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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 30, 1997
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)
Registrant's 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
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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 $7.125
per share held by nonaffiliates of the registrant is $10,260,812 as of June 16,
1997.
As of June 16, 1997, 2,277,679 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 30, 1997 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 1997 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 plan 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.
During the second quarter of fiscal 1997, the Company started a new entity with
Think Laboratories, Inc. of Kashiwa, Japan, through a new corporation owned 80%
by the Company and entitled Laser Graphic Systems, Incorporated, to develop the
market for engraving services in the United States. The Company also initiated
an expansion of its Scottsburg, Indiana facility which entails doubling the
existing capacity of the Scottsburg, Indiana plant during 1997; such expansion
supports the continued growth expected in the in-mold and other label markets.
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 "Company" and "Multi-Color" refer to
Multi-Color Corporation and its predecessors, including the label divisions of
Georgia-Pacific.
PRODUCTS
The Company's predecessors began producing paper labels in 1918 and the Company
has maintained many 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, canned
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food products, bottled (glass and plastic) products, boxed consumer products,
automotive liquid products, and personal care products. In addition, the
Company produces gift wrap.
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, vegetable oils, and
personal care products.
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.
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 Products, Inc.
Reckitt & Colman Prestone Products
The Dial Corp. Dow Brands
Campbell Soup Company, and Wm. Wrigley Jr. Company have been customers 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
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expertise distinguish the Company from other label producers. The Company
maintains a marketing staff of eleven people who are responsible for developing
innovative solutions, including new labels, for customers' label needs.
Approximately 51% of the Company's total sales in fiscal 1997 were to three
customers: The Procter & Gamble Company, 27% (divided among six product
categories and three separate buyers); Wm. Wrigley Jr. Company, 13%; and Alvin
Press, 11%. 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 plant and 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 development of new products.
Multi-Color currently uses its letterset printing capacity exclusively for
printing gum wrappers for Wm. Wrigley Jr. Company.
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 helps 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 $246,000 in fiscal
1997, $141,000 in fiscal 1996 and $183,000 in fiscal 1995.
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.
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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, quality and qualification
requirements present barriers to new entrants into Multi-Color's markets.
EMPLOYEES
As of March 30, 1997, the Company had 227 employees, of whom 70 were salaried
and 157 were hourly. Hourly employees at its Cincinnati plant are represented
by national unions under contracts which expired 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. With the downsizing of Cincinnati, the Company is currently using only
approximately 50,000 square feet of this facility. 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 are located at 205 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.
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ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None during the fourth quarter of the fiscal year ending March 30, 1997.
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 23 of the 1997 Annual
Report to Shareholders are incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Selected Financial Data on page 1 of the 1997 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 6 through 10 of the 1997 Annual Report to Shareholders are
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and related notes together with the
Report of Independent Certified Public Accountants, appearing on pages 11
through 22 of the 1997 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 March 9, 1996 is incorporated herein
by reference.
PART III
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ITEMS 10, 11, 12 and 13 are incorporated by reference to the Registrant's Proxy
Statement for its 1997 Annual Shareholders' Meeting which will be filed
pursuant to Regulation 14A within 120 days after the end of the fiscal year.
PART IV
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
The following consolidated financial statements of
Multi-Color Corporation, the related notes, and the Report of
Independent Certified Public Accountants, included in the
1997 Annual Report to Shareholders, are incorporated herein
by reference.
Consolidated Statements of Operations for the years ended
March 30, 1997, March 31, 1996 and April 2, 1995.
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[FN]
Consolidated Balance Sheets as of March 30, 1997 and March 31, 1996.
Consolidated Statements of Shareholders' Investment for the years
ended March 30, 1997, March 31, 1996 and April 2, 1995.
Consolidated Statements of Cash Flows for the years ended March 30,
1997, March 31, 1996 and April 2, 1995.
Notes to Consolidated 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 consolidated
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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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Shareholders and Board of Directors
Multi-Color Corporation
We have audited the accompanying consolidated balance sheets of Multi-Color
Corporation (an Ohio corporation) as of March 30, 1997, and March 31, 1996, and
the related consolidated statements of operations, shareholders' investment,
and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. The financial
statements of Multi-Color Corporation as of and for the year ended April 2,
1995, 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 audits 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 fiscal 1997 and 1996 financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Multi-Color Corporation as of March 30, 1997, and March 31, 1996, and the
consolidated results of their operations and their cash flows for the years
then ended in conformity with generally accepted accounting principles.
May 14, 1997 Grant Thornton LLP
Cincinnati, Ohio
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(a)(3) List of Exhibits
Exhibit Filing
Number Description of Exhibit Status
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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, Indiana
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 Revenue
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 e
Authority of Cincinnati and Hamilton County
dated as of November 1, 1985
10.8 Amendment to Loan Agreement between the e
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
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.)
10.14 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.)
10.15 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
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10.16 Bond Purchase Agreement for $3,250,000 County b
of Boone, Kentucky Industrial Building Revenue
Bonds Series 1989
10.17 Trust Indenture securing Port Authority of b
Cincinnati and Hamilton County, Ohio Industrial
Revenue Development Bonds dated November 1, 1985
10.18 Supplemental Trust Indenture to Trust Indenture b
securing Port Authority of Cincinnati and
Hamilton County Ohio Industrial Development
Revenue Bonds
10.19 Irrevocable Letter of Credit dated July 19, b
1994 from PNC Bank, Ohio, National Association
covering $6,500,000 Port Authority of Cincinnati
and Hamilton County, Ohio Industrial Revenue
Development Bonds
10.20 Substituted Revolving Note dated February 23, 1996 h
made by the Company to PNC Bank, Ohio, National
Association, in the Principal amount of $1,875,000
10.21 Substituted Revolving Note dated February 23, 1996 h
made by the Company to Star Bank, National Association
in the principal amount of $1,875,000
10.22 First Amendment and Waiver Agreement dated May 2, 1996 h
10.23 Second Amended and Restated Credit, Reimbursement and i
Security Agreement among the Company, PNC Bank, Ohio,
National Association, and Star Bank, National
Association dated January 9, 1997
10.24 Loan Agreement between Laser Graphic Systems, Incorporated i
and PNC Bank, Ohio, National Association dated as of
January 9, 1997
10.25 First Amendment to January 9, 1997 Credit Agreement, i
effective as of February 25, 1997
10.26 Second Amendment to January 9, 1997 Credit Agreement, i
effective as of April 1, 1997
10.27 Agreement between the Company and Think Laboratory Co. LTD i
dated July 1, 1996
10.28 Loan Agreement between the Company and City of Scottsburg, i
Indiana, dated as of April 1, 1997 for $3,000,000
MANAGEMENT CONTRACTS AND COMPENSATION PLANS
10.29 1985 Stock Option Plan a
10.30 1987 Stock Option Plan a
10.31 1992 Directors' Stock Option Plan a
10.32 Profit Sharing/401(k) Retirement Savings Plan and Trust a
10.33 Deferred Compensation Rabbi Trust Agreement h
10.34 Multi-Color Employee Stock Purchase Plan as g
amended and restated dated March 4, 1992
10.35 1997 Stock Option Plan j
10.36 Employment Agreement - William R. Cochran h
10.37 Severance Agreement - John C. Court h
10.38 Severance Agreement - John D. Littlehale h
10.39 Severance Agreement - John R. Voelker h
10.40 Severance Agreement - William R. Cochran h
11 Computation of Earnings Per Share h
13 Annual Report to Shareholders i(1)
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(1) Only portions of the 1997 Annual Report to Shareholders specifically
incorporated by reference to this Form 10-K are filed herewith. A supplemental
paper copy of the 1997 Annual Report to Shareholders has been provided to the
Securities and Exchange Commission for informational purposes only.
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23.1 Consent of Grant Thornton LLP Independent i
Certified Public Accountants
23.2 Consent of Arthur Andersen LLP Independent i
Certified Public Accountants
27 Financial Data Schedule h
99 Form 8-K filed May 10, 1996 h
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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.
c Filed as an exhibit to the Form 10-K for the 1990 fiscal year and
incorporated herein by reference.
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 as an exhibit to the Form 10-K for the 1996 fiscal year and
incorporated herein by reference.
i Filed herewith.
j Filed as an exhibit to the 1997 Proxy Statement and incorporated herein
by reference.
(b) Reports on Form 8-K.
None filed during the fourth quarter.
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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 27, 1997 (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.
Name Capacity Date
/s/ John C. Court Chairman of the Board of June 27, 1997
- --------------------------- Directors, President, and
John C. Court Chief Executive Officer
/s/ John D. Littlehale Vice President, Manufacturing June 27, 1997
- --------------------------- Secretary, and Director
John D. Littlehale
/s/ William R. Cochran Vice President, June 27, 1997
- --------------------------- Chief Financial Officer
William R. Cochran (Principal Financial Officer
and Principal Accounting
Officer)
/s/ Burton D. Morgan Director June 27, 1997
- ---------------------------
Burton D. Morgan
/s/ Lorrence T. Kellar Director June 27, 1997
- ---------------------------
Lorrence T. Kellar
/s/ David H. Pease, Jr. Director June 27, 1997
- ---------------------------
David H. Pease, Jr.
/s/ Louis M. Perlman Director June 27, 1997
- ---------------------------
Louis M. Perlman
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EXHIBIT 10.23
SECOND AMENDED AND RESTATED
CREDIT, REIMBURSEMENT AND SECURITY AGREEMENT
ORIGINAL DATED AS OF JULY 15, 1994
RESTATED AS OF JANUARY 9, 1997
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
---------
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TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C> <C>
1. Definitions.................................................................... 3
1.1 Defined Terms......................................................... 3
1.2 Other Accounting Definitional Provisions.............................. 20
1.3 Other Definitional Provisions......................................... 21
2. Credit Facilities.............................................................. 21
2.1 Revolving Credit Facility............................................. 21
2.2 [Intentionally Omitted]............................................... 21
2.3 Manner of Borrowing................................................... 22
2.3.1 Revolving Borrowings..................................... 22
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
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TABLE OF CONTENTS CONTINUED
<TABLE>
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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.............................................................. 39
a. Amendment and Extension 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............................................................... 43
2.15.1 Taxes, Reserve Requirements, Etc.................................. 43
2.15.2 Capital Adequacy.................................................. 43
2.15.3 Certificate of Lender............................................. 44
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........................................................ 45
2.17.1 Events............................................................ 45
2.17.2 Statement......................................................... 45
2.17.3 Survival.......................................................... 45
2.18 [Intentionally Omitted]........................................................ 45
2.19 Use of Proceeds................................................................ 46
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS CONTINUED
<TABLE>
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<S> <C> <C>
3. Lock Box; Cash Collateral Account...................................................................... 46
3.1 Lock Box...................................................................................... 46
3.2 Cash Collateral Account....................................................................... 49
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............................................. 51
6.3 Pledged Bonds................................................................................. 51
6.3.1 Pledge........................................................................... 51
6.3.2 Pledged Bond Payments............................................................ 51
6.3.3 Release of Pledged Bonds......................................................... 52
6.3.4 Liability of Agent............................................................... 52
6.3.5 Representations; Rights and Remedies............................................. 52
7. Conditions Precedent................................................................................... 52
7.1 Initial Advances.............................................................................. 53
7.1.1 Loan Documents................................................................... 53
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........................................................................... 54
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................................................................. 55
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.......................................................... 56
7.1.23 Collateral Evaluation............................................................ 56
</TABLE>
iii
<PAGE> 5
TABLE OF CONTENTS CONTINUED
<TABLE>
PAGE
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<S> <C> <C>
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 Representation................................................................................ 57
8. Representations and Warranties......................................................................... 57
8.1 Organization.................................................................................. 57
8.2 Latest Financials............................................................................. 57
8.3 Recent Adverse Changes........................................................................ 57
8.4 Recent Actions................................................................................ 57
8.5 Title......................................................................................... 58
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......................................................................... 60
8.15 Investment Company Act........................................................................ 60
8.16 Governmental Consents......................................................................... 60
8.17 Disclosure.................................................................................... 61
8.18 Registered Office............................................................................. 61
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................................................................... 62
9.5 [Intentionally Omitted]....................................................................... 62
9.6 Quarterly Statements.......................................................................... 62
9.7 Annual Audits................................................................................. 62
9.8 Annual Statements............................................................................. 62
9.9 Auditor's Letters............................................................................. 63
9.10 Annual Budgets, Forecasts and Comparisons..................................................... 63
9.11 Notices of Default............................................................................ 63
9.12 Payment of Charges............................................................................ 63
</TABLE>
iv
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TABLE OF CONTENTS CONTINUED
<TABLE>
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9.13 Existence; Operations.................................................. 63
9.14 Insurance.............................................................. 64
9.15 Compliance with Laws................................................... 64
9.16 Environmental Violations............................................... 64
9.17 Environmental Audit and Other Environmental Information................ 65
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 [Intentionally Omitted]................................................ 66
9.24 [Intentionally Omitted]................................................ 66
9.25 Sale of Equipment...................................................... 66
9.26 Excess Cash Flow....................................................... 66
9.27 [Intentionally Omitted]................................................ 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.......................................................... 67
10.6 Leverage Ratio......................................................... 68
10.7 Minimum Tangible Net Worth............................................. 68
10.8 [Intentionally Omitted]................................................ 68
10.9 Guarantees............................................................. 68
10.10 Corporate Changes...................................................... 68
10.11 Redemptions............................................................ 68
10.12 Dividends.............................................................. 68
10.13 Investments, Loans and Advances........................................ 69
10.14 Merger or Sale of Assets............................................... 69
10.15 Capital Expenditures................................................... 69
10.16 Acquisitions........................................................... 69
10.17 Transfer of Collateral................................................. 69
10.18 Sale and Leaseback..................................................... 70
10.19 Line of Business....................................................... 70
10.20 Waivers................................................................ 70
10.21 Payments to Shareholders and Affiliates................................ 70
10.22 Salaries and Deferred Compensation..................................... 70
10.23 Transactions with Affiliates........................................... 70
10.24 Post-Closing Matters................................................... 70
10.25 Bond Documents......................................................... 70
</TABLE>
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<PAGE> 7
TABLE OF CONTENTS CONTINUED
<TABLE>
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10.26 Limitation on Optional Calls............................................... 70
10.27 Excess Borrowing........................................................... 71
11. Events of Default................................................................... 71
11.1 Payment.................................................................... 71
11.2 Bond Documents............................................................. 71
11.3 Covenants.................................................................. 71
11.4 Representations and Warranties............................................. 71
11.5 Obligations................................................................ 71
11.6 Execution, Attachment, Etc................................................. 72
11.7 Loss, Theft or Substantial Damage to the Collateral........................ 72
11.8 Judgments.................................................................. 72
11.9 Bankruptcy, Etc............................................................ 72
11.10 Impairment of Security..................................................... 72
11.11 [Intentionally Omitted].................................................... 72
11.12 Other Indebtedness......................................................... 72
11.13 Amendment.................................................................. 73
12. Intercreditor Lien and Payment Provisions........................................... 74
12.1 Lien Priority.............................................................. 74
12.2 Participation in Letters of Credit......................................... 74
12.3 Sharing of Payments, Etc................................................... 75
12.4 Receipt of Payments by Lenders............................................. 76
12.5 Distributions, Etc......................................................... 76
12.6 Benefit.................................................................... 77
13. Representations and Warranties to Survive........................................... 77
14. Environmental Indemnification....................................................... 77
15. The Agent........................................................................... 77
15.1 Authorization and Action................................................... 77
15.2 Agent's Reliance, Etc...................................................... 78
15.3 The Agent and Its Affiliates............................................... 78
15.4 Lender Credit Decision..................................................... 79
15.5 Indemnification............................................................ 79
15.6 Successor Agent............................................................ 79
15.7 Relations Among Lenders.................................................... 80
15.8 Benefit.................................................................... 80
16. General............................................................................. 80
16.1 Waiver..................................................................... 80
16.2 Notices.................................................................... 81
</TABLE>
vi
<PAGE> 8
TABLE OF CONTENTS CONTINUED
<TABLE>
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16.3 Successors and Assigns........................................................................ 82
16.4 Modifications................................................................................. 83
16.5 Illegality.................................................................................... 83
16.6 Gender, Etc................................................................................... 84
16.7 Headings...................................................................................... 84
16.8 Purpose....................................................................................... 84
16.9 Ratification.................................................................................. 84
16.10 Claims and Release of Claims by the Company................................................... 84
16.11 Execution in Counterparts..................................................................... 85
16.12 Remedies Cumulative........................................................................... 85
16.13 Costs, Expenses and Legal Fees................................................................ 85
16.14 Indemnity..................................................................................... 86
16.15 Continuing Agreement.......................................................................... 86
16.16 Complete Agreement............................................................................ 86
16.17 No Third Party Beneficiaries.................................................................. 86
16.18 No Partnership or Joint Venture............................................................... 87
16.19 Governing Law and Jurisdiction; Waiver of Jury Trial.......................................... 87
</TABLE>
vii
<PAGE> 9
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
EXHIBIT U Pledge Agreement (Laser Graphic Systems, Incorporated stock)
<PAGE> 10
SECOND 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> 11
$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
2
<PAGE> 12
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 $4,500,000
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 Second 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 Person, or
3
<PAGE> 13
(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: Middle Market Banking, 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>
Applicable Margin
Cash Flow Coverage -----------------
Ratio
-----
<S> <C>
greater than 1.10x less than or equal to 1.20x 0.50%
greater than 1.20x less than or equal to 1.40x 0.25%
greater than 1.40x less than or equal to 1.60x 0.00%
greater than 1.60x 0.00%
</TABLE>
4
<PAGE> 14
b. As to any Revolving Loan Eurodollar Rate Advance:
<TABLE>
<CAPTION>
Applicable Margin
Cash Flow Coverage -----------------
Ratio
-----
<S> <C>
greater than 1.10x less than or equal to 1.20x 2.25%
greater than 1.20x less than or equal to 1.40x 2.00%
greater than 1.40x less than or equal to 1.60x 1.75%
greater than 1.60x 1.50%
</TABLE>
As of the Closing Date, the initial rate of interest for any
Revolving Loan Base Rate Advance will be the Prime Rate plus 0.5% and the
initial rate of interest for any Revolving Loan Eurodollar Advance will be the
Eurodollar Rate plus 2.25%.
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.
5
<PAGE> 15
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 Inventories, less the Block (as defined below), less the
aggregate face amount of all outstanding Standby Letters of Credit, or (b) the
Total Revolving Commitment. For purposes hereof, the "Block" will mean the
following amounts during the following periods so long as no Event of Default
has occurred: (i) $500,000 from Closing Date to March 30, 1997; (ii) $250,000
from March 31, 1997 to June 29, 1997; and $0.00 from June 30, 1997 and
thereafter. If an Event of Default has occurred, the Block will automatically
and without notice to the Company remain at the amount in effect on the date of
such Event of Default and will not be further reduced.
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 Second 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 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 using funds other than borrowed funds,
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 Second
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 Second Restated Credit Agreement or
the Security Documents or now or in the future securing any of the Obligations.
6
<PAGE> 16
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].
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 Second 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.
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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.
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
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<PAGE> 18
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 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
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<PAGE> 19
discretion, shall elect to consider Eligible Inventory for purposes of this
Second 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 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. ss. 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 Second 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].
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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 Company, or any Subsidiary thereof, would
be deemed to be a "single employer" or member of the same "controlled group"
within the meaning of ss. 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 Second Restated Credit Agreement.
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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 using funds other than borrowed funds, permitted dividends, taxes
and quarterly deposits to the Sinking Fund Accounts, and specifically excluding
deposits of payments on the BKS Enterprises, Inc. Promissory Note, proceeds from
the sale of assets or equity contributions.
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 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. ss. 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,
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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.
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), ninety (90) or one
hundred eighty (180) 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.
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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 Second Restated Credit Agreement.
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 Second 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 Second 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
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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 Second 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 Second Restated Credit
Agreement, together with all agreements, instruments and documents referred to
therein or contemplated thereby.
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 ss. 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 ss. 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 Second 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 Second 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 Second 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 Second 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.
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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 Second 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.
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 Second 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), limited liability company, joint stock
company, trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
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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 Second Restated Credit Agreement, then in each
such event, any rate of interest payable under this Second Restated Credit
Agreement, the Notes or any of the other Loan 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.
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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 "Second Restated Credit Agreement" will mean this
Second 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.
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 Second 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 Second 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.
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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 Second 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 Second Restated Credit
Agreement.
1.1.132 "Standby Letter of Credit Facility" will mean the
Credit Facility described in Section 2.11 of this Second Restated Credit
Agreement.
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, and (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. 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 Second 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, 1998; PROVIDED,
HOWEVER, that the Termination Date will in no event be later than the date on
which all of the
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<PAGE> 29
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.
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 March
31, 1996, 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 Second
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
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for the year ended March 31, 1996 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 Second
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 Second Restated Credit Agreement
will mean this Second Restated Credit Agreement as a whole and not any
particular provision of this Second Restated Credit Agreement.
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, 1998. 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].
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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
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 Second 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
22
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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 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 Second 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 Second 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
23
<PAGE> 33
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 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 Second Restated Credit
Agreement, or any requested conversion or continuation otherwise fails to
satisfy the applicable requirements of this Second 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 Second 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.
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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. Commencing with the two consecutive Fiscal Quarters after the
Closing Date, the Applicable Margin will change if the Company maintains the
specified Cash Flow Coverage 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
Second 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
25
<PAGE> 35
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 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 Second 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, 1998, 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
26
<PAGE> 36
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 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, 1998, 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, 1998, 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
27
<PAGE> 37
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 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 Second 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 Second 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 Second 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 Second 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 Second 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 Second Restated
Credit Agreement. The obligations of the Company under this Section shall
survive the termination of this Second 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
Second 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 does not comply with the terms
of such Standby Letter of Credit; PROVIDED that such
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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, 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
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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 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
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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 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
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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 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
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<PAGE> 49
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 EXTENSION FEE. The Company shall pay
to the Agent, for the account of the Lenders, on the Closing
Date a nonrefundable amendment and extension fee in an amount
equal to $10,000 to be shared pro rata by the Lenders.
B. COMMITMENT FEE. The Company shall pay to the
Agent, for the account of the Lenders, a commitment fee (the
"Commitment Fee") from and including the Closing Date to the
Termination Date, computed at the rate per annum set forth
below, 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.
<TABLE>
<CAPTION>
COMMITMENT FEE
Cash Flow Coverage --------------
Ratio
-----
<S> <C> <C> <C>
greater than 1.10x less than or equal to 1.20x 0.50%
greater than 1.20x less than or equal to 1.40x 0.375%
greater than 1.40x less than or equal to 1.60x 0.25%
greater than 1.60x 0.25%
</TABLE>
Commencing with the two consecutive Fiscal Quarters
after the Closing Date, the Commitment Fee will change if the
Company maintains the specified Cash Flow Coverage Ratio for
two consecutive Fiscal Quarters. As of the Closing Date, the
initial Commitment Fee will be 0.50%.
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
Second 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 $20,000 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
40
<PAGE> 50
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:
<TABLE>
<CAPTION>
Letter Of Credit Fees
Cash Flow Coverage ---------------------
Ratio
-----
<S> <C>
greater than 1.10x less than or equal to 1.20x 2.00%
greater than 1.20x less than or equal to 1.40x 1.75%
greater than 1.40x less than or equal to 1.60x 1.50%
greater than 1.60x 1.25%
</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. Commencing with the two consecutive
Fiscal Quarters after the Closing Date, the applicable Letter
of Credit Fee will change if the Company maintains the
specified Cash Flow Coverage Ratio for two consecutive Fiscal
Quarters. As of the Closing Date, the initial Letter of Credit
Fees will be 2.00%.
F. AUDIT FEES. The Company shall pay to the Agent,
for its own account, on demand, $3,000.00 for each annual
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 Second 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
41
<PAGE> 51
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 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 Second 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 Second Restated Credit Agreement.
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<PAGE> 52
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 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 Second 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 Second
Restated Credit Agreement, the Loans, Letters of Credit and other obligations)
or (iii) will impose any other condition affecting this Second 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.
43
<PAGE> 53
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
Section. The agreements and obligations contained in Section 2.15 will survive
the payment in full of the Obligations and any termination of this Second
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.
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<PAGE> 54
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 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 Second Restated Credit Agreement.
2.18 [INTENTIONALLY OMITTED].
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<PAGE> 55
2.19 USE OF PROCEEDS.
----------------
2.19.1 The proceeds of the Revolving Credit Loans will be used
exclusively for working capital purposes and other general corporate 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.
3. LOCK BOX; CASH COLLATERAL ACCOUNT.
----------------------------------
3.1 LOCK BOX.
---------
3.1.1 Until the expiration of this Second 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"
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<PAGE> 56
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.
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 Second 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)
381-1480, ext. 104.
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
47
<PAGE> 57
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
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 Second
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 Second
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.
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<PAGE> 58
3.2 CASH COLLATERAL ACCOUNT.
------------------------
3.2.1 Until the expiration of this Second 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 the Cash Collateral Account. Subject to the limitations, terms
and conditions of this Second 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 $125,000 into each
Sinking Fund Account until the Termination Date. 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:
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<PAGE> 59
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 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.
5.9 A Pledge Agreement executed by the Company in the form of the
attached Exhibit U, covering all of the stock of Laser Graphic Systems,
Incorporated owned by the Company.
6. SECURITY AND SUBROGATION UNDER INDENTURE.
----------------------------------------
6.1 SECURITY. To further secure the Company's Letter of Credit
Obligations under this Second 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
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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 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 Second 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
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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 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
Second 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 Second 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 Second 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.
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7.1 INITIAL ADVANCES. The Lenders' obligations to make the initial
Advances and issue the Letters of Credit pursuant to Section 2 of this Second
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.
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
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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
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. ss.122.2 and
33 C.F.R. ss.328.3), and (b) there has been no unpermitted filling of wetlands
at any of such Mortgaged Properties. The foregoing Condition Precedent initially
was fulfilled on or about July 15, 1994.
7.1.10 APPRAISAL. The Agent has received an updated appraisal
of each Mortgaged Property, in form and content satisfactory to the Agent,
prepared by an MAI appraiser selected or approved by the Agent.
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
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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.
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 Second
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 Second 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.
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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.
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 Second 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 Second
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 Second 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 Second 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.
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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:
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 March 31,
1996 and related statement of income and retained earnings and statement of cash
flows as of March 31, 1996, and the interim balance sheets and statements of
income and retained earnings and cash flows of the Company for the six (6) month
period ended as of September 29, 1996, 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 March 31, 1996 and September 29, 1996, respectively. 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 March 31, 1996, 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 March 31, 1996, 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
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Section 8.2, above, and current liabilities incurred since March 31, 1996 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 March 31, 1996 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.
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 Second Restated Credit
Agreement and has been duly authorized to do so by appropriate action of its
board of directors. This Second 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 Second Restated Credit Agreement nor the consummation of any of the
transactions herein contemplated
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(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 (except as
contemplated by this Second 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.
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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.
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.
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8.17 DISCLOSURE. Neither this Second 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.
9. AFFIRMATIVE COVENANTS. The Company covenants and agrees that from the date of
execution of this Second Restated Credit Agreement until all Obligations to the
Lenders have been fully paid and this Second 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 Second 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
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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
monthly, a Borrowing Base Certificate in the form of the attached Exhibit T. The
Borrowing Base Certificate will update accounts receivable monthly 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 ANNUAL AUDITS. The Company will permit the Agent, at the Company's
expense, to perform annual audits with respect to Inventory and/or receivables
and payables of the Company. At its discretion, the Agent may perform such
audits more frequently than annually and all such audits shall be at the
Company's expense.
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
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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 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.
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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 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.
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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 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
Second 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)
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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 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 [INTENTIONALLY OMITTED].
9.24 [INTENTIONALLY OMITTED].
9.25 SALE OF EQUIPMENT. The Company will use its best effort to sell
obsolete, underutilized 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 [INTENTIONALLY OMITTED].
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 Second Restated Credit Agreement until all of the Obligations
have been fully paid and this Second 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, below.
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, when
combined with the annual rental payments of Laser Graphic Systems, Incorporated,
exceed $600,000.
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. Permit the Cash Flow Coverage Ratio to
be less than 1.10 to 1 as of the end of each Fiscal Quarter on a trailing four
quarter basis. Principal payments on 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.
10.5 CURRENT RATIO. During the following periods, permit the Current
Ratio to be less than:
<TABLE>
<CAPTION>
Current Ratio At the End of each month during the period
- ------------- ------------------------------------------
<S> <C>
1.20 Closing Date through March 30, 1997
1.30 March 31, 1997 through March 29, 1998
1.35 March 30, 1998 and thereafter
</TABLE>
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10.6 LEVERAGE RATIO. During the following periods, permit the Leverage
Ratio to be greater than:
Leverage Ratio At the end of each month during the period
- -------------- ------------------------------------------
3.10 Closing Date through March 30, 1997
3.00 March 31, 1997 through June 29, 1997
2.90 June 30, 1997 through September 28, 1997
2.80 September 29, 1997 through December 28, 1997
2.70 December 29, 1997 through March 29, 1998
2.60 March 30, 1998 and thereafter
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 Leverage Ratio.
10.7 MINIMUM TANGIBLE NET WORTH. Permit Tangible Net Worth at any time
to be less than $7,000,000 through January 1, 1997, plus 75% of positive
consolidated net income (with no deductions for net losses), less dividends
permitted under Section 10.12, below, and permitted treasury stock purchases,
calculated in accordance with generally accepted accounting principles, on a
cumulative basis for all periods since October 1, 1996. Tangible Net Worth will
be calculated on a cumulative basis at the end of each month.
10.8 [INTENTIONALLY OMITTED].
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;
PROVIDED, HOWEVER, that after June 30, 1997 and so long as no Default or Event
of Default has occurred and is continuing, the Company may utilize up to 25% of
Excess Cash Flow for each Fiscal Quarter, but not more than $25,000 for any
Fiscal Quarter, to redeem outstanding shares of its common stock.
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;
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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) loans,
extensions of credit, advances or contributions of capital to its Subsidiary,
Laser Graphic Systems, Incorporated, not to exceed $750,000 in the aggregate;
(b) 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 (c)
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, including the
capitalized value of any leases, which, when calculated in accordance with GAAP
and added to all other capital expenditures of the Company, would exceed (i)
$3,200,000 during Fiscal Year 1997, (ii) $2,600,000 during Fiscal Year 1998, and
(iii) $1,800,000 during any Fiscal Year thereafter. Unexpended amounts from the
prior Fiscal Year may 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
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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 Second Restated Credit Agreement,
is in the ordinary course of the Company's business and is on fair and
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
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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 Second Restated Credit
Agreement, (c) any amounts due under this Second 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
Second 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
11.4 REPRESENTATIONS AND WARRANTIES. Any representation, warranty or
statement made by or on behalf of the Company in this Second 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 Second
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
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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 Second 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 Second 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 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
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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 Second 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,
(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
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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
Second 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 Second 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.
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 Second 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.
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12.3 SHARING OF PAYMENTS, ETC.
12.3.1 Except as otherwise expressly required by the terms of
this Second 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 Second 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.
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 Second 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
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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 Second 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 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
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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 Second 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 Second 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 Second 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, 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 Second 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
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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 Second 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 Second 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 Second
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 Second 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
Second 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 Second 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 Second
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, 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 Second 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
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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 Second 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 Second 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 Second 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 Second 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 in
respect of rights or responsibilities under, this Second 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 Second Restated Credit Agreement.
15.6 SUCCESSOR AGENT. The Agent may resign at any time as Agent under
this Second 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
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$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 Second Restated Credit Agreement; PROVIDED, HOWEVER, that the successor
Agent will not be considered as a Lender for purposes of this Second 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 Second 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 Second 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 Second 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 Second 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 Second 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.
16. GENERAL.
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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
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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 Second 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 Second 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 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
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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, 26th Floor
P.O. Box 1198
Cincinnati, Ohio 45201-1198
Attention: Middle Market Banking
Telecopier No.: (513) 651-8952
To the Company Multi-Color Corporation
or the Authorized 205 West Fourth Street, Suite 1140
Company Cincinnati, Ohio 45202
Representative: Attention: William B. Cochran
Telecopier No.: (513) 381-2813
To the Lenders: PNC Bank, Ohio, National Association
201 East Fifth Street, 26th Floor
P.O. Box 1198
Cincinnati, Ohio 45201-1198
Attention: Middle Market Banking
Telecopier No.: (513) 651-8952
Star Bank, National Association
425 Walnut Street
ML 8025
Cincinnati, Ohio 45202
Attention: Andrew Hawking
Telecopier No.: (513) 632-2068
16.3 SUCCESSORS AND ASSIGNS.
16.3.1 This Second 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 Second Restated Credit Agreement in whole or in part without the
prior written consent of the Agent and the Lenders and the Agent may not assign
this Second 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 Second 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
Second Restated Credit Agreement (including, without limitation, its Commitments
to the Company hereunder and its participation obligations to the Agent as to
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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 Second 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 Second 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 Second 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 Second 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 Second 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 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
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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 Second 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 Second 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 Second 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 Second Restated Credit Agreement. The
purpose of this Second 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 Second 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 Second 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 Second 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 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
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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 Second 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 Second 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 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 Second
Restated Credit Agreement and the other amended Loan Documents; in amending,
supplementing, waiving or enforcing provisions of this Second Restated Credit
Agreement and the other amended Loan Documents; in collecting any sum which is
not paid when due under
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this Second 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 Second 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 Second 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 Second 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
Second 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 Second Restated Credit Agreement.
16.15 CONTINUING AGREEMENT. This Second Restated Credit Agreement is
and is intended to be a continuing 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 Second 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.
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.
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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 SECOND
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 SECOND 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 SECOND RESTATED CREDIT
AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY TRANSACTION CONTEMPLATED IN ANY OF
SUCH AGREEMENTS.
Signed at Cincinnati, Ohio, effective as of January 9, 1997.
MULTI-COLOR CORPORATION,
AS COMPANY
By: /s/ JOHN C. COURT
------------------------------------------
Print Name: John C. Court
---------------------------------
Title: President
------------------------------------
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PNC BANK, OHIO, NATIONAL ASSOCIATION,
ON ITS OWN BEHALF AS LENDER, AND AS AGENT
By:/s/ WARREN F. WEBER
-----------------------------------------
Print Name: Warren F. Weber
---------------------------------
Title: Assistant Vice President
--------------------------------------
STAR BANK, NATIONAL ASSOCIATION,
AS LENDER
By:/s/ EDWARD L. DWYER
-----------------------------------------
Print Name: Edward L. Dwyer
---------------------------------
Title: Vice President
--------------------------------------
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EXHIBIT 10.24
LOAN AGREEMENT
--------------
LASER GRAPHIC SYSTEMS, INCORPORATED ("Borrower"), the banks listed on
the signature pages hereof (each individually "Lender" and collectively
"Lenders"), and PNC BANK, OHIO, NATIONAL ASSOCIATION, as agent for Lenders
("Agent"), hereby agree as follows:
1. DEFINITIONS. Capitalized terms used herein and not otherwise defined herein
will have the meanings given those terms in Section 15, below.
2. CREDIT FACILITIES.
2.1 NON-REVOLVING CREDIT LOAN.
2.1.1 TOTAL FACILITY. Each Lender severally agrees to make,
subject to the terms and conditions and upon the representations and warranties
of Borrower set forth in this Agreement, Revolving Loans to Borrower upon
Borrower's request in an amount not to exceed the Available Commitment of such
Lender. The Revolving Loans will be represented by the promissory notes of
Borrower of even date herewith and all amendments, extensions and renewals
thereto and restatements and replacements thereof (collectively, "Revolving
Credit Notes" or "Notes").
2.2 RATE OF INTEREST.
2.2.1 The outstanding principal balance of the Revolving Loans
will bear interest at a rate per annum equal to the Prime Rate plus 0.5%,
subject to the applicability of the Default Rate. All interest rate calculations
under this Agreement or any Note will be based on a year of 360 days for the
actual number of days in each interest period. In no event will the rate of
interest exceed twenty-five percent (25%) per annum, or the equivalent rate for
a shorter or longer period.
2.3 PAYMENTS. From the date of execution hereof through the Conversion
Date, accrued interest on the Revolving Loans will be due and payable on (i) the
first day of each month, commencing February 1, 1997, and (ii) on the Conversion
Date. Following the Conversion Date, principal will be due and payable in
installments (in an amount deemed sufficient by Lenders to fully and evenly
amortize the principal balance of the Revolving Loans on the Conversion Date
over the remaining term of the Notes) commencing on August 1, 1997 and on the
first day of each month thereafter until the Termination Date, on which date the
entire remaining principal balance and all accrued but unpaid interest on the
Revolving Loans
<PAGE> 2
will be due and payable. Accrued interest will be due and payable on the due
date of each principal payment.
2.4 LATE PAYMENTS. Borrower will make each payment hereunder and under
the Notes, as the case may be, not later than 11:00 a.m. (Cincinnati time) on
the day when due by deposit to Agent's Account, in same day funds. Amounts
received by Agent after 11:00 a.m. (Cincinnati time) on any Business Day will be
deemed to have been received on the next Business Day. Subject to the foregoing,
Agent will cause to be distributed to each Lender on the Business Day of receipt
by Agent an amount equal to the amount of such payment then due such Lender.
Payments when received will be applied in the following order: (i) to charges,
fees and expenses (including Attorneys Fees), (ii) to accrued interest, and
(iii) to principal. If any payment of principal, interest or other amount due
hereunder is not paid within 15 calendar days of the date due, Borrower also
will pay to Agent, for the benefit of Lenders, a late charge equal to the lesser
of 5% of the amount of such payment or $50. The foregoing charge is imposed for
the purpose of defraying Agent's and Lenders' expenses incident to the handling
of delinquent payments.
2.5 NON-REVOLVING NATURE OF LOANS AND RECORDATION OF ADVANCES. Borrower
may borrow and repay Revolving Loans subject to the terms, conditions and limits
set forth herein but amounts borrowed and repaid may not be reborrowed.
Notwithstanding any of the foregoing to the contrary, Lenders will have no
obligation to make any further advances on or after the Conversion Date. Each
Lender is authorized to record in its books and records the date and amount of
each advance and payment hereunder, and other information related thereto, which
books and records 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
Borrower of any of its obligations under this Agreement, any Note or any of the
Security Documents.
2.6 ADVANCES.
2.6.1 Borrower will give Agent a Notice of Borrowing with
respect to each Revolving Loan, not later than 11:00 a.m. (Cincinnati time) one
Business Day prior to the proposed borrowing date. Each proposed borrowing date
must be a Business Day and must be prior to the Conversion Date. Agent will give
to each Lender prompt notice thereof by telex, telecopier or cable. Each Notice
of Borrowing will be by telex, telecopier or cable (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. Each Lender will, before 11:00 a.m.
(Cincinnati time) on the Borrowing Date, make available at Agent's Account, in
same day funds, such Lender's Ratable Portion of such Revolving Loan. After
Agent's receipt of such funds and upon fulfillment of the applicable conditions
set forth herein, Agent will make such funds available to Borrower by crediting
Borrower's Account.
2.6.2 Each Notice of Borrowing, whether telephonic or written,
will be binding upon and irrevocable by Borrower. No Lender will have any
liability in acting upon any request that such Lender believes in good faith to
have been given on behalf of Borrower and will have
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no duty to verify the authenticity of the signature(s) appearing on any written
request and no duty to verify the identity of any person making any telephonic
request.
2.6.3 Borrower will use the proceeds of each Revolving Loan
only to finance not more than 90% of the acquisition cost of property and
equipment used in connection with Borrower's business.
2.7 ADDITIONAL COSTS.
2.7.1 TAXES, RESERVE REQUIREMENTS, ETC. If any applicable law,
treaty, rule or regulation (whether domestic or foreign) now or hereafter in
effect and whether or not presently applicable to any Lender, or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by Lenders with
any guideline, request or directive of any such authority (whether or not having
the force of law), will: (a) affect the basis of taxation of payments to any
Lender of any amounts payable by Borrower under this Agreement (other than taxes
imposed on the overall net income of such Lender, by the jurisdiction, or by any
political subdivision or taxing authority of any such jurisdiction, in which
Lender has its principal office), (b) 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 Lender, or (c) impose any other
condition with respect to this Agreement, any Note executed in connection with
this Agreement or any of the Security Documents, and the result of any of the
foregoing is to increase the cost of making, funding or maintaining any such
Note or to reduce the amount of any sum receivable by any Lender thereon, then
Borrower will pay to Lenders from time to time, upon request by any Lender, with
a copy of such request to be provided to Agent, additional amounts sufficient to
compensate Lenders for such increased cost or reduced sum receivable.
2.7.2 CAPITAL ADEQUACY. If either: (a) the introduction of, or
any change in, or in the interpretation of, any United States or foreign law,
rule or regulation or (b) compliance with any directive, guidelines or request
from any central bank or other United States or foreign 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 Lender or any
corporation directly or indirectly owning or controlling any Lender and any
Lender determines that such introduction, change or compliance has or would have
the effect of reducing the rate of return on such Lender's capital or on the
capital of such owning or controlling corporation as a consequence of its
obligations hereunder or under any Note or any commitment to lend thereunder 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, Borrower will pay to such Lender such additional amount or amounts
as will compensate such Lender for such reduction.
2.7.3 CERTIFICATE OF LENDER. A certificate of any Lender
setting forth such amount or amounts as will be necessary to compensate such
Lender as specified above will be
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delivered to Borrower and will be conclusive absent manifest error. Borrower
will pay Agent for the account of such Lender the amount shown as due on any
such certificate within 10 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 Lenders
regardless of any possible contention of invalidity or inapplicability of the
law, regulation, etc., that results in the claim for compensation under this
Section.
3. COLLATERAL. The Collateral for the repayment of the Obligations will be that
granted pursuant to the Security Documents.
4. REPRESENTATIONS AND WARRANTIES. To induce Lenders to enter into this
Agreement and to make the advances herein contemplated, Borrower hereby
represents and warrants as follows:
4.1 ORGANIZATION. Borrower is a corporation duly organized and in good
standing under the laws of the state of its incorporation, is duly qualified in
all jurisdictions where required by the conduct of its business or ownership of
its assets except where the failure to so qualify would not have a material
adverse effect on its condition, financial or otherwise, and has the power and
authority to own and operate its assets and to conduct its business as is now
done.
4.2 LATEST FINANCIALS. Its financial statements, if any, as delivered
to Lenders are true, complete and accurate in all material respects and fairly
present its financial condition, assets and liabilities, whether accrued,
absolute, contingent or otherwise and the results of its operations for the
periods specified therein. The annual financial statements of all business
entities included in such financial statements have been prepared in accordance
with generally accepted accounting principles applied consistently with
preceding periods subject to any comments and notes contained therein (and
subject in the case of interim statements to normal year-end adjustments).
4.3 RECENT ADVERSE CHANGES. Except as specifically disclosed in the
Disclosure Schedule, since the date of its formation, it has not suffered any
damage, destruction or loss which has materially and adversely affected its
business or assets and no event or condition of any character has occurred which
has materially and adversely affected its assets, liabilities, business or
financial condition, and it has no knowledge of any event or condition which may
materially and adversely affect its assets, liabilities, business or financial
condition.
4.4 RECENT ACTIONS. Except as disclosed in the Disclosure Schedule,
since the date of its formation, its business has been conducted in the ordinary
course and it has not: (a) incurred any obligations or liabilities, whether
accrued, absolute, contingent or otherwise, other than liabilities incurred and
obligations under contracts entered into in the ordinary course of business and
other than liabilities to Lenders; (b) discharged or satisfied any lien or
encumbrance or paid any obligations, absolute or contingent, other than current
liabilities, in the ordinary course of business; (c) mortgaged, pledged or
subjected to lien or any other encumbrance any of its assets, tangible or
intangible, or cancelled any debts or claims except in the ordinary course of
business; or (d) made any loans or otherwise conducted its business other than
in the ordinary course.
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4.5 TITLE. It has good and marketable title to its assets, including
but not limited to the Collateral, free and clear from all liens and
encumbrances except for: (a) current taxes and assessments not yet due and
payable, (b) liens and encumbrances, if any, reflected or noted on any balance
sheet delivered to the Agent, (c) any security interests, pledges or mortgages
to Lenders in connection with the closing of this Agreement, (d) assets disposed
of in the ordinary course of business, and (e) Permitted Liens.
4.6 LITIGATION, ETC. Except as disclosed on the Disclosure Schedule, as
of the date hereof, there are no actions, suits, proceedings or governmental
investigations pending or, to its knowledge, threatened against it which, if
adversely determined, could result in a material and adverse change in its
financial condition, business or assets; and there is no basis known to it for
any such actions, suits, proceedings or investigations.
4.7 TAXES. Except as to taxes not yet due and payable, it has filed all
returns and reports that are now required to be filed by it in connection with
any federal, state or local tax, duty or charge levied, assessed or imposed upon
it or its property, including 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. It has filed for no extension of time for the
payment of any tax or for the filing of any tax return.
4.8 AUTHORITY. It has full power and authority to enter into the
transactions provided for in this Agreement. The documents to be executed by it
in connection with this Agreement, when executed and delivered by it will
constitute the legal, valid and binding obligations of it enforceable in
accordance with their respective terms except as such enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws in effect from time to time affecting the rights of creditors
generally and except as such enforceability may be subject to general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in law or in equity).
4.9 OTHER DEFAULTS. There does not now exist any default or violation
by it of or under any of the terms, conditions or obligations of: (a) its
Articles of Incorporation or Bylaws; (b) any indenture, mortgage, deed of trust,
franchise, permit, contract, agreement, or other instrument to which it is a
party or by which it is bound; or (c) any material law, regulation, ruling,
order, injunction, decree, condition or other requirement applicable to or
imposed upon it by any law or by any governmental authority, court or agency;
and the transactions contemplated by this Agreement and the Security Documents
will not result in any such default or violation.
4.10 STOCK OF BORROWER. All of the issued and outstanding securities of
Borrower are owned by the parties listed on the Disclosure Schedule in the
amounts specified by the name of each such shareholder and except as listed on
the Disclosure Schedule, Borrower has no outstanding options, warrants or
contracts to issue additional securities of any kind.
4.11 STOCK. Except as listed on the Disclosure Schedule, Borrower does
not own more than one percent (1%) of the issued and outstanding capital stock
or other ownership interests of any corporation, firm or entity.
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4.12 SUBSIDIARIES, PARTNERSHIPS AND JOINT VENTURES. Except as listed on
the Disclosure Schedule, Borrower has no Subsidiaries and is not a party to any
partnership agreement or joint venture agreement.
4.13 LICENSES, ETC. It has obtained any and all licenses, permits,
franchises or other governmental authorizations necessary for the ownership of
its properties and the conduct of its business. It possesses adequate licenses,
patents, patent applications, copyrights, trademarks, trademark applications,
and trade names to continue to conduct its business as heretofore conducted by
it, without any conflict with the rights of any other person or entity.
4.14 SUFFICIENT CAPITAL. It now has capital sufficient to carry on its
business, all business and transactions in which it is about to engage, and is
now solvent and able to pay its debts as they mature. It now owns property
having a value, both at fair valuation and at present fair saleable value,
greater than the amount required to pay its debts.
4.15 NAME, PLACES OF BUSINESS AND LOCATION OF COLLATERAL. The address
of its principal place of business and every other place from which it conducts
business is as specified in the Disclosure Schedule. The Collateral and all
books and records pertaining to the Collateral are and will be located at the
addresses indicated on the Disclosure Schedule. In the five years preceding the
date hereof, it has not conducted business under any name other than its current
name nor maintained any place of business or any assets in any jurisdiction
other than those disclosed on the Disclosure Schedule. All of the registered
offices from which Borrower conducts or has ever conducted business in Kentucky
are as set forth on the Disclosure Schedule.
4.16 ERISA. It 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 it 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 annual valuation date applicable thereto,
exceed by more than $25,000 the aggregate value of the assets of such Plans.
Neither it nor any such ERISA Affiliate has incurred any Withdrawal Liability
that materially adversely affects the financial condition of it and its ERISA
Affiliates taken as a whole. Neither it nor any such ERISA Affiliate has
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 it and its
ERISA Affiliates taken as a whole.
4.17 REGULATION U. No part of the proceeds of the Loan will be used to
purchase or carry any margin stock (as such term is defined in Regulation U of
the Board of Governors of the Federal Reserve System).
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4.18 CLOSING MEMO. The information contained in each of the documents
listed on the Closing Memo to be executed or delivered by it or relating to it
is complete and correct in all material respects.
4.19 ENVIRONMENTAL MATTERS.
4.19.1 Borrower and the activities or operations on any of the
real estate that Borrower owns or occupies (the "Property") are in compliance in
all material respects with all applicable federal, state and local, statutes,
laws, regulations, ordinances, policies and orders relating to regulation of the
environment, health or safety, or contamination or cleanup of the environment
(collectively "Environmental Laws").
4.19.2 Borrower has obtained all approvals, permits, licenses,
certificates, or satisfactory clearances from all governmental authorities
required under Environmental Laws with respect to the Property and any
activities or operations at the Property.
4.19.3 To the best of Borrower's knowledge, there have not
been and are not now any solid waste, hazardous waste, hazardous or toxic
substances, pollutants, contaminants, or petroleum in, on, under or about the
Property. The use which Borrower makes and intends to make of the Property will
not result in the deposit or other release of any hazardous or toxic substances,
solid waste, pollutants, contaminants or petroleum on, to or from the Property.
4.19.4 To the best of Borrower's knowledge, there have been no
complaints, citations, claims, notices, information requests, orders or
directives on environmental grounds or under Environmental Laws (collectively
"Environmental Claims") made or delivered to, pending or served on, or
anticipated by Borrower or its agents, or of which Borrower or its agents, are
aware or should be aware (i) issued by any governmental department or agency
having jurisdiction over the Property or the activities or operations at the
Property, or (ii) issued or claimed by any third party relating to the Property
or the activities or operations at the Property.
4.19.5 To the best of Borrower's knowledge, no
asbestos-containing materials are installed, used or incorporated into the
Property, and no asbestos-containing materials have been disposed of on the
Property.
4.19.6 To the best of Borrower's knowledge, no polychlorinated
biphenyls ("PCBs") are located at, on or in the Property in the form of
electrical equipment or devices, including, but not limited to, transformers,
capacitors, fluorescent light fixtures with ballasts, cooling oils or any other
device or form.
4.19.7 To the best of Borrower's knowledge, there have not
been and are not now any underground storage tanks located within or about the
Property.
4.19.8 The Property does not contain any wetlands as that term
is defined by relevant governmental agencies under Environmental Laws and, to
the best of Borrower's
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knowledge, after Due Investigation, there has been no filling of wetlands on the
Property in violation of Environmental Laws.
4.20 LABOR MATTERS. There are no material strikes or other material
labor disputes against it pending or, to its knowledge, threatened. The hours
worked and payment made to its employees in all material respects have not been
in violation of the Fair Labor Standards Act or any other applicable law dealing
with such matters. All payments due from it, or for which any claim may be made
against it, on account of wages and employee health and welfare insurance and
other benefits, have been paid or accrued as a liability on its books. The
consummation of the transactions contemplated herein will not give rise to a
right of termination or right of renegotiation on the part of any union under
any collective bargaining agreement to which it is a party or by which it is
bound.
5. AFFIRMATIVE COVENANTS. From the date of execution of this Agreement until all
Obligations to Lenders have been fully paid and this Agreement terminated,
Borrower will:
5.1 BOOKS, RECORDS AND ACCESS TO THE COLLATERAL. Maintain proper books
of account and other records and enter therein complete and accurate entries and
records of all of its transactions and give representatives of Agent access
thereto at all reasonable times, including permission to examine, copy and make
abstracts from any of such books and records and such other information as it
may from time to time reasonably request. It will give Agent reasonable access
to the Collateral for the purposes of examining the Collateral and verifying its
existence. It will make available to Agent for examination copies of any
reports, statements or returns which it may make to or file with any
governmental department, bureau or agency, federal or state. In addition, it
will cause its officers to be available from time to time upon reasonable notice
to discuss the status of the Loan, its business and any statements, records or
documents furnished or made available to Agent in connection with this
Agreement.
5.2 QUARTERLY STATEMENTS. Furnish each Lender within 30 days after the
end of each calendar quarter internally prepared financial statements of
Borrower with respect to such calendar quarter, which financial statements will:
(a) be in reasonable detail and in form reasonably satisfactory to Agent, (b) be
accompanied by a Compliance Certificate, (c) include a balance sheet as of the
end of such period, profit and loss and surplus statements for such period and a
statement of cash flows for such period, (d) include prior year comparisons and
(e) be on a consolidating and consolidated basis for Borrower and its
Subsidiaries, if any, and for any entity in which Borrower's financial
information is consolidated in accordance with generally accepted accounting
principles.
5.3 ANNUAL STATEMENTS. Furnish each Lender within 90 days after the end
of each fiscal year of Borrower annual audited financial statements which will:
(a) include a balance sheet as of the end of such year, profit and loss and
surplus statements and a statement of cash flows for such year; (b) be on a
consolidated and consolidating basis with Borrower, its Subsidiaries, if any,
and any entity into which Borrower's financial information is consolidated in
accordance with generally accepted accounting principles; (c) be accompanied by
a Compliance Certificate, and (d) contain the unqualified opinion of an
independent certified public accountant acceptable to Lenders and its
examination will have been made in accordance with
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generally accepted auditing standards and such opinion will contain a report
reasonably satisfactory to Lenders of any inconsistency in the application of
generally accepted accounting principles with the preceding years' statements,
if any.
5.4 AUDITOR'S LETTERS, ETC. Furnish to Agent any letter, other than
routine correspondence, directed to it by its auditors or independent
accountants, relating to its financial statements, accounting procedures,
financial condition, tax returns or the like.
5.5 TAXES. Pay and discharge when due all indebtedness and all taxes,
assessments, charges, levies and other liabilities imposed upon it, its income,
profits, property or business, except those which currently are being contested
in good faith by appropriate proceedings and for which it has set aside adequate
reserves or made other adequate provision with respect thereto, 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
Lender has received an opinion in form and substance and from legal counsel
acceptable to it that such proceeding is without merit.
5.6 OPERATIONS. Continue its business operations in substantially the
same manner as at present, except where such operations are rendered impossible
by a fire, strike or other events beyond its 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 party or under which it
occupies or holds real or personal property so as to prevent any loss or
forfeiture thereof or thereunder.
5.7 INSURANCE. Comply with the insurance requirements of the Security
Documents. In addition to the foregoing, keep its insurable real and personal
property insured with responsible insurance companies against loss or damage by
fire, windstorm and other hazards which are commonly insured against in an
extended coverage endorsement in an amount equal to not less than 80% of the
insurable value thereof on a replacement cost basis and also maintain public
liability insurance in a reasonable amount. In addition, the parties delivering
to Agent insurance certificates as listed on the Closing Memo will maintain
extended liability insurance and property insurance of at least the amounts and
coverages listed on such certificates delivered in connection with the Closing
and in a form and with companies reasonably satisfactory to Agent.
Notwithstanding the foregoing, such property insurance will at all times be in
an amount so that such party will not be deemed a "co-insurer" under any
co-insurance provisions of such policies. All such insurance policies will name
Lender as an additional insured and, where applicable, as lender's loss payee
under a loss payable endorsement satisfactory to Agent. All such policies will
provide that ten (10) days prior written notice must be given to Agent before
such policy is altered or cancelled. Schedules of all insurance will be
submitted to Agent upon request. Such schedules will contain a description of
the risks covered, the amounts of insurance carried on each risk, the name of
the insurer and the cost of such insurance. Such schedules will be supplemented
from time to time promptly to reflect any change in insurance coverage.
5.8 COMPLIANCE WITH LAWS. Comply with all laws and regulations
applicable to it and to the operation of its business, including without
limitation those relating to environmental
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and health matters, and do all things necessary to maintain, renew and keep in
full force and effect all rights, permits, licenses, certificates, satisfactory
clearances and franchises necessary to enable it to continue its business.
5.9 ENVIRONMENTAL VIOLATIONS.
5.9.1 If any hazardous or toxic substances, pollutants,
contaminants, solid waste or hazardous waste, or petroleum are released (as that
term is defined under Environmental Laws) at the Property, or are otherwise
found to be in, on, under or about the Property in violation of Environmental
Laws or in excess of cleanup levels established under Environmental Laws,
immediately will notify Lender in writing and will commence such action as may
be required with respect to such items, including, but not limited to, removal
and cleanup thereof, and deposit with Agent cash collateral, letter of credit,
bond or other assurance of performance in form, substance and amount reasonably
acceptable to Lender to cover the cost of such action. Upon request, Borrower
will provide Lender with updates on the status of Borrower's actions to resolve
or otherwise address such items.
5.9.2 In the event Borrower receives notice of an
Environmental Claim from any governmental agency or other third party alleging a
violation of or liability under Environmental Laws with respect to the Property
or Borrower's activities or operations at the Property, immediately notify Agent
in writing and will commence such action as may be required with respect to such
Environmental Claim. Upon request, Borrower will provide Agent with updates on
the status of Borrower's actions to resolve or otherwise address such
Environmental Claim.
5.10 ENVIRONMENTAL AUDIT AND OTHER ENVIRONMENTAL INFORMATION. Provide
copies of all environmental reports, audits, studies, data, results, and
findings obtained by it from work conducted by it 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 its property or property adjacent
thereto as soon as such reports, audits, studies, data, results, and findings
become available to it. If the submissions are considered inadequate or
insufficient in order for Agent to adequately consider the status of
environmental compliance by it or if the submissions are in error, then Agent
may require Borrower, at Borrower's sole expense, to engage an independent
engineering firm acceptable to Agent to conduct a complete environmental report,
study, finding or audit in as timely a fashion as is reasonably possible. In
addition, Borrower will provide Agent with information related to remedial
action at its property or adjacent to its property as soon as such information
becomes available to it (such information will include but not be limited to a
copy of the Remedial Investigation/Feasibility Study for that property).
5.11 BUSINESS NAMES AND LOCATIONS. Immediately notify Agent of any
change in the name under which it conducts its business and, unless Agent
otherwise consents in writing, keep and maintain all of the Collateral supplied
by it only at its addresses listed in the Disclosure Schedule, keep its
principal place of business at the address specified in the Disclosure Schedule
and notify Agent immediately upon the opening or closing of any place from which
it conducts business.
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5.12 ACQUISITION OF ASSETS. Not acquire any assets, real or personal,
unless such assets are automatically covered by the existing Loan Documents or
within 10 days of such acquisition, Borrower delivers to Agent a mortgage,
pledge or security agreement to encumber such asset in favor of Lenders.
5.13 ACCOUNTS. So long as the Loan is in effect, maintain Agent as
Borrower's primary bank of account, and Borrower will maintain all operating
accounts at Agent.
5.14 ERISA COMPLIANCE. Comply in all material respects with the
applicable provisions of ERISA and furnish to Agent: (i) as soon as possible,
and in any event within 30 days after any officer of it 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 it to the PBGC in an aggregate amount exceeding $25,000, a
statement of a financial officer setting forth details as to such Reportable
Event and the action that it 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 it 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 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 its financial officer
setting forth details as to such failure and the action that it 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 30 days after receipt thereof by
Borrower or any ERISA Affiliate from the sponsor of a Multiemployer Plan, a copy
of each notice received by Borrower or any ERISA Affiliate concerning (A) the
imposition of Withdrawal Liability in an amount exceeding $25,000, 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 it or
an ERISA Affiliate to such Multiemployer Plan in an amount exceeding $25,000.
5.15 NOTICE OF DEFAULT. Notify Agent in writing within five days after
it knows or has reason to know of the occurrence of an Event of Default.
5.16 SALE AND LEASEBACK. Not directly or indirectly enter into any
arrangement to sell or transfer all or any part of its assets then owned by it
and thereupon or within one year thereafter rent or lease any of the assets so
sold or transferred.
5.17 LINE OF BUSINESS. Not enter into any lines or areas of business
substantially different from the business or activities in it is presently
engaged.
5.18 BUSINESS OPPORTUNITIES. Not divert (or permit anyone to divert)
any of its business or opportunities to any other corporate or business entity
in which it or its Subsidiaries may hold a direct or indirect interest.
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5.19 WAIVERS. Not waive any right or rights of substantial value which,
singly or in the aggregate, is or are material to its condition (financial or
other), properties or business.
6. NEGATIVE COVENANTS. From the date of execution of this Agreement until all of
the Obligations have been fully paid and this Agreement terminated, Borrower
will not:
6.1 DEBT. Incur any Indebtedness other than: (a) the Loans and any
subsequent Indebtedness to Lender; (b) open account obligations incurred in the
ordinary course of business having maturities of less than 90 days; and (c)
rental and lease payments for real or personal property whose aggregate annual
rental payments, when combined with the annual rental payments of Multi-Color
Corporation, would exceed $600,000 when added to Borrower's rental or lease
agreements existing on the date hereof.
6.2 LIENS. Incur, create, assume, become or be liable in any way, or
suffer to exist any Lien on any of its assets, now or hereafter owned, other
than Permitted Liens.
6.3 GUARANTEES. Guarantee, endorse or become contingently liable for
the obligations of any person, firm or corporation, except in connection with
the endorsement and deposit of checks in the ordinary course of business for
collection.
6.4 CAPITAL EXPENDITURES. Make capital expenditures or acquisitions,
including the capitalized value of any leases in the aggregate, which, when
calculated in accordance with generally accepted accounting principles and when
combined with the capital expenditures and acquisitions of Multi-Color
Corporation, would exceed (i) $3,200,000 in the aggregate during fiscal year
1997, (ii) $2,600,000 in the aggregate during fiscal year 1998, and (iii)
$1,800,000 in the aggregate during any fiscal year thereafter. Unexpended
amounts from the prior fiscal year may not be carried forward to the next fiscal
year.
6.5 DIVIDENDS. Declare or pay any payment or dividends of any kind
other than dividends payable solely in shares of its capital stock (including
without limitation debt repayment, payment for goods and services) to any
Affiliate, other than Multi-Color Corporation, or any person related to any
Affiliate, except for reasonable salary and bonus payments to its employees and
except for the current 5% royalty payments to Think Laboratory Co. Ltd.
6.6 ADDITIONAL SECURITIES. Issue any additional securities of any
description or issue warrants, options or rights to purchase its securities.
6.7 REDEMPTIONS. Purchase, retire, redeem or otherwise acquire for
value, directly or indirectly, any shares of its capital stock now or hereafter
outstanding.
6.8 INVESTMENTS. Purchase or hold beneficially any stock, other
securities or evidences of indebtedness of, or make any investment or acquire
any interest whatsoever in, any other person, firm or corporation other than
short term investments of excess working capital invested in one or more of the
following: (a) investments (of one year or less) in direct or guaranteed
obligations of the United States, or any agencies thereof; (b) investments (of
one year
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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; and (c) money market
mutual funds with average maturities of less than 90 days.
6.9 MERGER, ACQUISITION OR SALE OF ASSETS. Merge or consolidate with or
into any other entity or acquire all or substantially all the assets of any
person, firm, partnership, joint venture or corporation, or sell, lease or
otherwise dispose of any of its assets except for dispositions in the ordinary
course of business.
6.10 ADVANCES AND LOANS. Lend or commit to lend money, give credit or
make advances (other than advances not to exceed $2,500 for any one employee and
other reasonable and ordinary advances to cover reasonable expenses of
employees, such as travel expenses) to any Person, including, without
limitation, Affiliates.
6.11 SUBSIDIARIES. Acquire any Subsidiaries, create any Subsidiaries or
enter into any partnership or joint venture agreements.
6.12 TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate unless such transaction is
otherwise permitted under this Agreement, is in the ordinary course of its
business, and is on fair and reasonable terms no less favorable to it than it
would obtain in a comparable arm's length transaction with a non-Affiliate.
6.13 POST-CLOSING MATTERS. Fail to deliver to Agent in form and
substance satisfactory to Agent the documents, if any, noted as post-closing
items on the Closing Memo on or before the date specified in the Closing Memo.
6.14 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 outside of the counties of the addresses listed on the
Disclosure Schedule; provided, however, that Borrower may transfer Collateral or
the books and records related thereto to another county with the prior written
consent of Agent and if Borrower has provided to Agent prior to such transfer an
opinion addressed to Agent in the form and substance and written by counsel
acceptable to Agent to the effect that the perfection and priority of 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 Agent's security interest together with the commencement of such
steps by Borrower at its expense.
6.15 If Borrower receives notice of an Environmental Claim from any
governmental agency or other third party alleging a violation of or liability
under Environmental Laws with respect to the Property or Borrower's activities
or operations at the Property, immediately notify Lender in writing and will
commence such action as may be required with respect to such Environmental
Claim. Upon request, Borrower will provide Lender with updates on the status of
Borrower's actions to resolve or otherwise address such Environmental Claim.
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7. EVENTS OF DEFAULT. Upon the occurrence of any of the following events with
respect to Borrower or any guarantor:
7.1 NON-PAYMENT. The non-payment of any principal amount of any Note
when due, whether by acceleration or otherwise, or the nonpayment of any
interest upon any Note or any other amount due Lender pursuant to this Agreement
within 5 days of when the same is due;
7.2 COVENANTS. The default in the due observance of any affirmative
covenant or agreement to be kept or performed by it under the terms of this
Agreement or any of the Security Documents and the failure or inability of it to
cure such default within 30 days of the occurrence thereof; provided that such
30 day grace period will not apply to: (a) any default which in Lender's good
faith determination is incapable of cure, (b) any default that has previously
occurred, (c) any default in any negative covenants, or (d) any failure to
maintain insurance or to permit inspection of the Collateral or of its books and
records;
7.3 REPRESENTATIONS AND WARRANTIES. Any representation or warranty made
by it in this Agreement, in any of the Security Documents or in any report,
certificate, opinion, financial statement or other document furnished in
connection with the Obligations is false or erroneous in any material respect or
any material breach thereof has been committed;
7.4 OBLIGATIONS. Except as provided in Sections 7.1, 7.2 and 7.3 above,
the default by it in the due observance of any covenant, negative covenant or
agreement to be kept or performed by it under the terms of this Agreement, the
Security Documents or any document now or in the future executed in connection
with any of the Obligations and the lapse of any applicable cure period provided
therein with respect to such default, or, if so defined therein, the occurrence
of any Event of Default or Default (as such terms are defined therein);
7.5 RELATED LOAN. The occurrence of any Default or Event of Default (as
defined therein) under the Second Amended and Restated Credit, Reimbursement and
Security Agreement of even date herewith among Multi-Color Corporation, Lenders
and Agent, or under any Note or Loan Document (as defined therein) relating
thereto;
7.6 BANKRUPTCY, ETC. It: (a) dissolves or is the subject of any
dissolution, a winding up or liquidation; (b) makes a general assignment for the
benefit of creditors; or (c) files or has filed against it a petition in
bankruptcy, for a reorganization or an arrangement, or for a receiver, trustee
or similar creditors' representative for its property or assets or any part
thereof, or any other proceeding under any federal or state insolvency law, and
if filed against it, the same has not been dismissed or discharged within 60
days thereof;
7.7 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 it or against
any of the Collateral, except those liens being diligently contested in good
faith which in the aggregate do not exceed $25,000;
7.8 LOSS, THEFT OR SUBSTANTIAL DAMAGE TO THE COLLATERAL. In addition to
the rights of Agent to deal with proceeds of insurance as provided in the
Security Documents, the loss,
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theft or substantial damage to the Collateral if the result of such occurrence
(singly or in the aggregate) is the failure or inability to resume substantially
normal operation of its business within 30 days of the date of such occurrence;
7.9 JUDGMENTS. Unless in the opinion of Agent adequately insured or
bonded, the entry of a final judgment for the payment of money involving more
than $25,000 against it and the failure by it to discharge the same, or cause it
to be discharged, within 10 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; the entry of one or more final
monetary or non-monetary judgments or order which, singly or in the aggregate,
does or could reasonably be expected to: (a) cause a material adverse change in
the value of the Collateral or its condition (financial or otherwise),
operations, properties or prospects, (b) have a material adverse effect on its
ability to perform its obligations under this Agreement or the Security
Documents, or (c) have a material adverse effect on the rights and remedies of
Agent or Lenders under this Agreement, any Note or any Security Document;
7.10 REVOCATION OF GUARANTEE. The revocation or attempted revocation or
limitation in whole or in part of any Guarantee;
7.11 IMPAIRMENT OF SECURITY. (a) The validity or effectiveness of any
Security Document or its transfer, grant, pledge, mortgage or assignment by the
party executing it in favor of Agent is impaired; (b) any party to a Security
Document asserts that any Security Document is not a legal, valid and binding
obligation of it enforceable in accordance with its terms; (c) the security
interest or lien purporting to be created by any of the Security Documents
ceases to be or is asserted by any party to any Security Document (other than
Agent) not to be a valid, perfected lien subject to no liens other than liens
not prohibited by this Agreement or any Security Document; or (d) any Security
Document is amended, subordinated, terminated or discharged, or any person is
released from any of its covenants or obligations except to the extent that
Agent expressly consents in writing thereto; or
7.12 OTHER INDEBTEDNESS. A default with respect to any evidence of
Indebtedness in excess of $25,000 by it (other than to Lenders pursuant to this
Agreement), if the effect of such default is to accelerate the maturity of such
Indebtedness or to permit the holder thereof to cause such Indebtedness to
become due prior to the stated maturity thereof, or if any Indebtedness of it in
excess of $25,000 for borrowed money (other than to Lenders pursuant to this
Agreement) is not paid when due and payable, whether at the due date thereof or
a date fixed for prepayment or otherwise (after the expiration of any applicable
grace period);
then immediately upon the occurrence of any of the events described in SECTION
7.6 and at the option of Agent upon the occurrence of any other Event of
Default, the Loan, all Notes and all other Obligations immediately will mature
and become due and payable without presentment, demand, protest or notice of any
kind which are hereby expressly waived. After the occurrence of any Event of
Default, Lenders are authorized without notice to anyone to offset and apply to
all or any part of the Obligations all moneys, credits and other property of any
nature whatsoever of Borrower 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 Borrower individually or
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jointly with another party), any Lender or any Affiliate of any Lender. The
rights and remedies of 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. In
furtherance but not in limitation of the foregoing, upon the occurrence of an
Event of Default, Lenders may refuse to make any further advances under the
Revolving Loans. Borrower waives any requirement of marshalling of the assets
covered by the Security Documents upon the occurrence of any Event of Default.
Upon or at any time after the occurrence of an Event of Default,
Lenders, or Agent on behalf of Lenders, may request the appointment of a
receiver of the Collateral. Such appointment may be made without notice, and
without regard to (i) the solvency or insolvency, at the time of application for
such receiver, of the person or persons, if any, liable for the payment of the
Obligations; and (ii) the value of the Collateral at such time. Such receiver
will have the power to take possession, control and care of the Collateral and
to collect all accounts resulting therefrom. Notwithstanding the appointment of
any receiver, trustee, or other custodian, Lenders will be entitled to the
possession and control of any cash, or other instruments at the time held by, or
payable or deliverable under the terms of this Agreement or any Security
Documents to Lenders or Agent.
8. INTERCREDITOR LIEN AND PAYMENT PROVISIONS.
8.1 LIEN PRIORITY.
8.1.1 Borrower has granted to Agent, for the benefit of
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 will be subordinate, inferior and subject to the pledges, liens and security
interests of Agent for the benefit of Lenders in the Collateral.
8.1.2 No Lender will take any action with respect to
foreclosure or repossession of the Collateral upon an Event of Default without
the prior written consent of all Lenders, so long as this Agreement is in effect
or any obligations exist between Borrower and Lenders pursuant thereto or
pursuant to the Security Documents. Lenders will cooperate with each other with
regard to all such actions with respect to the Collateral and in all events,
sums due and owing Lenders under this Agreement, the Obligations or the other
Security 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 Borrower to any Lender.
8.2 SHARING OF PAYMENTS, ETC.
8.2.1 Except as otherwise expressly required by the terms of
this Agreement, each payment or prepayment of principal, interest, fees,
expenses and other charges under the Loans will be applied pro-rata among
Lenders in accordance with their respective Ratable Portions applicable thereto.
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<PAGE> 17
8.2.2 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 Revolving Loans owing to it under the terms of this
Agreement in excess of its Ratable Portion, such Lender will forthwith purchase
from the other Lenders, such participations in the Revolving Loans 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.
Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 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 Borrower in the amount of such participation.
8.2.3 Borrower and Lenders further acknowledge that Agent will
not be obligated to make any Revolving Loans to the extent that any of the other
Lenders do not contribute their Ratable Portion of any Revolving Loan.
8.2.4 Each Lender's Ratable Portion of any payment hereunder
will be reduced to the extent that such Lender has not contributed its Ratable
Portion of any amount owing to Agent hereunder.
8.2.5 Each Lender's obligation to purchase participation
interests pursuant to this Agreement will be absolute and unconditional.
8.2.6 Each Lender will be entitled to receive from Agent its
Ratable Portion of interest on Revolving Loans of such Lender only as calculated
based upon funds actually received by Agent from each Lender by 11:00 a.m.
(Cincinnati time) on the day due from such Lender. Funds received by Agent after
such cut off time will be treated as having been received by Agent on the next
Business Day following the day on which received.
8.2.7 To the extent that Agent will have advanced funds
hereunder on a day prior to receipt by Agent of a Lender's Ratable Portion of
such advance, interest accrued and paid on such unfunded sums will be for the
account of Agent.
8.3 RECEIPT OF PAYMENTS BY LENDERS. Should any payment or distribution
not permitted by the provisions of this Agreement be received by any Lender upon
or with respect to all or any part of the Notes, Obligations and/or the
Collateral prior to the full payment and satisfaction of the Obligations in the
priority set forth in this Section and the termination of all financing
arrangements between Lenders and Borrower, such Lender will deliver the same to
Agent in precisely the form received (except for the endorsement or assignment
of 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 will be held in trust by such Lender as
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<PAGE> 18
property of Agent on behalf of all Lenders. In the event of the failure of any
Lender to make any such endorsement or assignment, Agent on behalf of all
Lenders, or any of its officers or employees on behalf of Agent on behalf of all
Lenders, is hereby irrevocably authorized in its own name or in the name of
Lenders to make the same, and is hereby appointed each Lender's attorney-in-fact
for those purposes, that appointment being coupled with an interest and
irrevocable.
8.4 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 Borrower or the proceeds
thereof to creditors of Borrower or to any indebtedness, liabilities and
obligations of Borrower, or upon any liquidation, dissolution or other winding
up of Borrower or Borrower's business, or in the event of any sale (singly or in
the aggregate) of all or any substantial part of the assets of Borrower, or in
the event of any receivership, insolvency or bankruptcy proceeding, or
assignment for the benefit of creditors, or any proceeding by or against
Borrower 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 will be payable or
deliverable upon or with respect to all or any part of the Obligations will be
paid or delivered directly to Agent for application to the Obligations (whether
due or not due in order and manner as set forth herein) until the Obligations
will have been fully paid and satisfied. Lenders hereby irrevocably authorize
and empower 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 Agent's own name or in the name of Lenders or otherwise, as
Agent may deem necessary or advisable to carry out the provisions of this
Section. Lenders hereby agree to execute and deliver to Agent such limited
powers of attorney, assignments, endorsements or other instruments as may be
requested by Agent in order to enable 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.
8.5 BENEFIT. The provisions of this Section are solely for the benefit
of Lenders, and may at any time or times be changed by Lenders as they may elect
without necessity of notice to or consent or approval by Borrower or any other
Person; and neither Borrower nor any other Person will have any right to rely on
or enforce any of the provisions hereof.
9. CONDITIONS PRECEDENT.
9.1 AT CLOSING. Lenders' obligation to make any Revolving Loan is
conditioned upon the receipt by Agent of all documents in form and substance
acceptable to Agent listed on the Closing Memo, except for those specifically
listed thereon as post-closing items.
9.2 ADDITIONAL ADVANCES. Lenders' obligations to make any Revolving Loan
and/or any advance under any Note on any date in the future (to the extent that
there are funds remaining to be disbursed hereunder or under any Note) are
subject to the conditions precedent that:
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<PAGE> 19
9.2.1 NO DEFAULTS. There does not exist any Event of Default,
nor any event which upon notice or lapse of time or both would constitute an
Event of Default.
9.2.2 ACCURACY. The representations and warranties contained in
this Agreement, the Security Documents, and in each document listed on the
Closing Memo and in any document delivered in connection therewith will be true
and accurate on and as of such date, except as such warranties and
representations may be affected by: (a) this Agreement or transactions
contemplated thereby, and (b) events occurring after the Closing Date as to
those representations and warranties relating to Borrower's financial
statements.
9.2.3 OTHER DOCUMENTS. Agent will have received such other
documents, instruments, opinions, certificates or items of information which it
may have reasonably required in connection with the transactions provided for in
this Agreement.
9.3 BORROWING REPRESENTATIONS. Each borrowing by Borrower hereunder will
constitute a representation and warranty by Borrower as of the date of such
borrowing that the conditions set forth in SECTION 9.2 have been satisfied.
10. CLOSING EXPENSES. Borrower will pay Agent for the benefit of Lenders
immediately upon the execution of this Agreement a reasonable sum for expenses
and Attorneys Fees incurred by Lenders in connection with the preparation,
execution and delivery of this Agreement and the attendant documents and the
consummation of the transactions contemplated hereby together with all: (a)
recording fees and taxes; (b) survey, appraisal and environmental report
changes; and (c) title search and title insurance charges, including any stamp
or documentary taxes, charges or similar levies which arise from the payment
made hereunder or from the execution, delivery or registration or any Security
Document or this Agreement. If Borrower fails to pay such fees, Lenders are
entitled to disburse such sums as an advance under any Note.
11. POST-CLOSING EXPENSES. To the extent that Agent or any Lender incurs any
costs or expenses in protecting or enforcing its rights in the Collateral or
observing or performing any of the conditions or obligations of Borrower or any
Guarantor thereunder, including but not limited to Attorneys Fees in connection
with litigation, preparation of amendments or waivers, present or future stamp
or documentary taxes, charges or similar levies which arise from any payment
made hereunder or from the execution, delivery or registration of any Security
Document or this Agreement, such costs and expenses will be due on demand, will
be included in the Obligations and will bear interest from the incurring or
payment thereof at the Default Rate.
12. REPRESENTATIONS AND WARRANTIES TO SURVIVE. All representations, warranties,
covenants, indemnities and agreements made by Borrower herein and in the
Security Documents will survive the execution and delivery of this Agreement,
the Security Documents and the issuance of any Notes.
13. ENVIRONMENTAL INDEMNIFICATION. No Lender will be deemed to assume any
liability or obligation for loss, damage, fines, penalties, claims or duties to
clean-up or dispose of wastes or materials on or relating to the Property merely
by conducting any inspections of the Property
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or by obtaining title to the Property by foreclosure, deed in lieu of
foreclosure or otherwise. Borrower, including its successors and assigns, agrees
to remain fully liable and will indemnify, defend and hold harmless Lenders,
their respective directors, officers, employees, agents, contractors,
subcontractors, licensees, invitees, successors and assigns, from and against
any claims, demands, judgments, damages, actions, causes of action, injuries,
administrative orders, liabilities, costs, expenses, clean-up costs, waste
disposal costs, litigation costs, fines, penalties, damages and other related
liabilities arising from (i) the failure of Borrower to perform any obligation
herein required to be performed by Borrower, (ii) the removal or other
remediation of hazardous or toxic substances, hazardous wastes, pollutants or
contaminants, solid waste or petroleum at or from the Property, (iii) the
removal or other abatement of any asbestoscontaining material from the Property
(or if removal is prohibited by law, the taking of whatever action is required
by law, including without limitation, the implementation of any required
operation or maintenance program), (iv) any act or omission, event or
circumstance existing or occurring resulting from or in connection with the
ownership, construction, occupancy, operation, use and/or maintenance of the
Property, (v) any and all claims or proceedings (whether brought by private
party or governmental agency) for bodily injury, property damage, abatement or
remediation, environmental damage or impairment and any other injury or damage
resulting from or relating to any hazardous or toxic substances, hazardous
waste, pollutants, contaminants, solid waste, or petroleum located upon or
migrating into, from or through the Property (whether or not any or all of the
foregoing was caused by Borrower or its tenant or subtenant, or a prior owner of
the Property or its tenant or subtenant, or any third party and whether or not
the alleged liability is attributable to the handling, storage, generation,
transportation or disposal of such material or the mere presence of such
material on the Property), and (iv) Borrower's breach of any representation or
warranty contained in this Section. Without limitation, the foregoing
indemnities will apply to Lenders with respect to claims, demands, losses,
damages (including consequential damages), liabilities, causes of action,
judgments, penalties, costs and expenses (including reasonable attorneys' fees
and court costs) which in whole or in part are caused by or arise out of the
negligence of any Lender. Such indemnity, however, will not apply to any Lender
to the extent the subject of the indemnification is caused by or arises out of
the gross negligence or willful misconduct of such Lender. All environmental
representations, warranties, covenants, and indemnities will continue
indefinitely and may not be cancelled or terminated except by a writing signed
by Lenders specifically referring to this Section. Notwithstanding anything
contained to the contrary in any Note, this Agreement, or other document
evidencing or securing the Obligations, the provisions of this Section will
survive the termination or expiration of the Obligations, the full repayment of
the Obligations, or the acquiring of title by any Lender or its successors and
assigns by foreclosure, deed in lieu of foreclosure or otherwise, and will be
fully enforceable against Borrower and its successors and assigns. The
provisions of this Section will constitute a separate undertaking by Borrower
and will be an inducement to Lenders in extending the Obligations to Borrower.
The provisions of this Section will not be subject to any anti-deficiency or
similar laws.
14. AGENT.
14.1 AUTHORIZATION AND ACTION. Each Lender hereby appoints and
irrevocably authorizes Agent to take such action as agent on its behalf and to
exercise such powers and
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discretion under this Agreement and the other Loan Documents as are delegated to
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 Agent to execute, deliver and perform its
obligations hereunder and under each of the Loan Documents to which Agent is a
party, and to exercise hereunder or thereunder all rights, powers and remedies
that Agent may have hereunder or thereunder. Each Lender agrees that any action
taken by Agent in accordance with the provisions of this Agreement or the
Security Documents, and the exercise by Agent of the powers set forth herein or
therein, together with such other powers as are reasonably incidental thereto,
will be authorized and binding upon all Lenders. As to any matters not expressly
provided for hereunder or by the Security Documents (including, without
limitation, enforcement or collection of the Obligations), 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 Lenders. The duties of Agent will be
mechanical and administrative in nature and Agent will have no fiduciary
relationship in respect of any Lender. If Agent requests instructions from any
Lender with respect to any act or failure to act in connection with this
Agreement, the Credit Facilities or any of the Security Documents, Agent will be
entitled to refrain from such act or taking such action unless and until Agent
has received instructions and Agent will have no liability to any Person or
Lender by reason of so refraining. Agent will not be required to take any action
which exposes Agent to personal liability or is contrary to this Agreement, any
Security Document or applicable law.
14.2 AGENT'S RELIANCE, ETC. Neither Agent, any Affiliate of Agent, nor
any of their respective directors, officers, agents, employees, attorneys or
consultants will be liable for any action taken or omitted to be taken by it or
them under or in connection with this Agreement, any of the Obligations, any of
the Collateral or any Security Document, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, Agent: (a) may consult with legal counsel (including counsel for
Borrower), 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 Agreement, any Note or any Security 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 Agreement, the Obligations or
any Security Document on the part of Borrower or as to the existence or possible
existence of any Default or Event of Default or to inspect the property
(including the books and records) of Borrower; (d) will not be responsible to
any Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, the Obligations or any
Security 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 Borrower or is cared for, protected or insured or has been
encumbered or that the liens granted to Agent pursuant to the Security 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 Agreement, the
Obligations or any Security Document by acting upon any notice, consent,
certificate or
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other instrument or writing (which may be by telephone, telegram, cable,
telecopy or telex) believed by it to be genuine and signed or sent by the proper
party or parties. Agent will not be liable for any apportionment or distribution
of payments made by it in good faith pursuant to this 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,
will 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.
14.3 AGENT AND ITS AFFILIATES. With respect to the Revolving Loans made
by it, the Notes issued to it, and the Collateral, Agent will have the same
rights and powers under the Security Documents as any other Lender and may
exercise the same as though it were not Agent; and the term "Lender" or
"Lenders" will, unless otherwise expressly indicated, include Agent in its
individual capacity. 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 Borrower, Borrower's Affiliates and any Person who may do
business with or own securities of Borrower or Borrower's Affiliates, all as if
it were not Agent and without any duty to account therefor to Lenders.
14.4 LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon 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 Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon 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 Agreement, the
Obligations, the Collateral and the Security Documents; and Agent will not have
any duty or responsibility at any time to provide any Lender with any credit or
other information with respect thereto.
14.5 INDEMNIFICATION. Lenders agree to indemnify Agent (to the extent
not reimbursed by Borrower), ratably according to their respective Revolving
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 Agent in any way relating to or
arising out of this Agreement, any Note, the Obligations or any of the Security
Documents or any action taken or omitted by Agent under this Agreement, any
Note, the Obligations or any of the Security 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 Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse Agent promptly upon
demand for its ratable share of any out-of-pocket expenses incurred by 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 in respect of rights or
responsibilities under, this Agreement, any Note, the Obligations or any of the
Security Documents, or any of them, to the extent that Agent is not reimbursed
for such expenses by Borrower. The provisions of this Section will survive the
termination of this Agreement.
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14.6 SUCCESSOR AGENT. Agent may resign at any time as Agent under this
Agreement, the Notes or the Security Documents by giving written notice thereof
to Lenders and Borrower, which resignation will be effective only upon the
appointment of a successor Agent. Upon any such resignation, 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 $50,000,000. 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 Agreement; provided, however, that the
successor Agent will not be considered as a Lender for purposes of this
Agreement. After any retiring Agent's resignation, the provisions of this
Section will inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under this Agreement. If the other Lenders request
Agent to resign, then, prior to such resignation, the other Lenders will cause
Agent to be paid all amounts owed to Agent hereunder.
14.7 RELATIONS AMONG LENDERS. Each Lender agrees that it will not take
or institute any actions or proceedings against Borrower under this Agreement or
with respect to any Collateral, without the prior written consent of all
Lenders.
14.8 BENEFIT. The provisions of this Section are solely for the benefit
of Agent and Lenders, and may at any time or times be changed by Lenders as they
may elect without necessity of notice to or consent or approval by Borrower or
other Person; and neither Borrower nor any other Person will have any right to
rely on or enforce any of the provisions hereof. In performing its actions and
duties under this Agreement, Agent acts solely as agent of Lenders and does not
assume or have any obligation toward or agency relationship with or for
Borrower.
15. DEFINITIONS. For purposes hereof:
15.1 Each accounting term not defined or modified herein will have the
meaning given to it under generally accepted accounting principles in effect on
the Closing Date.
15.2 "Affiliate" will mean any Person under common control or having
similar equity holders owning at least ten percent (10%) thereof, whether such
common control is direct or indirect. All of Person's direct or indirect parent
corporations, partners, Subsidiaries, and the officers, shareholders, members,
directors and partners of any of the foregoing and persons related by blood or
marriage to any of the foregoing will be deemed to be a Person's Affiliates for
purposes of this Agreement.
15.3 "Agent's Account" will mean account number 4000364216 of Agent
maintained by Agent at its office at Cincinnati, Ohio, or such other account
maintained by Agent and designated by Agent in a written notice to Lenders and
Borrower.
15.4 "Attorneys Fees" will mean the reasonable value of the services
(and all costs and expenses related thereto) of the attorneys (and all
paralegals and other staff employed by such attorneys) employed by Agent or any
Lender from time to time to: (i) take any action in or with respect to any suit
or proceedings (bankruptcy or otherwise) relating to the Collateral or this
- 23 -
<PAGE> 24
Agreement; (ii) protect, collect, lease or sell, any of the Collateral; (iii)
attempt to enforce any lien on any of the Collateral or to give any advice with
respect to such enforcement; (iv) enforce any of Lenders' rights to collect any
of the Obligations; (v) give Agent or any Lender advice with respect to this
Agreement, including but not limited to advice in connection with any default,
workout or bankruptcy; (vi) prepare any amendments, restatements, amendments or
waivers to this Agreement or any of the documents executed in connection with
any of the Obligations.
15.5 "Available Commitment" will mean, as to any Lender at any time, an
amount equal to the excess, if any, of (i) such Lender's Revolving Commitment
over (ii) the then outstanding Revolving Loans made by such Lender.
15.6 "Borrower's Account" will mean the account of Borrower at Agent
designated by Agent for use hereunder.
15.7 "Business Day" will mean any day excluding Saturday, Sunday and any
other day on which banks are required or authorized to close in Ohio.
15.8 "Closing" will mean the execution and delivery of the documents
listed on the Closing Memo.
15.9 "Closing Date" will mean the date on which this Agreement is
executed.
15.10 "Closing Memo" will mean the Closing Memorandum between Borrower
and Agent in connection with the transactions represented by this Agreement.
15.11 "Code" will mean the Internal Revenue Code of 1986, as amended
from time to time.
15.12 "Collateral" will mean any property, real or personal, tangible or
intangible, now or in the future securing the Obligations, including but not
limited to the property covered by the Security Documents listed in the Closing
Memo.
15.13 "Compliance Certificate" will mean the Compliance Certificate in
the form delivered to Borrower in connection with the Closing.
15.14 "Conversion Date" will mean August 1, 1997.
15.15 "Default" will mean any event or condition which with the passage
of time or giving of notice, or both, would constitute an Event of Default.
15.16 "Default Rate" will mean 4% per annum plus the highest rate of
interest that would otherwise be in effect under any Note but not more than the
highest rate permitted by applicable law.
- 24 -
<PAGE> 25
15.17 "Disclosure Schedule" will mean the Disclosure Schedule delivered
by Borrower to Lenders in connection with the Closing.
15.18 "ERISA" will mean the Employee Retirement Income Security Act of
1974, or any successor statute, as amended from time to time.
15.19 "ERISA Affiliate" will mean any trade or business (whether or not
incorporated) that is a member of a group of which Borrower is a member and
which is treated as a single employer under Section 414 of the Code.
15.20 "Event of Default" will mean any of the events listed in Section
7 above.
15.21 "Guarantees" will mean the guarantees of all or any part of the
Obligations, now existing or hereafter arising, including but not limited to
those listed on the Closing Memo, whether on a full, limited or non-recourse
basis and such term will include any Person that hypothecates or otherwise
pledges any property to Agent or any Lender in connection with any of the
Obligations and will include any amendments thereto and restatements thereof.
15.22 "Guarantor(s)" will mean any Person(s) that now or in the future
deliver one or more Guarantees to Agent for the benefit of Lenders. Initially,
the Guarantor will mean Multi- Color Corporation.
15.23 "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, including but not limited to the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 ET SEQ.
("CERCLA").
15.24 "Indebtedness" will mean, without duplication: (i) all obligations
(including capitalized lease obligations) which in accordance with generally
accepted accounting principles would be shown on a balance sheet as a liability;
(ii) all obligations for borrowed money or for the deferred purchase price of
property or services; and (iii) all guarantees, reimbursement, payment or
similar obligations, absolute, contingent or otherwise, under acceptance, letter
of credit or similar facilities.
15.25 "Loan(s)" will mean any and all advances of funds under this
Agreement or any of the Notes.
15.26 "Multiemployer Plan" will mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA to which Borrower 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 plan years made or accrued an obligation to
make contributions.
- 25 -
<PAGE> 26
15.27 "Note(s)" will mean any note, now or in the future, between
Borrower and any Lender, and will include any amendments made thereto and
restatements thereof, extensions and replacements.
15.28 "Notice(s) of Borrowing" will mean the notice required under
Section 2.6.1, above, in the form delivered by Agent to Borrower in connection
with the Closing.
15.29 "Obligations" will mean and include all loans, advances, debts,
liabilities, obligations, covenants and duties owing to Lenders from Borrower of
any kind or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, whether arising under this Agreement or under any
other agreement, instrument or document, whether or not for the payment of
money, whether arising by reason of an extension of credit, opening of a letter
of credit, loan, guaranty, indemnification or in any other manner, whether
direct or indirect (including those acquired by assignment, participation,
purchase, negotiation, discount or otherwise), absolute or contingent, joint or
several, due or to become due, now existing or hereafter arising and whether or
not contemplated by Borrower or Lenders on the Closing Date.
15.30 "PBGC" will mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.
15.31 "Permitted Liens" will mean:
(i) liens securing the payment of taxes, either not yet due or the
validity of which is being contested in good faith by appropriate
proceedings, and as to which it has set aside on its books adequate
reserves to the extent required by generally accepted accounting
principles;
(ii) 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;
(iii) liens imposed by law, such as carriers', warehousemen's or
mechanics' liens, incurred by it in good faith in the ordinary course of
business, and liens arising out of a judgment or award against it with
respect to which it will currently be prosecuting an appeal, a stay of
execution pending such appeal having been secured;
(iv) liens in favor of Lenders;
(v) reservations, exceptions, encroachments and other similar title
exceptions or encumbrances affecting real properties, provided such do
not materially detract from the use or value thereof as used by the
owner thereof;
(vi) attachment, judgment and similar liens provided that execution is
effectively stayed pending a good faith contest.
- 26 -
<PAGE> 27
15.32 "Person" will mean an individual, partnership, corporation
(including a business trust), limited liability company, joint stock company,
trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
15.33 "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 Borrower or any ERISA Affiliate.
15.34 "Prime Rate" will mean the rate per annum established by Agent
from time to time based on its consideration of various factors, including money
market, business and competitive factors, and it is not necessarily any Lender's
most favored interest rate. Subject to any maximum or minimum interest rate
limitations specified herein or by applicable law, if and when such Prime Rate
changes, then in each such event, the rate of interest payable under this
Agreement, any Note, the Security Documents or any other document evidencing the
Obligations that is tied to the Prime Rate will change automatically without
notice effective the date of such changes.
15.35 "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 Lenders' Revolving Commitments; provided, however, that
as to any Lender that fails or refuses to make its Ratable Portion of any
Revolving Loan, such Lender's Ratable Portion of payments distributable to
Lenders will be adjusted accordingly.
15.36 "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).
15.37 "Revolving Commitment(s)" will mean, as to any Lender, the dollar
amount set forth opposite its name on SCHEDULE 1 hereto.
15.38 "Revolving Loans" will mean the advances described in Section
2.1.1 above.
15.39 "Security Documents" will mean the agreements, pledges, mortgages,
guarantees, or other documents delivered by Borrower, any Guarantor or any other
person or entity to Lender previously, now or in the future to encumber the
Collateral in favor of Agent for the benefit of Lenders, including but not
limited to those listed on the Closing Memo, and all amendments thereto and
restatements thereof.
15.40 "Subsidiaries" will mean a corporation of which shares of stock
having ordinary voting power (other than stock having such power only by reason
of the happening of a contingency) to elect a majority of the Board of Directors
or other managers of such corporation are at the time owned, or the management
of which is otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by Borrower.
- 27 -
<PAGE> 28
15.41 "Termination Date" will mean June 30, 2002; provided, however,
that the Termination Date will in no event be later than the date on which the
Revolving Commitments will have been terminated in whole, whether by expiration
or upon acceleration.
15.42 "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.
All other terms contained in this Agreement and not otherwise defined herein
will, unless the context indicates otherwise, have the meanings provided for by
the Uniform Commercial Code of the State of Ohio to the extent the same are
defined therein.
16. GENERAL.
16.1 INDEMNITY. Borrower will indemnify, defend and hold harmless Agent
and each Lender, its 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 Agent, such Lender or any such indemnified party may
incur arising under or by reason of this Agreement or any act hereunder or with
respect hereto or thereto including but not limited to any of the foregoing
relating to any act, mistake or failure to act in perfecting, maintaining,
protecting or realizing on any collateral or lien thereon except the willful
misconduct or gross negligence of such indemnified party. Without limiting the
generality of the foregoing, Borrower agrees that if, after receipt by any
Lender of any payment of all or any part of the Obligations, demand is made at
any time upon such Lender for the repayment or recovery of any amount or amounts
received by it in payment or on account of the Obligations and such 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 Agreement will continue in
full force and effect and Borrower will be liable, and will indemnify, defend
and hold harmless such Lender 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 Borrower in reliance upon such
payment, and any such contrary action so taken will be without prejudice to
Lenders' rights under this 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 expiration or termination of this Agreement.
16.2 CONTINUING AGREEMENT. This Agreement is and is intended to be a
continuing agreement and will remain in full force and effect until each Loan is
finally and irrevocably paid in full and this Agreement is terminated by a
writing signed by Lenders specifically terminating this Agreement.
16.3 NO THIRD PARTY BENEFICIARIES. Nothing express or implied herein is
intended or will be construed to confer upon or give any Person, other than the
parties hereto, any right or remedy hereunder or by reason hereof.
- 28 -
<PAGE> 29
16.4 NO PARTNERSHIP OR JOINT VENTURE. Nothing contained herein or in any
of the agreements or transactions contemplated hereby is intended or will be
construed to create any relationship other than as expressly stated herein or
therein and will not create any joint venture, partnership or other
relationship.
16.5 WAIVER. No delay or omission on the part of Agent or 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 an acquiescence therein nor will the
action or nonaction of Lenders 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 the Loans
hereunder will constitute a waiver of any of the conditions to Lenders'
obligation to make further disbursements; nor, if Borrower is unable to satisfy
any such condition, will any such disbursement have the effect of precluding
Agent or any Lender from thereafter declaring such inability to be an Event of
Default.
16.6 NOTICES. All notices, demands, requests, consents, approvals and
other communications required or permitted hereunder will be in writing and will
be conclusively deemed to have been received by a party hereto and to be
effective if delivered personally to such party, or sent by telex, telecopy
(followed by written confirmation) or other telegraphic means, or by overnight
courier service, or by certified or registered mail, return receipt requested,
postage prepaid, addressed to such party at the address set forth below or to
such other address as any party may give to the other in writing for such
purpose:
To Agent: PNC Bank, Ohio, National Association
201 East Fifth Street, 26th Floor
P.O. Box 1198
Cincinnati, Ohio 45201-1198
Attention: Middle Market Banking
Telecopier No.: (513) 651-8952
To Lenders: PNC Bank, Ohio, National Association
201 East Fifth Street, 26th Floor
P.O. Box 1198
Cincinnati, Ohio 45201-1198
Attention: Middle Market Banking
Telecopier No.: (513) 651-8952
Star Bank, National Association
425 Walnut Street
ML 8025
Cincinnati, Ohio 45202
Attention: Andrew Hawking
Telecopier No.: (513) 632-2068
- 29 -
<PAGE> 30
To Borrower: Laser Graphic Systems, Incorporated
3520 Turfway Road
Erlanger, Kentucky 41018
Attention: President
Telecopier No.: ________________
All such communications, if personally delivered, will be conclusively deemed to
have been received by a party hereto and to be effective when so delivered, or
if sent by telex, telecopy or telegraphic means, on the day on which
transmitted, or if sent by overnight courier service, on the day after deposit
thereof with such service, or if sent by certified or registered mail, on the
third business day after the day on which deposited in the mail.
16.7 SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and
inure to the benefit of Borrower and Lenders and their respective successors and
assigns, provided, however, that Borrower may not assign this Agreement in whole
or in part without the prior written consent of Lenders and Lenders at any time
may assign this Agreement in whole or in part, subject to the terms and
conditions of this Agreement.
16.8 MODIFICATIONS. This Agreement, any Notes and the Security
Documents, and the documents listed on the Closing Memo, constitute the entire
agreement of the parties and supersede all prior agreements and understandings
regarding the subject matter of this Agreement, including but not limited to any
proposal or commitment letters. No modification or waiver of any provision of
this Agreement, any Note, any of the Security Documents or any of the documents
listed on the Closing Memo, nor consent to any departure by Borrower 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 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 Borrower in any case will entitle
Borrower to any other or further notice or demand in the same, similar or other
circumstance.
16.9 REMEDIES CUMULATIVE. No single or partial exercise of any right or
remedy by Agent or any Lender 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 Lenders may deem appropriate.
16.10 ILLEGALITY. If fulfillment of any provision hereof or any
transaction related hereto or of any provision of the Notes or the Security
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 Agreement in whole or in
- 30 -
<PAGE> 31
part, then such clause or provision only will be void, as though not herein
contained, and the remainder of this 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 Lenders, all of the Obligations of Borrower
to Lenders will become immediately due and payable.
16.11 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.
16.12 HEADINGS. The headings in this Agreement are for convenience only
and will not limit or otherwise affect any of the terms hereof.
16.13 TIME. Time is of the essence in the performance of this
Agreement.
16.14 GOVERNING LAW AND JURISDICTION; NO JURY TRIAL. THIS AGREEMENT
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 LAW PRINCIPLES, AND BORROWER 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 BORROWER AT
ITS 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; PROVIDED THAT NOTHING CONTAINED HEREIN WILL PREVENT
AGENT OR LENDERS FROM BRINGING ANY ACTION OR EXERCISING ANY RIGHTS AGAINST ANY
SECURITY OR AGAINST BORROWER INDIVIDUALLY, OR AGAINST ANY PROPERTY OF BORROWER,
WITHIN ANY OTHER STATE OR NATION. BORROWER WAIVES ANY OBJECTION BASED ON FORUM
NON CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER.
BORROWER AND LENDERS EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT, ANY DOCUMENTS EVIDENCING ANY OF THE
OBLIGATIONS, OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH AGREEMENTS.
Executed at Cincinnati, Ohio on January 9, 1997.
LASER GRAPHIC SYSTEMS, INCORPORATED
AS BORROWER
By:/s/ JOHN C. COURT
-----------------------------------------
Print Name: John C. Court
---------------------------------
Title: President
------------------------------------
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<PAGE> 32
PNC BANK, OHIO, NATIONAL ASSOCIATION
ON ITS OWN BEHALF AS LENDER, AND AS AGENT
By:/s/ WARREN F. WEBER
----------------------------------------
Print Name: Warren F. Weber
--------------------------------
Title: Assistant Vice President
------------------------------------
STAR BANK, NATIONAL ASSOCIATION
AS LENDER
By:/s/ EDWARD L. DWYER
----------------------------------------
Print Name: Edward L. Dwyer
--------------------------------
Title: Vice President
-------------------------------------
- 32 -
<PAGE> 33
SCHEDULE 1
LIST OF LENDERS, ADDRESSES AND COMMITMENTS
------------------------------------------
NON-REVOLVING CREDIT FACILITY REVOLVING COMMITMENTS
- ----------------------------- ---------------------
1. PNC Bank, Ohio, National Association $250,000
201 East Fifth Street, 26th Floor
P.O. Box 1198
Cincinnati, Ohio 45201-1198
Attention: Middle Market Banking
Telephone: (513) 651-8613
Telecopy: (513) 651-8952
ABA No.: 042000398
2. Star Bank, National Association $250,000
425 Walnut Street
Cincinnati, Ohio 45202
Attention: Andrew Hawking
Telephone: (513) 632-4036
Telecopy: (513) 632-2068
ABA No.: 042000013
TOTAL REVOLVING COMMITMENT $500,000
- 33 -
<PAGE> 1
EXHIBIT 10.25
FIRST AMENDMENT TO CREDIT 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 February 25, 1997 ("Effective Date"):
1. RECITALS.
1.1 On January 9, 1997, the Company, the Lenders and the Agent
entered into a Second 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 has requested that the Lenders amend the
Credit Agreement as provided herein, and the Lenders are willing to do so
subject to and in accordance with the terms of this First Amendment to Credit
Agreement (this "Amendment").
2. AMENDMENT.
2.1 Section 1.1.2 of the Credit Agreement is hereby amended to
provide as follows:
"1.1.2 "Advance" or "Advances" will mean Revolving Credit
Loans or Non-Revolving Credit Loans, as the case may be."
2.2 Item (b) of Section 1.1.49 (definition of Eligible
Inventory) of the Credit Agreement is hereby amended to provide as follows: "(b)
any Inventory not in the actual possession of the Company or any Inventory in
the possession of a bailee, warehouseman, consignee, subcontractor or similar
third party; provided, however, that up to $500,000 of Inventory in the
possession of a consignee will be Eligible Inventory if the Company has
protected its interest in such consigned Inventory in accordance with applicable
law and to the Lenders' satisfaction, including but not limited to filing (and
continuing as and when required) UCC financing statements giving notice of the
consignment and giving written notice of the consignment to all secured parties
claiming a security interest in the consignee's inventory, in each case prior to
such consignee receiving any Inventory, and if the Lenders' security interest in
such Inventory remains a perfected first priority security interest,".
<PAGE> 2
2.3 Section 1.1.123 of the Credit Agreement is hereby amended
to provide as follows:
"1.1.123 "Revolving Credit Facility" or "Revolving Credit
Facilities" will mean the Credit Facilities described in Sections 2.1
and 2.2, below."
2.4 The following Section 2.2 is hereby added to the Credit
Agreement:
"2.2 NON-REVOLVING CREDIT FACILITY.
2.2.1 Each Lender severally agrees to make, subject
to the terms and conditions set forth herein and in the promissory
notes evidencing such loans, non-revolving credit loans ("Non-Revolving
Credit Loans") to the Company upon the Company's request in an amount
not to exceed $1,000,000 for each Lender and $2,000,000 in the
aggregate for all Lenders, provided that no Event of Default exists.
2.2.2 The Non-Revolving Credit Loans will be
evidenced by the Non-Revolving Credit Notes made by the Company to the
order of the Lenders and will bear interest and be payable in the
manner set forth herein and therein. The Non-Revolving Credit Loans
will bear interest at a rate per annum equal to the interest rate for
Revolving Credit Loans, as selected by the Company from time to time in
a Notice of Borrowing. The Company will pay to the Agent for the
account of the Lenders the outstanding principal of, and all accrued
and unpaid interest on, all Non-Revolving Credit Loans on August _____,
1997.
2.2.3 Each Non-Revolving Credit 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.
2.2.4 Accrued interest under the Non-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 maturity date thereof, and (iv) after
maturity, on demand.
2.2.5 The Company may borrow and repay Non-Revolving
Credit Loans subject to the terms, conditions and limits set forth
herein and in the Non- Revolving Credit Notes but amounts borrowed and
repaid may not be reborrowed. Each Lender is authorized to record in
its books and records the
- 2 -
<PAGE> 3
date and amount of each advance and payment under the Non-Revolving
Credit Loans, and other information related thereto, which books and
records 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 any of its obligations under this Agreement, any
Note or any of the Security Documents.
2.2.6 The Non-Revolving Credit Loans are intended to
be temporary credit facilities until the new industrial revenue bonds
relating to the Company's Scottsburg, Indiana facility are issued."
2.5 Section 10.11 of the Credit Agreement is hereby amended to
provide as follows:
"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; PROVIDED, HOWEVER, that so long as no
Default or Event of Default has occurred and is continuing, the Company
may utilize up to $25,000 to redeem outstanding shares of its common
stock during the Fiscal Quarter ending March 31, 1997; and PROVIDED,
FURTHER, that after September 30, 1997 and so long as no Default or
Event of Default has occurred and is continuing, the Company may
utilize up to 25% of Excess Cash Flow for each Fiscal Quarter, but not
more than $25,000 for any Fiscal Quarter, to redeem outstanding shares
of its common stock."
2.6 Section 10.13 of the Credit Agreement is hereby amended to
provide as follows:
"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) loans, extensions of credit, advances or
contributions of capital to its Subsidiary, Laser Graphic Systems,
Incorporated, not to exceed $750,000 in the aggregate; (b) 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, or
to cover reasonable cash advances against employees' salaries; and (c)
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
- 3 -
<PAGE> 4
companies are insured by the Federal Deposit Insurance Corporation and
have capital in excess of $150,000,000."
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. To induce
the Lenders and the Agent to enter into this Amendment, the Company represents
and warrants as follows:
3.1 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 Amendment and are true and
correct as of the date of the execution of this Amendment.
3.2 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.
3.3 The person executing this 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 Amendment on behalf of the Company.
4. 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 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 Letters of Credit.
5. CONDITIONS. The Lenders' and Agent's obligations pursuant to this
Amendment are subject to the following conditions:
- 4 -
<PAGE> 5
5.1 The Agent shall have received for the account of the
Lenders an amendment fee of $2,000.
5.2 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 Amendment, the
Non-Revolving Credit Notes and all other documents executed in connection
herewith.
5.3 The representations and warranties of the Company in
Section 3, above, shall be true.
5.4 The Company shall pay all expenses and attorneys fees
incurred by the Lenders in connection with the preparation, execution and
delivery of this Amendment and related documents.
6. GENERAL.
6.1 Except as expressly modified herein, the Credit Agreement
is and remains in full force and effect.
6.2 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 or any agreement or instrument guaranteeing, securing or
otherwise relating to the Credit Agreement.
6.3 This Amendment will be binding upon and inure to the
benefit of the Company, the Lenders and the Agent and their respective
successors and assigns.
6.4 All representations, warranties and covenants made by the
Company herein will survive the execution and delivery of this Amendment.
6.5 This Amendment will in all respects be governed and
construed in accordance with the laws of the State of Ohio.
6.6 This 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.
- 5 -
<PAGE> 6
Executed as of the Effective Date.
MULTI-COLOR CORPORATION,
as Company
By:/s/ WILLIAM R. COCHRAN
----------------------------------------
Print Name: William R. Cochran
--------------------------------
Title: VP/CEO
-------------------------------------
PNC BANK, OHIO,
NATIONAL ASSOCIATION,
on its own behalf as Lender and as Agent
By:/s/ JOHN L. NOELLKE
----------------------------------------
Print Name: John L. Noellke
--------------------------------
Title: Senior Vice President
-------------------------------------
STAR BANK,
NATIONAL ASSOCIATION,
as Lender
By:/s/ ANDREW T. HAWKING
----------------------------------------
Print Name: Andrew T. Hawking
--------------------------------
Title: Senior Vice President
-------------------------------------
- 6 -
<PAGE> 7
CERTIFICATE OF THE SECRETARY
OF
MULTI-COLOR CORPORATION
The undersigned, Secretary of Multi-Color Corporation (the
"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
Second Amended and Restated Credit, Reimbursement and Security
Agreement (the "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 January 9, 1997 to (i)
amend 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, any Vice
President or the Chief Financial Officer be, and they each hereby are,
authorized to execute any and all documents to effect the same,
including but not limited to a First Amendment to Credit Agreement and
Non-Revolving Credit Notes, which documents shall contain such terms,
conditions, releases and other agreements as any one of such officers
in his or her sole discretion deems appropriate.
FURTHER RESOLVED, that it is in the Corporation's best
interests to guarantee all of the obligations of its wholly-owned
subsidiary, Laser Graphic Systems, Incorporated, to PNC Bank, Ohio,
National Association and Star Bank, National Association, and that the
President or any Vice President be, and they each hereby are,
authorized to execute any and all documents to effect the same,
including but not limited to a Guarantee containing such terms,
conditions and other agreements as any one of such officers in his or
her sole discretion deems appropriate, and that all documents or
agreements heretofore executed and acts or things heretofore done to
effectuate such guarantee are hereby ratified, confirmed and approved
in all respects as the act or acts of the Corporation.
2. The following is a complete and accurate list of the officers of the
Corporation as of February _____, 1997:
President................................... John C. Court
Vice President.............................. John D. Littlehale
Secretary................................... John D. Littlehale
Chief Financial Officer..................... William R. Cochran
/s/ JOHN D. LITTLEHALE
------------------------------
Secretary
<PAGE> 1
EXHIBIT 10.26
SECOND AMENDMENT TO CREDIT 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 April 1, 1997 (the "Effective Date"):
1. RECITALS.
1.1 On January 9, 1997, the Company, the Lenders and the Agent
entered into a Second Amended and Restated Credit, Reimbursement and Security
Agreement (as amended by the First Amendment to Credit Agreement dated February
25, 1997, 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 acquire, construct, install and
equip an economic development facility comprising an eight color Uteco
Rotogravure Printing Press, Program 1010, Model 80 and the costs of renovating,
rebuilding and installing a second eight color press, Press 404, in its printing
facility located in Scottsburg, Indiana and to construct an additional 30,000
square foot facility for manufacturing and warehousing purposes at such
facility.
1.3 In connection with the project described in Section 1.2,
above, the City of Scottsburg, Indiana has issued its Variable Rate Demand
Industrial Development Revenue Bonds, Series 1997 (Multi-Color Corporation
Project), in the principal amount of $3,000,000 (the "1997 Scottsburg Bonds")
under a Trust Indenture dated as of April 1, 1997 (the "1997 Scottsburg
Indenture") between the City of Scottsburg, Indiana, PNC Bank, Indiana, Inc. and
PNC Bank, Ohio, National Association, as Co-Trustee (together, the "Trustee").
1.4 In order to facilitate the issuance and sale of the 1997
Scottsburg Bonds and to enhance the marketability of the 1997 Scottsburg Bonds
and thereby achieve interest costs savings and other savings to the Company, the
Company has requested the Agent to issue an irrevocable letter of credit (the
"1997 Scottsburg Letter of Credit") to the Trustee, for the account of the
Company, authorizing the Trustee to make one or more draws on the Agent up to an
aggregate of $3,049,316 (the "1997 Scottsburg Letter of Credit Amount") as set
forth in the 1997 Scottsburg Letter of Credit.
1.5 The Company has requested that the Lenders amend the
Credit Agreement in connection with the issuance of the 1997 Scottsburg Letter
of Credit and the Lenders are willing to do so subject to and in accordance with
the terms of this Second Amendment to Credit Agreement (the "Amendment").
<PAGE> 2
2. AMENDMENTS. The Credit Agreement is hereby amended as follows:
2.1 The defined terms used in the foregoing Recitals are
deemed incorporated into the Credit Agreement and may be used in the Credit
Agreement with the meanings given such terms in the foregoing Recitals.
2.2 Section 1.1.16 of the Credit Agreement is hereby deleted
in its entirety and replaced with the following:
1.1.16 "Bond Counsel" will mean Taft, Stettinius &
Hollister as to the Boone Bonds and the Scottsburg Bonds and
Peck, Shaffer & Williams, L.L.P. as to the Port Authority
Bonds and the 1997 Scottsburg Bonds.
2.3 Section 1.1.18 of the Credit Agreement is hereby deleted
in its entirety and replaced with the following:
1.1.18 "Bonds" will mean the Boone Bonds, Port
Authority Bonds, Scottsburg Bonds, Refunding Bonds, and 1997
Scottsburg Bonds collectively and individually as the context
requires.
2.4 Section 1.1.42 of the Credit Agreement is hereby
deleted in its entirety and replaced with the following:
1.1.42 "Date of Issuance" will mean the respective
dates the Boone Alternate Letter of Credit, the Port Authority
Alternate Letter of Credit, the Scottsburg Alternate Letter of
Credit, or the 1997 Scottsburg Letter of Credit were issued
and delivered to the Trustee, as the context requires.
2.5 Section 1.1.74 of the Credit Agreement is hereby deleted
in its entirety and replaced with the following:
1.1.74 "Indenture" will mean the Boone Indenture, the
Scottsburg Indenture, the 1997 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.
-2-
<PAGE> 3
2.6 Section 1.1.82 of the Credit Agreement is hereby deleted
in its entirety and replaced with the following:
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, the Boone Alternate
Letter of Credit, and the 1997 Scottsburg Letter of Credit
individually and collectively as the context requires.
2.7 Section 1. 1.83 of the Credit Agreement is hereby deleted
in its entirety and replaced with the following:
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, the
Port Authority Alternate Letter of Credit Amount, and the 1997
Scottsburg Letter of Credit Amount, as applicable.
2.8 Section 1.1.115 of the Credit Agreement is hereby deleted
in its entirety and replaced with the following:
1.1.115 "Remarketing Agent" will mean (i) with
respect to the Port Authority Bonds, Citicorp Investment Bank;
(ii) with respect to the Boone Bonds and the Scottsburg Bonds,
The Ohio Company; and (iii) with respect to the 1997
Scottsburg Bonds, PNC Capital Markets, Inc.
2.9 The following Section 2.10.4 is hereby added to the Credit
Agreement:
2.10.4 ISSUANCE OF 1997 SCOTTSBURG LETTER OF CREDIT.
The Company has requested the Agent, as agent and for the
account of the Lenders, to issue the 1997 Scottsburg 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, the 1997
Scottsburg Letter of Credit in the 1997 Scottsburg Letter of
Credit Amount and substantially in the form attached hereto as
Exhibit V. The Interest Portion of the 1997 Scottsburg Letter
of Credit Amount has been established on the basis of sixty
(60) days' interest on the 1997 Scottsburg Bonds, at an
assumed maximum interest rate of 10% per annum. The 1997
Scottsburg Letter of Credit shall expire at 5:00 p.m. on July
31, 1998, subject to renewal as provided therein. The 1997
Scottsburg Letter of Credit is subject to prior automatic
termination as provided therein. The payment of all
-3-
<PAGE> 4
drawings honored under the 1997 Scottsburg Letter of Credit
will be made with the Agent's own funds. Draws under the 1997
Scottsburg Letter of Credit are not available to pay any
amounts due under any other Letter of Credit.
2.10 Section 2.10.6.2 of the Credit Agreement is hereby
deleted in its entirety and replaced with the following:
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, or Exhibit V if the 1997 Scottsburg 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, the Scottsburg Alternate Letter of Credit,
or the 1997 Scottsburg Letter of Credit, as the case may be.
2.11 Section 4 of the Credit Agreement is hereby deleted in
its entirety and replaced with the following:
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 $125,000 into
each Sinking Fund Account until the Termination Date.
Commencing with the Fiscal Quarter ending June 30, 1998, the
amount to be deposited into each Sinking Fund Account will
increase to $165,000 and the Company will deposit such amount
into each Sinking Fund Account on such date and on the first
Business Day of each Fiscal Quarter thereafter until the
Termination Date. 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 in to 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
-4-
<PAGE> 5
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. Upon the Agent's request, the Company shall use
the funds in the Sinking Fund Accounts to redeem Bonds
pursuant to the optional redemption provisions thereof.
2.12 The following Section 7.4 is hereby added to the Credit
Agreement:
7.4 SCOTTSBURG FACILITY LIMITATION ON DISBURSEMENTS.
Notwithstanding anything to the contrary contained in the
Trust Indenture or Loan Agreement relating to the 1997
Scottsburg Bonds, or in any other document or instrument
relating to such Bonds, disbursements from the Construction
Fund (as such term is defined in the Trust Indenture relating
to the 1997 Scottsburg Bonds) will be limited to the cost of
(i) up to $150,000 of the Issuance Costs (as such term is
defined in the Trust Indenture relating to the 1997 Scottsburg
Bonds), (ii) an eight color Uteco Rotogravure Printing Press,
Program 1010, Model 80 and the costs of renovating, rebuilding
and installing a second eight color press, Press 404, in the
Company's printing facility located in Scottsburg, Indiana,
and (iii) all work, materials and labor incorporated into the
Company's Scottsburg, Indiana facility in connection with
constructing an additional 30,000 square foot facility for
manufacturing and warehousing purposes at such location (the
"Project") and materials stored on the real property where the
Project is located (collectively, "Hard Costs"), which Hard
Costs will be reasonably determined by the Agent. In its
discretion upon prior consultation with the Lenders, the Agent
may disburse funds for costs relating to the Project other
than Hard Costs. All costs for which disbursement is made will
be costs shown for such item in the approved budget for the
Project (the "Budget"), up to the amount shown in the Budget,
as verified by the Agent. No disbursements will be made for
fees, profit and overhead of the Company or any contractor.
The Agent will have no obligation to disburse amounts shown in
the Budget as a "contingency" except as the Agent may approve
from time to time; regardless of the percentage of completion
of the Project. No disbursements will be made if an Event of
Default has occurred.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF COMPANY. To
induce the Lenders and the Agent to enter into this Amendment, the Company
represents and warrants as follows:
3.1 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
-5-
<PAGE> 6
this Amendment and are true and correct as of the date of the execution of this
Amendment.
3.2 No Default or Event of Default (as such term is defined in
Section 11 of the Credit Agreement) exists on the date hereof.
3.3 The person executing this 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 Amendment on behalf of the Company.
3.4 If the Company elects to construct the proposed additional
30,000 square foot manufacturing and warehousing facility at its Scottsburg,
Indiana location, the Company will furnish to the Agent an endorsement to the
mortgagee's title insurance policy increasing the amount of such insurance
coverage to an amount reasonably acceptable to the Lenders and insuring that the
lien of the Open-End Mortgage, Assignment of Rents and Leases and Security
Agreement referred to in Section 5.7 of the Credit Agreement (Scott County,
Indiana property) is a first and best lien on the real estate described therein,
subject only to exceptions acceptable to the Lenders, and insuring that there
has been no material adverse change in the state of title to such real estate.
3.5 If the Company elects to construct the proposed additional
30,000 square foot manufacturing and warehousing facility at its Scottsburg,
Indiana location, the Company will furnish to the Agent evidence of the
Company's maintenance of fire and casualty and builder's risk insurance coverage
on the improvements to be constructed on the Scott County, Indiana property for
the full replacement value thereof with companies reasonably satisfactory to the
Agent, and all policies will name the Agent, for the benefit of the Lenders, as
lenders loss payee, additional insured, and mortgagee under the standard
mortgage endorsement.
4. CONDITIONS. The Lenders' and the Agent's obligations pursuant to
this Amendment are subject to the following conditions:
4.1 The Agent will 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 Amendment and all
other documents executed in connection herewith.
4.2 The representations and warranties of the Company in
Section 3, above, shall be true.
4.3 The Company will pay all expenses and attorneys fees
incurred by the Lenders in connection with the preparation, execution and
delivery of this Amendment and related documents.
5. GENERAL.
5.1 Except as expressly modified herein, the Credit Agreement
is and remains in full force and effect.
5.2 Nothing contained herein will be construed as waiving any
default or Event
-6-
<PAGE> 7
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 or any agreement or instrument guaranteeing, securing or otherwise
relating to the Credit Agreement.
5.3 This Amendment will be binding upon and inure to the
benefit of the Company, the Lenders and the Agent and their respective
successors and assigns.
5.4 All representations, warranties and covenants made by the
Company herein will survive the execution and delivery of this Amendment.
5.5 This Amendment will in all respects be governed and
construed in accordance with the laws of the State of Ohio.
5.6 This 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: \s\ WILLIAM R. COCHRAN
---------------------------------------
Print Name: WILLIAM R. COCHRAN
------------------------------
Title: VP/CFO
-----------------------------------
PNC BANK, OHIO, NATIONAL ASSOCIATION,
on its own behalf as Lender, and as Agent
By: \s\ WARREN F. WEBER
---------------------------------------
Print Name: WARREN F. WEBER
------------------------------
Title: AVP
-----------------------------------
STAR BANK, NATIONAL ASSOCIATION,
as Lender
By: \s\ ANDREW T. HAWKING
--------------------------------------
Print Name: ANDREW T. HAWKING
------------------------------
Title: SENIOR VICE PRESIDENT
-----------------------------------
-7-
<PAGE> 1
EXHIBIT 10.27
This expresses the agreement of Think Laboratory Co. LTD (Think) and Multi-Color
Corporation (MCC) to form a joint venture to supply rotogravure engravings to
the United States market. Both parties have agreed to the following:
1. The joint venture will be 80% owned by MCC and 20% owned by Think
Laboratory. The venture will have total capital of $3,000,000. Each
party may make a cash contribution 50% of its investment in the form of
cash or may make its investment in the form of equipment. The remaining
50% will be in the form of leases or bank borrowings. Capital will be
invested into the project as necessary to fund the project.
2. The project will proceed in 2 phases. The initial selling effort
will be to develop 1 or 2 customers who can be supplied using MCC's
existing Boomerang Line and a new Laserstream and Coating Machine
capable of handling Shafted Bases. This will demonstrate the projects
feasibility. In addition, MCC will install an upgraded Barco system to
provide the prepress capability to handle the increased volume. Costs
and expenses for sales, production, administration and installation
(working capital) during this period will be the responsibility of MCC
and will be considered a capital contribution by Multi-Color.
3. The next phase of the project will be to expand the building and
install the Batten Boomerang line. Costs and expenses during this phase
of the project will be shared on a prorata basis by the two companies
based on their respective equity contributions.
4. Think agrees to not sell its Laserstream and Boomerang Line to trade
engravers (service houses) or to any U.S. based printers during the
term of this agreement. MCC and Think agree to discuss opportunities
for Think to sell equipment in the United States and MCC agrees
permission to sell equipment in the United States to U.S. printers will
not be unreasonably withheld.
5. Listed as Attachment A. is the capital required by the joint venture
to establish the joint venture.
6. A royalty of 5% will be paid beginning after 12 months or when the
operation becomes profitable whichever comes sooner.
7. The term of this agreement will be for five years. The agreement may
be terminated by either party by providing 90 days notice prior to the
end of the original contract term or any extensions. By mutual
agreement, this agreement may be extended for additional 3 year
periods.
Agreed Agreed
By /s/ JOHN C. COURT By /s/ T. SLEIGETON
-------------------------- -------------------------------
Multi-Color Corporation Think Laboratory Co. LTD.
<PAGE> 2
<TABLE>
<CAPTION>
Capital Requirements
Phase 1. YEN $
<S> <C> <C>
Laserstream 68,000,000 600,000
Coater 1. 9,000,000 80,000
Proof Press 13,000,000 120,000
Grinder 12,000,000 110,000
Prepress 20,000,000 180,000
Working Capital & 25,500,000 250,000
Installation Costs
Phase 2
Building Expansion 55,000,000 500,000
Batten Line 100,000,000 1,000,000
Coater 2 9,000,000 80,000
</TABLE>
<PAGE> 1
EXHIBIT 10.28
================================================================================
LOAN AGREEMENT
DATED AS OF APRIL 1, 1997
by and between
CITY OF SCOTTSBURG, INDIANA
and
MULTI-COLOR CORPORATION
***********************************************************
RELATING TO
$3,000,000
CITY OF SCOTTSBURG, INDIANA
VARIABLE RATE DEMAND
INDUSTRIAL DEVELOPMENT REVENUE BONDS, SERIES 1997
(MULTI-COLOR CORPORATION PROJECT)
***********************************************************
All right, title and interest (excluding certain rights of
indemnification and payment of expenses) of the City of Scottsburg,
Indiana (the "Issuer") in this Loan Agreement have been pledged and
assigned to PNC Bank, Ohio, National Association, as Trustee under a
Trust Indenture dated as of April 1, 1997 between the Issuer and the
Trustee.
================================================================================
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
PAGE
----
Recitals..........................................................................................................1
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
<S> <C> <C>
Section 1.1 Definitions.......................................................................... 2
Section 1.2 Definitions Contained in the Indenture............................................... 7
Section 1.3 General Rules of Construction........................................................ 7
Section 1.4 Representations, Warranties and Covenants of the Company............................. 7
Section 1.5 Tax-Exempt Status of Bonds........................................................... 8
Section 1.6 Representations, Warranties and Covenants of the Issuer.............................. 12
ARTICLE II
FINANCING OF PROJECT
Section 2.1 Issuance of Bonds.................................................................... 16
Section 2.2 Construction Fund.................................................................... 16
Section 2.3 Fixed Rate........................................................................... 17
Section 2.4 Completion of Project; Excess Bond Proceeds.......................................... 17
Section 2.5 Investment of Moneys................................................................. 17
ARTICLE III
LOAN OF PROCEEDS TO COMPANY; NOTE
Section 3.1 Loan of Bond Proceeds................................................................ 18
Section 3.2 Credits to Company................................................................... 18
Section 3.3 Note................................................................................. 18
Section 3.4 Additional Loan Repayments........................................................... 19
Section 3.5 Letter of Credit..................................................................... 20
Section 3.6 Issuer and Company to Cooperate in Redemption of Bonds............................... 20
Section 3.7 No Defense or Set-Off................................................................ 20
Section 3.8 Assignment of Issuer's Rights........................................................ 20
Section 3.9 Acceleration of Payment to Redeem Bonds.............................................. 21
Section 3.10 Security............................................................................. 21
ARTICLE IV
COVENANTS OF COMPANY
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 4.1 Maintenance and Operation of Project................................................. 22
Section 4.2 Maintenance of Existence............................................................. 22
Section 4.3 Payment of Issuer's Fees and Expenses................................................ 22
Section 4.4 Indemnity Against Claims............................................................. 22
Section 4.5 Damage to or Condemnation of Project................................................. 24
Section 4.6 Taxes, Other Governmental Charges and Utility Charges................................ 24
Section 4.7 Insurance............................................................................ 25
Section 4.8 Company's Lease of Project Facilities................................................ 25
Section 4.9 Compliance with Laws................................................................. 26
Section 4.10 Arbitrage Covenant................................................................... 26
Section 4.11 Financing Statements................................................................. 26
Section 4.12 Notice and Certification With Respect to Bankruptcy
Proceedings.......................................................................... 27
Section 4.13 [Reserved]........................................................................... 27
Section 4.14 Granting of Easements................................................................ 27
Section 4.15 Limitation of Liens.................................................................. 28
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
Section 5.1 Events of Default; Acceleration...................................................... 29
Section 5.2 Payment on Default; Suit Therefor.................................................... 30
Section 5.3 Other Remedies....................................................................... 31
Section 5.4 Cumulative Rights.................................................................... 31
Section 5.5 Waiver............................................................................... 31
ARTICLE VI
MISCELLANEOUS
Section 6.1 Limitation of Liability of Issuer.................................................... 32
Section 6.2 Notices.............................................................................. 32
Section 6.3 Severability......................................................................... 33
Section 6.4 Applicable Law....................................................................... 33
Section 6.5 Assignment; Successors and Assigns................................................... 33
Section 6.6 Enforcement of Certain Provisions by the Bank........................................ 33
Section 6.7 Amendments........................................................................... 34
Section 6.8 Term of Agreement.................................................................... 34
Section 6.9 Amounts Remaining in Bond Fund....................................................... 34
Section 6.10 Receipt of Indenture................................................................. 34
Section 6.11 Headings............................................................................. 34
Section 6.12 Counterparts......................................................................... 34
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Signature Page..................................................................................................S-1
Exhibit A - Form of Note
Exhibit B - Project Site
Exhibit C - Project Facilities
Exhibit D - Form of Requisition Certificate
</TABLE>
iii
<PAGE> 5
THIS LOAN AGREEMENT (the "Agreement") dated as of April 1,
1997 is made by and between CITY OF SCOTTSBURG, INDIANA (the "Issuer"), a city
and political subdivision created and existing under the laws of the State of
Indiana, and MULTI-COLOR CORPORATION, an Ohio Corporation (the "Company"),
under the following circumstances summarized in the following recitals (the
capitalized terms not defined in the recitals being used therein as defined in
Article I hereof):
RECITALS
A. Pursuant to the provisions of Section 36-7-12 et seq.,
Indiana Code, as amended, the Issuer has determined to issue, sell and deliver
its Bonds and to loan the proceeds derived from the sale thereof to the Company
to assist in the financing of the Project to be undertaken by the Company.
B. The Company and the Issuer have full right and lawful
authority to enter into this Agreement and to perform and observe the provisions
hereof on their respective parts to be performed and observed.
C. To support the payment of the Bonds so long as the Bonds
bear interest at a Variable Rate (as such term is defined in the Indenture), PNC
Bank, Ohio, National Association, Cincinnati, Ohio, a national banking
association (the "Bank"), has, simultaneously with the execution and delivery of
this Agreement, delivered to the Paying Agent its irrevocable direct-pay letter
of credit dated the Closing Date, for the account of the Company, pursuant to a
Reimbursement, Credit and Security Agreement of even date herewith between the
Bank and the Company.
NOW, THEREFORE, for and in consideration of the promises and
the mutual covenants hereinafter contained, and intending to be legally bound
hereby, the parties hereto covenant and agree as follows:
<PAGE> 6
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.1 Definitions. The terms defined in this Article 1
shall for all purposes of this Agreement have the meanings herein specified,
unless the context clearly otherwise requires:
"Act" means Section 36-7-12 et seq., Indiana Code, as now in
effect and as it may from time to time be amended or supplemented.
"Additional Loan Repayments" means those payments to be paid
by the Company, in addition to the Loan Repayments, pursuant to Section 3.4
hereof.
"Agreement" means this Loan Agreement, as the same may be
amended in accordance with its terms and the terms of the Indenture.
"Arbitrage Rebate Fund" shall have the meaning set forth in
the Indenture.
"Authorized Representative" means the President, Vice
President or Treasurer of the Company, or any other person designated by the
Company.
"Bank" means PNC Bank, Ohio, National Association, Cincinnati,
Ohio as issuer of the Original Letter of Credit and any bank or financial
institution issuing any subsequent Letter of Credit in replacement thereof.
"Bond" or "Bonds" means any of the City of Scottsburg, Indiana
Variable Rate Demand Industrial Development Revenue Bonds, Series 1997
(Multi-Color Corporation Project) issued under the Indenture.
"Bond Counsel" means any counsel named in the list of
"Municipal Bond Attorneys" published in the then current edition of The Bond
Buyer's DIRECTORY OF MUNICIPAL BOND DEALERS or counsel determined by the Trustee
to be qualified to pass upon legal questions related to municipal bonds,
initially, Peck, Shaffer & Williams, P.L.L., Cincinnati, Ohio.
"Bond Documents" means, collectively, the Placement Agreement,
the Indenture, this Agreement, the Note and the Bonds.
"Bond Fund" shall have the meaning set forth in the Indenture.
"Bondholder" means the registered owner of any Bond.
2
<PAGE> 7
"Bond Resolution" means the resolution adopted by the Issuer
on April 7, 1997, authorizing, INTER ALIA, the issuance, sale and delivery of
the Bonds.
"Bond Year" shall have the meaning specified for such term in
the Indenture.
"Business Day" means any day other than (i) a Saturday or
Sunday, or (ii) a day on which banking institutions in Pittsburgh, Pennsylvania,
Cincinnati, Ohio, or any other city in which the Principal Office of any of the
Trustee, the Paying Agent, the Remarketing Advisor or the Bank, is located are
required or authorized by law (including executive order) to close or on which
the Principal Office of any of the Trustee, the Paying Agent, the Remarketing
Advisor or the Bank is closed for reasons not related to financial conditions.
"Closing" means the concurrent initial delivery of the Bonds
against initial payment therefor.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated or in effect thereunder.
"Company" means Multi-Color Corporation, an Ohio corporation
organized and existing under the laws of the State of Ohio and authorized to do
business in the State of Indiana.
"Condemnation Award" means any award or payment (less any
expenses, including attorneys fees, incurred by the Issuer, the Trustee, the
Bank and the Company in connection therewith) which may be made with respect to
the Project as a result of (i) the taking of all or any portion of the Project
by the exercise of the right of eminent domain by any governmental body, or by
any person, firm or corporation acting under a governmental body, or by any
person, firm or corporation acting under governmental authority (or a bona fide
sale in lieu of such taking) or (ii) the alteration of the grade or curb cut of
any street.
"Construction Fund" shall have the meaning set forth in the
Indenture.
"Construction Fund Surplus Account" shall have the meaning set
forth in the Indenture.
"Costs of the Project" means the costs of the Project,
including without limitation the following:
(1) all costs and expenses incurred by or for the account of
the Company in connection with the planning, development and design of the
Project, including the cost of preliminary investigations, surveys, estimates,
environmental assessments, plans and specifications;
3
<PAGE> 8
(2) all costs of acquiring the Project Site, acquiring,
constructing and installing the Project Facilities, including any modifications
or improvements to the Project Site, the cost to the Company of supervising
construction, payments to contractors, workmen, and materialmen and fees for
professional or other specialized services;
(3) all costs of acquiring and installing machinery and
equipment which will constitute part of the Project Facilities;
(4) the cost of contract bonds and insurance of all kinds that
may be necessary or desirable in connection with the construction of the Project
Facilities which are not paid for by any contractor or otherwise provided for;
(5) all expenses incurred in connection with the issuance and
sale of the Bonds, including, without limitation, all legal, accounting,
financial, printing, recording and filing fees and expenses;
(6) all amounts necessary to pay in part or in full temporary
loans and advances made to the Company if the funds provided by such loans or
advances were used by the Company to pay a portion or all of the cost of
constructing or acquiring the Project;
(7) interest on the Bonds during the construction of the
Project (to the extent permitted under the Code); and
(8) all amounts necessary to reimburse the Company for moneys
paid or advanced by the Company for any of the aforesaid costs and expenses.
"Co-Trustee" means PNC Bank, Indiana, Inc., New Albany,
Indiana, and its successors in trust under the Indenture.
"Event of Default" means any of the events described in
Section 5.1 hereof.
"Event of Taxability" means any event, act or omission that
may cause the interest on the Bonds to be includable in the gross income of the
holders thereof (other than a holder who is a "substantial user" within the
meaning of Section 147(a) of the Code or a Related Person thereof).
"Financing Documents" means, collectively, the Bond Documents,
the Reimbursement Agreement and the Remarketing Agreement, and the documents
delivered in connection with any of the foregoing.
"Force Majeure" means any cause, circumstance or event not
reasonably within the control of the Company, including, without limitation, the
following: acts of God; strikes, lockouts or other industrial disturbances; acts
of public enemies; orders or restraints of any kind of the government of the
United States or of the State of Ohio or any of their departments, agencies,
political subdivisions or officials; civil disturbances; riots; epidemics;
4
<PAGE> 9
landslides; lightning; earthquakes; fires; hurricanes; storms; droughts; floods;
washouts; arrests; restraint of government and people; explosions; breakage,
malfunction or accident to facilities, machinery, transmission pipes or canals;
partial or entire failure of utilities; and shortages of labor, materials,
supplies or transportation.
"Indenture" means the Trust Indenture dated of even date
herewith between the Issuer and the Trustee, as amended or supplemented at the
time in question.
"Inducement Resolution" means the resolution adopted by the
Issuer on September 3, 1996, respecting the Bonds and the Project.
"Issuance Costs" means all reasonable costs incurred in
connection with the issuance of the Bonds, including without limitation, all
financial, legal, accounting and appraisal costs; the Issuer's actual
out-of-pocket expenses; the costs of printing and reproduction; the initial fees
of the Trustee (including the first year's annual fee), the Remarketing Advisor
and any Paying Agent; all costs, fees and expenses related to the issuance of
the Original Letter of Credit; the costs of filing or recording any Financing
Documents; and all other reasonable costs incident to the issuance, sale and
delivery of the Bonds.
"Letter of Credit" means the Original Letter of Credit or any
letter of credit substituted therefor or any replacement letter of credit
delivered to the Paying Agent pursuant to Article 6 of the Indenture or any
Fixed Rate Letter of Credit (as defined in the Indenture).
"Loan Repayments" means the loan repayments to be paid by the
Company pursuant to Section 3.1 hereof.
"Note" means the promissory note of the Company dated the
Closing Date and otherwise in substantially the same form as is set forth in
EXHIBIT A hereto.
"Original Letter of Credit" means the Bank's Irrevocable
Letter of Credit No. [LOC NUMBER], dated the Closing Date, issued in favor of
the Paying Agent, for the account of the Company.
"Paying Agent" means the Person appointed as such by the
Issuer and accepting such appointment for the time being pursuant to Article 12
of the Indenture.
"Person" has the meaning set forth in the Indenture.
"Placement Agreement" means the Placement Agreement dated as
of April 7, 1997 among the Issuer, the Company, and PNC Brokerage Corp.,
providing for the initial placement and delivery of the Bonds.
"Principal User" means a "principal user" within the meaning
of Section 144(a) of the Code.
5
<PAGE> 10
"Project" means the Project Site and the Project Facilities.
Any reference to construction and installation of the Project includes all work
necessary to plan and design the
6
<PAGE> 11
Project and all work necessary to prepare the Project Site or any part thereof
for the construction and installation of any part of the Project Facilities,
including any necessary excavation and site preparation work, the design and
construction of such foundation and structures as shall be necessary or
desirable in connection with the Project and the modification of existing parts
of the Project to such extent as shall be necessary to complete the Project.
"Project Facilities" or "Facilities" means the manufacturing
facility on the Project Site and all fixtures, machinery and equipment and other
items of tangible personal property located or installed at the Project Site,
the costs of which, in whole or in part, are paid by the Company, or reimbursed
to the Company as Costs of the Project, from the proceeds of the Bonds,
including all accessions thereto, modifications thereof, and replacements
therefor, as such real estate improvements, fixtures, machinery and equipment
are more specifically described in EXHIBIT C hereto.
"Project Site" means the land described in EXHIBIT B hereto.
"Rebate Amount" shall have the meaning set forth in the
Indenture.
"Rebate Consultant" shall have the meaning set forth in the
Indenture.
"Rebate Year" shall have the meaning set forth in the
Indenture.
"Reimbursement Agreement" means the Second Amended and
Restated Credit, Reimbursement and Security Agreement, originally dated as of
July 15, 1994 and restated as of January 9, 1997, as amended by the First
Amendment effective as of February __, 1997 and the Second Amendment, effective
as of April 1, 1997, between the Company, the Bank and Star Bank, National
Association, as the same may be amended from time to time and filed with the
Paying Agent, and any agreement of the Company with the Bank issuing a
replacement Letter of Credit and which provides that it shall be deemed to be a
Reimbursement Agreement for the purpose of the Indenture.
"Related Person" means a "related person" as defined in
Section 144(a)(3) of the Code.
"Remarketing Advisor" means PNC Capital Markets, Inc. and its
successors in such capacity as provided in Article 13 of the Indenture.
"Remarketing Agreement" means the Remarketing Agreement dated
as of April 1, 1997, between the Company and the Remarketing Advisor or any
agreement executed by the Company and any subsequent Remarketing Advisor
appointed pursuant to the Indenture.
"State" means the State of Indiana.
7
<PAGE> 12
"Trustee" means PNC Bank, Ohio, National Association,
Cincinnati, Ohio, and its successors in trust under the Indenture.
"Trustee's Extraordinary Fees and Expenses" refers to all
reasonable fees, expenses and costs incurred by the Trustee in connection with
the performance of extraordinary services, including, but not limited to, its
fees and attorneys' fees, expenses, and any advances and costs resulting from
(a) a default of the Bonds, (b) any litigation relating to the Bonds or (c) any
change of law which, in the opinion of the Trustee's counsel, is a material
change affecting the Bonds.
Section 1.2 Definitions Contained in the Indenture. Unless the
context clearly indicates a different meaning, other words, terms or phrases
which are not defined in this Agreement, but which are defined in the Indenture,
shall have the meanings respectively given them in the Indenture.
Section 1.3 General Rules of Construction.
A. Whenever in this Agreement the context requires:
(1) references to the singular number shall include
the plural and vice versa; and
(2) words denoting gender shall be construed to
include the masculine, feminine and neuter.
B. The Table of Contents and the titles given to any Article
or Section of this Agreement are for convenience of reference only and are not
intended to modify, amend or limit such Article or Section.
C. "Herein," "hereby," "hereunder," "hereof," hereinafter" and
other equivalent words refer to this Agreement in its entirety and not solely to
the particular portion in which any such word is used.
Section 1.4 Representations, Warranties and Covenants of the
Company. The Company represents, warrants and covenants to the Issuer as
follows:
A. The Company is an Ohio corporation duly organized and
validly existing under the laws of the State of Ohio, authorized to do business
in the State, and has full power and authority to carry on the business in which
it is engaged and to execute, deliver and perform its obligations under the
Financing Documents to which it is a party.
B. The Company has duly authorized the execution and delivery
of the Financing Documents to which it is a party and all actions required to
perform its obligations thereunder, and no approval or other action by any
person is required in connection with the
8
<PAGE> 13
execution, delivery and performance thereof other than that which has been
obtained as of the date of execution hereof.
C. The Financing Documents have been duly executed and
delivered by the Company, constitute the legal, valid and binding obligations of
the Company, and are enforceable in accordance with their respective terms,
except as their enforceability may be subject to the exercise of judicial
discretion in accordance with general equitable principles, and to any
applicable bankruptcy, insolvency, reorganization, moratorium and other laws for
the relief of debtors, to the extent that such laws may be constitutionally
applied.
D. Except as disclosed in writing to the Issuer, the
Remarketing Advisor and any governmental entity required by law to be advised
prior to the Closing, to the best knowledge of the Company, there is no action,
suit, proceeding, inquiry or investigation, at law or in equity, or before or by
any court or public board or body, pending or, to the best knowledge of the
Company, threatened, against the Company:
(1) challenging the validity of, or seeking to enjoin
the performance by the Company of its obligations with respect
to, the Financing Documents; or
(2) against or affecting the Company (nor to the best
knowledge of the Company is there any basis therefor) wherein
an unfavorable decision, ruling or finding would materially
and adversely affect any of the transactions contemplated by
the Financing Documents or might result in any material
adverse change in the business, properties, condition
(financial or otherwise), or operations of the Company.
E. The Company has no present intention of abandoning the
Project or of operating or using the Project in any manner other than as
represented to the Issuer.
F. As of the Closing Date, the information provided by the
Company to the Issuer contained in the documents delivered at the Closing is
true and correct in all material respects, and such information does not and as
of its date did not include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made therein, under the
circumstances in which they were made, not misleading.
Section 1.5 Tax-Exempt Status of Bonds.
It is the intention of the parties hereto that the interest on
the Bonds not be included in gross income for federal income tax purposes, and
to that end the Company hereby represents, warrants and agrees, for the benefit
of the Issuer and the Bondholders, as follows:
A. The Project constitutes and will constitute either land or
property of a character subject to the allowance for depreciation under Section
167 of the Code.
9
<PAGE> 14
B. At least ninety-five percent (95%) of the net proceeds of
the Bonds will be used to pay for, or to reimburse the Company for payment of,
the costs of the acquisition, construction and installation of the Project, and
will not be used, directly or indirectly, to provide working capital to the
Company or any Related Person to the Company. Except as permitted under the
Code, none of such costs will be for or with respect to obligations paid or
incurred prior to the adoption of the Inducement Resolution. All such costs will
be chargeable to the capital account of the Company for federal income tax
purposes or will be so chargeable either with a proper election by the Company
(for example under Section 266 of the Code) or but for a proper election by the
Company to deduct such amounts.
C. Neither the Company nor any other Principal User of the
Project, nor any Related Person to any of them, has taken or permitted to be
taken on its behalf any action which would adversely affect the exclusion of the
interest on the Bonds from gross income for federal income tax purposes. The
Company will not take, or permit to be taken on its behalf or by or on behalf of
any such Principal User or Related Person, any action which would adversely
affect the exclusion from gross income of interest on the Bonds for federal
income tax purposes (including allowing any person to become a Principal User of
the Project). The Company will take and cause each such Principal User to take
such action as may from time to time be required under applicable law or
regulation, whether now in effect or hereafter enacted or promulgated, to
continue the exclusion of the interest on the Bonds from gross income for
federal income tax purposes.
D. The sum of (i) the principal amount of the Bonds and (ii)
the aggregate principal amount of all obligations issued, expenditures made and
obligations incurred during the three-year period ending on the Closing Date
with respect to the Project Facilities and any other facilities within the
incorporated area of the City of Scottsburg, Indiana (including, without
limitation, the leasing of equipment) which constitute "Capital Expenditures"
(within the meaning of Section 144(a)(4) of the Code), other than those
mentioned in Section 144(a)(4)(C) of the Code, by the Company, any other
Principal User of the Project, any Related Person of either, or otherwise with
respect to the Project Facilities, is not in excess of $10,000,000, and such
sum, together with all such Capital Expenditures to be assumed, made or incurred
during the three-year period beginning on the Closing Date, will not exceed
$10,000,000.
E. Except as permitted under the Code, prior to the adoption
of the Inducement Resolution, neither the Company nor any Related Person to the
Company had entered into any binding agreement in connection with the
acquisition, construction or installation of the Project, no on-site work had
been commenced in connection with the acquisition, construction or installation
of the Project, and no off-site fabrication of any portion of the Project had
been commenced. The Company will complete the acquisition, construction or
installation of the Project by April 1, 1999.
F. Except for the Bonds, no bonds, notes or other obligations
of any state, territorial possession or any political subdivision of the United
States of America or any political subdivision of any of the foregoing or of the
District of Columbia have been issued
10
<PAGE> 15
and are now outstanding, the proceeds of which have been or are to be used
primarily with respect to the Facilities.
G. With respect to the Bonds, there are no other obligations
that are in whole or in part either an obligation of, or guaranteed or otherwise
secured by the credit of, the Company or are in whole or in part secured by the
Trust Estate and that have been, are being, or will be sold (i) at substantially
the same time, (ii) under a common plan of marketing, and (iii) at substantially
the same rate of interest.
H. The Company intends to operate and maintain the project at
all times during the term of this Agreement, so long as Loan Repayments remain
to be paid, and does not know of any reason why the Project will not be so
operated and maintained by the Company in the absence of circumstances not now
anticipated by the Company or beyond its control.
I. In compliance with Section 147(b) of the Code, the average
weighted maturity of the Bonds does not exceed one hundred twenty percent (120%)
of the average reasonably expected economic life of the facilities being
financed by the Bonds.
J. Less than twenty-five percent (25%) of the net proceeds of
the Bonds are to be or will be used (directly or indirectly) for the acquisition
of land (or an interest therein). None of the net proceeds of the Bonds are to
be or will be used to provide depreciable farm property, as defined in Section
144(a)(11)(B) of the Code, with respect to which the Principal User is or will
be the same person or two or more Related Persons.
K. None of the net proceeds of the Bonds are to be or will be
used for the acquisition of any property (or an interest therein) unless the
first use of such property by the Company is pursuant to such acquisition or
unless:
(i) With respect to the portion of the Project
consisting of one or more buildings, rehabilitation
expenditures have been, or will be made, on such building in
an amount equal to fifteen percent (15%) of the cost of
acquiring, constructing and installing such buildings (and
equipment, if located within a building and to be used in a
manner similar to its use prior to the acquisition,
construction and installation in the buildings) financed with
the net proceeds of the Bonds;
(ii) With respect to the portion of the Project
consisting of facilities other than buildings, rehabilitation
expenditures have been or will be made in an amount equal to
one hundred percent (100%) of the cost of acquiring,
constructing and installing such facilities (and equipment)
financed with the Net Proceeds of the Bonds;
(iii) As used herein, rehabilitation expenditures
means any amount properly chargeable to a capital account for
the rehabilitation of the building or
11
<PAGE> 16
facility incurred, including amounts incurred by a successor
to the Company, or by the seller of the property under and
pursuant to a sales contract with the Company, within two
years of the later of the date on which that portion of the
Project financed by the net proceeds of the Bonds was
acquired, constructed or installed or the Closing Date, which
shall include, in the case of an integrated operation
contained in a building before its acquisition, rehabilitating
or replacing existing equipment, but excluding any expenditure
described in Section 48(g)(2)(B) of the Code;
L. None of the proceeds of the Bonds are to be or will be used
to provide any private or commercial golf course, country club, massage parlor,
tennis club, skating facility (including roller skating, skateboard and ice
skating), racquet sports facility (including any handball or racquetball court),
hot tub facility, suntan facility, racetrack, airplane, skybox or other private
luxury box, health club facility, facility primarily used for gambling, or store
the principal business of which is the sale of alcoholic beverages for
consumption off premises.
M. None of the proceeds of the Bonds will be used to provide a
facility the primary purpose of which is retail food and beverage services,
automobile sales or services, or the provision of recreation or entertainment.
N. There are no other "qualified bonds" (within the meaning of
Section 141(e) of the Code) which, together with the Bonds, are to be used with
respect to a single building, an enclosed shopping mall or a strip of offices,
stores or warehouses using substantially common facilities.
O. None of the proceeds of the Bonds will be used directly or
indirectly to provide residential real property for family units.
P. Ninety-five percent (95%) or more of the "net proceeds" (as
such term is defined in Section 150(2)(3) of the Code) of the Bonds are to be
used and will be used to provide a manufacturing facility (within the meaning of
Section 144(a)(12)(C) of the Code). Any office space included within the Project
will be located on the premises of the manufacturing facility and not more than
a de minimis amount of the functions to be performed at such office will not be
directly related to the day-to-day operations at such facility.
Q. The Company is expected to be the only Principal User of
the Project.
R. The Project Site is located at 2281 South U.S. 31,
Scottsburg, Indiana 47170. All of the Project Facilities will be located on the
Project Site.
12
<PAGE> 17
S. The information contained in the Information Return for
Private Activity Bond Issues (IRS Form 8038) filed with respect to the Bonds
(except information with respect to the Issuer, as to which the Company makes no
warranty) is in all respects true, correct and complete.
T. Neither the obligations of the Company under this Agreement
nor the Bonds are or will be "federally guaranteed," as defined in Section
149(b) of the Code.
U. The Company does not have on the date hereof and the
Company shall not permit any other Person to become a Principal User of the
Project prior to the date three (3) years after the Project is placed in service
if it has on the date hereof "outstanding tax-exempt facility-related bonds" (as
defined in Section 144(a)(10) of the Code) allocated to it, including its
allocable portion of the Bonds, in excess of $40,000,000 in the aggregate (such
allocation being pursuant to Section 144(a)(10) of the Code).
V. The total of all Issuance Costs paid, or for which the
Company is reimbursed, from or with the proceeds of the Bonds shall not exceed
two percent (2%) of the proceeds of the Bonds.
W. The Company covenants that, notwithstanding any other
provision of this Agreement, it will not knowingly take, or permit to be taken
on its behalf, any action which would impair the exclusion of interest on the
Bonds from gross income for purposes of federal income taxation, and that the
Company will take such reasonable actions as may be necessary from time to time
to continue such exclusion, including, without limitation, the preparation and
filing of any statements required to be filed by it in order to maintain such
exclusion.
X. The Company agrees to file with the Trustee, and to cause
any other Principal User of the Project to file with the Trustee, within ninety
(90) days of the close of each of the three (3) twelve-month periods next
succeeding the Closing Date, a certificate of an Authorized Representative that
the $10,000,000 limitation described above in Subsection D hereof has not been
exceeded as of the close of such twelve-month period.
Y. Promptly after the Company first becomes aware of any Event
of Taxability (as defined in the Indenture), the Company shall give written
notice thereof to the Issuer and the Trustee.
Section 1.6 Representations, Warranties and Covenants of the
Issuer. The Issuer represents, warrants and covenants for the benefit of the
Company and the Bondholders, as follows:
A. The Issuer is a city and political subdivision created and
organized under the Constitution and laws of the State.
13
<PAGE> 18
B. The Issuer has all requisite power, authority and right,
under the laws and Constitution of the State, including particularly the Act, to
execute and deliver the Bond Documents and all other instruments and documents
to be executed and delivered by the Issuer pursuant thereto, to perform and
observe the provisions thereof and to carry out the transactions contemplated
thereby. All official action on the part of the Issuer which is required for the
execution, delivery, performance and observance by the Issuer of the Bond
Documents has been duly authorized and effectively taken, and such execution,
delivery, acceptance, performance and observance by the Issuer do not contravene
applicable law or any contractual restriction binding on or affecting the
Issuer.
C. No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution and delivery (or acceptance) by the Issuer of,
and performance by the Issuer of its obligations under, the Bond Documents.
D. This Agreement is, and each other Bond Document when
delivered will be, a legal, valid and binding limited obligation of the Issuer
enforceable against the Issuer in accordance with its respective terms.
E. There is no default of the Issuer in the payment of the
principal of or interest on any of its indebtedness for borrowed money or under
any instrument or instruments or agreements under and subject to which any
indebtedness for borrowed money has been incurred which does or could affect the
validity and enforceability of the Bond Documents or the ability of the Issuer
to perform its obligations thereunder, and no event has occurred and is
continuing under the provisions of any such instrument or agreement which
constitutes or, with the lapse of time or the giving of notice, or both, would
constitute such a default.
F. With respect to the Bonds, there are no other obligations
of the Issuer that have been, are being or will be sold (i) at substantially the
same time, (ii) under a common plan of marketing, and (iii) at substantially the
same rate of interest.
G. There is not pending or, to the knowledge of the
undersigned officers of the Issuer, threatened, any action or proceeding before
any court, governmental agency or arbitrator (i) to restrain or enjoin the
issuance or delivery of the Bonds or the collection of any revenues pledged
under the Indenture, (ii) in any way contesting or affecting the authority for
the issuance of the Bonds or the validity of any of the Bond Documents or (iii)
in any way contesting the existence or powers of the Issuer.
H. To the knowledge of the undersigned officers of the Issuer,
except for the Bonds and the Economic Development Revenue Bonds, Series 1989
(Multi-Color Corporation Project) dated November 7, 1989, no bonds, notes or
other obligations of the Issuer have been issued and are now outstanding, the
proceeds of which have been used or are to be used primarily with respect to the
Facilities.
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I. In connection with the authorization, issuance and sale of
the Bonds, the Issuer has complied with all applicable provisions of the
Constitution and laws of the State, including particularly the Act.
J. The Issuer has not assigned or pledged and will not assign
or pledge its interest in this Agreement for any purpose other than to secure
the Bonds under the Indenture. The Bonds constitute the only bonds or other
obligations of the Issuer in any manner payable from the revenues to be derived
from this Agreement, and except for the Bonds no bonds or other obligations have
been or will be issued in connection with this Agreement.
K. The Issuer is not in default under any of the provisions of
the laws of the State which default would affect its existence or its powers
referred to above in Subsection B hereof.
L. Immediately prior to the adoption of the Bond Resolution,
the Scottsburg Economic Development Commission held a public hearing with
respect to the Bonds and the Project at which all interested individuals were
afforded a reasonable opportunity to express their views, either orally or in
writing, on the issuance of the Bonds and the location and nature of the
Project. Notice of such public hearing was published in the Scott County Journal
and Scott County Chronicle, newspapers of general circulation in the City of
Scottsburg, Indiana at least fourteen (14) days in advance of the date of such
hearing.
M. The Issuer has had allocated to the Bonds a portion of the
State's volume cap under Section 146 of the Code equal to the aggregate
principal amount of the Bonds.
N. No elected official, officer or employee of the Issuer, or
any agency acting on its behalf, has any interest whatsoever in the Company or
in the transactions contemplated by this Agreement.
O. The Issuer will not enter into any agreement or instrument
which might in any way prevent or materially impair its ability to perform its
obligations under the Bond Documents.
P. The Issuer will not consent or agree to any modification of
this Agreement or waive compliance with any of the terms thereof, unless any
such modification or waiver shall have been agreed to in writing by the Trustee
and the Bank.
Q. So long as any Bonds shall remain unpaid, the Issuer will,
upon request of the Trustee and provided that the Issuer shall be furnished with
sufficient funds to pay all costs and expenses (including reasonable attorneys'
fees) reasonably incurred by it as such costs and expenses accrue:
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(1) take all action and do all things which it is
authorized by law to take and do in order to perform and observe all
covenants and agreements on its part to be performed and observed under
the Bond Documents; and
(2) execute, acknowledge where appropriate, and
deliver from time to time, promptly at the request of the Trustee, all
such instruments and documents as in the reasonable opinions of the
Trustee and the Counsel to the Issuer (which opinions shall not be
unreasonably withheld or delayed) are necessary or desirable to carry
out the intent and purpose of the Bond Documents or any of them.
R. So long as any Bonds shall remain unpaid, the Issuer will
not, without the written consent of the Trustee:
(1) take any action which, directly or indirectly,
adversely affects its existence or powers under the laws of the State;
(2) take any action which would adversely affect the
exclusion of interest on the Bonds from gross income for purposes of
federal income taxation; or
(3) pledge any interest in this Agreement, or the
amounts to be derived from it, other than as contemplated by the
Indenture.
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ARTICLE II
FINANCING OF PROJECT
Section 2.1 Issuance of Bonds. In order to finance the
Project, the Issuer, upon request of the Company, will issue and sell the Bonds
up to the maximum aggregate principal amount of $3,000,000. The Bonds will be
issued under and secured by the Indenture. The Bonds will be payable solely from
payments made by the Company pursuant to the terms hereof, or from other moneys
available for such purpose under the terms of the Indenture. The net proceeds of
the Bonds shall be applied pursuant to the Indenture and Article 3 hereof.
Section 2.2 Construction Fund. The net proceeds of the Bonds
(exclusive of accrued interest, if any, deposited in the Bond Fund) will be
deposited by the Trustee in the Construction Fund established under the
Indenture for payment of Costs of the Project. Moneys on deposit in the
Construction Fund shall be disbursed by the Trustee to pay for, or reimburse the
Company for its payment of, the Costs of the Project, upon receipt by the
Trustee of the following:
A. A requisition certificate in the form of EXHIBIT D attached
to this Agreement, properly completed and signed by an Authorized Representative
and approved in writing by the Bank, dated not more than thirty (30) days prior
to the date of receipt thereof by the Trustee, requesting the payment or
reimbursement.
B. In the case of payments or reimbursements for Costs of the
Project constituting costs of the Project Facilities, the following items are
required:
(1) A certificate of the Authorized Representative of
the Company stating that the Persons to be paid from the requested
disbursement, or the Persons paid by the Company and for which
reimbursement is sought, have satisfactorily completed the work or the
portion thereof and/or furnished the materials or the portion thereof
for which payment is requested;
(2) A certificate of the Company listing all work
done or materials supplied since the last previous such certificate
delivered by the Company under this Section 2.2 and all mechanics' and
materialmen's lien waivers for such work and/or materials; and
(3) In case of payment or reimbursement for equipment
comprising a portion of the Project Facilities, an itemized listing of
all equipment, including exact nomenclature and serial number, if any,
bought or to be bought with the requested disbursement.
The Company agrees that the sums so requisitioned from the
Construction Fund will be used only for the Costs of the Project, and will not
be used for any other
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purpose. The Company shall have the right to enforce payments from the
Construction Fund upon compliance with the procedures set forth in this Section
2.2; provided that during the continuance of an Event of Default as defined in
the Indenture, the Construction Fund shall be held for the benefit of
Bondholders in accordance with the provisions of the Indenture.
Section 2.3 Fixed Rate. The Company shall not elect to
establish a Fixed Rate for the Bonds, unless it shall have first delivered to
the Trustee the Favorable Opinion required by the Indenture.
Section 2.4 Completion of Project; Excess Bond Proceeds. When
the Company certifies to the Trustee and the Issuer, in the manner provided in
the Indenture, that the Project is complete, any amounts remaining in the
Construction Fund will be transferred to the Construction Fund Surplus Account
in the Construction Fund and applied by the Trustee in accordance with the
Indenture. Such application shall constitute payment of a portion of, and shall
be credited against, the Loan Repayments due from the Company to the Issuer. If
for any reason the amount in the Construction Fund is insufficient to pay all
Costs of the Project, the Company, nonetheless, will complete the Project and
shall pay all such additional costs from its own funds. The Company shall not be
entitled to any reimbursement for any such additional costs from the Issuer, the
Trustee or any Bondholder; nor shall it be entitled to any abatement, diminution
or postponement of the Loan Repayments.
Section 2.5 Investment of Moneys. Any moneys held as a part of
the Bond Fund, the Construction Fund or any other fund shall be invested or
reinvested by the Trustee, pursuant to the request and direction of the Company,
to the extent permitted by law, as set forth in Section 7.2 of the Indenture.
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ARTICLE III
LOAN OF PROCEEDS TO COMPANY; NOTE
Section 3.1 Loan of Bond Proceeds. The Issuer agrees to lend
the proceeds of the Bonds to the Company upon the terms and conditions set forth
herein in order to pay the Costs of the Project. The Company covenants and
agrees, upon the terms and conditions and according to the provisions set forth
herein and in the Note, to borrow the proceeds of the Bonds, to repay such loan,
with interest thereon, by delivering, or causing to be delivered, the Loan
Repayments on a timely basis (as more specifically described in Section 3.3
hereof), and to comply with all of its agreements and covenants herein set
forth.
Section 3.2 Credits to Company.
A. The Company shall be entitled to receive a current credit
against its Loan Repayments to the extent of the following amounts:
(1) The amount of any income arising from the
investment of funds on deposit in the Bond Fund; and
(2) The amount of any draws under the Letter of
Credit.
B. Should any amounts derived from the proceeds of the Bonds
(to the extent not applied for the acquisition and construction of the Project
or the purchase of machinery, equipment, and/or fixtures of like or greater
value), or of any insurance in respect of the Project, or of any Condemnation
Award, under this Agreement, be paid into the Bond Fund, such amounts shall be
used to redeem the Bonds (or reimburse the Bank for draws under the Letter of
Credit, the proceeds of which were used to effect such redemption) at the
earliest date permitted under the Indenture in the inverse order of maturities.
Section 3.3 Note.
A. Concurrently with the sale and delivery by the Issuer of
the Bonds, to evidence the indebtedness hereunder, the Company shall execute and
deliver to the Issuer the Note.
B. Payments by the Company to the Trustee in accordance with
the provisions of the Note shall constitute Loan Repayments as required under
Section 3.1 hereof. The Bonds shall be payable from moneys on deposit in the
Bond Fund, including draws under the Letter of Credit and payments made by the
Company to the Trustee of the principal of, premium, if any, and interest on the
Note, as provided in the Indenture. Upon the redemption of the Bonds at any time
upon the request of the Company, consistent with the terms and conditions of the
Indenture, the Company shall make a Loan Repayment equal to the proposed
principal payment, premium, if any, and interest due on the applicable date of
such redemption of the Bonds. Whenever payment, or provision therefor, has been
made
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in respect of the principal of (whether at maturity, upon redemption, or
otherwise) and interest on all or any portion of the Bonds in accordance with
the Indenture, the Note shall be deemed paid to the extent that such payment or
provision therefor has been made and is considered to be a payment of principal
of, and/or interest on, such Bonds. If such Bonds are thereby deemed paid in
full, the Note shall be canceled and returned to the Company. Subject to the
foregoing or unless the Company is entitled to a credit under this Agreement or
the Indenture, all payments shall be in the full amount required under the Note.
C. The payments required under Subsection B above shall be
paid by the Company directly to the Trustee for the account of the Issuer for
deposit in the General Account.
D. In any event, the payments required by Subsection B above
shall always be sufficient (supplemented, whenever appropriate, by the credits
hereinabove specified) to provide for the then current payment of principal of
and interest on the Bonds.
E. The Issuer agrees that contemporaneously with the Closing,
the Issuer shall establish with the Trustee the Bond Fund, and the Issuer agrees
that the Company shall remit or cause to be remitted the required Loan
Repayments under this Agreement directly to the Trustee by check or wire
transfer payable to the order of the Trustee, for deposit in the General
Account. The Issuer authorizes the payment of such required payments by the
Company to the Trustee for deposit in the General Account.
F. The Company's obligation to pay the Loan Repayments
hereunder shall commence on the Closing Date, with the first Loan Repayment
being due on or before the first Interest Payment Date.
G. No Loan Repayments need be made to the Issuer or to the
Trustee whenever and so long as the amount on deposit in the General Account is
sufficient, under the provisions of the Indenture, to retire the Bonds then
Outstanding.
Section 3.4 Additional Loan Repayments. The Company shall pay
as Additional Loan Repayments (a) all reasonable fees, charges, and expenses
(including attorneys' fees) of the Trustee for services under the Indenture,
including the Trustee's Extraordinary Fees and Expenses, (b) any amount required
to be paid by the Company under Section 4.10 hereof, (c) all taxes, impositions,
and other payments of whatever nature which the Company has agreed to pay or
assume under the provisions of this Agreement or the Note, (d) all reasonable
costs and expenses incident to the payment of the principal of and interest on
the Bonds as the same becomes due and payable, including all costs and expenses,
if any, in connection with the redemption and payment of the Bonds, and (e) all
reasonable expenses (including attorneys' fees) incurred by the Issuer and the
Trustee in connection with the enforcement of any rights under this Agreement,
the Note, or the Indenture.
The Company shall pay such Additional Loan Repayments directly
to the party entitled thereto, and such payment shall not be payable to any fund
or account with the
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Trustee. The Issuer acknowledges that the Company may contest in good faith any
Additional Loan Repayments.
Section 3.5 Letter of Credit. Concurrently with the issuance
by the Issuer of the Bonds, the Company shall cause the Bank to deliver the
Original Letter of Credit to the Trustee. The Company may also from time to time
cause the Letter of Credit to be extended or cause the delivery of another
Letter of Credit in replacement therefor, to the extent permitted by the terms
of the Indenture. It is anticipated that so long as any Letter of Credit is held
by the Paying Agent, all payments of principal of and interest on the Bonds will
be funded from draws on the Letter of Credit and that moneys representing Loan
Repayments will be applied to reimburse the Bank for such draws.
Section 3.6 Issuer and Company to Cooperate in Redemption of
Bonds. Whenever the Bonds are subject to optional redemption pursuant to the
Indenture, the Issuer will, but only upon the written request of the Company,
direct the Trustee to call the same for redemption as provided in the Indenture.
Whenever the Bonds are subject to mandatory redemption pursuant to the
Indenture, the Company will cooperate with the Issuer and the Trustee in
effecting such redemption and will deliver to the Trustee moneys sufficient to
redeem the Bonds in accordance with mandatory redemption provisions relating
thereto as may be set forth in Article 8 of the Indenture.
Section 3.7 No Defense or Set-Off. The obligations of the
Company to make or cause to be made the Loan Repayments and the Additional Loan
Repayments under this Agreement and the Note shall be absolute and
unconditional, without defense or set-off by reason of any default by the Issuer
under this Agreement or under any other agreement between the Company and the
Issuer or for any other reason, including without limitation, any acts or
circumstances that may constitute failure of consideration, destruction of or
damage to the Project, commercial frustration of purpose, or failure of the
Issuer to perform and observe any agreement, whether express or implied, or any
duty, liability or obligation arising out of or connected with this Agreement,
it being the intention of the parties that the Loan Repayments and the
Additional Loan Repayments required of the Company hereunder will be paid in
full when due without any delay or diminution whatsoever. Loan Repayments shall
be received by the Issuer or the Trustee as net sums and the Company agrees to
pay or cause to be paid all charges against or which might diminish such net
sums.
Section 3.8 Assignment of Issuer's Rights. As security for the
payment of the Bonds, the Issuer, herein and in the Indenture, assigns to the
Trustee all of the Issuer's rights under this Agreement (except the rights of
the Issuer to receive payments under Sections 1.6(Q) and 3.4 and 4.3 hereof and
the right of indemnification under Section 4.4 hereof and the right to consent
to amendments of this Agreement). The Company consents to such assignment and
agrees to make the Loan Repayments or cause the Loan Repayments to be made
directly to the Trustee, without defense or set-off by reason of any dispute
between the Company and the Trustee. Whenever the Company is required to obtain
the consent of the Issuer hereunder, the Company shall also obtain the consent
of the Trustee.
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Section 3.9 Acceleration of Payment to Redeem Bonds. Whenever
the Bonds are subject to optional redemption pursuant to the Indenture, the
Issuer will, but only upon request of the Company, direct the Trustee and the
Paying Agent to call the same for redemption as provided in the Indenture.
Whenever the Bonds are subject to mandatory redemption pursuant to the
Indenture, the Company will cooperate with the Issuer, the Trustee and the
Paying Agent in effecting such redemption. In the event of any optional or
mandatory redemption of the Bonds, the Company will pay or cause to be paid on
or before the date of redemption an amount equal to the applicable redemption
price as a prepayment of that portion of the Loan corresponding to the principal
of the Bonds to be redeemed, together with applicable premium (if any) and
interest accrued to the date of redemption.
Section 3.10 Security. In order to secure its obligations
hereunder, the Company agrees that the Issuer shall have a security interest in
all the Company's right, title and interest in and to all funds and investments
thereof now or hereafter held by the Trustee or the Paying Agent under the
Indenture as security for the payment of the Bonds, including without
limitation, any and all payment funds, debt service funds and other funds and
securities and other instruments comprising investments thereof and interest and
other income derived therefrom held as security for the payment of the Bonds.
The terms of this Section 3.10 shall constitute a security agreement within the
meaning of the State Uniform Commercial Code.
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ARTICLE IV
COVENANTS OF COMPANY
Section 4.1 Maintenance and Operation of Project.
A. During the term of this Agreement, the Company will, at its
own cost and expense, keep and maintain, or cause to be kept and maintained, in
good repair and condition (excepting reasonable wear and tear), the Project and
all additions and improvements thereto, and pay, or cause to be paid, any
utility charges and other costs and expenses arising out of its occupancy of the
Project; provided that this covenant shall not prevent the Company from
assigning its interest in the Project pursuant to Section 6.5 hereof.
B. The Company agrees to timely pay for any improvements to
the Project and to comply in all material respects, at its own cost and expense,
with all lawful and enforceable notices received from public authorities from
and after the date hereof which affect the Project and the use and operation
thereof, other than those improvements to the Project, the validity or
application of which is at the time being contested, in whole or in part, in
good faith by appropriate proceedings.
C. The Company will maintain and use the Project Facilities as
a manufacturing facility or, subject to the provisions of Section 4.8 hereof,
lease them to tenants for such use and will not use or permit the use of the
Project Facilities in any manner which would result in a violation of Section
144(a)(8) or Section 147(e) of the Code.
Section 4.2 Maintenance of Existence. So long as this
Agreement is in effect, the Company will maintain its existence as an Ohio
corporation, and its authority to do business in Indiana.
Section 4.3 Payment of Issuer's Fees and Expenses. Except to
the extent payment is provided from the Construction Fund, the Company will pay
the Issuer's fees and all reasonable expenses, including legal and accounting
fees, incurred by the Issuer in connection with the issuance of the Bonds and
the performance by the Issuer of its functions and duties under this Agreement
and the Indenture.
Section 4.4 Indemnity Against Claims. In the exercise of the
powers of the Issuer, the Trustee or the Paying Agent under the Indenture or
hereunder, including (without limiting the foregoing) the application of moneys,
the investment of funds and the letting or other disposition of the Project upon
the occurrence of an Event of Default, neither the Issuer, the Trustee, the
Paying Agent nor their members, directors, officers, employees or agents shall
be accountable to the Company for any action taken or omitted by any of them in
good faith and with the reasonable belief that it is authorized or within the
discretion or rights or powers conferred. The Issuer, the Trustee, the Paying
Agent and their members, directors, officers, employees and agents shall be
protected in acting upon any document reasonably believed by them to be genuine,
and any of them may conclusively rely upon the
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advice of counsel and may (but need not) require further evidence of any fact or
matter before taking any action. No recourse shall be had by the Company for any
claims based hereon or on the Indenture against any member, director, officer,
employee or agent of the Issuer, the Trustee or the Paying Agent alleging
personal liability on the part of such person unless in the case of the Trustee
or the Paying Agent only such claims are based upon the bad faith, fraud or
deceit of such person. The Company will indemnify and hold harmless the Issuer,
the Trustee, the Paying Agent and each member, director, officer, employee and
agent of the Issuer, the Trustee or the Paying Agent against any and all claims,
losses, damages or liabilities, joint and several, to which the Issuer, the
Trustee, the Paying Agent or any member, director, officer, employee or agent of
the Issuer, the Trustee or the Paying Agent may become subject, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
directly or indirectly out of the Project or are based upon any other act or
omission in connection with the Project by the Issuer, the Trustee or the Paying
Agent, unless in the case of the Trustee or the Paying Agent only the losses,
damages or liabilities arise from the gross negligence or willful misconduct of
the person to be indemnified. The Company further releases the Issuer and agrees
that the Issuer shall not be liable for, and indemnifies the Issuer against, all
liabilities, claims, costs and expenses imposed upon or asserted against Issuer
on account of:
(a) any loss or damage to the property or injury to or death
of or loss by any person that may be occasioned by any cause whatsoever
pertaining to the construction, maintenance, operation and use of the Project;
(b) any breach or default on the part of the Company in the
performance of any covenant or agreement of the Company under this Agreement,
the Note or any related document, or arising from any act or failure to act by
the Company, or any of its agents, contractors, servants, employees or
licensees;
(c) the authorization, issuance and sale of the Bond, and the
provision of any information furnished in connection therewith and in connection
with any remarketing thereof, including, without limitation, any information
furnished by the Company for inclusion in any certifications made by the Issuer;
and
(d) any such claim or action or proceeding brought with
respect to the matters set forth in (a), (b) and (c) above.
In the event any claim is made or action brought against the
Issuer, the Trustee, the Paying Agent or any member, director, officer, employee
or agent of the Issuer, the Trustee or the Paying Agent, except for claims or
actions brought which are claimed to have arisen from the negligence or willful
misconduct of such person, the Issuer, the Trustee or the Paying Agent may
direct the Company to assume the defense of the claim and any action brought
thereon and pay all reasonable expenses (including attorney's fees) incurred
therein; or the Issuer, the Trustee or the Paying Agent may assume the defense
of any such claim or action, the reasonable cost (including attorney's fees) of
which shall be paid by the Company upon written request of the Issuer, the
Trustee or the Paying Agent to the
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Company. The Company may engage its own counsel to participate in the defense of
any such action. The defense of any such claim shall include the taking of all
actions necessary or appropriate thereto.
Section 4.5 Damage to or Condemnation of Project. In the event
of damage, destruction or condemnation of part or all of the Project, the
Company shall, as its sole option, either: (i) restore the Project, or (ii) if
permitted by the terms of the Bonds, direct the Issuer to call the Bonds for
redemption. Damage to, destruction of or condemnation of all or a portion of the
Project shall not terminate this Agreement, or cause any abatement of or
reduction in the payments to be made by the Company or otherwise affect the
respective obligations of the Issuer or the Company, except as set forth in this
Agreement. In the event of damage, destruction or condemnation of the Project or
any part thereof, the net proceeds of any insurance policies required to be
maintained under Section 4.7 hereof or the proceeds of any Condemnation Award
shall be paid to the Trustee, and if no Event of Default hereunder or under the
Indenture has occurred and is continuing, shall be, at the election of the
Company, applied to the repair or restoration of the portion of the Project
which is the subject of such damage or destruction, or which remains after such
condemnation, or, if Extraordinary Optional Redemption of the Bonds is permitted
by the terms of the Bonds, deposited in the General Debt Service Account and
applied pursuant to Section 5.2.B of the Indenture upon the redemption of the
Bonds and credited against the Loan Repayments. If the Issuer or the Company is
the payee, or one of the payees, of any check or other instrument representing
payment of any insurance proceeds or Condemnation Award referred to in this
Section, the Issuer or Company will endorse the same to the order of the Trustee
and deliver the same to the Trustee; and if the Issuer or the Company fails to
do so, the Issuer and the Company hereby irrevocably authorize any officer or
employee of the Trustee to endorse and deliver the same as the Issuer's or
Company's attorney-in-fact.
Section 4.6 Taxes, Other Governmental Charges and Utility
Charges. The Company shall pay, or cause to be paid before the same shall become
delinquent, all taxes, assessments, whether general or special, and governmental
charges of any kind whatsoever that may at any time be lawfully assessed or
levied against or with respect to the Project, including any equipment or
related property installed or brought by the Company therein or thereon and all
utility and other charges incurred in the operation, maintenance, use, occupancy
and upkeep of the Project. With respect to special assessments or other
governmental charges that lawfully may be paid in installments over a period of
years, the Company shall be obligated to pay only such installments as are
required to be paid during the term hereof. The Company may, at its expense, in
good faith contest any such taxes, assessments and other charges and, in the
event of any such contest, may permit the taxes, assessments or other charges so
contested to remain unpaid during the period of such contest and any appeal
therefrom, unless the Issuer or the Trustee shall notify the Company that, in
the opinion of counsel, by nonpayment of any such items the lien of the
Indenture will be materially endangered or the Project, or any part thereof,
will be subject to material loss or forfeiture, in which event such taxes,
assessments or charges shall be paid promptly by the Company. The Company also
agrees to comply at its own cost and expense with all notices received from
public authorities from and after the date hereof. If the Company shall fail to
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pay any of the foregoing items required by this Section to be paid by it, the
Issuer or the Trustee may (but shall be under no obligation to) pay the same and
any amounts so advanced therefor by the Issuer or the Trustee shall become an
additional obligation of the Company to the Issuer or the Trustee, as the case
may be, making the advancement, which amounts, together with interest thereon
from the date thereof at a variable rate equal to the rate of interest announced
by the Trustee from time to time to be the prime rate designated by PNC Bank,
Ohio, National Association, Cincinnati, Ohio plus one percent (1%) per annum,
the Company hereby agrees and covenants to pay; provided however, such rate of
interest shall not exceed the maximum rate permitted under State law. Such
interest shall be considered to be additional indebtedness secured hereby.
Section 4.7 Insurance.
The Company shall maintain, or cause to be maintained, with
respect to the Project policies of insurance with insurers subject to regulation
by the State, of such type and in such amounts as are customary for entities of
like size and engaged in like business, provided that so long as the Bonds shall
be supported by a Letter of Credit the Company shall maintain such policies of
insurance (and in such amounts) as are specified in the Reimbursement Agreement.
Section 4.8 Company's Lease of Project Facilities. The Company
may lease any portion of the Project Facilities, but only subject to the
following conditions:
A. The Company shall have obtained the written consent to such
lease of (i) the Bank; and (ii) the Trustee if an Event of Default has occurred
and is continuing;
B. No such lease shall relieve the Company of its obligation
to make the payments required under Sections 4.3 and 4.4 or to perform all other
covenants hereunder, for which the Company shall remain primarily liable;
C. The Company shall deliver to the Issuer and the Trustee a
copy of such lease within 30 days of the delivery thereof to the Company;
D. If the tenant were to be deemed a "principal user" or "test
period beneficiary" of the Project Facilities for purposes of Section 144(a) of
the Code, the Company shall have obtained and submitted to the Issuer and the
Trustee a favorable Opinion of nationally recognized bond counsel that the
proposed lease will not have an adverse effect on the exclusion of interest on
the Bonds from gross income for federal income tax purposes;
E. Not more than an aggregate of 25% of the Project Facilities
shall be leased to provide facilities the primary purpose of which is the
provision of retail food and beverage service, automobile sales or service,
recreation or entertainment, nor shall such facilities furnish more than 25% of
the rental revenues produced by the Project Facilities; and
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F. Such lease shall contain covenants (i) forbidding any use
of the leased premises which would constitute a violation of Section 144(a)(8)
or Section 147(e) of the Code; and (ii) if and as appropriate in the opinion of
nationally recognized bond counsel, with respect to the $10,000,000 limit of
Section 144(a)(4)(A) of the Code and the $40,000,000 limit of Section 144(a)(10)
of the Code.
Section 4.9 Compliance with Laws. With respect to the Project,
the Company will at all times materially comply with all applicable requirements
of federal, state and local laws and with all applicable lawful requirements of
any agency, board or commission created under the laws of the State or of any
other duly constituted public authority, and will use, and permit the use of,
the Project only for such purposes as are lawful under the Act; provided that
the Company shall be deemed in compliance with this Section so long as it is
contesting in good faith any such requirement by appropriate legal proceedings.
Section 4.10 Arbitrage Covenant.
A. The Company and the Issuer hereby covenant for the benefit
of the Bondholders that the Company and the Issuer will make no use of the
proceeds of the Bonds, or of any other funds which may be deemed to be proceeds
of the Bonds pursuant to Section 148 of the Code, which, if such use had been
reasonably expected on the date of issuance of the Bonds, would have caused the
Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code, and
that they will comply with the requirements of Section 148 of the Code with
respect to the Bonds.
B. The Company shall appoint a Rebate Consultant to determine
the Rebate Amount as of the end of a Rebate Year, as provided in Section 5.8 of
the Indenture, and shall notify the Trustee of such appointment. Following the
determination of the Rebate Amount as of the end of the Rebate Year, the Company
shall deposit into the Arbitrage Rebate Fund the amount, if any, required to be
deposited therein pursuant to Section 5.8 of the Indenture. The requirements of
the preceding sentence shall not apply, however, to the Bonds in the event the
Company obtains and submits to the Trustee an opinion of Bond Counsel that such
compliance is not required under Section 148 of the Code, and the regulations in
effect thereunder, in order for the interest on the Bonds to be and remain
excluded from gross income for federal income tax purposes; provided, however,
that such exemption from compliance with the requirements of this Subsection B
shall apply only to the extent provided in such opinion of Bond Counsel.
Section 4.11 Financing Statements. The Company shall execute
such financing statements, continuation statements and other documents under the
Ohio Uniform Commercial Code or other applicable law as the Issuer or the
Trustee may specify in order to perfect the security interest of the Trustee in
this Agreement, and the Company will pay the cost of filing the same in such
public offices as the Issuer or the Trustee shall designate. From time to time,
as reasonably requested by the Trustee, the Company shall furnish to the Trustee
an opinion of Counsel setting forth what actions, if any, should be taken by the
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<PAGE> 32
Company or the Trustee to preserve such security interest in favor of the
Trustee, and the right, title and interest of the Trustee in and to the Trust
Estate created under the Indenture. The Company shall execute and file or cause
to be executed and filed all further instruments as shall be required by law to
preserve such security interest, and shall furnish satisfactory evidence to the
Bank of the filing and refiling of such instruments.
Section 4.12 Notice and Certification With Respect to
Bankruptcy Proceedings. The Company shall promptly notify the Trustee of the
occurrence of any of the following events and shall keep the Trustee informed of
the status of any petition in bankruptcy filed (or bankruptcy or similar
proceeding otherwise commenced) against the Company: (i) application by the
Company for or consent by the Company to the appointment of a receiver, trustee,
liquidator or custodian or the like for itself or of its property, or (ii)
admission by the Company in writing of its inability to pay its debts generally
as they become due, or (iii) general assignment by the Company for the benefit
of creditors, or (iv) adjudication of the Company as a bankrupt or insolvent, or
(v) commencement by the Company of a voluntary case under the United States
Bankruptcy Code or filing by the Company of a voluntary petition or answer
seeking reorganization of the Company, an arrangement with creditors of the
Company, or an order for relief or seeking to take advantage of any insolvency
law or filing by the Company, or an answer admitting the material allegations of
an insolvency proceeding, or action by the Company, for the purpose of effecting
any of the foregoing, or (vi) if without the application, approval or consent of
the Company a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency, reorganization
or relief of debtors, seeking in respect of the Company an order for relief or
an adjudication in bankruptcy, reorganization, dissolution, winding up,
liquidation, a composition or arrangement with creditors, a readjustment of
debts, the appointment of a trustee, receiver, liquidator or custodian or the
like of the Company or of all or any substantial part of its assets, or other
relief in respect thereof under any bankruptcy or insolvency law.
Section 4.13 [Reserved].
Section 4.14 Granting of Easements. If no Event of Default
under this Agreement has occurred and is continuing, the Company may, with the
prior written consent of the Bank and notwithstanding anything contained in this
Agreement to the contrary, at any time or times, grant easements, licenses,
rights of way and other rights or privileges in the nature of easements with
respect to any property included in the Project Facilities, or release existing
easements, licenses, rights of way and other rights or privileges, all with or
without consideration and upon such terms and conditions as the Company shall
determine. The Issuer agrees that it will execute and deliver or will cause the
execution and delivery of, and will cause and direct the Trustee to execute and
deliver, any instrument necessary or appropriate to confirm and grant or release
any such easement, license, right of way or other right or privilege, upon
receipt by the Issuer and the Trustee of:
A. A copy of the instrument of grant or release;
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<PAGE> 33
B. A written application signed by the Company requesting such
instrument; and
C. A certificate executed by the Company, and such other
persons as the Issuer may reasonably require, stating that such grant or release
is not detrimental to the proper conduct of the business of the Company, and
that such grant or release will not impair the effective use or interfere with
the efficient and economical operation of the Project Facilities.
Section 4.15 Limitation of Liens. The Company shall not create
or suffer to be created by any other person any lien or charge upon the
Construction Fund or the Project Facilities or any part thereof or upon the
rents, contributions, charges, receipts or revenues therefrom, other than liens
thereon in favor of the Issuer, the Trustee or the Bank and, with the prior
approval of the Bank, liens on the Project Facilities; provided that nothing in
this Agreement shall limit the right of the Company to enforce payments from the
Construction Fund pursuant to Section 5.2 of the Indenture. The Company further
agrees to pay or cause to be discharged or make adequate provision to satisfy
and discharge, within ninety (90) days after the same shall become due, any such
lien or charge and also all lawful claims or demands for labor, materials,
supplies or other charges which, if unpaid, might be or become a lien upon the
revenues or income therefrom. Nothing in this Section shall require the Company
to pay or cause to be discharged or make provision for any such lien or charge
so long as the validity thereof shall be contested in good faith and so long as
the Construction Fund and the Project Facilities are not subject to loss or
forfeiture in whole or part. The Issuer shall cooperate with the Company in any
such contest and shall cooperate with the Company with respect to obtaining any
necessary releases of liens or other encumbrances on the Project Facilities.
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<PAGE> 34
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
Section 5.1 Events of Default; Acceleration. Each of the
following events is hereby defined as, and is declared to be and to constitute,
an "Event of Default" hereunder:
A. Failure by the Company to make or cause to be made any Loan
Repayment or Additional Loan Repayment required to be made hereunder and under
the Note on or before the date the same is due; or
B. Failure or refusal by the Company to comply with any of its
other covenants hereunder and such failure or refusal shall continue for a
period of sixty (60) days after written notice thereof has been given to the
Company and the Bank by the Issuer or the Trustee; provided that if such failure
is of such nature that it can be corrected but not within sixty (60) days, it
will not be an Event of Default so long as prompt corrective action is
instituted and is diligently pursued; or
C. The Company shall (i) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or the like of
itself or of its property, or (ii) admit in writing its inability to pay its
debts generally as they become due, or (iii) make a general assignment for the
benefit of creditors, or (iv) be adjudicated a bankrupt or insolvent, or (v)
commence a voluntary case under the United States Bankruptcy Code, or file a
voluntary petition or answer seeking reorganization, an arrangement with
creditors or an order for relief, or seek to take advantage of any insolvency
law or file an answer admitting the material allegations of a petition filed
against it in any bankruptcy, reorganization, or insolvency proceeding, or
action shall be taken by it for the purpose of effecting any of the foregoing,
or (iv) if without the application, approval or consent of the Company, a
proceeding shall be instituted in any court of competent jurisdiction, under any
law relating to bankruptcy, insolvency, reorganization or relief of debtors,
seeking in respect of the Company an order for relief or an adjudication in
bankruptcy, reorganization, dissolution, winding up, liquidation, a composition
or arrangement with creditors, a readjustment of debts, the appointment of a
trustee, receiver, liquidator or custodian or the like of the Company or of all
or any substantial part of its assets, or other like relief in respect thereof
under any bankruptcy or insolvency law, and, if such proceeding is being
contested by the Company in good faith, the same shall (A) result in the entry
of an order for relief or any such adjudication or appointment or (B) remain
unvacated, undismissed and undischarged for a period of sixty (60) days; or
D. For any reason the Bonds are declared due and payable by
acceleration in accordance with Section 10.2 of the Indenture; or
E. Receipt by the Trustee, the Paying Agent and the Company of
a written notice from the Bank (i) stating that an Event of Default (as defined
in the Reimbursement
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<PAGE> 35
Agreement) has occurred and is continuing and (ii) requesting the Trustee to
declare the principal of the Outstanding Bonds immediately due and payable; or
F. If the Trustee and the Paying Agent receive notice from the
Bank prior to 10 calendar days following a drawing under the Letter of Credit
for payment of interest on those Bonds Outstanding after the application of the
proceeds of such drawing, that the Letter of Credit will not be reinstated with
respect to such interest;
Then and in each and every such case the Trustee, by prompt notice in writing to
the Company, shall, in the case of an Event of Default under 5.1.A, 5.1.C or
5.1.E hereof, and may, in all other cases if such Event of Default has not been
cured, declare all sums which the Company is obligated to pay under this
Agreement to be due and payable immediately, and upon such declaration the same
shall become and shall be immediately due and payable, anything in this
Agreement contained to the contrary notwithstanding. In case the Trustee shall
have proceeded to enforce any right under this Agreement and such proceedings
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Trustee, then and in every such case the Company,
the Issuer and the Trustee shall be restored respectively to their several
positions and rights hereunder, and all rights, remedies and powers of the
Company the Issuer and its assignee or the Trustee shall continue as though no
proceeding had been taken.
Section 5.2 Payment on Default; Suit Therefor.
A. The Company covenants that, in case it shall fail to pay or
cause to be paid any Loan Repayment or Additional Loan Repayment payable by or
on behalf of the Company hereunder and under the Note as and when the same shall
become due and payable, whether at maturity, or by acceleration or otherwise,
then, upon demand of the Trustee, the Company will pay to the Trustee the entire
principal of and all interest on the Note that then shall have become due and
payable and all Additional Loan Repayments that then shall become due and
payable; and, in addition thereto, such further amounts as shall be sufficient
to cover the reasonable costs and expenses of collection, including reasonable
counsel fees and a reasonable compensation to the Trustee and the Paying Agent,
their agents and counsel, and any expenses or liabilities incurred by the
Issuer, the Trustee or the Paying Agent. In case the Company shall fail
forthwith to pay such amounts upon such demand, the Trustee shall be entitled
and empowered to institute any actions or proceedings at law or in equity for
the collection of the sums so due and unpaid, and may prosecute any such action
or proceeding to judgment or final decree, and may enforce any such judgment or
final decree against the Company and collect in the manner provided by law out
of the property of the Company the moneys adjudged or decreed to be payable.
B. In case there shall be pending proceedings for the
bankruptcy or for the reorganization of the Company under the federal bankruptcy
laws or any other applicable law, or in case a receiver or trustee shall have
been appointed for the benefit of the creditors or the property of the Company,
the Trustee shall be entitled and empowered by intervention in such proceedings
or otherwise to file and prove a claim or claims for the whole amount of
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<PAGE> 36
the outstanding balance on the Note, including interest owing and unpaid in
respect thereof, and, in case of any judicial proceedings, to file such proofs
of claim and other papers or documents as may be necessary or advisable in order
to have the claims of the Trustee allowed in such judicial proceedings relative
to the Company, its creditors, or its property, and to collect and receive any
moneys or other property payable or deliverable on any such claims, and to
distribute the same after the deduction of its charges and expenses. Any
receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized to make such payments to the Issuer or the Trustee, and to pay to the
Issuer or the Trustee any amount due it for reasonable compensation and
expenses, including counsel fees incurred by it up to the date of such
distribution.
Section 5.3 Other Remedies. Whenever all sums which the
Company is obligated to pay under this Agreement shall have been declared to be
immediately due and payable, the Trustee may take whatever action may be
available at law or in equity as may appear necessary or desirable to collect
the Loan Repayments, the Additional Loan Repayments and any other amounts
payable by the Company hereunder, or to enforce performance and observance of
any obligation, agreement or covenant of the Company under this Agreement or the
Note.
If any statute or rule of law shall validly limit the amount
of damage to be paid under this Section to less than the amount provided in this
Section, the Trustee shall be entitled to the maximum amount allowable under
such statute or rule of law.
Section 5.4 Cumulative Rights. No remedy conferred upon the
Issuer or the Trustee by this Agreement is intended to be exclusive of any other
available remedy, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given under this Agreement or now or
hereafter existing at law or in equity or by statute. No waiver by the Issuer or
the Trustee of any breach by the Company of any of its obligations, agreements
or covenants hereunder shall be a waiver of any subsequent breach, and no delay
or omission to exercise any right or power shall impair any such right or power
or shall be construed to be a waiver thereof, but any such right and power may
be exercised from time to time and as often as may be deemed expedient.
Section 5.5 Waiver. The Company hereby waives and relinquishes
the benefits of any present or future law exempting the Project from attachment,
levy or sale on execution, or any part of the proceeds arising from the sale
thereof, and all benefit of stay of execution or other process.
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ARTICLE VI
MISCELLANEOUS
Section 6.1 Limitation of Liability of Issuer. In the event of
any default by the Issuer hereunder, the liability of the Issuer to the Company
shall be enforceable only out of its interest in the Project and under this
Agreement and there shall be no other recourse for damages by the Company
against the Issuer, its officers, members, agents and employees, or any of the
property now or hereafter owned by it or them. No covenant, obligation or
agreement of the Issuer contained in this Agreement or the Indenture shall be
deemed to be a covenant, obligation or agreement of any present or future
member, officer, agent or employee of the Issuer in other than its official
capacity, and Issuer nor any official executing the Bond or any related
documents shall be liable personally on the Bond or be subject to any personal
liability or accountability by reason of the issuance thereof or by reason of
the covenants, obligations or agreements of the Issuer contained in this
Agreement or in the Indenture, or related documents.
Section 6.2 Notices. Notice hereunder shall be effective upon
receipt and shall be given by personal service or by certified or registered
mail, return receipt requested,
To the Issuer: City of Scottsburg, Indiana
2 East McClain Avenue
Scottsburg, IN 47170
Attention: Clerk-Treasurer
If to the Company: Multi-Color Corporation
205 West Fourth St., Suite 1140
Cincinnati, OH 45202
Attention: Chief Financial Officer
If to the Trustee or
the Paying Agent: PNC Bank, Ohio, National Association
201 East Fifth Street
Cincinnati, Ohio 45202-4117
Attention: Corporate Trust Department
If to the Bank: PNC Bank, Ohio, National Association
201 East Fifth Street
Cincinnati, Ohio 45202-4117
Attention: International Department
Operations Manager
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If to the Remarketing
Advisor: PNC Capital Markets, Inc.
Fifth Avenue and Wood Street,
26th Floor
Pittsburgh, Pennsylvania 15265
Attention: Sales Manager
Either party hereto and the Paying Agent, the Remarketing Advisor and the Bank
may change the address to which notices to it are to be sent by written notice
given to the other Persons listed in this Section. All notices shall, when
mailed as aforesaid, be effective on the date indicated on the return receipt,
and all notices given by other means shall be effective when received.
Section 6.3 Severability. If any provision hereof is found by
a court of competent jurisdiction to be prohibited or unenforceable, it shall be
ineffective only to the extent of such prohibition or unenforceability, and such
prohibition or unenforceability shall not invalidate the balance of such
provision to the extent it is not prohibited or unenforceable nor invalidate the
other provisions hereof, all of which shall be liberally construed in favor of
the Issuer or the Trustee in order to effect the provisions of this Agreement.
Section 6.4 Applicable Law. This Agreement shall be deemed to
be a contract made in the State and governed by the laws of the State.
Section 6.5 Assignment; Successors and Assigns. The Company
shall not assign this Agreement or any interest of the Company herein, either in
whole or in part, without the prior written consent of the Trustee, which
consent shall be given if the following conditions are fulfilled: (i) the
assignee assumes in writing all of the obligations of the Company hereunder;
(ii) neither the validity nor the enforceability of this Agreement shall be
adversely affected by such assignment; (iii) such assignment shall not, in the
opinion of Bond Counsel, have an adverse effect on the exclusion of interest on
the Bonds from gross income for federal income tax purposes; and (iv) if a
Letter of Credit is held by the Paying Agent, the consent of the Bank. For
purposes of this Section 6.5, no assignment shall be deemed to have occurred (a)
upon foreclosure by the Bank, or a conveyance in lieu thereof, or any other
transfer to the Bank or to a nominee of the Bank which is an affiliate of Bank,
or (b) by reason of a change in the composition of the ownership or identity of
the officers of the Company. Subject to the foregoing, this Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and assigns, and the terms "Issuer" and "Company" shall,
where the context requires, include the respective successors and assigns of
such persons. No assignment pursuant to this Section shall release the Company
from its obligations under this Agreement unless the Issuer, the Trustee and, if
a Letter of Credit is held by the Paying Agent, the Bank shall consent thereto.
Section 6.6 Enforcement of Certain Provisions by the Bank. The
Bank is hereby explicitly recognized as a third party beneficiary of this
Agreement, but only so long
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<PAGE> 39
as there shall be a Letter of Credit of such Bank issued and outstanding with
respect to the Bonds.
Section 6.7 Amendments. This Agreement may not be amended
except by an instrument in writing signed by the parties and, if such amendment
occurs after the issuance of any of the Bonds, consented to by the Trustee.
Section 6.8 Term of Agreement. This Agreement and the
respective obligations of the parties hereto shall be in full force and effect
from the date hereof until (i) the principal or redemption price of, premium, if
any, on and all interest on the Bonds shall have been paid, or provision for
such payment shall have been made pursuant to the terms of the Indenture, (ii)
the Indenture shall have been released pursuant to Section 16.1 thereof, (iii)
the Company shall have satisfied all its obligations under the Reimbursement
Agreement, and (iv) the Company and the Issuer shall have satisfied their
respective obligations hereunder.
Section 6.9 Amounts Remaining in Bond Fund. It is agreed by
the parties that any amounts remaining in the Bond Fund after payment in full of
the Bonds (or provision for payment thereof having been made in accordance with
the provisions of the Indenture) and of the fees, charges and expenses of the
Trustee and the Issuer in accordance with the Indenture, shall, upon release of
the Indenture pursuant to Section 16.1 thereof, be paid by the Trustee to the
Bank to the extent of any unreimbursed drawing under the Letter of Credit, or
any other obligations owing by the Company to the Bank under the Reimbursement
Agreement, the balance of such amounts being the property of and paid to the
Company by the Trustee.
Section 6.10 Receipt of Indenture. The Company hereby
acknowledges that it has received an executed copy of the Indenture and is
familiar with its provisions, and agrees that it will take all such actions as
are required or contemplated of it under the Indenture to preserve and protect
the rights of the Trustee and of the Bondholders thereunder and that it will not
take any action which would cause a default thereunder. Any redemption of Bonds
prior to maturity shall be effected as provided in the Indenture.
Section 6.11 Headings. The captions or headings in this
Agreement are for convenience of reference only and shall not control or affect
the meaning or construction of any provision hereof.
Section 6.12 Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be an original; but such counterparts shall together constitute but one and the
same instrument.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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[Signature Page]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first written above.
CITY OF SCOTTSBURG, INDIANA
/s/ William H. Graham
-------------------------------------------
William H. Graham
Mayor of the City of Scottsburg, Indiana
Attest:
/s/ Kelly Neuhauser
- -------------------------------
Kelly Neuhauser
Clerk-Treasurer of the City of
Scottsburg, Indiana
MULTI-COLOR CORPORATION
By: /s/ William R. Cochran
---------------------------------------
William R. Cochran
Vice President/Chief Financial Officer
S-1
<PAGE> 41
EXHIBIT A
PROMISSORY NOTE
$3,000,000 April 7, 1997
For value received, the undersigned, MULTI-COLOR CORPORATION
(the "Company"), an Ohio Corporation, hereby promises to pay to the order of the
CITY OF SCOTTSBURG, INDIANA (the "Issuer"), a city and political subdivision
created and existing under the laws of the State of Indiana (the "State"), the
principal sum of THREE MILLION DOLLARS ($3,000,000), on April 1, 2007 unless
earlier prepaid, plus interest on the unpaid principal balance hereof at the
rates hereinafter described, payable on each Interest Payment Date (as such term
is defined in the Trust Indenture dated as of April 1, 1997, (the "Indenture")
between the Issuer and PNC Bank, Ohio, National Association, Cincinnati, Ohio).
Both principal and interest shall be payable, without deduction for exchange or
collection charges, in lawful money of the United States of America, at the
principal office of PNC Bank, Ohio, National Association, Cincinnati, Ohio, the
trustee and paying agent (the "Trustee").
This Note shall bear interest from the date hereof at the
Variable Weekly Rate or the Fixed Rate as each is defined in the Indenture in
amounts sufficient to pay the interest on the Bonds as it comes due as provided
in the Indenture.
This Note is subject to mandatory and optional prepayment
under the terms of the Loan Agreement dated as of April 1, 1997, (the
"Agreement") between the Issuer and the Company, which is hereby made a part
hereof and incorporated by reference herein. Such mandatory prepayments are to
include payments to be made which correspond to mandatory sinking fund payments
on the Bonds as provided in the Indenture.
Notwithstanding anything to the contrary contained herein,
payments of principal and interest under this Note shall be sufficient to
provide for payment of principal of and interest on the Bonds as and when they
become due.
The obligations of the Company to make or cause to be made
payments under the Agreement and this Note shall be absolute and unconditional
without defense or set-off by reason of any default by the Issuer under the
Agreement or under any other agreement between the Company and the Issuer or for
any other reason, including without limitation, any acts or circumstances that
may constitute failure of consideration, destruction of or damage to the Project
(as defined in the Agreement), commercial frustration of purpose, or failure of
the Issuer to perform and observe any agreement, whether express or implied, or
any duty, liability or obligation, it being the intention of the parties that
the payments required of the Company hereunder will be paid in full when due
without any delay or diminution whatsoever.
A-1
<PAGE> 42
This Note is issued to evidence the indebtedness of the
Company under the Agreement.
In the event of default of the terms herein and/or the terms
of the Agreement, the Company shall be liable to the Issuer and the Trustee for
the Bonds for reasonable attorney fees incurred by the Issuer or the Trustee of
the Bonds, or their successors or assigns, as a result of said default.
IN TESTIMONY WHEREOF, witness the duly authorized signature of
the Company the date first above written, duly authorized by appropriate action
of the Company.
MULTI-COLOR CORPORATION
By: /s/ William R. Cochran
-------------------------------------
William R. Cochran
Vice President/Chief Financial Officer
ENDORSEMENT
Pay to the order of PNC Bank, Ohio, National Association,
Cincinnati, Ohio, as Trustee under the Trust Indenture dated as of April 1,
1997, from the undersigned, without recourse.
CITY OF SCOTTSBURG, INDIANA
/s/ William H. Graham
----------------------------------------
William H. Graham
Mayor of the City of Scottsburg, Indiana
A-2
<PAGE> 43
EXHIBIT B
PROJECT SITE
2281 South U.S. 31
Scottsburg, Indiana 47170
B-1
<PAGE> 44
EXHIBIT C
PROJECT FACILITIES
The Project consists of acquiring, constructing, installing
and equipping an economic development facility comprising an eight color Uteco
Rotogravure Printing Press, Program 1010, Model 80 and the costs of renovating,
rebuilding and installing a second eight color press, Press 404, in their
printing facility comprising approximately 57,000 square feet and to construct
an additional 30,000 square foot facility for manufacturing and warehousing
purposes at their existing Project Site in the City of Scottsburg, Indiana.
C-1
<PAGE> 45
EXHIBIT D
FORM OF REQUISITION CERTIFICATE
[Letterhead of
Multi-Color Corporation]
PNC Bank, Ohio, National Association Date:__________
201 East Fifth Street
Cincinnati, Ohio 45202
Attention: Corporate Trust Department
Requisition Number ___ submitted under Trust
Indenture dated as of April 1, 1997, between the City
of Scottsburg, Indiana (the "Issuer") and PNC Bank,
Ohio, National Association, as Trustee (the
"Indenture") with respect to the Issuer's Variable
Rate Demand Industrial Development Revenue Bonds,
Series 1997 (Multi-Color Corporation)
This requisition is submitted by MULTI-COLOR CORPORATION (the
"Company") to PNC BANK, OHIO, NATIONAL ASSOCIATION (the "Trustee"), pursuant to
Section 5.5 of the Indenture, for payment from the Construction Fund established
under the Indenture to the persons, in the amounts and for the costs set forth
below. Reference is made to the Indenture for definitions of the capitalized
terms used herein. The undersigned hereby certifies:
(a) The payment requisitioned hereby relates to the Costs of
the issuance of the Bonds or work, material, equipment and/or other Costs set
forth in subparagraph (c) below, and such work, material and equipment have been
incorporated into the Project Facilities substantially in accordance with the
plans and specifications therefor.
(b) The payment requisitioned hereby is to be made to the
following person or persons at the address or addresses indicated (any payments
to be made to the Company being for work done by Company personnel or for
reimbursement for payments heretofore made by the Company for the Issuer's
account, other than any payments made by way of mutual set-off between the
Company and the payee, and any payments to be made to the Trustee being for
interest on the Bonds during construction of the Project Facilities):
[List Payees and addresses] $________________
$________________
D-1
<PAGE> 46
(c) The amount of the payment requisitioned hereby, and the
work, material, equipment and/or other Costs of the Project to which it relates,
are as follows:
$----------------
$----------------
(d) The payment requisitioned hereby is due, is a proper
charge against the Construction Fund, and has not been the subject of any
previous withdrawal therefrom or of any other funds representing proceeds of
bonds issued by the Issuer on the Company's behalf.
(e) The payment of the Costs of the Project requisitioned
hereby will not violate the restrictions contained in the Loan Agreement dated
as of April 1, 1997 between the Issuer and the Company.
Accompanying this Requisition is a detailed statement listing
the Costs of the Project to be paid with the payment requisitioned hereby.
IN WITNESS WHEREOF, the Company has caused this Requisition to
be executed as of the date first above written.
MULTI-COLOR CORPORATION
By: /s/ MULTI-COLOR CORPORATION
----------------------------------
Title:____________________________
Date:____________________________
Attachments: Detailed Statement of Costs.
Supporting Invoices.
Approval (with Disclaimer).
D-2
<PAGE> 47
[FORM OF APPROVAL]
In reliance on the representations of the Company set forth
herein, the undersigned authorized representative of PNC Bank, Ohio, National
Association (the "Bank") approves payment of the foregoing Requisition No. ___
pursuant to Section 5.2 of the Indenture referred to therein. This approval
shall not relieve the Company of any of its liabilities under the Agreement or
the Reimbursement Agreement (as such terms are defined in the Indenture) nor
shall the Bank be deemed to make any representation as to the accuracy of the
Company's certifications contained herein or the propriety under the terms of
the Indenture or otherwise of the payments requested by the Company to be made
pursuant hereto.
PNC BANK, OHIO,
NATIONAL ASSOCIATION
By: /S / PNC BANK, OHIO, NATIONAL ASSOCIATION
-------------------------------------------
Authorized Officer
D-3
<PAGE> 1
EXHIBIT 13
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 consolidated 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 1996 Fiscal 1995
Percentage of Net Sales to to
-----------------------------------
1997 1996 1995 Fiscal 1997 Fiscal 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% (13.1%) (10.4%)
Cost of Goods Sold 82.8% 84.6% 95.5% (14.9%) (20.5%)
Gross Profit 17.2% 15.4% 4.5% (2.8%) 203.5%
Selling, General & Administrative Expenses 11.8% 10.4% 10.1% (1.3%) (7.8%)
Restructuring Charge - - (.1%) - (100.0%)
Impairment Loss on Long-Lived Assets - .2% 6.1% (100.0%) (97.1%)
Operating Income 5.4% 4.8% (11.6%) (2.0%) 136.7%
Interest Expense 2.1% 2.6% 2.3% (28.9%) (1.2%)
Other (.1%) .1% .3% (211.0%) (66.3%)
Income (Loss) Before Taxes 3.4% 2.1% (14.2%) 41.0% 113.2%
Credit for income taxes - (.1%) (.4%) (100.0%) (85.0%)
Extraordinary Item- Loss on Extinguishment
of Debt - - .4% - -
Net Income (Loss) 3.4% 2.2% (14.2%) 36.6% 113.7%
</TABLE>
Comparison of Fiscal Years Ended March 30, 1997 and March 31, 1996
<TABLE>
<CAPTION>
1997 1996 Change % Change
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales $48,142,920 $55,374,711 $(7,231,791) (13.1%)
</TABLE>
The 1997 decrease in sales resulted from the combination of the anticipated
decline in conventional label sales and a change in mix in the in-mold label
market resulting in a small revenue decline offset by an increase in cylinder
sales. Conventional label sales declined $6,348,000 to approximately $12,552,000
in 1997. 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 as the existing profitability did not meet
the expected returns established by management. The Company is continuing its
relationship with this customer and was awarded some new business which met the
profitability standards. 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.
Although 1997 unit volume was consistent with 1996, the Company's in-mold
label sales decreased by $1,258,000 to approximately $32,742,000 in 1997. The
decrease resulted from a change in mix in the in-mold market resulting in a
small revenue decline; however, the Company has confidence in the long-term
growth of the in-mold market. To accommodate this expected sales growth, the
Company is doubling its printing capacity and adding both a new short-run,
Italian-made press and a rebuilt press at the Scottsburg facility.
Sales at the Graphics division increased $394,000 due to the division now
providing the majority of the cylinder requirements for the Company's label
customers. The Company is currently marketing its cylinder manufacturing
capabilities externally to increase sales for this division. In anticipation of
increased sales, the Company started a new subsidiary with
6
<PAGE> 2
Think Laboratories, Inc. of Kashiwa, Japan, through a corporation owned 80%
by the Company and entitled Laser Graphic Systems, Incorporated. With this
subsidiary, the cylinder making capacity of the Graphics division will be
doubled.
<TABLE>
<CAPTION>
1997 1996 Change % Change
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross Profit $ 8,266,949 $ 8,507,987 $ (241,038) (2.8%)
As a % of Sales 17.2% 15.4% 1.8% -
</TABLE>
The 1997 gross profit percentage of 17.2% represents the highest gross profit
percentage in the Company's history. The Company's success at improving its
consolidated gross profit percentage with lower sales volumes supports
management's commitment to lower the Company's cost structure. Gross profit was
favorably impacted by consistent levels of in-mold label sales which generate
higher margins than conventional label sales, coupled with improved efficiency
at the Scottsburg and Graphics divisions. Gross profit was also favorably
impacted by the Company continuing its cost-cutting programs in 1997 at the
Cincinnati division to handle the lower levels of conventional label sales.
Additionally, the 1996 gross profit was favorably impacted by a one-time
$300,000 "out of period" supplier claim settlement.
With lower sales volumes in 1997 than in 1996, the 1997 Cincinnati gross
profit performance was down slightly from 1996 gross profit performance. This
resulted from a different mix of product being produced at Cincinnati in 1997
due to the successful transfer of all gravure in-mold label production to the
Scottsburg plant during 1996. The Company has continued its cost containment
programs at the Cincinnati plant to handle expected lower levels of conventional
label sales and is focusing on growing those businesses that generate a positive
contribution to gross profit.
Scottsburg's gross profit increased over 1996 and was favorably impacted by
higher sales volumes. Although an improvement in gross profit was realized,
there was a slight decline in gross profit percentage due to an increase in
employment to handle the production from the installation of the rebuilt and new
Italian rotogravure presses. Additionally, during 1996, the division benefited
from a one-time $300,000 "out of period" supplier claim settlement.
The Graphics division realized an increase of $523,000 in 1997 gross profit
over 1996. This was the result of the division providing the majority of the
cylinder requirements for the Company's label customers. During 1997, the
Company started a new entity with Think Laboratories, Inc. of Kashiwa, Japan,
through a corporation owned 80% by the Company and entitled Laser Graphic
Systems, Incorporated. With this subsidiary, the capacity of the Graphics
division will be doubled and the Company is currently seeking new markets for
its cylinder making capabilities to increase sales for this division.
<TABLE>
<CAPTION>
1997 1996 Change % Change
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Selling, General and
Administrative
Expenses $ 5,688,392 $ 5,764,988 $ (76,596) (1.3%)
As a % of Sales 11.8% 10.4% 1.4% -
</TABLE>
Selling, general, and administrative expense decreased $77,000. This decrease
was attributable to the Company no longer using an outside consulting firm
during fiscal 1996 to assist with its equity financing offset by additional
staffing to handle the Scottsburg plant expansion and the hiring of additional
in-mold label sales personnel during fiscal 1997 to assist with the expected
future growth of in-mold label sales.
<TABLE>
<CAPTION>
1997 1996 Change % Change
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Impairment Loss on
Long-Lived Assets $ - $111,698 $(111,698) (100.0%)
</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, 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. The
conclusion of this assessment in 1997 was that no additional impairment loss was
required.
<TABLE>
<CAPTION>
1997 1996 Change % Change
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Expense $1,011,709 $1,423,022 $(411,313) (28.9%)
</TABLE>
7
<PAGE> 3
Interest expense decreased due to principal payments on the Company's
Industrial Revenue Bonds.
The Company recorded no amounts for income taxes in 1997 as it anticipates
utilizing net operating loss carryforward benefits generated in prior periods.
There is no net deferred tax balance.
The Company recorded a net profit for 1997 of $1,627,000 or an increase of
$436,000 from the net profit of $1,191,000 in 1996, due to the factors discussed
above.
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.
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% 10.9% -
</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% .3% -
</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
8
<PAGE> 4
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 (100.0%)
</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, 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 $(17,533) (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.
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
9
<PAGE> 5
and $2,418,000 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 on February 23, 1996. The restated loan agreement provided for
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
allowed for annual capital expenditures not to exceed $1,500,000.
With the infusion of equity, the Company expanded the Scottsburg division
during 1997 by adding additional capacity. This added capacity supports 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 asset
acquisitions associated with the Scottsburg expansion. This amendment allowed
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.
On July 22, 1996, the February 23, 1996 restated loan agreement was amended
to improve the borrowing base calculation, reduce the annual agency fees, and
improve the reporting requirements of the Borrowing Base Certificate to a
monthly versus weekly requirement. Additionally, the Company started a new
entity with Think Laboratories, Inc. of Kashiwa, Japan, through a corporation
owned 80% by the Company and entitled Laser Graphic Systems, Incorporated,
during the second quarter to develop the market for engraving services in the
United States. Although the banks previously had verbally consented to the
creation of this subsidiary, the loan agreement required written consent.
Therefore, the third amendment and waiver to the February 23, 1996 restated loan
agreement was signed on October 31, 1996, whereby the lenders consented to the
new company. The third amendment also increased the annual lease lines by
$200,000 allowing the Company an annual exposure of $600,000 for rental payments
under all lease agreements on real and personal property in support of the
Company's Scottsburg plant expansion plans.
On January 9, 1997, the Company and its lenders, PNC Bank, Ohio, National
Association, and Star Bank, National Association, entered into a new Credit
Agreement extending its revolving line of credit through July 31, 1998. The new
loan agreement also provides for a $2,000,000 non-revolving credit facility
expiring August 25, 1997. Borrowings under the revolving line of credit are
limited to $4,500,000 and a $500,000 standby letter of credit to purchase raw
materials is included as a sub-limit to the revolving credit facility. The
agreement also allows the Company to make capital expenditures of $3,200,000
during fiscal year 1997, $2,600,000 during fiscal year 1998, and $1,800,000
during fiscal year 1999 in support of its capital expansion program. Unexpended
amounts during one fiscal year can be accumulated and carried over to the next
fiscal year. Additionally, the new agreement allows the Company an annual
exposure of $600,000 for rental payments under all lease agreements on real and
personal property. The new agreement also reduces the fee structure of the
Company's loan portfolio and establishes reduced interest rates if certain
performance targets are accomplished. The Company is in compliance with all
covenants included in the agreements. No borrowing beyond the existing credit
facilities is anticipated.
PNC Bank, Ohio, National Association, and Star Bank, National Association,
also entered into a new loan agreement on January 9, 1997 with Laser Graphic
Systems, Incorporated providing a revolving line of credit of $500,000 until
August 1, 1997, at which time, it will be converted to an evenly amortized term
note due June 30, 2002.
Cash provided by operating activities was $2,600,000 in 1997 compared to cash
provided by operating activities of $3,800,000 in 1996. The decrease was
primarily due to less significant reductions in inventories and accounts
receivables in 1997 than occurred in 1996. The Company's working capital was
$661,000 at the end of 1997 as compared to zero at the end of 1996. The
resulting current ratios were 1.08 to 1 and 1 to 1, respectively. The
improvement in working capital was primarily attributable to the reduction in
accounts payable resulting from the infusion of equity. At March 30, 1997 and
June 1, 1997, the Company was in compliance with its loan covenants and current
in its principal and interest payments on all debt. As of June 16, 1997,
approximately $1,600,000 was available under the revolving line of credit.
INFLATION
The Company does not believe that its operations have been materially
affected by inflation.
10
<PAGE> 6
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Years Ended March 30, 1997, March 31, 1996 and April 2, 1995
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 48,142,920 $ 55,374,711 $ 61,776,951
Cost of goods sold 39,875,971 46,866,724 58,973,910
- -------------------------------------------------------------------------------------------------------------------
Gross profit 8,266,949 8,507,987 2,803,041
Selling, general and administrative expenses 5,688,392 5,764,988 6,255,948
Restructuring charge (income) (Note 13) - - (85,000)
Impairment loss on long-lived assets (Note 2 (f)) - 111,698 3,800,000
- -------------------------------------------------------------------------------------------------------------------
Operating income (loss) 2,578,557 2,631,301 (7,167,907)
Interest expense 1,011,709 1,423,022 1,440,575
Minority interest in losses of subsidiary (Note 11) (13,424) - -
Other (income) expense, net (46,886) 54,311 161,300
- -------------------------------------------------------------------------------------------------------------------
Income (loss) before credit for income taxes 1,627,158 1,153,968 (8,769,782)
Credit for income taxes (Note 5) - (37,000) (246,537)
- -------------------------------------------------------------------------------------------------------------------
Income (loss) before extraordinary item 1,627,158 1,190,968 (8,523,245)
Extraordinary item (Note 3) - - 225,000
- -------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 1,627,158 $ 1,190,968 $ (8,748,245)
Weighted average shares and equivalents outstanding:
Primary 2,211,317 2,177,927 2,168,577
Fully diluted 2,823,533 2,200,595 2,168,577
- -------------------------------------------------------------------------------------------------------------------
Per share information:
Primary earnings (loss) before extraordinary item $ 0.62 $ 0.55 $ (3.93)
Extraordinary item $ - - $ (0.10)
- -------------------------------------------------------------------------------------------------------------------
Primary earnings (loss) per common and common
equivalent share $ 0.62 $ 0.55 $ (4.03)
- -------------------------------------------------------------------------------------------------------------------
Fully diluted earnings per common and common equivalent share $ 0.58 $ 0.54 $ (4.03)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
11
<PAGE> 7
CONSOLIDATED BALANCE SHEETS
As of March 30, 1997 and March 31, 1996
<TABLE>
<CAPTION>
1997 1996
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents (Note 2(d)) $ 80,780 $ 40,449
Accounts receivable, net:
Trade (Notes 3 and 9) 2,865,652 4,437,344
Other 383,515 38,266
Note receivable (Note 8) 118,585 108,415
Inventories (Notes 2(e) and 3) 5,092,074 4,745,535
Deferred tax benefit (Note 5) 240,675 255,744
Prepaid expenses, supplies and other 91,628 22,650
Refundable income taxes 45,818 33,000
- -----------------------------------------------------------------------------------------------------------------------------------
Total current assets 8,918,727 9,681,403
Property, Plant and Equipment, net (Notes 2(f) and 3) 19,083,988 18,107,508
Equipment held for sale, net (Note 2(g)) 144,248 -
Sinking Fund Deposits (Note 3) 74,451 2,236,939
Deferred Charges, net 2,652 55,886
Note Receivable (Note 8) 162,685 272,552
Note Receivable from Officer/Shareholder (Note 8) 100,000 100,000
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $ 28,486,751 $ 30,454,288
===================================================================================================================================
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Short-term debt (Note 3) $ 2,293,794 $ 1,891,554
Current portion of long-term debt (Note 3) 1,003,133 952,910
Current portion of capital lease obligations (Note 10) 114,497 58,028
Accounts payable 3,631,548 5,250,856
Accrued liabilities:
Payroll benefits and related taxes (Note 4(a)) 671,257 843,773
Vacations 115,051 300,115
Real estate and personal property taxes 348,430 309,467
Interest and other 79,932 78,003
- -----------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 8,257,642 9,684,706
Long-Term Debt (Note 3) 9,600,000 14,552,183
Capital Lease Obligations (Note 10) 301,687 320,907
Deferred Income Taxes (Note 5) 240,675 255,744
Deferred Compensation (Note 4(c)) 691,920 603,139
Pension Liability (Note 4(a)) 1,363 117,566
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 19,093,287 25,534,245
- -----------------------------------------------------------------------------------------------------------------------------------
Minority Interest (Note 11) 486,576 -
---------------------------------------------------------------------------------------------------------------------------------
Commitments and Contingencies (Note 12)
Shareholders' Investment (Notes 3, 7 and 14):
Preferred stock, no par value; 1,000,000 shares authorized,
- 13,242 shares issued at March 30, 1997 and March 31, 1996
(aggregate liquidation preference of $529,666) Series B 529,666 529,666
- 52,500 shares issued at March 30, 1997
(aggregate liquidation preference of $2,625,000) Series A 2,418,303 -
Common stock, no par value; 10,000,000 shares authorized, 2,191,419 and
2,172,569 shares issued at March 30, 1997 and March 31, 1996 218,052 217,257
Paid-in capital 9,174,645 9,140,334
Accumulated deficit (3,343,096) (4,709,445)
Excess of additional pension liability over unrecognized prior service cost (Note 4(a)) (45,682) (257,769)
Treasury stock, at cost; 10,900 shares (45,000) -
- -----------------------------------------------------------------------------------------------------------------------------------
Total shareholders' investment 8,906,888 4,920,043
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' investment $ 28,486,751 $ 30,454,288
===================================================================================================================================
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
12
<PAGE> 8
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
For the Years Ended March 30, 1997, March 31, 1996 and April 2, 1995
Preferred Stock Common Stock
---------------- ------------ Retained
Number of Number of Earnings Additional
Shares Shares Paid-In (Accumulated Pension Treasury
Outstanding Amount Outstanding Amount Capital Deficit) Liability Stock Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
April 3, 1994 - $ - 2,151,006 $215,101 $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 - - (8,733) - - - - (87,330) (87,330)
Sale and distribution
of treasury stock - - 8,733 - (37,115) - - 87,330 50,215
Sale of common stock - - 21,563 2,156 164,109 - - - 166,265
Change in additional
pension liability - - - - - - (200,678) - (200,678)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance,
April 2, 1995 - - 2,172,569 217,257 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 13,242 529,666 - - - - - - 529,666
Change in additional
pension liability - - - - - - 201,344 - 201,344
- -----------------------------------------------------------------------------------------------------------------------------------
Balance,
March 31, 1996 13,242 529,666 2,172,569 217,257 9,140,334 (4,709,445) (257,769) - 4,920,043
Add (deduct):
Net income - - - - - 1,627,158 - - 1,627,158
Preferred stock issued 52,500 2,418,303 - - - - - - 2,418,303
Purchase of treasury stock - - - - - - (45,000) (45,000)
Issuance of common stock - - 7,950 795 34,311 - - - 35,106
Preferred dividends paid - - - - - (260,809) - - (260,809)
Change in additional
pension liability - - - - - - 212,087 - 212,087
- -----------------------------------------------------------------------------------------------------------------------------------
Balance,
MARCH 30, 1997 65,742 $2,947,969 2,180,519 $218,052 $9,174,645 $(3,343,096) $ (45,682) $(45,000) $8,906,888
===================================================================================================================================
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
13
<PAGE> 9
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Years Ended March 30, 1997, March 31, 1996 and April 2, 1995
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,627,158 $ 1,190,968 $(8,748,245)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation 1,739,065 1,890,120 2,667,491
Amortization 53,234 86,780 84,484
Minority interest in losses of subsidiary (13,424) - -
Net gain on disposal of equipment (186) (48,667) -
Interest expensed on convertible debt - 29,666 -
Decrease in deferred income taxes, net - - (109,867)
Increase (decrease) in non-current deferred compensation, net 88,781 73,514 (288,258)
Increase (decrease) in non-current pension obligation, net of equity charge 95,884 99,015 (158,195)
(Increase) decrease in notes receivable 99,697 108,683 (30,767)
Net decrease in accounts receivable, inventories,
prepaid expenses, supplies, and other and refundable income taxes 798,108 5,139,845 1,994,948
Net decrease in accounts payable, accrued liabilities (excluding restructuring charge) (1,935,996) (4,918,973) (26,539)
Restructuring charges - - (85,000)
Payment of restructuring liabilities - - (195,450)
Impairment loss on long-lived assets - 111,698 3,800,000
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 2,552,321 3,762,649 (1,095,398)
- -----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (3,051,607) (931,085) (1,527,496)
Proceeds from sale of equipment 352,415 1,117,700 -
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (2,699,192) 186,615 (1,527,496)
- -----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in revolving line of credit, net 402,240 (2,213,347) 3,421,026
Sinking fund withdrawals (payments) 2,162,488 (1,836,939) (400,000)
Treasury stock, net (45,000) - (37,115)
Proceeds from issuance of common stock, net 35,106 - 166,265
Proceeds from issuance of preferred stock, net 2,418,303 - -
Repayment of long-term debt (4,901,960) (295,997) (314,269)
Preferred stock dividend payments (260,809) - -
Proceeds from minority shareholder of subsidiary 500,000 - -
Capitalized bank fees - - (207,150)
Repayment of capital lease obligation (123,166) (79,065) -
Proceeds from issuance of convertible debt - 500,000 -
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 187,202 (3,925,348) 2,628,757
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 40,331 23,916 5,863
Cash and Cash Equivalents, beginning of year 40,449 16,533 10,670
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, end of year $ 80,780 $ 40,449 $ 16,533
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Cash Flow Information:
Interest paid $ 1,079,629 $ 1,389,555 $ 1,344,411
Income taxes paid (refunds received) $ - $ 43,574 $ (550,740)
Supplemental Disclosure of Non Cash Activities:
Restructuring charge (Note 13) $ - $ - $ 59,201
Note receivable from sale of Lockport facility (Note 8) $ - $ - $ 450,000
Increase in property, plant and equipment and capital lease obligation $ 160,415 $ 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.
14
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 30, 1997, March 31, 1996 and April 2, 1995
(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 1997, 1996, and 1995 are for the fiscal years ended March
30, 1997, March 31, 1996 and April 2, 1995, respectively.
(B) PRINCIPLES OF CONSOLIDATION
The consolidated financials statements include the accounts of the Company
and its majority-owned subsidiary (Note 11). All significant intercompany
transactions have been eliminated.
(C) REVENUE RECOGNITION
Sales and related costs of goods sold are recognized upon shipment to the
customers.
(D) CASH AND CASH EQUIVALENTS
Cash and cash equivalents include operating cash accounts and money market
funds.
(E) 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>
1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
Finished goods $2,801,622 $2,383,016
Work-in-process 641,487 909,460
Raw materials 1,648,965 1,453,059
- -------------------------------------------------------------------------------
$5,092,074 $4,745,535
===============================================================================
</TABLE>
(F) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following as of year-end:
<TABLE>
<CAPTION>
1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
Land and buildings $ 4,026,842 $ 3,829,712
Machinery and equipment 25,478,077 26,439,064
Furniture and fixtures 1,006,120 856,568
Construction in progress 2,954,688 255,373
- -------------------------------------------------------------------------------
33,465,727 31,380,717
Accumulated depreciation (14,381,739) (13,273,209)
- -------------------------------------------------------------------------------
$ 19,083,988 $18,107,508
===============================================================================
</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 $246,000 and $677,000 were either sold or disposed of in 1997 and 1996,
respectively. 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>
(G) EQUIPMENT HELD FOR SALE
The Company has made available for sale certain equipment considered by
management to be excess and no longer necessary for the operations of the
Company. Accordingly, this equipment, net of accumulated depreciation of
$296,391 and impairment loss of $79,178, is classified as equipment held for
sale. The aggregate carrying values of such equipment are periodically reviewed
and are stated at the lower of cost or market.
(H) DEFERRED CHARGES
Deferred charges, net, consist primarily of costs associated with the 1995
refinancing of the credit agreement which are amortized over the term of the
agreement (Note 3).
(I) 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.
(J) EARNINGS (LOSS) PER COMMON AND COMMON
EQUIVALENT SHARE
Primary 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. Fully diluted earnings
per common and common equivalent share are computed based on the assumption that
the Series A and Series B convertible preferred stock had been converted to
common stock from the date of issue.
15
<PAGE> 11
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, common equivalent shares are excluded from the 1995
primary and fully diluted earnings (loss) per share calculations as they would
be anti-dilutive.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share". SFAS No.
128 requires the presentation of basic earnings per share and diluted earnings
per share, instead of primary and fully diluted earnings per share. The Company
will implement this statement in the fourth quarter 1998. The effect of adopting
SFAS No. 128 has not been determined.
(K) ADVERTISING COSTS
Advertising costs are charged to expense as incurred. Expenses are minimal
for the three fiscal years ended March 30, 1997.
(L) RESEARCH AND DEVELOPMENT COSTS
Research and development costs are charged to expense as incurred. Expenses
were $246,000, $141,000 and $183,000 for 1997, 1996 and 1995, respectively.
(M) STOCK-BASED COMPENSATION
The provisions of SFAS No. 123 "Accounting for Stock-Based Compensation" are
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 accounts for such awards under the provisions of APB No. 25
and, accordingly, no compensation cost has been recognized for the stock awards.
The Company has made the required additional disclosures under SFAS No. 123 for
1997 and 1996 (Note 7).
(N) 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.
(O) RECLASSIFICATION
Certain 1995 amounts have been reclassified to conform to the 1997 and 1996
presentation.
(3) DEBT
The components of the Company's debt are as follows:
<TABLE>
<CAPTION>
1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM DEBT
Revolving line of credit $ 2,293,794 $ 1,891,554
===================================================================================================================================
LONG-TERM DEBT
Cincinnati Industrial Revenue Bonds, floating weekly rate, which approximates
3.60% at March 30, 1997, scheduled balloon payment of $1,600,000 in November 2000 1,600,000 6,500,000
Scottsburg Industrial Revenue Bonds, floating weekly rate, which approximates 3.45% at
March 30, 1997, 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 3.45% at
March 30, 1997, scheduled balloon payment of $3,250,000 in December 2009 3,250,000 3,250,000
Other 3,133 5,093
- -----------------------------------------------------------------------------------------------------------------------------------
$ 10,603,133 $ 15,505,093
Less-current portion of debt and sinking fund payments (1,003,133) (952,910)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 9,600,000 $ 14,552,183
===================================================================================================================================
</TABLE>
The following is a schedule of future annual principal payments payable after
one year (including sinking fund payments):
<TABLE>
<S> <C>
1999 $ 500,000
2000 -
2001 100,000
2002 and thereafter 9,000,000
------------------------------------
$9,600,000
====================================
</TABLE>
On January 9, 1997, the Company restated its credit agreement with its
existing lenders covering the Company's line of credit and letters of credit
which secure all three Industrial Revenue Bonds (the Bonds). The restatement
extended the previous agreement until July 31, 1998 in support of its expansion
plans and also enables the Company to borrow additional monies under a
non-revolving credit facility. The current credit agreement is secured by
substantially all assets of the Company and requires sinking fund payments of
$250,000 per quarter until the termination of the credit agreement (July 31,
1998) plus
16
<PAGE> 12
other sinking fund payments as defined. Under this credit agreement, the
revolving line of credit provides for borrowings up to the lesser of $4,500,000
or specified percentages of trade receivables and inventories less $500,000
through March 30, 1997; $250,000 from March 31, 1997 to June 29, 1997; and $0
from June 30, 1997 and thereafter so long as no event of default has occurred.
This revolving line of credit expires July 31, 1998 and related interest rates
are based on prime rates or Eurodollar loan rates and the Company's leverage, as
defined. The non-revolving credit facility provides for borrowings up to
$2,000,000 at interest rates similar to the revolving line of credit and expires
August 25, 1997. The non-revolving credit facility is intended to be temporary
until the new industrial revenue bonds relating to the Company's Scottsburg
facility are issued (Note 15). At March 30, 1997, the average interest rate was
9.2% and the Company had approximately $1,180,000 in available borrowings under
the revolving line of credit and $2,000,000 under the non-revolving line of
credit.
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.
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, 1998.
In 1996, the Company had also restated its credit agreement that covered the
Company's short-term debt and letters of credit which secured the Bonds. The
prepayment fees of $225,000 associated with a previous financing agreement were
expensed as an extraordinary item in the 1995 statement of operations. The
restated credit agreement was secured by substantially all assets of the Company
and required sinking fund payments of $200,000 per quarter beginning in October
1994, increased to $250,000 per quarter after June 30, 1996.
During 1997, the Company redeemed $4,900,000 of the Cincinnati Industrial
Revenue Bonds with funds from the Sinking Fund Deposit account.
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>
1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned
during period $ 140,074 $ 183,913 $ 166,698
Interest cost on projected
benefit obligations 158,341 142,207 116,499
Actual (return) loss on
plan assets (375,606) (412,624) 57,395
Net amortization, deferral
and other 194,311 304,846 (153,592)
- -------------------------------------------------------------------------------
Total net periodic
pension costs $ 117,120 $ 218,342 $ 187,000
===============================================================================
</TABLE>
The actuarial assumptions used were:
<TABLE>
<CAPTION>
1997 1996 1995
- -------------------------------------------------------------------------------
<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 30, 1997 March 31, 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation $ 2,403,278 $ 2,186,718
Non-vested benefit obligation 45,785 46,278
- -------------------------------------------------------------------------------
Accumulated benefit obligation 2,449,063 2,232,996
- -------------------------------------------------------------------------------
Projected benefit obligation for
services rendered to date 2,449,063 2,232,996
Plan assets at fair value,
primarily composed of equity
securities 2,447,700 1,967,460
- -------------------------------------------------------------------------------
Projected benefit obligation
in excess of plan assets 1,363 265,536
Prior service cost not yet
recognized in net periodic
pension cost (3,633) (4,839)
Unrecognized net loss from
past experience different from
that assumed and effects of
changes in assumptions (45,682) (257,769)
Adjustment to recognize
minimum liability 49,315 262,608
- -------------------------------------------------------------------------------
Accrued pension cost $ 1,363 $ 265,536
================================================================================
</TABLE>
17
<PAGE> 13
(b) 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 plan 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 1997, 1996 and 1995
approximated $124,000, $101,000 and $93,000, respectively, which represent
one-half of the employee contributions not exceeding 6% of gross pay.
(c) 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 30, 1997 and March 31, 1996. Interest on the deferred amounts which are
included in the balances due were accrued at 10 1/4%, 11%, and 8 1/4% in 1997,
1996 and 1995, respectively. Expenses in 1997, 1996 and 1995 approximated
$88,000, $54,000 and $34,000, respectively.
(d) 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.
(e) 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 30, 1997 and March
31, 1996 a $100,000 loan at no interest was outstanding under this program from
an officer/shareholder (Note 8).
(f) 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 1997, 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>
1997 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENTLY PAYABLE
(receivable)
Federal $ 1,151,000 $ -- $ (255,000)
State and local 107,000 (37,000) 47,000
Benefit of operating loss
carryforwards (1,258,000) -- --
- --------------------------------------------------------------------------------
-- (37,000) (208,000)
- --------------------------------------------------------------------------------
DEFERRED
Federal 7,000 (256,000) 314,000
State and local (7,000) 256,000 (353,000)
$ -- $ (37,000) $ (247,000)
================================================================================
</TABLE>
The following is a reconciliation between the statutory federal income tax
rate and the effective rate shown above:
<TABLE>
<CAPTION>
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
Amount Rate Amount Rate Amount Rate
<S> <C> <C> <C> <C> <C> <C>
Computed provision (credit) for federal income
taxes at the statutory rate $ 553,000 34% $ 392,000 34% $(3,058,226) (34%)
State and local income taxes, net of federal
income tax benefit 100,000 6% 145,000 12% (325,173) (4%)
Valuation allowance (708,000) (43%) (708,000) (61%) 3,156,604 35%
Changes in estimates for deferred components - - 147,000 13% - -
Other 55,000 3% (13,000) (1%) (19,742) -
- ---------------------------------------------------------------------------------------------------------------------------
$ - - $ (37,000) (3%) $ (246,537) (3%)
============================================================================================================================
</TABLE>
18
<PAGE> 14
At year end the net deferred tax components consisted of the following:
<TABLE>
<CAPTION>
1997 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Tax depreciation over book depreciation $(3,890,541) $(4,625,417)
- ----------------------------------------------------------------------------------------------------
Other 3,671 (9,814)
- ----------------------------------------------------------------------------------------------------
$(3,886,870) $(4,635,231)
====================================================================================================
Deferred tax assets:
Asset impairment loss $ 1,016,135 $ 1,099,631
Deferred compensation 235,253 205,067
Vacation 27,217 71,439
Self-insured benefits 3,400 24,771
Inventory reserves 24,135 40,138
Other 208,520 255,531
AMT credit carryforward 70,980 70,980
Tax credit carryforward 142,215 147,215
State deferred tax asset, net of
federal benefit 15,303 8,600
Net operating loss carryforward 3,884,954 5,160,810
- ----------------------------------------------------------------------------------------------------
5,628,112 7,084,182
Valuation allowance (1,741,242) (2,448,951)
- ----------------------------------------------------------------------------------------------------
$ 3,886,870 $ 4,635,231
- ----------------------------------------------------------------------------------------------------
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 $11,426,000 can be carried
forward and used to reduce future taxable income in addition to tax credits of
approximately $142,000, 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 - 48,000
2007 - 37,000
2008 - 9,000
2009 5,610,000 18,000
2010 5,204,000 5,000
2011 612,000 -
- --------------------------------------------------------------
$ 11,426,000 $ 142,000
==============================================================
</TABLE>
The valuation allowance, which decreased by approximately $708,000 in 1997,
is required due to the uncertainty of realizing the net deferred tax asset
through future operations.
(6) MAJOR CUSTOMERS
During 1997, 1996 and 1995, sales to three companies and their
related subsidiaries and divisions approximated 51%, 49%, and 42%,
respectively, of the Company's net sales individually presented as follows:
<TABLE>
<CAPTION>
1997 1996 1995
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
27% 23% 16%
13% 14% 16%
11% 12% 10%
- -----------------------------------------------------------------------------
51% 49% 42%
=============================================================================
</TABLE>
In addition, the year end accounts receivable balances of these companies
approximated 43%, 34%, and 25% of the Company's total trade receivable balance
at year end 1997, 1996, and 1995, respectively.
(7) STOCK OPTIONS
As of March 30, 1997, 569,163 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. Stock options granted under the
plans enable the holder to purchase common stock at an exercise price not less
than the market value on the date of grant. To the extent not exercised, options
will expire not more than ten years after the date of grant. The applicable
options vest immediately or ratably over a three to five year period. A summary
of the changes in the options outstanding during 1997, 1996, and 1995 is set
forth below:
<TABLE>
<CAPTION>
Number of Shares Weighted Average Exercise Price Option Price Range (Per Share)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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 $8.24 $ 4.65-$12.63
Granted 74,000 2.89 2.63- 4.05
Cancelled (82,000) 9.08 5.75- 9.25
Expired (13,813) 6.75 5.75- 12.63
- ------------------------------------------------------------------------------------------------------------------------------------
Outstanding at March 31, 1996 312,800 $6.82 $ 2.63-$11.00
Granted 42,500 6.12 $ 6.00-$ 6.25
Exercised (1,250) 2.63 2.63
Cancelled (5,000) 9.25 9.25
Expired (20,000) 11.00 11.00
- ------------------------------------------------------------------------------------------------------------------------------------
OUTSTANDING AT MARCH 30, 1997 329,050 $6.47 $ 2.63-$11.00
- ------------------------------------------------------------------------------------------------------------------------------------
EXERCISABLE (VESTED) OPTIONS AT MARCH 30, 1997 242,250 $7.18 $ 2.63-$11.00
====================================================================================================================================
</TABLE>
19
<PAGE> 15
<TABLE>
<CAPTION>
The following summarizes options outstanding and exercisable at March 30, 1997:
Options Outstanding Options Exercisable
----------------------------------------------------- ------------------------------------
Weighted Weighted
Number Average Average Number Weighted
Range of Outstanding Remaining Exercise Exercisable at Average
Exercise Prices at 3/30/97 Contractual Life Price 3/30/97 Exercise Price
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$2.63 to $6.25 131,250 6.57 $4.16 54,450 $4.57
$6.26 to $11.00 197,800 1.02 $7.99 187,800 $7.94
------- -------
329,050 3.22 $6.47 242,250 $7.18
======= =======
</TABLE>
The weighted average fair value at date of grant for options granted during
1997 and 1996 was $3.17 and $1.04, respectively. The fair value of options at
the date of grant was estimated using the binomial model with the following
weighted average assumptions:
<TABLE>
<CAPTION>
1997 1996
- ---------------------------------------------------------------------
<S> <C> <C>
Expected life (years) 5.00 3.26
Interest rate 6.04% 5.67%
Volatility 51.71% 40.81%
Dividend yield 0% 0%
</TABLE>
Had compensation cost for the Company's stock option plans been determined
based on the fair value at the grant date for awards in 1997 and 1996 consistent
with the provisions of SFAS No. 123, the Company's net income and earnings per
share would have been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1997 1996
- ----------------------------------------------------------------------
<S> <C> <C>
Net income - as reported 1,627,158 1,190,968
Net income - pro forma 1,547,054 1,159,332
Net income per common and common
equivalent share - as reported
Primary $.62 $.55
Fully diluted $.58 $.54
Net income per common and common
equivalent share - pro forma
Primary $.58 $.53
Fully diluted $.55 $.53
</TABLE>
The initial application of SFAS No. 123 for pro forma disclosure may not be
representative of the future effects of applying the statement.
(8) NOTES RECEIVABLE
The components of notes receivable are summarized as follows:
<TABLE>
<CAPTION>
1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
Officer/shareholder note established under the
supplemental retirement program (Note 4(e)) $ 100,000 $ 100,000
===============================================================================
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 $281,270 $ 380,967
- ------------------------------------------------------------------------------
Less-current portion (118,585) (108,415)
- ------------------------------------------------------------------------------
$ 162,685 $ 272,552
=============================================================================
</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 1997, 1996 and 1995.
<TABLE>
<CAPTION>
1997 1996 1995
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of year $ 35,716 $ 297,391 $ 92,129
Provision 58,654 (185,153) 465,400
Accounts written-off (68,293) (76,522) (260,138)
- ----------------------------------------------------------------------
Balance at end of year $ 26,077 $ 35,716 $297,391
======================================================================
</TABLE>
(10) CAPITAL LEASE OBLIGATIONS
The Company has entered into capital leases for certain equipment. The amount
recorded for the equipment and related obligations under the capital leases
amounted to $618,415 and $458,000 at year end 1997 and 1996, respectively. The
accumulated depreciation is $54,913 and $5,089 at year end 1997 and 1996,
respectively. The following is a schedule of future annual minimum lease
payments under the capital leases together with the present value of the net
minimum lease payments, as of March 30, 1997:
<TABLE>
<CAPTION>
<S> <C>
Total future minimum lease payments $507,206
Less: Interest (91,022)
- -----------------------------------------------------------------------
Present value of minimum lease payments 416,184
Less: Current portion (114,497)
- ------------------------------------------------------------------------
$301,687
========================================================================
</TABLE>
The following is a schedule of future annual minimum lease payments payable
after one year:
1999 $ 99,792
2000 114,063
2001 85,928
2002 1,904
- --------------------------------------------
$301,687
============================================
20
<PAGE> 16
(11) MAJORITY-OWNED SUBSIDIARY
In July 1996, the Company started a new entity with Think Laboratories,
Inc. (Think) of Kashiwa, Japan to develop the market for engraving services in
the United States. The new company, Laser Graphic Systems, Incorporated (LGSI),
is owned 80% by the Company. For financial reporting purposes, LGSI's assets,
liabilities and earnings are consolidated with those of the Company, and Think's
interest in the Company is included in the accompanying financial statements as
minority interest.
The Company and Think are subject to a shareholders' agreement. Under the
terms of the agreement, Think will sell to LGSI any equipment it requires that
is manufactured by Think at a price no greater than 80% of Think's normal
wholesale price. During 1997, LGSI purchased equipment from Think totaling
$422,849. Additionally, a royalty of 5% of cylinders produced by LGSI will be
paid by LGSI to Think beginning July 1, 1997. The two parties will dissolve LGSI
after five years, unless mutually extended for an additional three years. The
parties may agree to dissolve LGSI upon either party providing 90 days written
notice of its desire to do so.
During January 1997, LGSI also entered into a revolving line of credit
agreement with two lenders for a total facility of $500,000. Borrowings under
the agreement bear interest at prime plus .5% and will be converted to a term
note on August 1, 1997 to be evenly amortized over the period ending June 30,
2002. The credit agreement is secured by substantially all of LGSI's assets and
is guaranteed by the Company. There were no borrowings outstanding under the
credit agreement at March 30, 1997.
(12) 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 year end 1997, 1996 and
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 and leases for certain office and
plant facilities. Leases expire on various dates through October 2001. Rent
expense during 1997, 1996 and 1995 was approximately $256,000, $238,000 and
$106,000, respectively.
The annual future minimum rental obligations as of March 30, 1997 are as
follows:
Year
- --------------------------------------------
1998 $289,037
1999 184,667
2000 134,966
2001 58,106
2002 17,079
- --------------------------------------------
Total $683,855
============================================
(B) ENVIRONMENTAL MATTERS
The Company is a party to an agreed administrative order with the Indiana
Department of Environmental Management (IDEM) concerning past violations of
certain air emissions standards at its Scottsburg location. Prior to the
execution of the order, the IDEM and the Company tentatively 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 22% of
the Company's total workforce, are covered under a union contract that expired
July 15, 1996. The Company is currently under negotiations with the union and
believes that it will be successful in renegotiating the contract.
(13) 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.
(14) PREFERRED STOCK
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
21
<PAGE> 17
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.
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 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 fiscal 1996 earnings per share calculation and the
primary earnings per share for fiscal 1996 would have been $.53 per share.
(15) SUBSEQUENT EVENTS
On April 1, 1997, the Company entered into a $3,000,000 industrial
development revenue bond financing (the Series 1997 Bonds) with the City of
Scottsburg, Indiana in support of its Scottsburg, Indiana, plant expansion. The
Series 1997 Bonds will bear interest, and contain the same Bondholder rights, as
described in Note 3. The bonds will be due in a balloon payment on April 1,
2007.
On April 9, 1997, the Company entered into an agreement to sell the land and
building at its Cincinnati location for $744,000, net of commissions. If
consummated, a loss of approximately $31,000 would be realized. The sale is
subject to the results of an environmental investigation and agreement on what
remedies, if any, are necessary. The Company is currently reviewing its
alternatives for the Cincinnati operations in the event the sale of the
facilities is consummated.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
==================================================
To the Shareholders and Directors of
Multi-Color Corporation:
We have audited the accompanying consolidated balance sheets of Multi-Color
Corporation (an Ohio corporation) as of March 30, 1997 and March 31, 1996, and
the related consolidated statements of operations, shareholders' investment, and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. The financial
statements of Multi-Color Corporation as of and for the year ended April 2, 1995
were audited by other auditors whose report dated June 16, 1996, expressed an
unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 fiscal 1997 and 1996 financial statements referred to
above present fairly, in all material respects, the consolidated financial
position of Multi-Color Corporation as of March 30, 1997 and March 31, 1996, and
the consolidated results of their operations and their cash flows for the years
then ended in conformity with generally accepted accounting principles.
/s/ Grant Thornton LLP
Cincinnati, Ohio
May 14, 1997
22
<PAGE> 18
OUR MARKETS
LABELS
Multi-Color labels enhance the marketing appeal of major branded consumer
products. Our labels add value to liquid detergents, beverages, health and
beauty aids, automotive liquids, and other consumer products. We offer
cost-effective, high-quality printing technologies - rotogravure, offset and
letterset - to meet each customer's special requirements. We are the leading
U.S. printer of in-mold labels - labels applied directly to plastic containers
as the container is being molded. Our expertise in adhesives, overprint coatings
and inks produce durable labels with consistently true and brilliant colors that
adhere extremely well to container surfaces and contours.
ROTOGRAVURE SERVICES
Rotogravure labels offer unparalleled graphic quality for branded consumer
products. Multi-Color is structured so that its rotogravure production is fully
competitive with other, traditionally lower-cost printing technologies. Our
state-of-the-art engraving system and rotogravure presses interface with
production processes that combine speed and cost-effectiveness. MCG and LGSI use
Think Laboratories' unique laser-exposing system and Ballard shell technology to
produce low-cost, ready-for-press cylinders in one-third the time of traditional
engraving methods. We have increased capacity at MCG and LGSI as a necessary
step to supply customers other than Multi-Color itself.
NEW MARKETS
Multi-Color's investment in research and development continues to improve the
quality of label substrates and labels to meet the requirements of consumer
product manufacturers and plastics molders. Specifically, a new, clear,
proprietary single-ply substrate holds great promise for offering health and
beauty-aid and beverage manufacturers a very economical "no-label-look" label
that adheres perfectly to a clear plastic container. We are also building new
markets for in-mold label applications beyond blow-molded products.
Specifically, we are developing the enormous potential in-mold labeling has with
injection-molded products. Through relationships with international companies
with expertise in applying in-mold labels in injection molding, we are seeking
to develop the U.S. market.
<PAGE> 19
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 1997 annual meeting of shareholders will be held at 12:00
noon, Eastern time on August 14, 1997, at the Company's offices located at 205
West Fourth Street, Suite 1140, Cincinnati, Ohio. Shareholders of record at the
close of business June 16, 1997, 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 1996 and 1997.
As of June 16, 1997, there were approximately 433 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
John C. Court
Chairman of the Board
Lorrence T. Kellar(1)
(Vice President, Real Estate, Kmart Corporation)
John D. Littlehale
Burton D. Morgan
(President of Basic Search, Inc.)
David H. Pease, Jr.(1)
(Chairman of Pease Industries, Inc.)
Louis M. Perlman(1)(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 of Manufacturing, Secretary
William R. Cochran
Vice President and Chief Financial Officer
John R. Voelker
Vice President, Sales and Marketing
23
<PAGE> 20
SELECTED FINANCIAL DATA
=======================
The selected financial data set forth below are derived from the Company's
audited consolidated 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 30 March 31 April 2 April 3 March 28
- ---------------------------------------------------------------------------------------------------------------------------
1997 1996 1995(3) 1994(4) 1993(5)
- ---------------------------------------------------------------------------------------------------------------------------
(In thousands, except share amounts)
<S> <C> <C> <C> <C> <C>
Net sales $ 48,143 $ 55,375 $ 61,777 $ 65,403 $ 65,868
Gross profit 8,267 8,508 2,803 2,558 9,558
Operating income (loss) 2,579 2,631 (7,168) (5,603) 3,347
Income (loss) before extraordinary item and
cumulative effect of accounting change 1,627 1,191 (8,523) (4,335) 1,230
Extraordinary item - - 225 - -
Income (loss) before accounting change 1,627 1,191 (8,748) (4,335) 1,230
Cumulative effect of accounting change - - - - 180
Net income (loss) 1,627 1,191 (8,748) (4,335) 1,410
Primary earnings (loss) per share(2) 0.62 0.55 (4.03) (2.02) 0.64
Weighted average shares outstanding - primary 2,211 2,178 2,169 2,151 2,195
Preferred dividends per share 261 - - - -
Working capital $ 661 $ (3) $(17,031)(6) $ 2,754 $ 8,168
Total assets 28,487 30,454 35,959 42,121 43,868
Short-term debt 3,411 2,902 19,898 (6) 1,395 902
Long-term debt 9,902 14,873 8 15,404 16,104
Shareholders' investment 8,907 4,920 2,998 11,818 16,572
===========================================================================================================================
</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.
<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 14, 1997 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 27, 1997
<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 No. 33-51772.
ARTHUR ANDERSEN LLP
Cincinnati, Ohio
June 27, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-30-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-30-1997
<CASH> 81,000
<SECURITIES> 0
<RECEIVABLES> 3,368,000
<ALLOWANCES> 0
<INVENTORY> 5,092,000
<CURRENT-ASSETS> 8,919,000
<PP&E> 33,466,000
<DEPRECIATION> 14,382,000
<TOTAL-ASSETS> 28,487,000
<CURRENT-LIABILITIES> 8,258,000
<BONDS> 9,902,000
0
2,948,000
<COMMON> 9,393,000
<OTHER-SE> (3,343,000)
<TOTAL-LIABILITY-AND-EQUITY> 28,487,000
<SALES> 48,143,000
<TOTAL-REVENUES> 48,143,000
<CGS> 39,876,000
<TOTAL-COSTS> 45,564,000
<OTHER-EXPENSES> (60,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,012,000
<INCOME-PRETAX> 1,627,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,627,000
<EPS-PRIMARY> .62
<EPS-DILUTED> .58
</TABLE>
