company. The
rights and remedies of the Lenders upon the occurrence of any Event of
Default will include but not be limited to all rights and remedies provided
in the Security Documents and all rights and remedies provided under
applicable law. The Company irrevocably waives (a) any requirement of
marshalling of the Collateral upon the occurrence of any Event of Default
and (b) any right to direct the application of any payments received by any
Lender or the Agent from or on behalf of the Company after the occurrence of
any Event of Default.
12. INTERCREDITOR LIEN AND PAYMENT PROVISIONS.
12.1 LIEN PRIORITY.
12.1.1 The Company has granted to the Agent, for the benefit of the
Lenders, a lien on and security interest in the Collateral to secure payment of
the Obligations. Notwithstanding the date, manner or order of perfection,
attachment or filing, all pledges, liens and security interests of any kind that
any Lender now has or hereafter acquires in any or all of the Collateral, are
and shall be subordinate, inferior and subject to the pledges, liens and
security interests of the Agent for the benefit of the Lenders in the
Collateral.
12.1.2 None of the Lenders will take any action with respect to
foreclosure or repossession of the Collateral upon an Event of Default without
the prior written consent of the Agent and the Lenders, so long as this Restated
Credit Agreement is in effect or any obligations exist between the Company and
the Lenders pursuant thereto or pursuant to the Security Documents. The Lenders
will cooperate with each other with regard to all such actions with respect to
such Collateral and in all events, sums due and owing the Lenders under this
Restated Credit Agreement, the Obligations or the other Loan Documents will be
paid out of any amounts realized upon any disposition or other transfer of the
Collateral prior to the application thereof to any other obligation of the
Company to any Lender.
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12.2 PARTICIPATION IN LETTERS OF CREDIT. Immediately upon the issuance of
each Letter of Credit, the Agent shall be deemed to have sold and transferred to
each Lender, and each Lender shall be deemed to have purchased and received from
the Agent, in each case irrevocably and without any further action by any party,
an undivided interest and participation in such Letter of Credit, each drawing
thereunder and the Obligations of the Company under this Restated Credit
Agreement related to such Letter of Credit in an amount equal to the Ratable
Portion of such Lender therein, to the end that all of the Lenders shall share
the obligations and risks as to Letters of Credit in accordance with their
respective Ratable Portions. Each Lender irrevocably agrees to pay to the Agent
upon demand at any time the amount of such Lender's participation in such Letter
of Credit Obligation.
12.3 SHARING OF PAYMENTS, ETC.
12.3.1 Except as otherwise expressly required by the terms of this
Restated Credit Agreement each payment or prepayment of principal, interest,
fees, expenses and other charges under the Credit Facilities and each reduction
of the Total Revolving Commitment will be applied pro-rata among the Lenders in
accordance with their respective Ratable Portions applicable thereto.
12.3.2 If any Lender at any time obtains any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) on account of Advances or Letter of Credit Obligations owing to it,
as applicable (other than payments to the Agent in respect of Letter of Credit
Obligations, and payments of fees and expenses to the Agent pursuant to Sections
2.13.2(c), (d), and (e) and of indemnities and expenses to the Agent pursuant to
Sections 2.10.8, 16.12 and 16.13 hereof, in excess of its pro rata share of
payments on account of Advances or Letter of Credit Obligations, as the case may
be), such Lender will forthwith purchase from the other Lenders, such
participations in the Advances or Letter of Credit Obligations, as applicable,
owing to them as will be necessary to cause such purchasing Lender to share the
excess payment ratably with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each Lender will be rescinded and such Lender will
repay to the purchasing Lender the purchase price to the extent of such recovery
together with an amount equal to such Lender's ratable share (according to the
proportion of (i) the amount of such Lender's required payment to (ii) the total
amount so recovered from the purchasing Lender) of any interest or other amount
paid or payable by the purchasing Lender in respect of the total amount so
recovered. The Company agrees that any Lender so purchasing a participation from
another Lender pursuant to this Restated Credit Agreement may, to the fullest
extent permitted by law, exercise all of its rights of payment (including the
right of set-off) with respect to such participation as fully as if such Lender
were the direct creditor of the Company in the amount of such participation.
12.3.3 The Company and the Lenders further acknowledge that the Agent
shall not be obligated to make any Advances to the extent that any of the other
Lenders do not contribute their Ratable Portion of any Advance.
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12.3.4 Each Lender's Ratable Portion of any payment hereunder shall be
reduced to the extent that such Lender has not contributed its Ratable Portion
of any amount owing to the Agent hereunder.
12.3.5 Each Lender's obligation to purchase participation interests
pursuant to this Restated Credit Agreement shall be absolute and unconditional.
12.3.6 Each Lender shall be entitled to receive from the Agent its
Ratable Portion of interest on Advances of such Lender only as calculated based
upon funds actually received by the Agent from each Lender by 11:00 a.m.
(Cincinnati time) on the day due from such Lender. Funds received by the Agent
after such cut off time will be treated as having been received by the Agent on
the next Business Day following the day on which received.
12.3.7 To the extent that the Agent shall have disbursed a Borrowing on
a day prior to receipt by the Agent of a Lender's Ratable Portion of such
Borrowing, interest accrued and paid on such unfunded sums will be for the
account of the Agent.
12.4 RECEIPT OF PAYMENTS BY LENDERS. Should any payment or distribution not
permitted by the provisions of this Restated Credit Agreement or the Security
Documents or proceeds thereof be received by any Lender upon or with respect to
all or any part of the Notes, Letter of Credit Obligations or the Obligations
and/or the Collateral prior to the full payment and satisfaction of the
Obligations in the priority set forth in this Section 12.4 and the termination
of all financing arrangements between the Lenders and the Company, such Lender
will deliver the same to the Agent in precisely the form received (except for
the endorsement or assignment of the Lender where necessary), for application to
the Obligations (whether due or not due in such order and manner as set forth
herein), and, until so delivered, the same shall be held in trust by such Lender
as property of the Agent on behalf of all of the Lenders. In the event of the
failure of any Lender to make any such endorsement or assignment, the Agent on
behalf of all of the Lenders, or any of its officers or employees on behalf of
the Agent on behalf of all of the Lenders, is hereby irrevocably authorized in
its own name or in the name of the Lenders to make the same, and is hereby
appointed each of the Lender's attorney-in-fact for those purposes, that
appointment being coupled with an interest and irrevocable.
12.5 DISTRIBUTIONS, ETC. In the event of any distribution, division or
application, partial or complete, voluntary or involuntary, by operation of law
or otherwise, of all or any part of the assets of the Company or the proceeds
thereof to creditors of the Company or to any indebtedness, liabilities and
obligations of the Company, or upon any liquidation, dissolution or other
winding up of the Company's business, or in the event of any sale (singly or in
the aggregate) of all or any substantial part of the assets of the Company, or
in the event of any receivership, insolvency or bankruptcy proceeding, or
assignment for the benefit of creditors, or any proceeding by or against the
Company for any relief under any bankruptcy or insolvency law or other laws
relating to the relief of debtors, readjustment of indebtedness, reorganization,
compositions or extensions, then and in any such event any payment or
distribution of any kind or character, either in cash, securities or other
property, whether or not on account of the Collateral, which shall be payable or
deliverable upon or with respect to all or any part of the
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Obligations shall be paid or delivered directly to the Agent for application to
the Obligations (whether due or not due in order and manner as set forth herein)
until the Obligations shall have been fully paid and satisfied. The Lenders
hereby irrevocably authorize and empower the Agent to demand, sue for, collect
and receive every such payment or distribution and give acquittance therefor and
to file claims and take such other proceedings in the Agent's own name or in the
name of the Lenders or otherwise, as the Lender may deem necessary or advisable
to carry out the provisions of this Section. The Lenders hereby agree to execute
and deliver to the Agent such limited powers of attorney, assignments,
endorsements or other instruments as may be requested by Agent in order to
enable the Agent to enforce any and all claims upon or with respect to the
Obligations and/or the Collateral, and to collect and receive any and all
payments or distributions which may be payable or deliverable at any time upon
or with respect to the Obligations and/or the Collateral.
12.6 BENEFIT. The provisions of this Section 12 are solely for the benefit
of the Lenders, and may at any time or times be changed by the Lenders pursuant
to Section 16.4, below, as they may elect without necessity of notice to or
consent or approval by the Company or any other Person (other than the Lenders
pursuant to Section 16.4, below); and the Company, or other Person shall not
have any right to rely on or enforce any of the provisions hereof.
13. REPRESENTATIONS AND WARRANTIES TO SURVIVE. All representations, warranties,
covenants and agreements made by the Company herein and in the other Loan
Documents will survive the execution and delivery of this Restated Credit
Agreement, the Security Documents and the issuance of the Notes.
14. ENVIRONMENTAL INDEMNIFICATION. The Company assumes any liability or
obligation of, or claims asserted against the Agent or any of the Lenders for
loss, damage, fines, penalties, claims or duty to clean-up or dispose of wastes
or materials on or relating to any of its assets, real or personal, owned or
leased, regardless of any inspections of such assets made by the Agent or the
Lenders prior to the consummation of this transaction or as a result of any
conveyance of title to the Agent or the Lenders by foreclosure, deed in lieu of
foreclosure, or otherwise. The Company agrees to remain fully liable and will
indemnify and hold harmless Agent and the Lenders from any costs, expenses,
clean-up costs, waste disposal costs, litigation costs, fines, penalties,
including without limitation those costs, expenses, penalties and fines within
the meaning of CERCLA, and other related liabilities. The provisions of this
Section will survive any termination of this Restated Credit Agreement.
15. THE AGENT.
15.1 AUTHORIZATION AND ACTION. Each Lender hereby appoints and irrevocably
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Restated Credit Agreement and the other
Loan Documents as are delegated to the Agent by the terms hereof or thereof,
together with such powers as are reasonably incidental thereto. Without
limitation of the foregoing, each Lender hereby expressly authorizes the Agent
to execute, deliver and perform its obligations hereunder and under each of the
Loan Documents to which the Agent is a party, and to exercise hereunder or
thereunder all rights,
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powers and remedies that the Agent may have hereunder or thereunder. Each Lender
agrees that any action taken by the Agent in accordance with the provisions of
this Restated Credit Agreement or the Loan Documents, and the exercise by the
Agent of the powers set forth herein or therein, together with such other powers
as are reasonably incidental thereto, shall be authorized and binding upon all
Lenders. As to any matters not expressly provided for hereunder or by the Loan
Documents (including, without limitation, enforcement or collection of the
Obligations), the Agent will not be required to exercise any discretion or take
any action, but will be required to act or to refrain from acting (and will be
fully protected in so acting or refraining from acting) upon the instructions of
the Lenders, and such instructions will be binding upon all the Lenders. The
duties of the Agent will be mechanical and administrative in nature and the
Agent will have no fiduciary relationship in respect of any Lender. If the Agent
shall request instructions from any Lenders with respect to any act or failure
to act in connection with this Restated Credit Agreement, the Credit Facilities
or any of the Loan Documents, the Agent shall be entitled to refrain from such
act or taking such action unless and until the Agent has received instructions
and the Agent will have no liability to any Person or Lender by reason of so
refraining. The Agent will not be required to take any action which exposes the
Agent to personal liability or is contrary to this Restated Credit Agreement,
any Security Document or applicable law.
15.2 AGENT'S RELIANCE, ETC. Neither the Agent, any Affiliate
of the Agent, nor any of their respective directors, officers, agents,
employees, attorneys or consultants will be liable to any Lender for any action
taken or omitted to be taken by it or them under or in connection with this
Restated Credit Agreement, any of the Obligations, any of the Collateral or any
Loan Document, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the Agent:
(a) may consult with legal counsel (including counsel for the Company),
independent public accountants and other experts selected by it and will not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (b) makes no
warranty or representation to any Lender and will not be responsible to any
Lender for any statements, warranties or representations made in or in
connection with this Restated Credit Agreement, the Notes or any Loan Document;
(c) will not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Restated Credit
Agreement, the Obligations or any Loan Document on the part of the Company or as
to the existence or possible existence of any Potential Default, Default or
Event of Default or to inspect the property (including the books and records) of
the Company; (d) will not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Restated Credit Agreement, the Obligations or any Loan Document or any other
instrument or document furnished pursuant thereto; (e) will have no obligation
to any Person to assure that the Collateral exists or is owned by the Company or
is cared for, protected or insured or has been encumbered or that the liens
granted to Agent pursuant to the Loan Documents have been created, perfected,
protected or enforced or are entitled to any particular priority or to exercise
at all or in any particular manner or under any duty of care any right,
authority or power in respect of the Collateral; and (f) will incur no liability
under or in respect of this Restated Credit Agreement, the Obligations or any
Loan Document by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telephone, telegram, cable,
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telecopy or telex) believed by it to be genuine and signed or sent by the proper
party or parties. The Agent will not be liable for any apportionment or
distribution of payments made by it in good faith pursuant to this Restated
Credit Agreement, and if any such apportionment or distribution is subsequently
determined to have been made in error the sole recourse of any Person to whom
payment was due, but not made, shall be to recover from the recipients of such
payments any payment in excess of the amount to which they are determined to
have been entitled.
15.3 THE AGENT AND ITS AFFILIATES. With respect to its Commitments, the
Advances made or Letters of Credit issued by it, the Notes issued to it, and the
Collateral, the Agent will have the same rights and powers under the Loan
Documents as any other Lender and may exercise the same as though it were not
the Agent; and the term "Lender" or "Lenders" will, unless otherwise expressly
indicated, include the Agent in its individual capacity. The Agent and its
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with the Company or
the Company's Affiliates and any Person who may do business with or own
securities of the Company or the Company's Affiliates, all as if it were not the
Agent and without any duty to account therefor to the Lenders.
15.4 LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Restated Credit Agreement. Each
Lender also acknowledges that it will, independently and without reliance upon
the Agent or any other Lender and based on such documents and information as it
will deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under or otherwise relating to this Restated Credit
Agreement, the Obligations, the Collateral and the Security Documents; and the
Agent will not have any duty or responsibility at any time to provide any Lender
with any credit or other information with respect thereto.
15.5 INDEMNIFICATION. The Lenders agree to indemnify the Agent (to the
extent not reimbursed by the Company), ratably according to their respective
Commitments existing on the date hereof, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against the Agent in any way relating to or
arising out of this Restated Credit Agreement, the Notes, the Letters of Credit,
the Obligations or any of the Loan Documents or any action taken or omitted by
the Agent under this Restated Credit Agreement, the Notes, the Letters of
Credit, the Obligations or any of the Loan Documents, provided that no Lender
will be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse the Agent promptly
upon demand for its ratable share of any out-of-pocket expenses incurred by the
Agent in connection with the preparation, review, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice
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in respect of rights or responsibilities under, this Restated Credit Agreement,
the Notes, the Letters of Credit, the Obligations or any of the Loan Documents,
or any of them, to the extent that the Agent is not reimbursed for such expenses
by the Company. The provisions of this Section will survive the termination of
this Restated Credit Agreement.
15.6 SUCCESSOR AGENT. The Agent may resign at any time as Agent under this
Restated Credit Agreement, the Notes or the Loan Documents by giving written
notice thereof to the Lenders and the Company. Upon any such resignation, the
Lenders will appoint a successor Agent, which will be a commercial bank
organized under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $150,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent will thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the retiring Agent will
be discharged from its duties and obligations under this Restated Credit
Agreement; provided, however, that the successor Agent will not be considered as
a Lender for purposes of this Restated Credit Agreement. After any retiring
Agent's resignation, the provisions of this Section 15 will inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent under
this Restated Credit Agreement. If the other Lenders request the Agent to
resign, then, prior to such resignation, the other Lenders shall cause the Agent
to be paid all amounts owed to Agent hereunder, including, without limitation,
the Agent's Ratable Portion of all outstanding Advances and other Obligations,
replacement Letters of Credit shall be substituted for any Letters of Credit
issued by the Agent and Letters of Credit outstanding pursuant to this Restated
Credit Agreement shall be returned to Agent without demand for payment by the
beneficiaries thereof.
15.7 RELATIONS AMONG LENDERS.
15.7.1 Except as contemplated under this Restated Credit Agreement, no
Lender shall make any loan, advance or other financial accommodation to the
Company without the prior written consent of all the Lenders except for
corporate credit cards issued by any of the Lenders.
15.7.2 Each Lender agrees that it will not take or institute any
actions or proceedings, against the Company under this Restated Credit Agreement
or with respect to any Collateral, without the prior written consent of all the
Lenders.
15.8 BENEFIT. The provisions of this Section 15 are solely for the benefit
of the Agent and the Lenders, and may at any time or times be changed by the
Lenders as they may elect without necessity of notice to or consent or approval
by the Company or other Person (other than the Lenders pursuant to Section 16.4,
below); and the Company or other Person shall not have any right to rely on or
enforce any of the provisions hereof. In performing its actions and duties under
this Restated Credit Agreement the Agent acts solely as Agent of the Lenders and
does not assume or have any obligation toward or agency relationship with or for
the Company.
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16. GENERAL.
16.1 WAIVER. No delay or omission on the part of any Lender to exercise any
right or power arising from any Event of Default will impair any such right or
power or be considered a waiver of any such right or power or a waiver of any
such Event of Default or any acquiescence therein nor will the action or
nonaction of any Lender in case of such Event of Default impair any right or
power arising as a result thereof or affect any subsequent default or any other
default of the same or a different nature. No disbursement of Advances, issuance
of Letters of Credit or disbursement under the Letters of Credit hereunder will
constitute a waiver of any of the conditions to the Lenders' obligation to make
further disbursements; nor, in the event that the Company is unable to satisfy
any such condition, will any such disbursement have the effect of precluding the
Lenders from thereafter declaring such inability to be a Default or an Event of
Default. No modification or waiver of any provision of this Restated Credit
Agreement or any of the Loan Documents, nor consent to any departure by the
Company therefrom, will be established by conduct, custom or course of dealing;
and no modification, waiver or consent will in any event be effective unless the
same is in writing and specifically refers to this Restated Credit Agreement,
and then such waiver or consent will be effective only in the specific instance
and for the purpose for which given. No notice to or demand on the Company in
any case will entitle the Company to any other or further notice or demand in
the same, similar or other circumstance. Unless otherwise agreed in writing by
all the Lenders pursuant to Section 16.4 hereof, the liability of the Company
will not be affected by any surrender, exchange, acceptance, or release by the
Agent or any Lender of any party or other person or any other guarantee or any
security held by it for any of the Obligations or by the Agent's or any Lender's
failure to take any steps to perfect or maintain its lien or security interest
in or to preserve any of its rights to, any guarantee, security or other
collateral for any of the Obligations, by any delay or omission in exercising
any right, remedy or power with respect to any of the Obligations or any
guarantee or collateral therefor, or by any irregularity, unenforceability or
invalidity of any of the Obligations or any security or guarantee therefor.
Subject to Section 16.4 hereof, the Lenders at any time and from time to time,
and without impairing, releasing, discharging or modifying the liabilities of
the Company hereunder, may (a) without the consent of or notice to the Company,
change the manner, amount, place or terms of payment or performance of or
interest rates on, or change or extend the time of payment of, or other terms
relating to, any of the Obligations, (b) renew, substitute, modify, amend or
alter, or grant consents or waivers relating to, any of the Obligations without
the consent of or notice to the Company, (c) renew, substitute, modify, amend or
alter, or grant consents or waivers relating to, any guarantee or any security
for any guarantee, (d) apply any and all payments received by a Lender by
whomever paid or however realized, including any proceeds of any Collateral, to
any of the Obligations in such order, manner and amount as such Lender may
determine in its sole discretion, (e) deal with any Person in respect of the
Obligations in such manner as such Lender deems appropriate in its sole
discretion and/or (f) substitute any security or guarantee. Irrespective of the
taking or refraining from the taking of any such action, the obligations of the
Company shall remain in full force and effect. The Lenders in their sole
discretion may determine the reasonableness of the period which may elapse prior
to the making of demand for any payment upon the Company and need not pursue any
remedy or remedies
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against any particular Company, any other Person or any Collateral before having
recourse against the Company hereunder.
16.2 NOTICES. All notices, demands, requests, consents or approvals required
hereunder will be in writing (including telegraphic, telex, facsimile or cable
communication) and mailed, telegraphed, telexed, transmitted, cabled or
delivered to such party at the address set forth below (or at such other address
as such party may specify to the other party in writing). All such notices and
communications will, when mailed, telegraphed, telexed, transmitted or cabled,
be effective when deposited in the mails (postage pre-paid), delivered to the
telegraph company, confirmed by telex answerback, transmitted by telecopier or
delivered to the cable company, respectively, except that notices and
communications to the Agent pursuant to Sections 2 or 15, above, will not be
effective until received by the Agent.
To the Agent: PNC Bank, Ohio, National Association
201 East Fifth Street
Second Floor
Cincinnati, Ohio 45202-4117
Attention: Special Assets Department
Telecopier No.: (513) 651-7010
To the Company Multi-Color Corporation
or the Authorized 4575 Eastern Avenue
Company Cincinnati, Ohio 45226
Representative: Attention: William B. Cochran
Telecopier No.: (513) 321-7659
To the Lenders: PNC Bank, Ohio, National Association
201 East Fifth Street
P.O. Box 1198
Cincinnati, Ohio 45201-1198
Attention: Special Assets Department
Telecopier No.: (513) 651-7010
Star Bank, National Association
425 Walnut Street
ML 8025
Cincinnati, Ohio 45202
Attention: Stephen Wood
Telecopier No.: (513) 632-3099
16.3 SUCCESSORS AND ASSIGNS.
16.3.1 This Restated Credit Agreement will be binding upon and inure to
the benefit of the Company and the Lenders and their respective successors and
assigns, provided, however, that the Company may not assign this Restated Credit
Agreement in whole
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or in part without the prior written consent of the Agent and the Lenders and
the Agent may not assign this Restated Credit Agreement in whole or in part
without the prior written consent of the Company except as otherwise set forth
herein.
16.3.2 Each Lender may sell participations to one or more banks or
other entities in all or a portion of its rights and obligations under this
Restated Credit Agreement (including, without limitation, all or a portion of
its Commitments, and the Advances owing to it and the Note or Notes held by it);
provided, however, that (i) such Lender's obligations under this Restated Credit
Agreement (including, without limitation, its Commitments to the Company
hereunder and its participation obligations to the Agent as to Letter of Credit
Obligations) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any such Notes for all purposes of
this Agreement, (iv) the Company, the Agent and the other Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Restated Credit Agreement and (v) no
participant under any such participation shall have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by any party therefrom. Notwithstanding the foregoing, the Company
agrees that each such participant shall, to the extent provided in its
participation, be entitled to the rights and benefits under Sections 2.13 and
2.14, and, subject to Section 12, all rights of setoff under this Restated
Credit Agreement with respect to its participating interest, in each case, as if
such participant were a Lender.
16.3.3 Any Lender may, in connection with any participation or proposed
participation pursuant to this Section 16, disclose to the participant or
proposed participant, any information relating to the Company furnished to such
Lender by or on behalf of the Company.
16.4 MODIFICATIONS. No modification, amendment or waiver of any provision of
this Restated Credit Agreement or any of the Loan Documents nor consent to any
departure therefrom by the Company will in any event be effective unless the
same is in writing signed by all the Lenders and the Company and specifically
refers to this Restated Credit Agreement, and then such waiver or consent will
be effective only in the specific instance and for the purpose for which given,
provided, however, that no amendment, waiver or consent will be effective
without the signed written consent of all the Lenders, to (a) change the
percentage amount of the Commitments or of the aggregate unpaid principal amount
of the Notes or the number of Lenders which will be required for the Lenders or
any of them to take any action hereunder, (b) waive any Event of Default under
Section 11.1 hereof; (c) amend Sections 12 or 15 or this Section 16.4; (d)
increase any Commitment of any Lender; (e) change the rate of interest on any
Note held by any Lender; or (f) postpone any date fixed for any payment of
principal of, or interest on, any of the Notes; and provided further, however,
that no amendment, waiver or consent will, unless in writing and signed by the
Agent in addition to all of the Lenders, affect the rights or duties of the
Agent under this Restated Credit Agreement, the Letters of Credit, the
Obligations or any Loan Document. No notice to or demand on the Company in any
case will entitle the Company to any other or further notice or demand in the
same, similar or other circumstance. Notwithstanding anything to the contrary
contained herein: (a) the Agent may in its sole discretion and without the
consent of the Lenders reduce the fees
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or expenses for audits or legal services that the Company is required to pay to
Agent; provided, however, that any increase in such fees shall not be effective
unless the same is in writing and signed by the Lenders and the Company; and (b)
as long as the fees provided herein are at the customary level as normally
charged by the Agent, such fees are not subject to this Section 16.4.
16.5 ILLEGALITY. If fulfillment of any provision hereof or any transaction
related hereto or of any provision of any of the Loan Documents, at the time
performance of such provision is due, involves transcending the limit of
validity prescribed by law, then ipso facto, the obligation to be fulfilled will
be reduced to the limit of such validity; and if any clause or provisions herein
contained other than the provisions hereof pertaining to repayment of the
Obligations operates or would prospectively operate to invalidate this Restated
Credit Agreement in whole or in part, then such clause or provision only will be
void, as though not herein contained, and the remainder of this Restated Credit
Agreement will remain operative and in full force and effect; and if such
provision pertains to repayment of the Obligations, then, at the option of the
Lenders, all of the Obligations will become immediately due and payable.
16.6 GENDER, ETC. Whenever used herein, the singular number will include the
plural, the plural the singular and the use of the masculine, feminine or neuter
gender will include all genders.
16.7 HEADINGS. The headings in this Restated Credit Agreement are for
convenience only and will not limit or otherwise affect any of the terms hereof.
16.8 PURPOSE. The Company hereby ratifies and confirms all of its
obligations, liabilities and indebtedness under the provisions of the Credit
Agreement as amended and restated by this Restated Credit Agreement. The purpose
of this Restated Credit Agreement is to amend and restate the Credit Agreement.
The Agent, Lenders and the Company agree that nothing contained herein shall be
construed to extinguish, release or discharge or constitute a novation of, or an
agreement to extinguish, (a) the continuing Obligations under the provisions of
the Credit Agreement as amended and restated by this Restated Credit Agreement,
(b) any of the Loan Documents, (c) the security interests and liens created by
any of the Security Documents, and (d) any of the Obligations (as defined in the
Credit Agreement as amended and restated by this Restated Credit Agreement); all
of the foregoing described in (a), (b), (c) and (d) above to continue and remain
in full force and effect.
16.9 RATIFICATION. Agent, Lenders and the Company agree that any and all of
the terms and provisions of the Notes, the Security Documents, and any and all
other documents, instruments or agreements evidencing, securing or pertaining to
the Obligations evidenced by the Notes and Credit Agreement shall, except as
modified and amended, hereby remain in full force and effect as to the
Collateral. The Company hereby ratifies and extends the liens and security
interests of any and all security for the indebtedness evidenced by the Security
Documents, including, without limitation, the Mortgages until the Obligations
evidenced by the Restated Credit Agreement have been paid in full and agrees
that such modification and renewal of the Obligations shall in no manner affect
or impair the Security Documents and that the lien shall not in any manner be
waived; the purpose of this Agreement being to modify and renew
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the Obligations evidenced by the Credit Agreement and the Loan Documents and to
carry forward all liens securing the payment and performance of the Obligations,
which are acknowledged by the Company to be valid and subsisting.
16.10 CLAIMS AND RELEASE OF CLAIMS BY THE COMPANY. The Company represents
and warrants that the Company does not have any claims, counterclaims, setoffs,
actions or causes of actions, damages or liabilities of any kind or nature
whatsoever whether at law or in equity, in contract or in tort, whether now
accrued or hereafter maturing (collectively, "Claims") against the Lenders or
the Agent, their respective direct or indirect parent corporations or any direct
or indirect affiliates of such parent corporation, or any of the foregoing's
respective directors, officers, employees, agents, attorneys and legal
representatives, or the successors or assigns of any of them (collectively,
"Lender Parties") that directly or indirectly arise out of, are based upon or
are in any manner connected with any Prior Related Event. As an inducement to
the Lenders and the Agent to enter into this Restated Credit Agreement, the
Company on behalf of itself, and all of its successors and assigns hereby
knowingly and voluntarily releases and discharges all Lender Parties from any
and all Claims, whether known or unknown, that directly or indirectly arise out
of, are based upon or are in any manner connected with any Prior Related Event.
As used herein, the term "Prior Related Event" means any transaction, event,
circumstance, action, failure to act, occurrence of any sort or type, whether
known or unknown, which occurred, existed, was taken, permitted or begun at any
time prior to the Closing Date or occurred, existed, was taken, was permitted or
begun in accordance with, pursuant to or by virtue of any of the terms of the
Credit Agreement or any documents executed in connection with the Credit
Agreement or which was related to or connected in any manner, directly or
indirectly to the Notes, Letter of Credit or Standby Letter of Credit.
16.11 EXECUTION IN COUNTERPARTS. This Restated Credit Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed will be deemed to be an
original and all of which taken together will constitute one and the same
agreement.
16.12 REMEDIES CUMULATIVE. No single or partial exercise of any right or
remedy by the Lenders will preclude any other or further exercise thereof or the
exercise of any other right or remedy. All remedies hereunder and in any
instrument or document evidencing, securing, guaranteeing or relating to any
Loan or now or hereafter existing at law or in equity or by statute are
cumulative and none of them will be exclusive of the others or any other remedy.
All such rights and remedies may be exercised separately, successively,
concurrently, independently or cumulatively from time to time and as often and
in such order as the Lenders may deem appropriate.
16.13 COSTS, EXPENSES AND LEGAL FEES. The Company will be solely responsible
for any fees and expenses for appraisals, surveys, title insurance, lien
searches environmental reports, recording fees, documentary taxes and similar
items. The Company agrees to reimburse on demand the Agent for all reasonable
out-of-pocket costs and expenses, including, without limitation, due diligence
and audit expenses and reasonable fees and expenses of auditors, attorneys
(which attorneys may be the Agent's employees and including, without limitation,
the
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reasonable fees and disbursements of Frost & Jacobs, special counsel for the
Agent), and other advisors, expended or incurred in the syndication of the
Credit Facilities; the preparation, review, negotiation, execution and delivery,
and filing and recording as necessary, of this Restated Credit Agreement and the
other amended Loan Documents; in amending, supplementing, waiving or enforcing
provisions of this Restated Credit Agreement and the other amended Loan
Documents; in collecting any sum which is not paid when due under this Restated
Credit Agreement and the other amended Loan Documents; and/or in the protection,
perfection, preservation and enforcement of any and all rights of the Agent and
the Lender's in connection with this Restated Credit Agreement and any of the
other amended Loan Documents.
16.14 INDEMNITY. The Company will indemnify, defend and hold harmless the
Agent and Lenders, their respective directors, officers, counsel and employees,
from and against all claims, demands, liabilities, judgments, losses, damages,
costs and expenses, joint or several (including all accounting fees and
attorneys' fees reasonably incurred), that any such indemnified party may incur
arising under or by reason of the Company's failure to observe, perform or
discharge the Company's obligations, covenants, representations and duties under
this Restated Credit Agreement, any of the Credit Facilities, Loan Documents or
Collateral, except the willful misconduct or gross negligence of such
indemnified party. Without limiting the generality of the foregoing, the Company
agrees that if, after receipt by the Agent or any Lender of any payment of all
or any part of the Obligations, demand is made at any time upon the Agent and/or
any Lender for the repayment or recovery of any amount or amounts received by it
in payment or on account of the Obligations and the Agent and/or Lender repays
all or any part of such amount or amounts by reason of any judgment, decree or
order of any court or administrative body, or by reason of any settlement or
compromise of any such demand, this Restated Credit Agreement will continue in
full force and effect and the Company will be liable, and will indemnify, defend
and hold harmless the Agent and Lenders for the amount or amounts so repaid. The
provisions of this Section will be and remain effective notwithstanding any
contrary action which may have been taken by the Company in reliance upon such
payment, and any such contrary action so taken will be without prejudice to the
Agent's and any Lender's rights under this Restated Credit Agreement and will be
deemed to have been conditioned upon such payment having become final and
irrevocable. The provisions of this Section will survive the termination of this
Restated Credit Agreement.
16.15 CONTINUING AGREEMENT. This Restated Credit Agreement is and is
intended to be a continuing Restated Credit Agreement and will remain in full
force and effect until the Obligations are finally and irrevocably paid in full
and the Credit Facilities, Commitments, Letters of Credit and Standby Letters of
Credit are terminated.
16.16 COMPLETE AGREEMENT. This Restated Credit Agreement, together with the
exhibits and schedules hereto, the other Loan Documents as amended, the Security
Documents, the Bond Documents and related documents delivered on the Closing
Date constitutes the entire agreement of the parties hereto regarding the
subject matter hereof and thereof and supersedes any prior or written agreements
or understandings regarding such subject matter.
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16.17 NO THIRD PARTY BENEFICIARIES. Nothing express or implied herein is
intended or will be construed to confer upon or give any person, firm or
corporation, other than the parties hereto, any right to remedy hereunder or by
reasons hereof.
16.18 NO PARTNERSHIP OR JOINT VENTURE. Nothing contained herein or in any of
the agreements or transactions contemplated hereby is intended or will be
constructed to create any relationship other than as expressly stated herein or
therein and will not create any joint venture, partnership or other
relationship.
16.19 GOVERNING LAW AND JURISDICTION; WAIVER OF JURY TRIAL. THIS RESTATED
CREDIT AGREEMENT WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE
PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO. ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS RESTATED CREDIT AGREEMENT OR THE
OBLIGATIONS MAY BE BROUGHT IN ANY COURT(S) OF THE STATE OF OHIO, OR OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF OHIO, AND THE COMPANY
HEREBY ACCEPTS, GENERALLY, IRREVOCABLY AND UNCONDITIONALLY, THE JURISDICTION OF
ANY SUCH COURT AND CONSENTS THAT ANY SERVICE OF PROCESS MAY BE MADE BY CERTIFIED
MAIL DIRECTED TO THE COMPANY AT THE ADDRESS SET FORTH HEREIN FOR NOTICES AND
SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED FIVE (5) BUSINESS DAYS AFTER THE
SAME HAS BEEN DEPOSITED IN U.S. MAILS, POSTAGE PREPAID. THE COMPANY WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION
INSTITUTED HEREUNDER IN ANY SUCH JURISDICTION. NOTHING HEREIN CONTAINED SHALL
AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS, ENFORCE ANY JUDGMENT OR
OTHERWISE PROCEED AGAINST THE COMPANY, ANY SECURITY OR ANY PROPERTY OF THE
COMPANY IN ANY OTHER JURISDICTION. THE COMPANY AND THE LENDERS EACH
UNCONDITIONALLY AND IRREVOCABLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING RELATING TO THIS RESTATED CREDIT AGREEMENT, THE OTHER LOAN
DOCUMENTS OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH AGREEMENTS.
Signed at Cincinnati, Ohio, effective as of February 23, 1996.
MULTI-COLOR CORPORATION,
AS COMPANY
By:
----------------------------------
Print Name:
--------------------------
Title:
-------------------------------
87
<PAGE> 98
PNC BANK, OHIO, NATIONAL ASSOCIATION,
ON ITS OWN BEHALF AS LENDER, AND AS AGENT
By:
----------------------------------
Print Name:
--------------------------
Title:
-------------------------------
STAR BANK, NATIONAL ASSOCIATION,
AS LENDER
By:
----------------------------------
Print Name:
--------------------------
Title:
-------------------------------
88
<PAGE> 1
EXHIBIT 10.19
-------------
SUBSTITUTED
REVOLVING CREDIT NOTE
---------------------
$1,875,000 Cincinnati, Ohio
February 23, 1996
FOR VALUE RECEIVED, MULTI-COLOR CORPORATION, an Ohio corporation (the
"Company"), promises to pay to the order of PNC BANK, OHIO, NATIONAL ASSOCIATION
(the "Lender") on or before the Termination Date (as defined in the Restated
Credit Agreement referred to below), in lawful money of the United States of
America and in immediately available funds, at the Lender's offices located at
201 East Fifth Street, P.O. Box 1198, Cincinnati, Ohio 45201-1198, or at such
other location as the holder hereof may designate from time to time, the
principal amount of ONE MILLION EIGHT HUNDRED SEVENTY-FIVE THOUSAND DOLLARS
($1,875,000), or, if less, the aggregate unpaid principal amount of all
Revolving Credit Loans of the Lender. The Company further agrees to pay interest
in like money from time to time on the unpaid principal amount hereof from the
date of each Advance hereunder until paid in full at the Interest Rates and on
the dates specified in the Restated Credit Agreement (computed on the basis of
360 days per year for the actual number of days in each interest period).
Interest also will be payable on any overdue payment of principal and (to the
extent permitted by law) interest as provided in the Restated Credit Agreement.
This Note is delivered in substitution for the Revolving Credit Note
dated July 19, 1994 in the original principal amount of $2,500,000 and is
secured by the property covered by the Security Documents as that term is
defined in the Amended and Restated Credit, Reimbursement and Security Agreement
of even date herewith among the Company, the Lender and PNC Bank, Ohio, National
Association, as Agent (the "Restated Credit Agreement"). The Restated Credit
Agreement amends and fully restates the Credit, Reimbursement and Security
Agreement dated as of July 15, 1994. All references to the Restated Credit
Agreement will include all amendments made thereto from time to time. The terms,
covenants, conditions, stipulations and agreements contained in the Restated
Credit Agreement and the Security Documents are hereby made a part hereof to the
same extent and effect as if they were fully set forth herein. Capitalized terms
used in this Note and not otherwise defined herein will have the meanings given
such terms in the Restated Credit Agreement.
All payments hereunder are payable to the Agent at the Agent's Account
for the account of the Lender.
In the event of the occurrence of an Event of Default under the
Restated Credit Agreement: (i) the outstanding principal balance hereunder may
become, or may be declared to be, immediately due and payable as provided in the
Restated Credit Agreement; (ii) the rate of interest payable hereunder
automatically will be increased to a rate equal to the Default Rate in effect
from time to time; and (iii) the holder may exercise from time to time any of
the rights and remedies available to the holder under applicable law and/or any
of the Loan Documents
<PAGE> 2
as amended. The Company waives presentment, demand, protest and notice of
demand, protest and dishonor.
If from any circumstances whatsoever the fulfillment of any provision
of this Note involves transcending the limit of validity prescribed by any
applicable usury statute or any other applicable law, with regard to obligations
of like character and amount, then the obligation to be fulfilled will be
reduced to the limit of such validity as provided in such statute or law, so
that in no event will any exaction of interest be possible under this Note in
excess of the limit of such validity. In no event will the Company be bound to
pay interest of more than the legal limit for the use, forbearance or detention
of money and the right to demand any such excess is hereby expressly waived by
the Lender.
THIS NOTE WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE
PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, AND THE COMPANY HEREBY AGREES TO
THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN HAMILTON COUNTY,
OHIO AND CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY CERTIFIED MAIL DIRECTED
TO THE COMPANY AT ITS ADDRESS SET FORTH IN THE RESTATED CREDIT AGREEMENT FOR
NOTICES AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED FIVE (5) BUSINESS
DAYS AFTER THE SAME HAS BEEN DEPOSITED IN U.S. MAILS, POSTAGE PREPAID; PROVIDED
THAT NOTHING CONTAINED HEREIN WILL PREVENT THE LENDER FROM BRINGING ANY ACTION
OR EXERCISING ANY RIGHTS AGAINST ANY SECURITY OR AGAINST THE COMPANY
INDIVIDUALLY, OR AGAINST ANY PROPERTY OF THE COMPANY, WITHIN ANY OTHER STATE OR
NATION. THE COMPANY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER. THE COMPANY AND THE
LENDER EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
RELATING TO THIS NOTE, THE RESTATED CREDIT AGREEMENT OR ANY TRANSACTION
CONTEMPLATED IN ANY OF SUCH AGREEMENTS.
MULTI-COLOR CORPORATION
By:
----------------------------
Print Name:
--------------------
Title:
-------------------------
<PAGE> 1
EXHIBIT 10.20
-------------
SUBSTITUTED
REVOLVING CREDIT NOTE
---------------------
$1,875,000 Cincinnati, Ohio
February 23, 1996
FOR VALUE RECEIVED, MULTI-COLOR CORPORATION, an Ohio corporation (the
"Company"), promises to pay to the order of STAR BANK, NATIONAL ASSOCIATION
(the "Lender") on or before the Termination Date (as defined in the Restated
Credit Agreement referred to below), in lawful money of the United States of
America and in immediately available funds, at the Lender's offices located at
425 Walnut Street, P.O. Box 1038, Cincinnati, Ohio 45201-1038, or at such
other location as the holder hereof may designate from time to time, the
principal amount of ONE MILLION EIGHT HUNDRED SEVENTY-FIVE THOUSAND DOLLARS
($1,875,000), or, if less, the aggregate unpaid principal amount of all
Revolving Credit Loans of the Lender. The Company further agrees to pay
interest in like money from time to time on the unpaid principal amount hereof
from the date of each Advance hereunder until paid in full at the Interest
Rates and on the dates specified in the Restated Credit Agreement (computed on
the basis of 360 days per year for the actual number of days in each interest
period). Interest also will be payable on any overdue payment of principal and
(to the extent permitted by law) interest as provided in the Restated Credit
Agreement.
This Note is delivered in substitution for the Revolving Credit Note
dated July 19, 1994 in the original principal amount of $2,500,000 and is
secured by the property covered by the Security Documents as that term is
defined in the Amended and Restated Credit, Reimbursement and Security
Agreement of even date herewith among the Company, the Lender and PNC Bank,
Ohio, National Association, as Agent (the "Restated Credit Agreement"). The
Restated Credit Agreement amends and fully restates the Credit, Reimbursement
and Security Agreement dated as of July 15, 1994. All references to the
Restated Credit Agreement will include all amendments made thereto from time to
time. The terms, covenants, conditions, stipulations and agreements contained
in the Restated Credit Agreement and the Security Documents are hereby made a
part hereof to the same extent and effect as if they were fully set forth
herein. Capitalized terms used in this Note and not otherwise defined herein
will have the meanings given such terms in the Restated Credit Agreement.
All payments hereunder are payable to the Agent at the Agent's Account
for the account of the Lender.
In the event of the occurrence of an Event of Default under the
Restated Credit Agreement: (i) the outstanding principal balance hereunder may
become, or may be declared to be, immediately due and payable as provided in
the Restated Credit Agreement; (ii) the rate of interest payable hereunder
automatically will be increased to a rate equal to the Default Rate in effect
from time to time; and (iii) the holder may exercise from time to time any of
the rights and remedies available to the holder under applicable law and/or any
of the Loan Documents
<PAGE> 2
as amended. The Company waives presentment, demand, protest and notice of
demand, protest and dishonor.
If from any circumstances whatsoever the fulfillment of any provision
of this Note involves transcending the limit of validity prescribed by any
applicable usury statute or any other applicable law, with regard to
obligations of like character and amount, then the obligation to be fulfilled
will be reduced to the limit of such validity as provided in such statute or
law, so that in no event will any exaction of interest be possible under this
Note in excess of the limit of such validity. In no event will the Company be
bound to pay interest of more than the legal limit for the use, forbearance or
detention of money and the right to demand any such excess is hereby expressly
waived by the Lender.
THIS NOTE WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE
PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, AND THE COMPANY HEREBY AGREES
TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN HAMILTON
COUNTY, OHIO AND CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY CERTIFIED MAIL
DIRECTED TO THE COMPANY AT ITS ADDRESS SET FORTH IN THE RESTATED CREDIT
AGREEMENT FOR NOTICES AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED FIVE
(5) BUSINESS DAYS AFTER THE SAME HAS BEEN DEPOSITED IN U.S. MAILS, POSTAGE
PREPAID; PROVIDED THAT NOTHING CONTAINED HEREIN WILL PREVENT THE LENDER FROM
BRINGING ANY ACTION OR EXERCISING ANY RIGHTS AGAINST ANY SECURITY OR AGAINST
THE COMPANY INDIVIDUALLY, OR AGAINST ANY PROPERTY OF THE COMPANY, WITHIN ANY
OTHER STATE OR NATION. THE COMPANY WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER. THE
COMPANY AND THE LENDER EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING RELATING TO THIS NOTE, THE RESTATED CREDIT AGREEMENT OR ANY
TRANSACTION CONTEMPLATED IN ANY OF SUCH AGREEMENTS.
MULTI-COLOR CORPORATION
By:
--------------------------
Print Name:
------------------
Title:
-----------------------
<PAGE> 1
EXHIBIT 10.21
FIRST AMENDMENT AND WAIVER AGREEMENT
MULTI-COLOR CORPORATION, an Ohio corporation (the "Company"), PNC BANK,
OHIO, NATIONAL ASSOCIATION and STAR BANK, NATIONAL ASSOCIATION (each
individually, a "Lender" and collectively the "Lenders") and PNC BANK,
OHIO, NATIONAL ASSOCIATION, as agent for the Lenders (the "Agent"), hereby
agree as follows effective as of May 2, 1996 ("Effective Date"):
1. RECITALS.
1.1 On February 23, 1996 the Company, the Lenders and the Agent entered
into an Amended and Restated Credit, Reimbursement and Security Agreement
which amended and fully restated a Credit, Reimbursement and Security Agreement
dated as of July 15, 1994 (as amended and restated, the "Credit Agreement").
Capitalized terms used herein and not otherwise defined herein will have the
meanings given such terms in the Credit Agreement.
1.2 The Company desires to sell 60,000 shares of Series A Convertible
Preferred Stock, issue 13,242 shares of Series B Preferred Stock and common
stock in exchange for outstanding debt and purchase new equipment to be used at
its Scottsburg, Indiana plant.
1.3 In connection therewith the Company has requested that the Lenders
waive certain provisions of the Credit Agreement and amend the Credit
Agreement to permit the issuance and sale of such Stock and purchase of such
Equipment, and the Lenders are willing to do so subject to and in accordance
with the terms of this First Amendment and Waiver Agreement (the "First
Amendment").
2. WAIVERS. The following Sections of the Credit Agreement are hereby waived
as follows:
2.1 Compliance with Section 10.1, "DEBT," of the Credit Agreement is
hereby waived for the remainder of Fiscal Year 1997 to the extent necessary to
permit the Company to finance up to $2,000,000 of the purchase price of new
equipment to be used in its Scottsburg, Indiana plant.
2.2 Compliance with Section 10.3, "LIENS," of the Credit Agreement is
hereby waived for the remainder of Fiscal Year 1997 to permit purchase money
security interests granted to secure payment of equipment purchased in
accordance with the temporary waiver given in a accordance with Section 2.1,
above.
2.3 Compliance with Section 10.15, "CAPITAL EXPENDITURES," is hereby
waived for the remainder of Fiscal Year 1997 to permit expenditure of
capital to acquire the new equipment for use in the Scottsburg, Indiana plant,
provided that capital expenditures calculated in accordance with Section
10.15 shall in no event exceed $3,500,000 during Fiscal Year 1997.
<PAGE> 2
3. AMENDMENT.
3.1 Section 10.12, "DIVIDENDS," of the Credit Agreement is hereby
amended to permit the Company to pay dividends on 60,000 shares of Series A
Convertible Preferred Stock issued pursuant to the Preferred Stock Purchase
Agreement dated May 2, 1996 between the Company and Label Venture Group LLC and
13,242 shares of Series B Convertible Preferred Stock issued pursuant to
Resolutions of the Board of Directors of the Company dated May 1, 1996
(without regard to any amendments thereof) at a rate per annum not to exceed
$4.25, subject to adjustment based upon stock splits, stock dividends or
combinations thereof so long as at the time of making or declaring such
dividends and after giving effect thereto no Default or Event of Default exists
under Section 11.1, "PAYMENT," of the Credit Agreement or any other Default or
Event of Default exists under the Credit Agreement and, after giving effect to
any applicable grace or cure period, the Agent has not elected to accelerate
and exercise the remedies granted the Lenders under the Credit Agreement. Any
other issuance of preferred stock will continue to be subject to the
restrictions of Section 10.12, unaffected by the foregoing amendment.
3.2 Debt (including capitalized lease obligations) incurred as a
result of financing the new equipment to be used in the Company's Scottsburg,
Indiana plant and capital expenditures to acquire such equipment will be
excluded in calculating the Cash Flow Coverage Ratio under Section 10.4 and the
Leverage Ratio under Section 10.6 of the Credit Agreement. Capital expenditures
related to the new equipment for use in the Scottsburg, Indiana plant will be
excluded in calculating Excess Cash Flow.
4. CONSENT. In accordance with Section 10.10 of the Credit
Agreement, the Lenders hereby acknowledge that the conversion of Indebtedness,
evidenced by Subordinated Convertible Promissory Notes dated October 3, 1995
payable to John D. Littlehale, John C. Court, Lorrence T. Kellar, James Wiggins
and David H. Pease, Jr., into Series B Convertible Preferred Stock and
Indebtedness in the form of deferred compensation to John C. Court into common
stock of the Company, upon the terms set forth in the Resolutions of the Board
of Directors of the Company, dated May 1, 1996, is satisfactory to the Lenders.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. To
induce the Lenders and the Agent to enter into this First Amendment, the
Company represents and warrants as follows:
5.1 The representations and warranties of the Company
contained in Section 8 of the Credit Agreement are deemed to have been made
again on and as of the date of execution of this First Amendment and are true
and correct as of the date of the execution of this First Amendment.
5.2 No Event of Default (as such term is defined in Section
11 of the Credit Agreement) or event or condition which with the lapse of time
or giving of notice or both would constitute an Event of Default exists on the
date hereof.
- 2 -
<PAGE> 3
5.3 The person executing this First Amendment is a duly elected and
acting officer of the Company and is duly authorized by the Board of Directors
of the Company to execute and deliver this First Amendment on behalf of the
Company.
6. CLAIMS AND RELEASE OF CLAIMS BY THE COMPANY. The Company represents
and warrants that the Company does not have any claims, counterclaims, setoffs,
actions or causes of actions, damages or liabilities of any kind or nature
whatsoever whether at law or in equity, in contract or in tort, whether now
accrued or hereafter maturing (collectively, "Claims") against the Lenders or
the Agent, their respective direct or indirect parent corporations or any
direct or indirect affiliates of such parent corporation, or any of the
foregoing's respective directors, officers, employees, agents, attorneys and
legal representatives, or the successors or assigns of any of them
(collectively, "Lender Parties") that directly or indirectly arise out of, are
based upon or are in any manner connected with any Prior Related Event. As an
inducement to the Lenders and the Agent to enter into this First Amendment, the
Company on behalf of itself, and all of its successors and assigns hereby
knowingly and voluntarily releases and discharges all Lender Parties from any
and all Claims, whether known or unknown, that directly or indirectly arise out
of, are based upon or are in any manner connected with any Prior Related Event.
As used herein, the term "Prior Related Event" means any transaction, event,
circumstance, action, failure to act, occurrence of any sort or type, whether
known or unknown, which occurred, existed, was taken, permitted or begun at any
time prior to the Effective Date or occurred, existed, was taken, was permitted
or begun in accordance with, pursuant to or by virtue of any of the terms of
the Credit Agreement or any documents executed in connection with the Credit
Agreement or which was related to or connected in any manner, directly or
indirectly to the Notes or Letter of Credit.
7. CONDITIONS. The Lenders' and Agent's obligations pursuant to this
First Amendment are subject to the following conditions:
7.1 The Agent shall have been furnished copies, certified by the
Secretary or assistant Secretary of the Company, of resolutions of the Board of
Directors of the Company authorizing the execution of this First Amendment and
all other documents executed in connection herewith.
7.2 The representations and warranties of the Company in Section 5,
above, shall be true.
7.3 The Company shall pay all expenses and attorneys fees incurred
by the Lender in connection with the preparation, execution and delivery of
this First Amendment and related documents.
8. GENERAL.
8.1 The waivers set forth in Section 2, above, will relate only to
the specific matters covered by such Sections and will extend only for the
limited time period set forth therein. In no event will the Lenders and the
Agent be under any obligation to provide additional waivers or enter into any
amendments to the Credit Agreement with regard to those items or any other
provision of the Credit Agreement.
- 3 -
<PAGE> 4
8.2 Except as expressly modified herein, the Credit Agreement, as
amended, is and remains in full force and effect.
8.3 Except as specifically provided in Section 2, nothing contained
herein will be construed as waiving any Default or Event of Default under the
Credit Agreement or will affect or impair any right, power or remedy of the
Lenders or the Agent under or with respect to the Credit Agreement, as amended,
or any agreement or instrument guaranteeing, securing or otherwise relating to
the Credit Agreement.
8.4 This First Amendment will be binding upon and inure to the
benefit of the Company, the Lenders and the Agent and their successors and
assigns.
8.5 All representations, warranties and covenants made by the
Company herein will survive the execution and delivery of this First Amendment.
8.6 This First Amendment will in all respects be governed and
construed in accordance with the laws of the State of Ohio.
8.7 This First Amendment may be executed in one or more
counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
Executed as of the Effective Date.
MULTI-COLOR CORPORATION,
as Company
By:
---------------------------
Print Name:
------------------
Title:
------------------------
-4-
<PAGE> 5
PNC BANK OHIO,
NATIONAL ASSOCIATION,
on its own behalf as Lender and as Agent
By:
----------------------------------
Print Name:
--------------------------
Title:
-------------------------------
STAR BANK,
NATIONAL ASSOCIATION,
as Lender
By:
----------------------------------
Print Name:
--------------------------
Title:
-------------------------------
-5-
<PAGE> 6
CERTIFICATE OF THE SECRETARY
----------------------------
OF
--
MULTI-COLOR CORPORATION
-----------------------
The undersigned, Secretary of Multi-Color Corporation ("Corporation")
hereby certifies to PNC Bank, Ohio, National Association, as Agent as follows:
1. The following Resolution was duly adopted and is a binding resolution
of the Corporation:
RESOLVED, that the Corporation enter into an amendment to the Amended
and Restated Credit, Reimbursement and Security Agreement ("Credit
Agreement") by and between the Corporation and PNC Bank, Ohio,
National Association, as Agent and Lender and Star Bank, National
Association, as Lender, dated February 23, 1996 to (i) amend and waive
certain provisions of the Credit Agreement, and (ii) release any
claims the Corporation may have against the Lenders or the Agent and
certain other persons and/or entities, and that the President or any
Vice President, or any one of them, be and they each hereby are,
authorized to execute any and all documents to effect the same, which
documents shall contain such terms, conditions, waivers, releases or
other agreements as any one of such officers in his or her sole
discretion deems appropriate.
2. The following is a complete and accurate list of the Officers of the
Corporation as of this date:
President.......................... ______________________________
Vice President..................... ______________________________
Vice President..................... ______________________________
Vice President..................... ______________________________
Secretary.......................... ______________________________
Chief Financial Officer............ ______________________________
______________________________
Secretary
<PAGE> 1
EXHIBIT 10.26
-------------
MULTI-COLOR CORPORATION
DEFERRED COMPENSATION RABBI TRUST AGREEMENT
-------------------------------------------
This Agreement made this __ day of ____________, 1996, by and between
MULTI-COLOR CORPORATION (Company) and PNC BANK, OHIO, N.A.
(Trustee):
WHEREAS, Company has adopted the Deferred Compensation Agreement
entered between Multi-Color Corporation and John C. Court (the "Plan") as listed
in Appendix A attached;
WHEREAS, Company has incurred or expects to incur liability under the
terms of such Plan with respect to the individuals participating in such Plan;
WHEREAS, Company wishes to establish a trust (hereinafter called
"Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of Company's creditors in the event of Company's
Insolvency, as herein defined, until paid to Plan participants and their
beneficiaries in such manner and at such times as specified in the Plan;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plan
as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;
WHEREAS, it is the intention of the Company to make contributions to
the Trust to provide itself with a source of funds to assist it in the meeting
of its liabilities under the Plan;
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
Section 1. ESTABLISHMENT OF TRUST.
-----------------------
(a) Company hereby deposits with Trustee in trust no less than 80,000
shares of Multi-Color Corporation Common Stock, which shall become the principal
of the Trust to be held, administered and disposed of by Trustee as provided in
this Trust Agreement.
(b) The Trust hereby established is revocable by Company; it shall
become irrevocable upon a Change of Control, as defined herein.
<PAGE> 2
-2-
(c) The Trust is intended to be a grantor trust, of which Company is
the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(d) The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of Company and shall be used exclusively for
the uses and purposes of Plan participants and general creditors as herein set
forth. Plan participants and their beneficiaries shall have no preferred claim
on, or any beneficial ownership interest in, any assets of the Trust. Any rights
created under the Plan and this Trust Agreement shall be mere unsecured
contractual rights of Plan participants and their beneficiaries against Company.
Any assets held by the Trust will be subject to the claims of Company's general
creditors under federal and state law in the event of Insolvency, as defined in
Section 3(a) herein.
(e) Company, in its sole discretion, may at any time, or from time to
time, make additional deposits of cash or other property in trust with Trustee
to augment the principal to be held, administered and disposed of by Trustee as
provided in this Trust Agreement. Neither Trustee nor any Plan participant or
beneficiary shall have any right to compel such additional deposits.
(f) Upon a Change of Control, Company shall, as soon as possible, but
in no event longer than 30 days following the Change of Control, as defined
herein, make an irrevocable contribution to the Trust in an amount that is
sufficient to pay each Plan participant or beneficiary the benefits to which
Plan participants or their beneficiaries would be entitled pursuant to the terms
of the Plan as of the date on which the Change of Control occurred.
(g) Within 30 days following the end of the Plan year, ending after the
Trust has become irrevocable pursuant to Section 1(b) hereof, Company shall be
required to irrevocably deposit additional cash or other property to the Trust
in an amount sufficient to pay each Plan participant or beneficiary the benefits
payable pursuant to the terms of the Plan as of the close of the Plan year.
Section 2. PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES.
------------------------------------------------------
(a) Company shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of each Plan
participant (and his or her beneficiaries), that provides a formula or other
instructions acceptable to Trustee for determining the amounts so payable, the
form in which such amount is to be paid
<PAGE> 3
-3-
(as provided for or available under the Plan), and the time of commencement for
payment of such amounts. Except as otherwise provided herein, Trustee shall make
payments to the Plan participants and their beneficiaries in accordance with
such Payment Schedule. With respect to Plan benefits attributable to Plan
participants and their benefits, the Company shall be solely responsible for
determining the amounts of income that are taxable and reportable, determining
the nature and amounts of taxes to be withheld and for withholding, remitting
and reporting all such income and taxes to the applicable government entities.
The Trustee shall have no duties with respect thereto.
(b) The entitlement of a Plan participant or his or her beneficiaries
to benefits under the Plan shall be determined by Company or such party as it
shall designate under the Plan, and any claim for such benefits shall be
considered and reviewed under the procedures set out in the Plan.
(c) Company may make payment of benefits directly to Plan participants
or their beneficiaries as they become due under the terms of the Plan. Company
shall notify Trustee of its decision to make payment of benefits directly prior
to the time amounts are payable to participants or their beneficiaries. In
addition, if the principal of the Trust, and any earnings thereon, are not
sufficient to make payments of benefits in accordance with the terms of the
Plan, Company shall make the balance of each such payment as it falls due.
Trustee shall notify Company where principal and earnings are not sufficient to
make payment of benefits.
Section 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST
--------------------------------------------------
BENEFICIARY WHEN COMPANY IS INSOLVENT.
- --------------------------------------
(a) Trustee shall cease payment of benefits to Plan participants and
their beneficiaries if the Company is Insolvent. Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) Company is unable to pay
its debts as they become due, or (ii) Company is subject to a pending proceeding
as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of Company under federal and state law as set forth
below.
(1) The Board of Directors and the Chief Executive
Officer of Company shall have the duty to inform Trustee in writing
of Company's Insolvency. If a person claiming to be a creditor of
<PAGE> 4
-4-
Company alleges in writing to Trustee that Company has been Insolvent, Trustee
shall determine whether Company is Insolvent and, pending such determination,
Trustee shall discontinue payment of benefits to Plan participants or their
beneficiaries.
(2) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person claiming to be a
creditor alleging that Company is Insolvent, Trustee shall have no duty to
inquire whether Company is Insolvent. Trustee may in all events rely on such
evidence concerning Company's solvency as may be furnished to Trustee and that
provides Trustee with a reasonable basis for making a determination concerning
Company's solvency.
(3) If at any time Trustee has determined that Company is
Insolvent, Trustee shall discontinue payments to Plan participants or their
beneficiaries and shall hold the assets of the Trust for the benefit of
Company's general creditors. Nothing in this Trust Agreement shall in any way
diminish any rights of Plan participants or their beneficiaries to pursue their
rights as general creditors of Company with respect to benefits due under the
Plan or otherwise.
(4) Trustee shall resume payment of benefits to Plan
participants or their beneficiaries in accordance with Section 2 of this Trust
Agreement only after Trustee has determined that Company is not Insolvent (or is
no longer Insolvent).
(c) Provided that there are sufficient assets, if Trustee discontinues
the payment of benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plan for the period
of such discontinuance, less the aggregate amount of any payments made to Plan
participants or their beneficiaries by Company in lieu of the payments provided
for hereunder during any such period of discontinuance.
Section 4. PAYMENTS TO COMPANY.
--------------------
Except as provided in Section 3 hereof, after the Trust has become
irrevocable, Company shall have no right or power to direct Trustee to return to
Company or to divert to others any of the Trust assets before all payment of
benefits have been made to Plan participants and their beneficiaries pursuant to
the terms of the Plan.
<PAGE> 5
-5-
Section 5. INVESTMENT AUTHORITY
--------------------
(a) Trustee shall, at the direction of the Company, invest in
securities (including stock or rights to acquire stock) or obligations issued by
Company. All rights associated with assets of the Trust shall be exercised by
Trustee or the person designated by Trustee, and shall in no event be
exercisable by or rest with Plan participants, except that the voting rights
with respect to Trust assets will be exercised by Company and, except that
dividend rights with respect to Trust assets will rest with Company. The Trustee
shall not be responsible for the management and control of any assets that are
subject to the investment direction of the Company except to serve as custodian
thereof.
Company shall have the right, at any time, and from time to time in its
sole discretion, to substitute assets of equal fair market value for any assets
held by the Trust.
Section 6. DISPOSITION OF INCOME.
----------------------
(a) During the term of this Trust, all income received by the Trust,
net of expenses and taxes, shall be accumulated and reinvested. Notwithstanding
the foregoing, any earnings on the float associated with payment of benefits to
Plan participants shall be retained by the Trustee as part of its compensation
for handing benefit payment transactions.
Section 7. ACCOUNTING BY TRUSTEE.
----------------------
Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between
Company and Trustee. Within 60 days following the close of each calendar year
and within 60 days after the removal or resignation of Trustee, Trustee shall
deliver to Company a written account of its administration of the Trust during
such year or during the period from the close of the last preceding year to the
date of such removal or resignation, setting forth all investments, receipts,
disbursements and other transactions effected by it, including a description of
all securities and investments purchased and sold with the cost or net proceeds
of such purchases or sales (accrued interest paid or receivable being shown
separately), and shown all cash, securities and other property held in the Trust
at the end of such year or as of the date of such removal or resignation, as the
case may be. Upon the expiration of 90 days from the date of filing such account
or upon the earlier specific approval thereof by the Company, the Trustee shall
be forever released and discharged from all liability and
<PAGE> 6
-6-
accountability to the Company with respect to the acts or transactions shown in
such account, except with respect to any such acts or transactions as to which
the Company shall, within such 90 day period, file written objections with the
Trustee. Nothing herein contained, however, shall be deemed to preclude the
Trustee of its right to have its account settled by a court of competent
jurisdiction.
Section 8. RESPONSIBILITY OF TRUSTEE.
--------------------------
(a) Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by Company which is contemplated by, and
in conformity with, the terms of the Plan or this Trust and is given in writing
by Company, and provided further, that the Trustee shall incur no liability to
any person for any action or failure to act taken pursuant to a determination of
the existence or non-existence of an event of Insolvency pursuant to Section 3
hereunder. In the event of a dispute between Company and a party, Trustee may
apply to a court of competent jurisdiction to resolve the dispute.
(b) If Trustee undertakes, defends or settles any litigation or claims
arising in connection with this Trust, Company agrees to indemnify Trustee
against Trustee's costs, expenses and liabilities (including, without
limitation, attorneys' fees and expenses) relating thereto and to be primarily
liable for such payments. If Company does not pay such costs, expenses and
liabilities in a reasonably timely manner, Trustee may obtain payment from the
Trust.
(c) Trustee may consult with legal counsel (who may also be counsel for
Company or the Trustee generally) with respect to any of its duties or
obligations hereunder, at the Company's expense and shall have no liability for
any act, or failure to act in reliance upon advice of such counsel.
(d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder.
(e) Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is
<PAGE> 7
-7-
held as an asset of the Trust, Trustee shall have no power to name a beneficiary
of the policy other than the Trust, to assign the policy (as distinct from
conversion of the policy to a different form) other than to a successor Trustee,
or to loan to any person the proceeds of any borrowing against such policy.
(f) However, notwithstanding the provisions of Section 8(e) above, and
to the extent permitted by applicable law, Trustee may loan to Company the
proceeds of any borrowing against an insurance policy held as an asset of the
Trust.
(g) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.
Section 9. COMPENSATION AND EXPENSES OF TRUSTEE.
-------------------------------------
Company shall pay all administrative and Trustee's fees and expenses.
If not so paid, the fees and expenses shall be paid from the Trust.
Section 10. RESIGNATION AND REMOVAL OF TRUSTEE.
-----------------------------------
(a) Trustee may resign at any time by written notice to Company, which
shall be effective 60 days after receipt of such notice unless Company and
Trustee agree otherwise.
(b) Trustee may be removed by Company on 60 days notice or
upon shorter notice accepted by Trustee.
(c) Upon a Change of Control, as defined herein, Trustee may
not be removed by Company for 2 years.
(d) If Trustee resigns within 2 years after a Change of Control, as
defined herein, Company shall apply to a court of competent jurisdiction for the
appointment of a successor Trustee or for instructions.
(e) If Trustee resigns within 2 years of a Change of Control, as
defined herein, Trustee shall select a successor Trustee in accordance with the
provisions of Section 11(b) hereof prior to the effective date of Trustee's
resignation or removal.
(f) Upon resignation or removal of Trustee and appointment of
a successor Trustee, all assets shall subsequently be transferred
<PAGE> 8
-8-
to the successor Trustee. The transfer shall be completed within 60 days after
receipt of notice of resignation, removal or transfer, unless Company extends
the time limit.
(g) If Trustee resigns or is removed, a successor shall be appointed,
in accordance with Section 10 hereof, by the effective date of resignation or
removal under paragraphs (a) or (b) of this section. If no such appointment has
been made, Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Trust.
Section 11. APPOINTMENT OF SUCCESSOR.
-------------------------
(a) If Trustee resigns [or is removed] in accordance with Section 10(a)
or (b) hereof, Company may appoint any third party, such as a bank trust
department or other party that may be granted corporate trustee powers under
state law, as a successor to replace Trustee upon resignation or removal. The
appointment shall be effective when accepted in writing by the new Trustee, who
shall have all of the rights and powers of the former Trustee, including
ownership rights in the Trust assets. The former Trustee shall execute any
instrument necessary or reasonably requested by Company or the successor Trustee
to evidence the transfer.
(b) If Trustee resigns pursuant to the provisions of Section 10(e)
hereof and selects a successor Trustee, Trustee may appoint any third party such
as a bank trust department or other party that may be granted corporate trustee
powers under state law. The appointment of a successor Trustee shall be
effective when accepted in writing by the new Trustee. The new Trustee shall
have all the rights and powers of the former Trustee, including ownership rights
in Trust assets. The former Trustee shall execute any instrument necessary or
reasonably requested by the successor Trustee to evidence the transfer.
(c) The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing Trust assets, subject to
Section 7 and 8 hereof. The successor Trustee shall not be responsible for and
Company shall indemnify and defend successor Trustee from any claim or liability
resulting from any action or inaction of any prior Trustee or from any other
past event, or any condition existing at the time it becomes successor Trustee.
<PAGE> 9
-9-
Section 12. AMENDMENT AND TERMINATION.
--------------------------
(a) This Trust Agreement may be amended by a written instrument
executed by Trustee and Company. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Plan(s) or shall make the Trust
revocable after it has become irrevocable in accordance with Section 1(b)
hereof.
(b) The Trust shall terminate upon the date on which Plan participants
and their beneficiaries are no longer entitled to benefits pursuant to the terms
of the Plan, unless sooner revoked in accordance with Section 1(b) hereof. Upon
termination of the Trust any assets remaining in the Trust shall be returned to
the Plan participants and their beneficiaries.
(c) Upon written approval of participants or beneficiaries entitled to
payment of benefits pursuant to the terms of the Plan, Company may terminate
this Trust prior to the time all benefit payments under the Plan have been made.
All assets in the Trust at termination shall be returned to the Plan
participants and their beneficiaries.
(d) This Trust Agreement may not be amended by Company for
2 years following a Change of Control, as defined herein.
Section 13. MISCELLANEOUS.
--------------
(a) Any provisions of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Plan participants and their beneficiaries under
this Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or subjected to attachment, garnishment,
levy, execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of Ohio to the extent not preempted by federal law.
(d) For purposes of this Trust, Change of Control shall mean: "the
purchase or other acquisition by any person, entity or group of persons, within
the meaning of section 13(d) or 14(d) of the Securities Exchange Act of 1934
("Act"), or any comparable successor provisions, of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Act) of 30 percent or more of
either the outstanding shares of common stock or the combined
<PAGE> 10
-10-
voting power of Company's then outstanding voting securities entitled to vote
generally, or the approval by the stockholders of Company of a reorganization,
merger or consolidation, in each case, with respect to which persons who were
stockholders of Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than 50 percent of the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated Company's then outstanding securities,
or a liquidation or dissolution of Company or of the sale of all or
substantially all of Company's assets."
(e) Any notice, report, demand or waiver required or permitted
hereunder shall be in writing and shall be given personally or by prepaid
registered or certified mail, return receipt requested, addressed as follows:
If to the Company: Multi-Color Corporation
4575 Eastern Avenue
Cincinnati, Ohio 45226
Attention: John C. Court
If to the Trustee: PNC Bank, Ohio, National Association
PNC Center
201 E. Fifth Street
Cincinnati, Ohio 45201
Attention: Manager, Retirement and
Investment Services
(f) The Trustee shall be indemnified and saved harmless by the Company
from and against any and all liability to which the Trustee may be subjected in
carrying out its duties under this Agreement (including any liability incurred
as a result of compliance with instructions of the Company, its agents or
employees), including all expenses reasonably incurred in its defense, except to
the extent it is judicially determined that any loss or damage is directly
attributable to the Trustee's (i) failure to exercise the care, skill, prudence
and diligence under the circumstances then prevailing that a prudent person
acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and like aims, (ii) gross
negligence or willful misconduct or (iii) violation of applicable law. The
indemnification provided to the Trustee shall also apply to any liability
arising from the actions or nonactions
<PAGE> 11
-11-
of any predecessor trustee or fiduciary or other fiduciaries of the
Plan.
(g) This Agreement represents the entire agreement of the parties with
respect to the subject matter herein, and all prior agreements and
understandings, written or oral, between the parties are replaced and superseded
by this Agreement, and are no longer of any force and effect.
Section 14. EFFECTIVE DATE.
---------------
The effective date of this Trust Agreement shall be _____________ __,
1996.
MULTI-COLOR CORPORATION PNC BANK, OHIO, N.A.
BY:_______________________ BY:__________________________
<PAGE> 12
-1-
APPENDIX A
----------
DEFERRED COMPENSATION AGREEMENT
-------------------------------
THIS DEFERRED COMPENSATION AGREEMENT is made effective by and between
MULTI-COLOR CORPORATION, an Ohio Corporation, with its principal place of
business located at 4575 Eastern Avenue, Cincinnati, Ohio 45226 (the
"Corporation") and John C. Court (the "Employee").
WHEREAS, the Employee is employed by the Corporation;
WHEREAS, the Corporation desires to benefit from the Employee's
knowledge and experience to the exercised on behalf of the Corporation, and is
willing to offer to the Employee an incentive, in the form of a deferred bonus,
as provided in this Deferred Compensation Agreement (the "Agreement").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties agree as follows:
1. DEFERRAL OF BONUS. The Corporation hereby awards Employee a
deferred bonus in the amount of 15% of the Employee's compensation to be paid to
the Employee pursuant to this Agreement (the "Deferred Amount").
2. INVESTMENT OF THE DEFERRED ACCOUNT. The Deferred Amount shall be
credited to a bookkeeping account (the "Deferred Account") but shall not be
segregated from the other assets owned by the Corporation or separately invested
by the Corporation. All amounts allocated to the Deferred Account by the
Corporation shall remain subject to the claims of its general creditors,
including the Employee. The Deferred Account shall be credited with interest
computed at the rate set annually by the Board of Directors compounded
quarterly. All additions to the Deferred Account shall be appropriately
reflected on the books and records of the Corporation, and identified as an
addition to the total sum owing to the Employee.
3. PAYMENT OF DEFERRED COMPENSATION TO THE EMPLOYEE. Sixty (60) days
following the Employee's death or disability, or sixty (60) days following the
retirement of the Employee (as defined in the Corporation's Profit Sharing
Retirement Plan dated January 1, 1984, as amended), or six (6) months after the
employee's termination of employment whichever first occurs, the Deferred
Account, including all earnings and accretions thereto, shall be paid to the
Employee in Full.
4. DESIGNATION OF BENEFICIARY. The Employee shall have the right to
designate a beneficiary hereunder and to change any beneficiary previously
designated by him. Such designation shall be made by delivering to the officer
of the Corporation then administering this Agreement, a writing setting forth
the name and address of the person so designated together with a statement by
the Employee of his intention that the person so designated be the beneficiary
hereunder.
5. PAYMENT OF DEFERRED COMPENSATION. In the event that the Employee's
employment shall be terminated by reason of his death, and if the Employee shall
be survived by a beneficiary duly designated by the Employee in accordance with
Paragraph 4, above, then the amount otherwise payable to the employee shall be
paid to such beneficiary, which beneficiary shall have all of the rights
conferred upon him pursuant to Paragraph 3 above. If, for any reason, the
beneficiary is not properly designated in accordance with Paragraph 4 above,
then any portion owing hereunder but as yet unpaid shall be paid over in one
lump sum ot the Executor (or other legal representative) of the Employees's
estate. The payment by the Corporation to any other person properly designated
as the
<PAGE> 13
-2-
Employee's beneficiary in accordance with Paragraph 4, or to the Executor (or
other legal representative of the Employee's estate) shall serve as a full
discharge and acquittance of the Corporation's obligation hereunder.
6. ACCELERATION. Notwithstanding the provisions of Paragraphs 3 and 5
above, the Corporation shall have the power to pay, at any time, all or any part
of the Deferred Account to the employee or, in the event of his prior death, to
his duly designated beneficiary. Said power of acceleration shall be exercised
only in cases of need, as determined in the sole discretion of the Corporation,
and the determination of the Corporation shall be conclusive and binding on the
Employee and his beneficiary.
7. INTERPRETATION. This Agreement shall not be interpreted either as an
employment agreement or as a trust agreement. To that end, the Employee shall
serve as an employee of the Corporation or as an employee of any subsidiary of
the Corporation only at the will of the Corporation.
8. DEFERRED ACCOUNT STATEMENTS. The Employee (or his beneficiary) shall
be provided a statement, not less frequently than annually, in reasonable
detail, setting forth all additions to and distributions from the Deferred
Account. This statement shall be provided within 90 days after the close of the
Corporation's fiscal year.
9. ASSIGNMENT. This Agreement may not be assigned by the Employee.
10. AGREEMENT BINDING. This Agreement shall insure to the benefit of,
and be binding upon, the parties hereto and their respective next of kin,
legatees, administrators, executors, legal representatives and successors.
11. ENTIRE AGREEMENT. This writing constitutes the entire understanding
between the parties with respect to the matters herein described. Said
understanding may be modified, altered or amended only by a writing signed by
both parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in duplicate
as of the day of , 1996.
MULTI-COLOR CORPORATION
BY:
-------------------------------
Employee
--------------------------
<PAGE> 1
EXHIBIT 10.28
-------------
May 19, 1994
Mr. William R. Cochran
Aluchem
1 Landy Lane
Reading, OH 45215
Dear Bill,
This letter is to confirm our agreement that we have agreed that you will join
Multi-Color Corporation as Vice President/CFO on June 6th, 1994.
Our offer consists of the following:
1. Salary of $80,000 per year; increase to $85,000 after 12 months.
Annual raises thereafter but bonuses are intended to be main increase
in compensation.
2. Bonus of up to 50% of base salary tied 50% to specific targets or
responsibilities and 50% to corporate profits. No bonus is owed if the
Company is not profitable.
<TABLE>
<CAPTION>
Target EPS
----------
<S> <C>
Year 1 .50
Year 2 1.25
Year 3 1.50
Year 4 1.75
Year 5 2.00
</TABLE>
Targets to be agreed with by John Court at the beginning of fiscal year.
3. Eligibility for "rabbi" plan and any other executive programs.
4. Granted 7,500 option shares at current market price vested over 5
years. Expectation would be that if bonus were 25% or greater (as % of
salary) additional options would be granted on an annual basis.
5. Normal benefits (see book). Three weeks vacation if time available.
6. In the event you are terminated (without cause) in the first 3 years of
employment, Multi-Color agrees to a salary continuation program for 6
months or until you find a new position.
7. Multi-Color will re-imburse you for cost of lost vacation deposit
subject to agreement on specific amount.
8. Multi-Color will provide a car or assist in your leasing a car for the
next year on terms to be agreed.
I and the other managers at Multi-Color look forward to your joining the company
and are optimistic about the results.
Best regards,
John C. Court
<PAGE> 1
EXHIBIT 10.29
-------------
MULTI-COLOR LETTERHEAD
Mr. John C. Court
4575 Eastern Avenue
Cincinnati, Ohio 45226
RE: Severance Agreement
-------------------
This letter is sent to you to confirm our understanding concerning the
obligations of Multi-Color Corporation to you under circumstances in which you
are terminated by the Company for any reason.
If, at any time after the date hereof, Multi-Color Corporation shall
for any reason terminate your employment with the Company, you will be entitled
to receive severance pay for twenty-four (24) months at a monthly rate equal to
fifty percent (50%) of your monthly base salary on the date of termination.
Should you at any time obtain full-time employment during the above-mentioned
twenty-four (24) month period, the Company's obligations to make severance
payments shall cease for any and all periods after the date you commence such
full-time employment. Additionally, during the period you receive severance
benefits, you will also be entitled to receive the same Medical Insurance and
Life Insurance benefits in effect prior to the termination of your employment.
If you are in agreement with this severance arrangement, please indicate your
acceptance below.
AGREED TO AND ACCEPTED: MULTI-COLOR CORPORATION
/s/John C. Court By:/s/John C. Court
- -------------------------------- --------------------------------------
John C. Court
Its: President
<PAGE> 1
EXHIBIT 10.30
-------------
MULTI-COLOR LETTERHEAD
Mr. John D. Littlehale
4575 Eastern Avenue
Cincinnati, Ohio 45226
RE: Severance Agreement
-------------------
This letter is sent to you to confirm our understanding concerning the
obligations of Multi-Color Corporation to you under circumstances in which you
are terminated by the Company for any reason.
If, at any time after the date hereof, Multi-Color Corporation shall
for any reason terminate your employment with the Company, you will be entitled
to receive severance pay for twenty-four (24) months at a monthly rate equal to
fifty percent (50%) of your monthly base salary on the date of termination.
Should you at any time obtain full-time employment during the above-mentioned
twenty-four (24) month period, the Company's obligations to make severance
payments shall cease for any and all periods after the date you commence such
full-time employment. Additionally, during the period you receive severance
benefits, you will also be entitled to receive the same Medical Insurance and
Life Insurance benefits in effect prior to the termination of your employment.
If you are in agreement with this severance arrangement, please indicate your
acceptance below.
AGREED TO AND ACCEPTED: MULTI-COLOR CORPORATION
/s/John D. Littlehale By:/s/John C. Court
- -------------------------------- --------------------------------------
John C. Court
Its: President
<PAGE> 1
EXHIBIT 10.31
-------------
MULTI-COLOR LETTERHEAD
Mr. John R. Voelker
4575 Eastern Avenue
Cincinnati, Ohio 45226
RE: Severance Agreement
-------------------
This letter is sent to you to confirm our understanding concerning the
obligations of Multi-Color Corporation to you under circumstances in which you
are terminated by the Company for any reason.
If, at any time after the date hereof, Multi-Color Corporation shall
for any reason terminate your employment with the Company, you will be entitled
to receive severance pay for twenty-four (24) months at a monthly rate equal to
fifty percent (50%) of your monthly base salary on the date of termination.
Should you at any time obtain full-time employment during the above-mentioned
twenty-four (24) month period, the Company's obligations to make severance
payments shall cease for any and all periods after the date you commence such
full-time employment. Additionally, during the period you receive severance
benefits, you will also be entitled to receive the same Medical Insurance and
Life Insurance benefits in effect prior to the termination of your employment.
If you are in agreement with this severance arrangement, please indicate your
acceptance below.
AGREED TO AND ACCEPTED: MULTI-COLOR CORPORATION
/s/John R. Voelker By:/s/John C. Court
- -------------------------------- --------------------------------------
John C. Court
Its: President
<PAGE> 1
EXHIBIT 10.32
-------------
MULTI-COLOR LETTERHEAD
Mr. William R. Cochran
4575 Eastern Avenue
Cincinnati, Ohio 45226
RE: Severance Agreement
-------------------
This letter is sent to you to confirm our understanding concerning the
obligations of Multi-Color Corporation to you under circumstances in which you
are terminated by the Company for any reason.
If, at any time after the date hereof, Multi-Color Corporation shall
for any reason terminate your employment with the Company, you will be entitled
to receive severance pay for twenty-four (24) months at a monthly rate equal to
fifty percent (50%) of your monthly base salary on the date of termination.
Should you at any time obtain full-time employment during the above-mentioned
twenty-four (24) month period, the Company's obligations to make severance
payments shall cease for any and all periods after the date you commence such
full-time employment. Additionally, during the period you receive severance
benefits, you will also be entitled to receive the same Medical Insurance and
Life Insurance benefits in effect prior to the termination of your employment.
If you are in agreement with this severance arrangement, please indicate your
acceptance below.
AGREED TO AND ACCEPTED: MULTI-COLOR CORPORATION
/s/William R. Cochran By:/s/John C. Court
- -------------------------------- --------------------------------------
John C. Court
Its: President
<PAGE> 1
EXHIBIT 11
Multi-Color Corporation
COMPUTATION OF EARNINGS PER SHARE
For the Years Ended March 31, 1996, April 2, 1995 and April 3, 1994
<TABLE>
<CAPTION>
1996 1995(1) 1994(1)
------------------------- ------------- -------------
Fully
Primary Diluted
----------- ------------
<S> <C> <C> <C> <C>
Net income (loss) for the period:
Income (loss) before extraordinary
item $1,190,968 $ 1,190,968 ($8,523,245) ($4,335,433)
Extraordinary item -- -- 225,000 --
---------- ----------- ------------ ------------
Net income (loss)(A) $1,190,968 $ 1,190,968 ($8,748,245) ($4,335,433)
========== =========== ============ ============
Weighted common shares outstanding: 2,172,932 2,172,932 2,168,577 2,151,006
Dilutive effect of options
outstanding during the period (2) 4,995 27,663 -- --
---------- ----------- ------------ ------------
Total common and common equivalent
Shares (B) 2,177,927 2,200,595 2,168,577 ($2.02)
========== =========== ============ ============
Income (loss) per common and common
equivalent shares (A)/(B);
Before extraordinary item $ 0.55 $ 0.54 ($3.93) ($2.02)
Extraordinary item -- -- (0.10) --
Net income (loss)
$ 0.55 $ 0.54 ($4.03) ($2.02)
========== =========== ============ ============
<FN>
(1) For 1995 and 1994, the primary and fully dilutive earnings per share
computations are the same. Due to the net losses, common equivalent
shares are excluded from the computations as they would be
anti-dilutive.
(2) Since the fourth quarter incremental shares were greater than the
average of the four quarters in 1996, the fourth quarter incremental
shares were used in the year-to-date fully diluted calculation.
Stock options were not included if they were anti-dilutive.
</TABLE>
<PAGE> 1
Exhibit 13
PROFILE
Multi-Color Corporation, a leading supplier of labels in North America,
develops, manufactures and markets a wide variety of conventional and in-mold
labels ("IMLs") for branded consumer products. Label appearance is a significant
element of marketing and merchandising on mass-marketed products. The Company's
in-mold and conventional labels are used on a wide range of consumer products,
including liquid detergents, fabric softeners, liquid soaps, automotive
products, food, and personal care products. The Company currently supplies
approximately 51% of the market for IMLs in the United States.
In addition to its printing capabilities, Multi-Color provides customers
with graphics services. MCG Laser Graphics offers fully computerized artwork
preparation. Graphics also uses a unique laser exposing system to produce
high-quality gravure cylinders faster and at a lower cost than previously
possible.
TABLE OF CONTENTS
Selected Financial Data/Stock Price Range .. 1
Letter to Shareholders ..................... 2
Management's Discussion and Analysis ....... 4
Statements of Operations ................... 9
Balance Sheets ............................. 10
Statements of Shareholders' Investment ..... 11
Statements of Cash Flows ................... 12
Notes to Financial Statements .............. 13
Report of Independent Certified Public
Accountants ............................ 20
Shareholder Information/
Directors and Officers ................. 21
In-Mold Labels
Collaborating with a customer and a leading supplier of blow-molded containers,
the Company developed the in-mold labeling process and heat-activated adhesives
for the U.S. market in 1978. The in-mold labeling process applies the label to a
plastic container as the container is being molded. In-mold labels bond better
and more neatly to plastic containers than conventional labels, improving
appearance and durability. In-mold labels are less expensive than many
alternative labeling technologies. They enable customers to be more efficient.
The Company expects to maintain or improve its market position through a strong
IML product line, low-cost manufacturing and continued product development.
Cylinder Engraving
MCG Laser Graphics is a state-of-the-art prepress and rotogravure engraving
services facility. It produces printed gravure cylinders, using a unique laser
exposing system. The Company believes it is the low-cost U.S. producer of
engravings. It has significant cost advantages in the plating line and laser
exposing system. This enables the Company to produce gravure cylinders more
quickly and less expensively than traditional engraving methods.
Conventional Labels
Multi-Color's conventional label operations consist primarily of square cut
labels. The Company is a low-cost producer of high-volume labels for major
consumer product companies. A distinguishing capability is the ability to offer
customers alternative printing technologies: offset, gravure and flexo. Other
products include gift wrap and diaper back sheets.
<PAGE> 2
SELECTED FINANCIAL DATA
The selected financial data set forth below are derived from the Company's
audited financial statements. This data should be read in conjunction with the
financial statements and notes thereto appearing elsewhere in this report.
<TABLE>
<CAPTION>
Fiscal Year Ended(1)
-----------------------------------------------------------
MARCH 31 April 2 April 3 March 28 March 29
-----------------------------------------------------------
1996 1995(3) 1994(4) 1993(5) 1992
- ----------------------------------------------------------------------------------------------------------
(In thousands, except share amounts)
<S> <C> <C> <C> <C> <C>
Net sales $ 55,375 $ 61,777 $ 65,403 $ 65,868 $ 65,334
Gross profit 8,508 2,803 2,558 9,558 7,294
Operating income (loss) 2,631 (7,168) (5,603) 3,347 1,756
Income (loss) before extraordinary item and
cumulative effect of accounting change 1,191 (8,523) (4,335) 1,230 78
Extraordinary item - 225 - - -
Income (loss) before accounting change 1,191 (8,748) (4,335) 1,230 78
Cumulative effect of accounting change - - - 180 -
Net income (loss) 1,191 (8,748) (4,335) 1,410 78
Earnings (loss) per share(2) 0.55 (4.03) (2.02) 0.64 0.03
Weighted average shares outstanding 2,178 2,169 2,151 2,195 2,229
Dividends per share - - - - -
Working capital $ (3) $(17,031)(6) $ 2,754 $ 8,168 $ 7,049
Total assets 30,454 35,959 42,121 43,868 43,769
Short-term debt 2,902 19,898 (6) 1,395 902 2,092
Long-term debt 14,873 8 15,404 16,104 16,417
Shareholders' investment 4,920 2,998 11,818 16,572 15,206
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Multi-Color maintains a fiscal year of 52 or 53 weeks beginning on the
Monday nearest to March 31. Fiscal year 1994 was a 53 week fiscal year. All
other fiscal years set forth herein are 52 weeks.
(2) Includes $.08 impact of change in accounting for income taxes in 1993.
(3) Fiscal year 1995 results includes a write down of $3,800 on certain
equipment and an extraordinary charge of $225 related to prepayment fees
associated with the previous financing agreement.
(4) Fiscal year 1994 results includes a restructuring charge of $1,777.
(5) Fiscal year 1993 results includes insurance recoveries related to the
Scottsburg flood of $3,149.
(6) Includes $14,700 of long-term debt which was subject to acceleration and
therefore classified as current.
STOCK PRICE RANGE
<TABLE>
<CAPTION>
PRICE
-----
FISCAL 1996 HIGH LOW
- ----------------------------------------------
<S> <C> <C>
FIRST QUARTER $ 5.00 $ 4.00
SECOND QUARTER 5.00 3.75
THIRD QUARTER 5.00 2.25
FOURTH QUARTER 5.25 2.75
YEAR ENDED MARCH 31, 1996 $ 5.25 $ 2.25
</TABLE>
<TABLE>
<CAPTION>
Price
-----
Fiscal 1995 High Low
- ----------------------------------------------
<S> <C> <C>
First quarter $ 10.00 $ 9.25
Second quarter 10.00 7.00
Third quarter 8.75 5.50
Fourth quarter 6.00 4.00
Year ended April 2, 1995 $ 10.00 $ 4.00
</TABLE>
1
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table shows, for the periods indicated, certain components of
the Company's statements of operations as a percentage of net sales and the
percentage changes in the dollar amounts of such components compared to the
indicated prior period.
<TABLE>
<CAPTION>
Period to Period Change
-----------------------
FISCAL 1995 Fiscal 1994
Percentage of Net Sales to to
-----------------------
1996 1995 1994 FISCAL 1996 Fiscal 1995
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% (10.4)% (5.5)%
Cost of Goods Sold 84.6% 95.5% 96.1% (20.5)% (6.2)%
Gross Profit 15.4% 4.5% 3.9% 203.5% 9.6%
Selling, General & Administrative Expenses 10.4% 10.1% 9.8% (7.8)% (2.0)%
Restructuring Charge - (.1)% 2.7% - (104.8)%
Impairment Loss on Long-Lived Assets .2% 6.1% - (97.1)% -
Operating Income 4.8% (11.6)% (8.6)% 136.7% (27.9)%
Interest Expense 2.6% 2.3% 1.7% (1.2)% 27.2%
Other .1% .3% .2% (66.3)% 21.6%
Income (Loss) Before Taxes 2.1% (14.2)% (10.5)% 113.2% (27.7)%
Tax Provision (Credit) (.1)% (.4)% (3.9)% (85.0)% 90.3%
Extraordinary Item - Loss on Extinguishment
of Debt - .4% - - -
Net Income (Loss) 2.2% (14.2)% (6.6)% 113.7% (101.8)%
</TABLE>
COMPARISON OF FISCAL YEARS ENDED MARCH 31, 1996 AND APRIL 2, 1995
<TABLE>
<CAPTION>
1996 1995 Change % Change
<S> <C> <C> <C> <C>
Net Sales $55,374,711 $61,776,951 $(6,402,240) (10.4%)
</TABLE>
The 1996 decrease in sales was anticipated by management and was the direct
result of declines in the conventional label business partially offset by
increased in-mold label sales. Conventional label sales declined $7,900,000 to
approximately $18,900,000 in 1996. The decline in conventional label business
was the result of the Company eliminating some unprofitable conventional label
activities and the reduced sales to one major customer. The expected declines
from the 1995 sales levels accommodated management's successful implementation
of cost cutting strategies which positively impacted 1996 results. The Company
continues to take steps to improve the profitability of its conventional label
business and may experience further sales declines as a result of these
efforts.
The Company's in-mold label sales increased by $1,900,000 to approximately
$34,000,000 in 1996. This increase resulted from increased penetration of the
household cleaning product markets with both new and existing customers. The
Company expects the in-mold label market to continue to increase due to higher
volumes to existing customers and new business. To accommodate this expected
sales growth, the Company is planning an expansion in capacity at its Scottsburg
manufacturing division during 1997.
4
<PAGE> 4
Sales at the Graphics division declined $400,000 due to the decline in
label sales and general industry conditions. To offset this decline, the Company
is currently marketing its cylinder manufacturing capabilities to increase sales
for this division.
<TABLE>
<CAPTION>
1996 1995 Change % Change
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross Profit $8,507,987 $2,803,041 $5,704,946 203.5%
As a % of Sales 15.4% 4.5% 10.3% -
</TABLE>
The 1996 gross profit percentage of 15.4% represents the highest gross
profit percentage in the Company's history. Gross profit was favorably impacted
primarily by higher levels of in-mold label sales which generate higher margins
than conventional label sales coupled with improved efficiency at the Scottsburg
division. Additionally, the gross profit was favorably impacted by a one time
$300,000 supplier claim settlement, the cost cutting programs initiated at
Cincinnati to handle the lower levels of conventional label sales, and the
transfer of all gravure in-mold label manufacturing to the Scottsburg division.
With lower sales volumes in 1996 than in 1995, the 1996 Cincinnati gross
profit performance exceeded the 1995 gross profit performance due to the cost
containment program implemented by management to handle the expected lower
levels of conventional label sales. The Company also eliminated unprofitable
Cincinnati conventional label businesses and is focusing on growing those
businesses that generate a positive contribution to gross profit.
Scottsburg had record gross profit performance due to higher volumes from
increased sales, the successful transfer of all gravure in-mold label
production, lower waste, and improved efficiencies. The Company is planning to
expand this facility and the division is expected to continue its upward growth.
During 1996, the division benefited from the $300,000 one time supplier claim
settlement. Additionally, the gross profit was adversely impacted during 1995 by
a $1,400,000 accrual for blocking (sticking together) of labels, which has
successfully been resolved, and also accounts for the comparative improvement in
gross profit.
The Graphics division realized a decline of $252,000 in 1996 gross profit
over 1995. This was the result of lower label sales in 1996 and general industry
conditions. The Company is currently seeking new markets for its cylinder making
capabilities to increase sales for this division.
<TABLE>
<CAPTION>
1996 1995 Change % Change
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Selling, General and
Administrative
Expenses $5,764,988 $6,255,948 $(490,960) (7.8%)
As a % of Sales 10.4% 10.1% .9% -
</TABLE>
The decrease in selling, general, and administrative expenses of $491,000
in 1996 was attributable to the implemented cost cutting programs initiated
during 1996. The reductions were partially offset by consulting services
(approximately $213,000) utilized to assist with the Company's financial
restructuring plan.
<TABLE>
<CAPTION>
1996 1995 Change % Change
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Restructuring Charge $ - $(85,000) $85,000 -
</TABLE>
During 1994, the Company incurred a $1,777,000 restructuring charge which
primarily included the costs associated with consolidating operations and
closing and disposing of the Lockport, Illinois facility. The $85,000 credit
realized during 1995 represents overaccrual of expenses associated with the
restructuring.
<TABLE>
<CAPTION>
1996 1995 Change % Change
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Impairment Loss on
Long-Lived Assets $111,698 $3,800,000 $(3,688,302) (97.1%)
</TABLE>
In 1995, the Company recorded a $3,800,000 impairment loss due to the
recurring losses at the Cincinnati location. This impairment loss reduced the
carrying value of certain equipment at the Cincinnati location to fair value as
generally determined by an independent appraiser. An overall management plan to
restore the Cincinnati operations to profitability was initiated in 1995. This
plan called for the elimination of unprofitable business activities in the
conventional label division and the rationalization of the overhead cost
structure to align it with the remaining business. While the remaining business
was expected to be profitable, projected sales levels were expected to be lower.
These expected lower sales levels resulted in the corresponding recording of the
1995 impairment loss against printing and finishing equipment. The additional
impairment loss recorded in 1996 on printing equipment reflects management's
ongoing assessment of expected sales levels,
5
<PAGE> 5
expected utilization of specific assets in meeting those sales levels, and the
corresponding carrying value and fair value of such assets as established by an
independent appraisal.
<TABLE>
<CAPTION>
1996 1995 Change % Change
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Expense $1,423,022 $1,440,575 $(17,553) (1.2%)
</TABLE>
Interest expense decreased due to the combination of lower borrowings
against the revolving loan offset by higher interest rates on the Company's
Industrial Revenue Bonds.
The Company recorded an income tax credit in 1996. There is no deferred tax
balance.
The Company recorded a net profit for 1996 of $1,191,000 or an increase of
$9,939,000 from the net loss of $(8,748,000) in 1995, due to the factors
discussed above.
COMPARISON OF FISCAL YEARS ENDED APRIL 2, 1995 AND APRIL 3, 1994.
<TABLE>
<CAPTION>
1995 1994 Change % Change
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales $61,776,951 $65,402,821 $(3,625,870) (5.5%)
</TABLE>
The Company's in-mold label sales increased by $2,300,000 to approximately
$32,000,000 in 1995. This increase resulted from increased penetration of the
beverage and household cleaning product markets with both new and existing
customers. This increase was impacted by the Company recording an accrual
against sales returns and allowances for blocking (sticking together) of labels
during the third quarter of 1995. The total accrual of $1,373,000 negatively
impacted in-mold label sales by $781,000 due to customer claims and other
allowances; cost of goods sold by $537,000 due to the write-off of inventory;
and selling, general, and administrative expenses by $55,000. The Company has
successfully converted the majority of the in-mold label business to a different
adhesive which has minimized the impact of blocking. Subsequent to this
conversion, the Scottsburg location, which primarily produces in-mold products,
realized record performance and the growth of the in-mold label market is
expected to increase. These increases were offset by lower conventional sales of
approximately $6,300,000. The decline in the conventional label sales reflected
lost business in the polystyrene foam beverage label market, canned food, and
cigarette product areas. Sales at the Graphics division increased by $300,000 in
1995.
<TABLE>
<CAPTION>
1995 1994 Change % Change
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross Profit $2,803,041 $2,558,338 $244,703 9.6%
As a % of Sales 4.5% 3.9% .6% -
</TABLE>
With the closing of the Lockport, Illinois facility during 1994, all of the
conventional label printing occurs at the Cincinnati facility. Lower sales
volumes in the conventional label markets coupled with higher than expected
transition and operational costs associated with the Lockport conversion,
negatively impacted the gross profit performance for the Cincinnati location.
Although the 1995 gross profit performance for Cincinnati exceeded the
consolidated 1994 Cincinnati/Lockport gross profit, the overall 1995 performance
did not meet management's expectations.
A significant portion of the in-mold label production occurs at the
Scottsburg facility which had increased production during 1995. Due to the
impact of the blocking accrual booked in the third quarter, the overall gross
profit for this facility declined from 1994. However, during the fourth quarter
of 1995, Scottsburg had record performance. This was the result of improved
efficiencies, lower waste, and the price restructuring implemented in the
in-mold label market.
The Graphics division realized an improvement of $235,000 in 1995 gross
profit over 1994. This was the result of higher sales coupled with improved
efficiencies and reductions in costs.
<TABLE>
<CAPTION>
1995 1994 Change % Change
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Selling, General and
Administrative
Expenses $6,255,948 $6,384,346 $(128,398) (2.0%)
As a % of Sales 10.1% 9.8% .3% -
</TABLE>
Selling, general and administrative expenses decreased in 1995 reflecting
cost reductions from the Company's restructuring program. Reductions realized in
payroll/benefits (approximately $161,000) and selling expenses (approximately
$153,000) offset increased consulting fees (approximately $255,000) to assist
with the restructuring initiative started in 1994.
<TABLE>
<CAPTION>
1995 1994 Change % Change
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Restructuring Charge $(85,000) $1,777,187 $1,862,187 -
</TABLE>
During 1994, the Company incurred a $1,777,000 restructuring charge which
primarily included the costs associated
6
<PAGE> 6
with consolidating operations and closing and disposing of the Lockport,
Illinois facility. The $85,000 credit realized during 1995 represents
overaccrual of expenses associated with the restructuring.
<TABLE>
<CAPTION>
1995 1994 Change % Change
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Impairment Loss on
Long-Lived Assets $3,800,000 - $3,800,000 -
</TABLE>
The impairment loss resulted from recurring losses at the Cincinnati
location and management's plans to reduce these losses which are primarily
attributable to conventional labels. This charge reduced the carrying value of
certain equipment at the Cincinnati location to fair value. Management intends
to implement cost containment programs coupled with the elimination of
unprofitable business to position Cincinnati as a positive cashflow contributor.
Additionally, management believes the carrying values of the assets after
recording the impairment loss will allow the selling of nonessential assets in
1996 without significant losses.
<TABLE>
<CAPTION>
1995 1994 Change % Change
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Expense $1,440,575 $1,132,553 $308,022 27.2%
</TABLE>
Interest expense increased $308,000 due to higher interest rates on the
Company's entire credit facility during the first quarter when the credit
facility was financed by another lender coupled with higher borrowings on the
revolving line of credit and higher interest rates on the Industrial Revenue
Bonds during the remainder of the year.
The Company recorded an income tax credit in 1995. There was no net
deferred tax balance.
The Company recorded an extraordinary item of $225,000 representing the
termination fee paid to the previous lender in connection with the Company's
debt refinancing.
The Company recorded a net loss for 1995 of $(8,748,000) or an increase of
$(4,413,000) from the net loss of $(4,335,000) in 1994, due to the factors
discussed above.
LIQUIDITY AND CAPITAL RESOURCES
In July 1994, the Company entered into a new Credit Agreement with PNC
Bank, Ohio, National Association, and Star Bank, National Association extending
through July 1997. This agreement was to provide available borrowings under the
revolving line of credit of up to a maximum of $5,000,000, subject to certain
borrowing base limitations, and to provide for up to an additional $1,400,000 of
long-term financing for capital expenditures. During 1995, the Company was in
violation of certain of its financial covenants and received waivers from its
lenders with respect to these violations until April 2, 1995. In connection with
the waivers, the Credit Agreement was amended to restrict the borrowing base,
increase the interest rate and fees applicable to the borrowings under the
Credit Agreement, and restricted the $1,400,000 term loan and lease lines. The
Company remained in violation of the cashflow coverage ratio, the leverage
ratio, and the current ratio covenants until February 23, 1996, at which time,
the Credit Agreement was restated. As the Company was in violation of certain
covenants that gave the lenders the right to accelerate the due dates of their
loans, the 1995 annual report was issued with the otherwise long-term debt
classified as short-term. This resulted in a significant deterioration in the
Company's working capital position.
During 1996, management launched a three tiered initiative designed to
overcome the Company's financial difficulties. First was a plan to restore the
Cincinnati operations to profitability as measured on an Earnings Before
Interest, Taxes, Depreciation, and Amortization (EBITDA) basis. This plan is
described in the "Comparison of Fiscal Years Ended March 31, 1996 and April 2,
1995" section. Second was a strategy to continue growing the in-mold label
business while improving gross margins in this area. This strategy called for
consolidating all the gravure in-mold label manufacturing in the Scottsburg
facility thereby increasing operating efficiencies and operating leverage. The
third aspect of the initiative called for the Company to raise approximately
$3,000,000 in equity to strengthen the capital structure of the Company. The
Company was successful in its efforts as four consecutive quarters of
profitability resulted during 1996 each having EBITDA exceeding $1,000,000.
Additionally, the Company was successful in raising $500,000 in equity prior to
year-end 1996 and $2,432,000 during the first quarter of 1997, supporting its
commitment to strengthen its overall financial structure.
Regaining profitability during 1996 coupled with significant improvements
in cashflow and debt reduction enabled the Company to restate its loan agreement
with its lenders
7
<PAGE> 7
on February 23, 1996. The Company is in compliance with all covenants. The
restated loan agreement provides available borrowings under the revolving line
of credit of up to $3,750,000 and a $500,000 standby letter of credit to
purchase raw materials included as a sub-limit to the revolving credit facility.
Additionally, the restated agreement allows for annual capital expenditures not
to exceed $1,500,000.
With the infusion of equity, the Company plans to expand the Scottsburg
division during 1997 by adding additional capacity. This added capacity will
support the strategy of growing the in-mold label business. Recognizing the
importance of this expansion program to the overall success of the Company, the
lenders amended the restated loan agreement on May 2, 1996 permitting the
acquisitions associated with the Scottsburg expansion. This amendment allows
total capital expenditures of $3,500,000 for 1997. Additionally, the associated
covenants impacted by the increased capital expenditures were appropriately
amended and the Company remains in compliance with the revised covenant
requirements.
Management believes that the additional equity acquired, coupled with the
expected cash to be generated from operations, will allow it to support
operations and the anticipated capital expenditures of $3,500,000 in fiscal
1997. No borrowing beyond the existing credit facilities is anticipated.
Cash provided by operating activities was $3,800,000 in 1996 compared to
cash used in operating activities of $1,100,000 in 1995. The increase was
primarily due to the 1996 net income performance and reductions in inventory and
receivables offset by reductions in accounts payables. The Company's working
capital was zero at the end of 1996 as compared to a $(17,000,000) (deficit) at
the end of 1995. The resulting current ratios were 1 to 1 and .47 to 1,
respectively. The improvement in working capital was primarily attributable to
the classification of the long-term debt as long-term in 1996 versus short-term
debt in 1995 because of the Company's violation of certain loan covenants as of
April 2, 1995. At March 31, 1996 and June 2, 1996, the Company was in compliance
with its loan covenants and current in its principal and interest payments on
all debt. As of June 24, 1996, approximately $1,800,000 was available under the
revolving line of credit.
INFLATION
The Company does not believe that its operations have been materially
affected by inflation.
8
<PAGE> 8
STATEMENTS OF OPERATIONS
For the Years Ended March 31, 1996, April 2, 1995 and April 3, 1994
<TABLE>
<CAPTION>
1996 1995 1994
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 55,374,711 $ 61,776,951 $ 65,402,821
Cost of goods sold 46,866,724 58,973,910 62,844,483
- ------------------------------------------------------------------------------------------------
GROSS PROFIT 8,507,987 2,803,041 2,558,338
Selling, general and administrative expenses 5,764,988 6,255,948 6,384,346
Restructuring charge (income) (Note 12) - (85,000) 1,777,187
Impairment loss on long-lived assets (Note 2(e)) 111,698 3,800,000 -
- ------------------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) 2,631,301 (7,167,907) (5,603,195)
Interest expense 1,423,022 1,440,575 1,132,553
Other expense, net 54,311 161,300 132,685
- ------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE CREDIT
FOR INCOME TAXES 1,153,968 (8,769,782) (6,868,433)
Credit for income taxes (Note 5) (37,000) (246,537) (2,533,000)
- ------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 1,190,968 (8,523,245) (4,335,433)
Extraordinary item (Note 3) - 225,000 -
- ------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 1,190,968 $ (8,748,245) $ (4,335,433)
- ------------------------------------------------------------------------------------------------
Weighted average shares outstanding 2,177,927 2,168,577 2,151,006
- ------------------------------------------------------------------------------------------------
Per share information:
Earnings (loss) before extraordinary item $ 0.55 $ (3.93) $ (2.02)
Extraordinary item $ - $ (0.10) $ -
- ------------------------------------------------------------------------------------------------
Net earnings (loss) per common and common
equivalent share $ 0.55 $ (4.03) $ (2.02)
- ------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
9
<PAGE> 9
BALANCE SHEETS
As of March 31, 1996 and April 2, 1995
<TABLE>
<CAPTION>
1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 40,449 $ 16,533
Accounts receivable-
Trade (Notes 3 and 9) 4,437,344 7,499,182
Other 38,266 136,184
Note receivable (Note 8) 108,415 67,237
Inventories (Note 3) 4,745,535 6,661,670
Deferred tax benefit (Note 5) 255,744 604,000
Prepaid expenses, supplies and other 22,650 113,559
Refundable income taxes 33,000 -
- ----------------------------------------------------------------------------------------------------------------------------
Total current assets 9,681,403 15,098,365
PROPERTY, PLANT AND EQUIPMENT, net (Notes 1, 2 (e) and 3) 18,107,508 19,789,274
SINKING FUND DEPOSITS (Notes 3 and 14) 2,236,939 400,000
DEFERRED CHARGES, net 55,886 148,711
NOTE RECEIVABLE (Note 8) 272,552 372,996
NOTES RECEIVABLE FROM OFFICERS/SHAREHOLDERS (Note 8) 100,000 149,417
- ----------------------------------------------------------------------------------------------------------------------------
Total assets $ 30,454,288 $ 35,958,763
============================================================================================================================
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Short-term debt (Note 3) $ 1,891,554 $ 4,104,901
Current portion of long-term debt (Note 3) 952,910 1,093,087
Current portion of capital lease obligation (Note 10) 58,028 -
Long-term debt subject to acceleration (Note 3) - 14,700,000
Accounts payable 5,250,856 9,596,695
Accrued liabilities-
Payroll benefits and related taxes 843,773 1,668,351
Vacations 300,115 426,256
Real estate and personal property taxes 309,467 390,678
Interest and other 78,003 101,754
Income taxes (Note 5) - 47,078
- ----------------------------------------------------------------------------------------------------------------------------
Total current liabilities 9,684,706 32,128,800
LONG-TERM DEBT (Note 3) 14,552,183 8,003
CAPITAL LEASE OBLIGATION (Note 10) 320,907 -
DEFERRED INCOME TAXES (Note 5) 255,744 604,000
DEFERRED COMPENSATION (Note 4(d)) 603,139 -
PENSION LIABILITY (Note 4(a)) 117,566 219,895
- ----------------------------------------------------------------------------------------------------------------------------
Total liabilities 25,534,245 32,960,698
- ----------------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (Note 11)
SHAREHOLDERS' INVESTMENT (Notes 3, 7 and 13):
Preferred stock, no par value; 1,000,000 shares authorized,
13,242 shares issued at March 31, 1996
(aggregate liquidation preference of $529,680) 1,324 -
Common stock, no par value; 10,000,000 shares authorized,
2,172,569 shares issued at March 31, 1996 and April 2, 1995 217,257 217,257
Paid-in capital 9,668,676 9,140,334
Retained earnings (accumulated deficit) (4,709,445) (5,900,413)
Excess of additional pension liability over unrecognized prior service cost (Note 4(a)) (257,769) (459,113)
- ----------------------------------------------------------------------------------------------------------------------------
Total shareholders' investment 4,920,043 2,998,065
- ----------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' investment $ 30,454,288 $ 35,958,763
============================================================================================================================
</TABLE>
The accompanying notes to financial statements are an integral part of
these balance sheets.
10
<PAGE> 10
STATEMENTS OF SHAREHOLDERS' INVESTMENT
For the Years Ended March 31, 1996, April 2, 1995 and April 3, 1994
<TABLE>
<CAPTION>
Preferred Stock Common Stock
--------------- ------------
Number of Number of
Shares Shares
Outstanding Amount Outstanding Amount
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE,
March 28, 1993 - $ - 2,146,006 $215,101
ADD (DEDUCT):
Net loss - - - -
Purchases of
treasury stock - - (24,337) -
Sale and distribution
of treasury stock - - 29,337 -
Additional pension
liability - - - -
- ------------------------------------------------------------------------------
BALANCE,
April 3, 1994 - - 2,151,006 215,101
ADD (DEDUCT):
Net loss - - - -
Purchases of
treasury stock - - (8,733) -
Sale and distribution
of treasury stock - - 8,733 -
Sale of common stock - - 21,563 2,156
Change in additional
pension liability - - - -
- ------------------------------------------------------------------------------
BALANCE,
April 2, 1995 - - 2,172,569 217,257
ADD (DEDUCT):
Net income - - - -
Conversion of convertible
debt to preferred stock 13,242 1,324 - -
Change in additional
pension liability - - - -
- ------------------------------------------------------------------------------
BALANCE,
March 31, 1996 13,242 $1,324 2,172,569 $217,257
==============================================================================
</TABLE>
<TABLE>
<CAPTION>
Retained
Earnings Additional
Paid-In (Accumulated Pension Treasury
Capital Deficit) Liability Stock Total
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE,
March 28, 1993 $9,217,635 $ 7,183,265 $ - $ (43,750) $ 16,572,251
ADD (DEDUCT):
Net loss - (4,335,433) - - (4,335,433)
Purchases of
treasury stock - - - (209,867) (209,867)
Sale and distribution
of treasury stock (204,295) - - 253,617 49,322
Additional pension
liability - - (258,435) - (258,435)
- ----------------------------------------------------------------------------------------------------
BALANCE,
April 3, 1994 9,013,340 2,847,832 (258,435) - 11,817,838
ADD (DEDUCT):
Net loss - (8,748,245) - - (8,748,245)
Purchases of
treasury stock - - - (87,330) (87,330)
Sale and distribution
of treasury stock (37,115) - - 87,330 50,215
Sale of common stock 164,109 - - - 166,265
Change in additional
pension liability - - (200,678) - (200,678)
- ----------------------------------------------------------------------------------------------------
BALANCE,
April 2, 1995 9,140,334 (5,900,413) (459,113) - 2,998,065
ADD (DEDUCT):
Net income - 1,190,968 - - 1,190,968
Conversion of convertible
debt to preferred stock 528,342 - - - 529,666
Change in additional
pension liability - - 201,344 - 201,344
- ----------------------------------------------------------------------------------------------------
BALANCE,
MARCH 31, 1996 $9,668,676 $(4,709,445) $(257,769) $ - $ 4,920,043
====================================================================================================
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
11
<PAGE> 11
STATEMENTS OF CASH FLOWS
For the Years Ended March 31, 1996, April 2, 1995 and April 3, 1994
<TABLE>
<CAPTION>
1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,190,968 $(8,748,245) $(4,335,433)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation 1,890,120 2,667,491 2,569,994
Amortization 86,780 84,484 83,606
Net gain on disposal of equipment (48,667) - -
Interest expensed on convertible debt 29,666 - -
Decrease in deferred income taxes, net - (109,867) (2,169,299)
Increase (decrease) in non-current deferred compensation, net 73,514 (288,258) (215,707)
Increase (decrease) in non-current pension obligation, net of equity charge 99,015 (158,195) (87,067)
(Increase) decrease in notes receivable 108,683 (30,767) 53,427
Net decrease in accounts receivable, inventories, prepaid expenses, supplies,
and other and refundable income taxes 5,139,845 1,994,948 88,314
Net increase (decrease) in accounts payable and accrued liabilities
(excluding restructuring charge) (4,918,973) (26,539) 4,750,703
Restructuring charges - (85,000) 1,777,187
Payment of restructuring liabilities - (195,450) (824,156)
Impairment loss on long-lived assets 111,698 3,800,000 -
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 3,762,649 (1,095,398) 1,691,569
- ----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (931,085) (1,527,496) (1,375,991)
Proceeds from sale of equipment 1,117,700 - -
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 186,615 (1,527,496) (1,375,991)
- ----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in revolving line of credit, net (2,213,347) 3,421,026 93,375
Sinking fund payments (1,836,939) (400,000) -
Treasury stock, net - (37,115) (160,545)
Proceeds from issuance of common stock, net - 166,265 -
Proceeds from long-term debt - - 11,640
Repayment of long-term debt (295,997) (314,269) (311,602)
Capitalized bank fees - (207,150) (20,000)
Repayment of capital lease obligation (79,065) - -
Proceeds from issuance of convertible debt 500,000 - -
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (3,925,348) 2,628,757 (387,132)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 23,916 5,863 (71,554)
CASH AND CASH EQUIVALENTS, beginning of year 16,533 10,670 82,224
- ----------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, end of year $ 40,449 $ 16,533 $ 10,670
- ----------------------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Cash Flow Information:
Interest paid $ 1,389,555 $ 1,344,411 $ 1,162,650
Income taxes paid (refunds received) $ 43,574 $ (550,740) $ 63,784
Supplemental Disclosure of Non Cash Activities:
Restructuring charge (Note 12) $ - $ 59,201 $ 613,380
Note receivable from sale of Lockport facility (Note 8) $ - $ 450,000 $ -
Increase in property, plant and equipment and capital lease obligation $ 458,000 $ - $ -
Increase in non-current deferred compensation and decrease in accrued liabilities $ 529,625 $ - $ -
==================================================================================================================================
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
12
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
March 31, 1996, April 2, 1995 and April 3, 1994
(1) THE COMPANY
Multi-Color Corporation (the Company), located in Cincinnati, Ohio,
primarily supplies printed labels and engravings to various name brand consumer
products companies located throughout the United States. The Company has plants
located in Cincinnati, Ohio, Scottsburg, Indiana and Erlanger, Kentucky.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) FISCAL YEAR
The fiscal year of the Company commences on the Monday closest to March 31.
References to fiscal 1996, 1995 and 1994 are for the fiscal years ended March
31, 1996, April 2, 1995 and April 3, 1994, respectively.
(b) REVENUE RECOGNITION
Sales and related costs of goods sold are recognized upon shipment to the
customers.
(c) CASH AND CASH EQUIVALENTS
Cash and cash equivalents include operating cash accounts and money market
funds.
(d) INVENTORIES
Inventories are stated at the lower of FIFO (first-in, first-out) cost or
market. Inventories as of year end consisted of the following:
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Finished goods $2,383,016 $3,128,973
Work-in-process 909,460 1,471,469
Raw materials 1,453,059 2,061,228
- --------------------------------------------------------------------------------
$4,745,535 $6,661,670
================================================================================
</TABLE>
(e) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following as of year end:
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Land and buildings $ 3,829,712 $ 3,815,795
Machinery and equipment 26,439,064 28,374,906
Furniture and fixtures 856,568 1,172,608
Construction in progress 255,373 34,628
- --------------------------------------------------------------------------------
31,380,717 33,397,937
Accumulated depreciation (13,273,209) (13,608,663)
- --------------------------------------------------------------------------------
$ 18,107,508 $ 19,789,274
================================================================================
</TABLE>
Property, plant and equipment are stated at the lower of fair value or
cost. In recognition of the losses experienced by the Company at the Cincinnati
location in prior years, the Company recorded a $3,800,000 impairment loss in
1995 on certain long-lived assets at the Cincinnati location to reduce the
carrying cost to the fair value as generally determined by an independent
appraiser. The impairment loss was recorded under the implementation of SFAS No.
121 "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to
be disposed of." An additional impairment loss of $112,000 was recorded in 1996
on the Cincinnati location's assets, while assets with an assigned impairment
value of $677,000 were either sold or disposed of in 1996. Depreciation is
calculated using the straight-line method over the estimated useful lives of the
assets, as follows:
<TABLE>
<S> <C>
Building ................... 20-30 years
Machinery and equipment .... 3-15 years
Furniture and fixtures ..... 5-10 years
</TABLE>
(f) DEFERRED CHARGES
Deferred charges, net, consist primarily of costs associated with the 1995
refinancing of the credit agreement which are being amortized over the
three-year term of the agreement (Note 3).
(g) INCOME TAXES
Deferred income tax assets and liabilities are provided for temporary
differences between the tax basis and reported amounts of assets and liabilities
that will result in taxable or deductible amounts in future years.
13
<PAGE> 13
(h) EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE
Earnings (loss) per common and common equivalent share are computed by
dividing net income (loss) by the weighted average number of common shares and
related equivalents outstanding during the period. Common equivalent shares are
shares issuable upon the exercise of stock options, when dilutive, net of shares
assumed to have been repurchased with the proceeds and shares issuable upon
conversion of the convertible preferred stock. Due to the net loss in 1995 and
1994, common equivalent shares are excluded from the earnings (loss) per share
calculation as they would be anti-dilutive. For 1996 the effect of common
equivalent shares is immaterial.
(i) ADVERTISING COSTS
Advertising costs are charged to expense as incurred. Expenses are minimal
for the three fiscal years ended March 31, 1996.
(j) RESEARCH AND DEVELOPMENT COSTS
Research and development costs are charged to expense as incurred. Expenses
were $141,000, $183,000 and $256,000 for 1996, 1995 and 1994, respectively.
(k) STOCK-BASED COMPENSATION
The provisions of SFAS No. 123 "Accounting for Stock-Based Compensation"
will be effective for the Company in 1997. This recent standard requires that
employee stock-based compensation either continue to be determined under
Accounting Principles Board Opinion (APB) No. 25 "Accounting for Stock Issued to
Employees" or in accordance with the provisions of SFAS No. 123 whereby
compensation expense is recognized based on the fair value of stock-based awards
on the grant date. The Company currently expects to continue to account for such
awards under the provisions of APB No. 25. SFAS No. 123 will require additional
disclosures beginning in 1997.
(l) USE OF ESTIMATES IN FINANCIAL STATEMENTS
In preparing financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements, as well as the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
(m) RECLASSIFICATION
Certain 1995 amounts have been reclassified to conform to 1996
presentation.
(3) DEBT
The components of the Company's debt are as follows:
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM DEBT
Revolving line of credit $ 1,891,554 $ 4,104,901
- --------------------------------------------------------------------------------
LONG-TERM DEBT
Bank term note, commercial paper
rate plus 2%, secured by certain
equipment, payable in monthly
installments of $25,926 plus
interest through April 1996 $ - $ 293,087
Cincinnati Industrial Revenue
Bonds, floating weekly rate, which
approximates 3.45% at March 31, 1996,
scheduled balloon payment of $6,500,000
in November 2000 6,500,000 6,500,000
Scottsburg Industrial Revenue Bonds,
floating weekly rate, which approximates
3.7% at March 31, 1996, scheduled balloon
payment of $5,750,000
in October 2009 5,750,000 5,750,000
Boone County Industrial Revenue
Bonds, floating weekly rate, which
approximates 3.7% at March 31, 1996,
scheduled balloon payment of $3,250,000
in December 2009 3,250,000 3,250,000
Other 5,093 8,003
- --------------------------------------------------------------------------------
15,505,093 15,801,090
Less-current portion of debt and
sinking fund payments (952,910) (1,093,087)
-debt subject to acceleration - (14,700,000)
- --------------------------------------------------------------------------------
$ 14,552,183 $ 8,003
================================================================================
</TABLE>
The following is a schedule of future annual principal payments payable
after one year (including sinking fund payments):
<TABLE>
<S> <C>
1998 $ 502,183
1999 -
2000 -
2001 5,050,000
2002 and thereafter 9,000,000
------------------------------------
$14,552,183
====================================
</TABLE>
14
<PAGE> 14
In 1996, the Company restated its credit agreement with two banks covering
the Company's short-term debt and letters of credit which secure all three
Industrial Revenue Bonds (the Bonds). The prepayment fees of $225,000 associated
with a previous financing agreement have been expensed as an extraordinary item
in the 1995 statement of operations. The current credit agreement is secured by
substantially all assets of the Company and requires sinking fund payments of
$200,000 per quarter beginning in October 1994. After June 30, 1996 and until
the termination of the credit agreement (July 31, 1997), sinking fund payments
are increased to $250,000 per quarter.
Under this credit agreement, the revolving line of credit provides for
borrowings up to the lesser of $3,750,000 or specified percentages of trade
receivables and inventories less $1,500,000. This revolving line of credit
expires July 31, 1997 and related interest rates are based on prime rates or
Eurodollar loan rates and the Company's leverage, as defined. At March 31, 1996,
the average interest rate was 8.6% and the Company had approximately $1,334,000
in available borrowings.
The credit agreement also contains certain covenants which, among others,
require the Company to maintain certain leverage, working capital and cash flow
ratios, and limit capital expenditures and dividends. The Company was in
compliance with all covenants at March 31, 1996.
With respect to the Bonds, the Company has the option to establish the
Bonds' interest rate form (variable or fixed interest rate). When a fixed
interest rate is selected, the fixed rate assigned will approximate the market
rate for comparable securities. When a variable rate is selected, or at the end
of a fixed interest rate period, the Bondholders reserve the right to demand
payment of the bonds. In the event that any of the Bondholders exercise their
rights, a remarketing agent is responsible for remarketing the Bonds on a best
efforts basis for not less than the outstanding principal and accrued interest.
In the event the Bonds are not able to be remarketed and the letters of credit
are exercised, the lender is committed to providing financing for up to 458
days. These letters of credit expire July 31, 1997.
The fair value of the Company's debt approximates carrying value.
(4) EMPLOYEE BENEFIT PLANS
(a) The Company has a defined benefit plan covering hourly employees at its
Cincinnati facility who meet certain age and service requirements. The Company's
funding policy is to contribute the recommended actuarially determined
contribution. Pension costs are based on length of service after May 1, 1985
using the unit credit method.
Net periodic pension cost includes the following components:
<TABLE>
<CAPTION>
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned
during period $ 183,913 $ 166,698 $ 160,912
Interest cost on projected
benefit obligations 142,207 116,499 96,115
Actual (return) loss on
plan assets (412,624) 57,395 (4,936)
Net amortization, deferral
and other 304,846 (153,592) (79,091)
- --------------------------------------------------------------------------------
Total net periodic
pension costs $ 218,342 $ 187,000 $ 173,000
================================================================================
</TABLE>
The actuarial assumptions used were:
<TABLE>
<CAPTION>
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate 7 1/4% 7 1/4% 7 1/4%
Rate of return on assets 9% 9% 9%
- --------------------------------------------------------------------------------
</TABLE>
The following table sets forth the plan's funded status and amounts
recognized in the Company's accompanying balance sheets:
<TABLE>
<CAPTION>
MARCH 31, 1996 April 2, 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefit obligation $ 2,186,718 $ 1,845,462
Non-vested benefit obligation 46,278 33,717
- --------------------------------------------------------------------------------
Accumulated benefit obligation 2,232,996 1,879,179
- --------------------------------------------------------------------------------
Projected benefit obligation for
services rendered to date 2,232,996 1,879,179
Plan assets at fair value,
primarily composed of equity
securities 1,967,460 1,385,435
- --------------------------------------------------------------------------------
Projected benefit obligation
in excess of plan assets 265,536 493,744
Prior service cost not yet
recognized in net periodic
pension cost (4,839) (6,045)
Unrecognized net loss from
past experience different from
that assumed and effects of
changes in assumptions (257,769) (459,113)
Adjustment to recognize
minimum liability 262,608 465,158
- --------------------------------------------------------------------------------
Accrued pension cost $ 265,536 $ 493,744
================================================================================
</TABLE>
15
<PAGE> 15
(b) Hourly employees at the Company's Lockport facility participated in a
union-sponsored, collectively bargained, defined benefit multi-employer pension
plan. The Company contributed approximately $84,000 to the plan in 1994. These
contributions were determined in accordance with the provisions of negotiated
labor contracts and generally were based on
the number of hours worked. Management believes there will be no unfunded
withdrawal liability as a result of the closure of the Lockport facility in 1994
(Note 12).
(c) The Company has established a profit sharing/401(k) retirement savings plan
which covers those employees who meet certain service requirements and are not
participants in the other Company retirement plans discussed above. The plan
provides for voluntary contributions by the Company's employees up to a
specified maximum percentage of gross pay. At the discretion of the Company's
Board of Directors, the Company will contribute a specified matching percentage
of the employee contributions. Company contributions in 1996, 1995 and 1994
approximated $101,000, $93,000 and $95,000, respectively, which represent
one-half of the employee contributions not exceeding 6% of gross pay.
(d) The Company previously entered into deferred compensation agreements with
certain officers/shareholders and management employees. Amounts due under
deferred compensation agreements are classified as long-term liabilities at
March 31, 1996. Interest on the deferred amounts accrued at 11%, 8 1/4% and 8%
in 1996, 1995 and 1994, respectively.
(e) The Company allows retirees between the ages of 62 and 65 to continue to
participate in its health plan. The retirees reimburse the Company a stipulated
premium amount so the net cost to the Company is immaterial. The Company offers
no other programs requiring recognition of the cost of postretirement or
postemployment benefits under the Financial Accounting Standards Board
statements on accounting for postretirement and postemployment benefits.
(f) During 1992 the Company established a supplemental retirement program for
key executives which allows a maximum of $300,000 in loans to such employees
with a maximum of $100,000 to any one individual. At March 31, 1996 and April 2,
1995, a $100,000 loan at no interest was outstanding under this program from an
officer/shareholder (Note 8).
(g) During 1993 the Company established a supplemental retirement bonus program
for key executives. The Company contributes a specified percentage of the
eligible executive's pay. Expenses in 1996 and 1995 approximated $54,000 and
$34,000, respectively. There were no contributions in 1994.
(h) The Company has an employee stock purchase plan whereby eligible employees
may purchase up to 1,000 shares of Company stock per year through payroll
deductions. The Company will contribute one bonus share for every four shares
purchased up to a maximum of twenty bonus shares per year to any one employee;
however, in 1996 and 1995 the Company contributed cash rather than stock.
(5) INCOME TAXES
The provision (credit) for income taxes includes the following components:
<TABLE>
<CAPTION>
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENTLY PAYABLE
(receivable)
Federal $ - $ (255,000) $ (415,000)
State and local (37,000) 47,000 50,000
- --------------------------------------------------------------------------------
(37,000) (208,000) (365,000)
- --------------------------------------------------------------------------------
DEFERRED-
Federal (256,000) 314,000 (1,926,000)
State and local 256,000 (353,000) (242,000)
- --------------------------------------------------------------------------------
$ (37,000) $ (247,000) $(2,533,000)
================================================================================
</TABLE>
The following is a reconciliation between the statutory federal income tax
rate and the effective rate shown above:
<TABLE>
<CAPTION>
1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
AMOUNT RATE Amount Rate Amount Rate
------------------ -------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Computed provision (credit) for federal income
taxes at the statutory rate $ 392,000 34% $(3,058,226) (34%) $(2,335,267) (34%)
State and local income taxes, net of federal
income tax benefit 145,000 12% (325,173) (4%) (212,762) (3%)
Valuation allowance (708,000) (61%) 3,156,604 35% - -
Changes in estimates for deferred components 147,000 13% - - - -
Other (13,000) (1%) (19,742) - 15,029 -
- ----------------------------------------------------------------------------------------------------------------------------
$ (37,000) (3%) $ (246,537) (3%) $(2,533,000) (37%)
============================================================================================================================
</TABLE>
16
<PAGE> 16
At year end the net deferred tax components consisted of the following:
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Tax depreciation over book
depreciation $(4,625,417) $(4,603,715)
Other (9,814) (11,749)
- --------------------------------------------------------------------------------
$(4,635,231) $(4,615,464)
================================================================================
Deferred tax assets:
Asset impairment loss $ 1,099,631 $ 1,292,000
Deferred compensation 205,067 157,069
Vacation 71,439 110,920
Self-insured benefits 24,771 22,156
Inventory reserves 40,138 136,153
Accrued rebates to customers - 82,196
Other 255,531 511,158
AMT credit carryforward 70,980 70,980
Tax credit carryforward 147,215 137,436
State deferred tax asset, net of
federal benefit 8,600 265,000
Net operating loss carryforward 5,160,810 4,987,000
- --------------------------------------------------------------------------------
7,084,182 7,772,068
Valuation allowance (2,448,951) (3,156,604)
- --------------------------------------------------------------------------------
$ 4,635,231 $ 4,615,464
- --------------------------------------------------------------------------------
Net deferred tax components $ - $ -
================================================================================
</TABLE>
For tax reporting purposes, the Company has approximately $71,000 of
alternative minimum tax (AMT) credits available for an indefinite period. The
regular tax net operating loss of approximately $15,179,000 can be carried
forward and used to reduce future taxable income in addition to tax credits of
approximately $147,000 which can be carried forward through the following
expiration dates:
<TABLE>
<CAPTION>
Year Net Operating Losses Tax Credits
-----------------------------------------------
<S> <C> <C>
2005 $ - $ 25,000
2006 1,276,000 48,000
2007 1,437,000 37,000
2008 325,000 9,000
2009 5,959,000 18,000
2010 5,204,000 5,000
2011 978,000 5,000
-----------------------------------------------
$ 15,179,000 $ 147,000
===============================================
</TABLE>
The valuation allowance, which decreased by approximately $708,000 in 1996,
is required due to the uncertainty of realizing the net deferred tax asset
through future operations.
(6) MAJOR CUSTOMERS
During 1996, 1995 and 1994, sales to three companies and their related
subsidiaries and divisions approximated 49%, 42% and 44% respectively, of the
Company's net sales individually presented as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-----------------------------------------------
<S> <C> <C> <C>
23% 16% 18%
14% 16% 17%
12% 10% 9%
-----------------------------------------------
49% 42% 44%
===============================================
</TABLE>
In addition, the year end accounts receivable balances of these companies
approximated 34%, 25% and 28% of the Company's total trade receivable balance at
year end 1996, 1995 and 1994, respectively.
(7) STOCK OPTIONS
As of March 31, 1996, 570,413 of the authorized but unissued common shares
were reserved for issuance to key employees and directors under the Company's
qualified and non-qualified stock option plans. The applicable options vest
immediately or ratably over a three to five year period. A summary of the
changes in the options outstanding during 1996, 1995 and 1994 is set forth
below:
<TABLE>
<CAPTION>
Number of Option Price
Shares Range (Per Share)
- --------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at March 28, 1993 306,000 $5.75-$12.63
Granted 105,000 9.25-11.00
Exercised (19,900) 5.75-6.75
Cancelled (28,100) 5.75-12.63
- --------------------------------------------------------------------------------
Outstanding at April 3, 1994 363,000 $5.75-$12.63
Granted 51,500 4.65-9.25
Exercised (15,187) 5.75
Cancelled (39,700) 5.75-12.63
Expired (25,000) 12.63
- --------------------------------------------------------------------------------
Outstanding at April 2, 1995 334,613 $4.65-$12.63
Granted 74,000 2.63-4.05
Cancelled (82,000) 5.75-9.25
Expired (13,813) 5.75-12.63
- --------------------------------------------------------------------------------
OUTSTANDING AT MARCH 31, 1996 312,800 $2.63-$11.00
- --------------------------------------------------------------------------------
EXERCISABLE (VESTED) OPTIONS AT
MARCH 31, 1996 213,525 $4.65-$11.00
================================================================================
</TABLE>
17
<PAGE> 17
(8) NOTES RECEIVABLE
The components of notes receivable are summarized as follows:
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Officer/shareholder note established under the
supplemental retirement program (Note 4(f)) $ 100,000 $ 100,000
Other employee notes - 49,417
- --------------------------------------------------------------------------------
$ 100,000 $ 149,417
================================================================================
Note receivable related to the sale of the
Lockport facility, interest at 9%, payable in
monthly installments through July 1999,
secured by a mortgage on the property and
personal guarantees $ 380,967 $ 440,233
- --------------------------------------------------------------------------------
Less-current portion (108,415) (67,237)
- --------------------------------------------------------------------------------
$ 272,552 $ 372,996
================================================================================
</TABLE>
(9) ACCOUNTS RECEIVABLE
The Company values its trade accounts receivable on the reserve method.
During 1995, the allowance for doubtful accounts was increased in anticipation
of customer claims relating to the blocking (sticking together) of labels. The
allowance was reduced during 1996 as the claims were successfully resolved. The
following table summarizes the activity in the allowance for doubtful accounts
for fiscal 1996 and 1995.
<TABLE>
<CAPTION>
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of year $ 297,391 $ 92,129 $ -
Provision (185,153) 465,400 92,129
Accounts written-off (76,522) (260,138) -
- --------------------------------------------------------------------------------
Balance at end of year $ 35,716 $ 297,391 $ 92,129
================================================================================
</TABLE>
(10) CAPITAL LEASE OBLIGATIONS
In January 1996, the Company entered into a capital lease for a piece of
machinery. The amount recorded for the equipment and related obligation under
the capital lease amounted to $458,000. The accumulated depreciation is $5,089
at March 31, 1996.
The following is a schedule of future annual minimum lease payments under
the capital lease together with the present value of the net minimum lease
payments, as of March 31, 1996:
<TABLE>
<S> <C>
Total future minimum lease payments $ 522,592
Less: Interest (143,657)
- --------------------------------------------------------------------------------
Present value of minimum lease payments 378,935
Less: Current portion (58,028)
- --------------------------------------------------------------------------------
$ 320,907
================================================================================
</TABLE>
The following is a schedule of future annual minimum lease payments payable
after one year:
<TABLE>
<S> <C>
1998 $ 72,198
1999 82,803
2000 94,966
2001 70,940
--------------------------
$320,907
==========================
</TABLE>
(11) COMMITMENTS AND CONTINGENCIES
(a) OPERATING LEASE AGREEMENTS
During 1994, the Company entered into a leasing arrangement that provided
for total availability of $609,000 from a bank. As of March 31, 1996 and April
2, 1995, the Company had utilized $405,000 of the total lease arrangement.
During 1995, the bank limited the availability to $405,000. The Company also has
certain other miscellaneous equipment leases. Leases expire on various dates
through April 2001. Rent expense during 1996 and 1995 was approximately $238,000
and $106,000, respectively. Rent expense in 1994 was nominal.
The annual future minimum rental obligations as of March 31, 1996 are as
follows:
<TABLE>
<CAPTION>
Year
--------------------------------------
<S> <C>
1997 $235,000
1998 168,000
1999 52,000
2000 35,000
2001 and thereafter 26,000
--------------------------------------
Total $516,000
======================================
</TABLE>
(b) ENVIRONMENTAL MATTERS
The Company is a party to an agreed administrative order with the Indiana
Department of Environmental Management (IDEM) concerning violations of certain
air emissions standards at its Scottsburg location. Prior to the execution of
the order, the IDEM and the Company tenta-
18
<PAGE> 18
tively reached an agreement whereby a civil penalty would be assessed of up to
$235,000 which the Company accrued and expensed in 1995. When the agreement was
finalized, the penalty was reduced to $185,000. The difference of $50,000
between the estimated and actual penalty was recorded as income in 1996. In
connection with this agreement, the Company installed certain environmental
control equipment and structures having a total cost of approximately $600,000
in 1996.
(c) LITIGATION
Litigation is instituted from time to time against the Company which
involves routine matters incident to the Company's business. In the opinion of
management, the ultimate disposition of such litigation will not have a material
effect upon the Company's financial statements.
(d) UNION CONTRACT
Hourly employees at the Company's Cincinnati plant, approximately 33% of
the Company's total workforce, are covered under a union contract that expires
July 15, 1996. The Company believes that it will be successful in renegotiating
the contract.
(12) RESTRUCTURING PLAN
The Company began implementing a restructuring plan in the second quarter
of 1994 which resulted in a pre-tax charge to operating results of $1,777,187
primarily related to closing the Lockport facility. The restructuring charge
included the anticipated loss and holding costs on property, plant and equipment
to be disposed of, severance pay, and certain other costs. During 1995 the
restructuring plan was completed and the difference of $85,000 between the
estimated and actual costs was recorded as income.
(13) PREFERRED STOCK
Effective March 31, 1996, 13,242 shares of Series B Convertible Preferred
Stock were issued upon conversion of the entire outstanding balance, including
accrued interest, of the Subordinated Convertible Notes that were issued in
October 1995. The Series B Convertible Preferred Stock was issued at $40 per
share and also has a liquidation value of $40 per share, plus unpaid dividends.
These shares are immediately convertible , at the option of the Shareholders,
into 132,420 shares of Common Stock and may be redeemed by the Company starting
in May 1998. Had the Subordinated Convertible Notes been immediately converted
into shares of Common Stock upon issuance in October 1995, the Common Stock
would have been included in the earnings per share calculation and the primary
earnings per share would have been $.53 per share.
(14) SUBSEQUENT EVENTS
On May 1, 1996, the Company redeemed $2,200,000 of the Cincinnati
Industrial Revenue Bonds with funds from the Sinking Fund Deposit account (Note
3).
On May 2, 1996, the Company sold to Label Venture Group LLC 52,500 shares
of a newly created issue of Series A Convertible Preferred Stock for $2,432,000.
Each share of Series A Convertible Preferred Stock is immediately convertible,
at the option of the Shareholder, into ten shares of the Company's Common Stock
and may be redeemed by the Company starting in May 1998. The Series A
Convertible Preferred Stock bears a preferred dividend of $4.25 per share and
has a liquidation value of $50 per share, plus unpaid dividends. The Company's
lenders required $1,000,000 of the proceeds to be deposited into the Company's
Sinking Fund Deposit account (Note 3). The remaining proceeds are intended to
support future capital expansion plans. Had the $1,000,000 of proceeds that will
ultimately be used to retire a portion of the Industrial Revenue Bonds (Note 3)
been received at the beginning of the 1996 fiscal year, 215,775 shares of Common
Stock would have been treated as common stock equivalents in the earnings per
share calculation. These common stock equivalents represent a proportional share
of the net proceeds received and the total number of shares of Common Stock into
which the Preferred Stock that was issued may be converted. The primary earnings
per share would have been $.50 per share.
19
<PAGE> 19
REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS
To the Shareholders and Directors of
Multi-Color Corporation:
We have audited the accompanying balance sheet of Multi-Color Corporation
(an Ohio corporation) as of March 31, 1996, and the related statements of
operations, shareholders' investment, and cash flows for the year 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 audit. The financial statements of Multi-Color Corporation as of and for
the years ended April 2, 1995 and April 3, 1994 were audited by other auditors
whose report dated June 16, 1996, expressed an unqualified opinion on those
statements.
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 fiscal 1996 financial statements referred to above
present fairly, in all material respects, the financial position of Multi-Color
Corporation as of March 31, 1996, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
Cincinnati, Ohio
May 15, 1996
20
<PAGE> 20
SHAREHOLDER INFORMATION
Multi-Color's shares are traded in the over-the-counter market under the
NASDAQ-NMS symbol LABL.
ANNUAL MEETING NOTICE
Multi-Color's 1996 annual meeting of shareholders will be held at 12:00
noon, Eastern time on August 12, 1996, at the Company's offices located at 205
West Fourth Street, Suite 1140, Cincinnati, Ohio. Shareholders of record at the
close of business June 24, 1996, will be entitled to vote at this meeting.
CORPORATE HEADQUARTERS
Multi-Color Corporation
205 West Fourth Street
Suite 1140
Cincinnati, Ohio 45202
(513) 381-1480
TRANSFER AGENT AND REGISTRAR
Fifth Third Bank
Fifth Third Center
Cincinnati, Ohio 45263
Inquiries regarding stock transfers, lost certificates or address changes
should be directed to the Stock Transfer Department of Fifth Third Bank at the
above address.
INDEPENDENT PUBLIC ACCOUNTANTS
Grant Thornton LLP
Cincinnati, Ohio 45202
CORPORATE COUNSEL
Keating, Muething & Klekamp
Cincinnati, Ohio 45202
FORM 10-K/INVESTOR CONTACT
A copy of the Company's Form 10-K annual report as filed with the
Securities and Exchange Commission is available to shareholders without charge
upon written request. These requests and other inquiries should be directed to
William R. Cochran, Vice President and Chief Financial Officer, Multi-Color
Corporation, 205 West Fourth Street, Suite 1140, Cincinnati, Ohio 45202.
MARKET INFORMATION
The Company's shares trade in the over-the-counter market under the
NASDAQ-NMS symbol LABL. The Stock Range Table on page 1 represents the high and
low sales prices for Multi-Color's common stock as reported in the NASDAQ
National Market System for fiscal years 1995 and 1996.
As of June 24, 1996, there were 443 shareholders of record of the
Company's common stock.
DIVIDEND POLICY
Multi-Color currently intends to retain its earnings to fund the growth of
its business and does not anticipate paying any cash dividends on Common Stock
in the foreseeable future. The Company's financing agreements prohibit the
payment of Common Stock cash dividends. Additionally, the Company is prohibited
from paying dividends on the Common Stock unless all dividends declared on the
Company's Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock have been fully paid.
DIRECTORS AND OFFICERS
DIRECTORS
Burton D. Morgan
Chairman of the Board
(President of Basic Search, Inc.)
John C. Court
Lorrence T. Kellar(1)
(Vice President, Real Estate, Kmart Corporation)
John D. Littlehale(1)
David H. Pease, Jr.(1)
(Chairman of Pease Industries, Inc.)
Louis M. Perlman(2)
(Private Investor)
(1) Audit Committee Member
(2) Effective May 2, 1996
OFFICERS
John C. Court
President and Chief Executive Officer
John D. Littlehale
Vice President and Secretary
William R. Cochran
Vice President and Chief Financial Officer
John R. Voelker
Vice President, Sales and Marketing
Donald E. Goben, Sr.
Vice President
21
<PAGE> 1
EXHIBIT 23.1
Consent of Independent Certified Public Accountants
---------------------------------------------------
As independent certified public accountants, we hereby consent to the
incorporation by reference of our report dated May 15, 1996 which is included in
this Form 10-K, into the Company's previously filed Registration Statement on
Form S-8 (No. 33-51772).
GRANT THORNTON LLP
Cincinnati, Ohio,
June __, 1996
<PAGE> 1
EXHIBIT 23.2
Consent of Independent Public Accountants
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 10-K, into the Company's previously filed
Registration Statement No. 33-51772.
ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
June 28, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-03-1995
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 40,000
<SECURITIES> 0
<RECEIVABLES> 4,584,000
<ALLOWANCES> 0
<INVENTORY> 4,746,000
<CURRENT-ASSETS> 9,681,000
<PP&E> 31,381,000
<DEPRECIATION> 13,273,000
<TOTAL-ASSETS> 30,454,000
<CURRENT-LIABILITIES> 9,685,000
<BONDS> 0
<COMMON> 9,886,000
0
1000
<OTHER-SE> (4,709,000)
<TOTAL-LIABILITY-AND-EQUITY> 30,454,000
<SALES> 55,375,000
<TOTAL-REVENUES> 55,375,000
<CGS> 46,867,000
<TOTAL-COSTS> 52,743,000
<OTHER-EXPENSES> 54,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,423,000
<INCOME-PRETAX> 1,154,000
<INCOME-TAX> (37,000)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,191,000
<EPS-PRIMARY> .55
<EPS-DILUTED> .54
</TABLE>
<PAGE> 1
EXHIBIT 99
----------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) Report Filed Under Item 5
-------------------------
Multi-Color Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 0-16148 31-1125853
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
4575 Eastern Avenue, Cincinnati, Ohio 45226
- --------------------------------------------------------------------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (513) 321-5381
------------------------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE> 2
-2-
Item 5. Other Events.
-------------
This Form 8-K is filed for the purpose of supplying the press release
issued by Multi-Color Corporation (the "Company") on May 6, 1996 relating to the
Company's issuance of a newly created Series A Convertible Preferred Stock and
Series B Convertible Preferred Stock.
INDEX TO EXHIBITS
MULTI-COLOR CORPORATION
Number Exhibit Description
- ------ -------------------
99 Press Release
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MULTI-COLOR CORPORATION
Date: May 8, 1996 /s/William R. Cochran
---------------------
William R. Cochran
Vice President and
Chief Financial Officer
<PAGE> 3
-3-
EXHIBIT 99
----------
MULTI-COLOR CORPORATION
FOR IMMEDIATE RELEASE Contact: William R. Cochran
May 6, 1996
Multi-Color Corporation has successfully completed the final stage of its
commitment to strengthen its balance sheet by approximately $3,000,000 by
raising $2,625,000 through the sale of 52,500 shares of a newly created issue of
Series A Convertible Preferred Stock to Label Venture Group LLC, a Delaware
Limited Liability Company, and converting the entire outstanding principal
amount ($500,000) of the Subordinated Convertible Notes issued in October, 1995
into a newly created Series B Convertible Preferred Stock.
Each share of Series A Convertible Common Stock is immediately convertible into
ten shares of the Company's Common Stock or a total of 525,000 shares of Common
Stock, which would be 19.46% of the Company's outstanding Common Stock after the
conversion. The Series A Convertible Preferred Stock bears a preferred dividend
of $4.25 per share. The Company has the right to redeem the Series A Convertible
Preferred Stock starting in May, 1998. The holders of the Series A Convertible
Preferred Stock have the right to appoint one member to the Company's Board of
Directors and have designated Louis Perlman as their Board designee.
The Series B Convertible Preferred Stock bears a preferred dividend of $4.25 per
share, is immediately convertible into 132,420 shares of Common Stock, and may
be redeemed by the Company starting in May, 1998.
The Company intends to use the proceeds to support its future capital expansion
plans and to reduce its indebtedness to PNC Bank and Star Bank, its principal
lenders. The completion of the above, coupled with the recent amended loan
agreement, provides the resources to allow Multi-Color to successfully attain
its strategic plan. In this regard, Multi-Color wishes to express its thanks to
PNC Bank and Star Bank for their cooperation.
