UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file No. 0-19800
GIBRALTAR PACKAGING GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 47-0496290
(State of incorporation) (IRS Employer Identification No.)
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274 RIVERSIDE AVENUE 06880
WESTPORT, CONNECTICUT (Zip Code)
(Address of principal executive offices)
(203) 227-0400
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of class)
Indicate by check mark whether the registrant (1) has filed reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES |X| NO | |
Indicate by check mark if disclosure of delinquent filers pursuant to
item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K. |X|
The aggregate market value of voting stock held by nonaffiliates of the
registrant on September 24, 1996 was $14,369,169.25 (based upon the September
24, 1996 closing sale price of the common stock as reported by the NASDAQ
National Market System).
The number of shares of common stock of the registrant outstanding as
of September 24, 1996 was 5,041,544 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Items 10, 11, 12 and 13 of Part III are incorporated by reference to
the definitive proxy statement relating to the registrant's Annual Meeting of
Stockholders for fiscal 1996, which definitive proxy statement will be filed
within 120 days of the end of the registrant's fiscal year.
<PAGE>
TABLE OF CONTENTS
PART I
Page
Item 1 Business........................................................1
Item 2. Properties......................................................9
Item 3. Legal Proceedings...............................................9
Item 4. Submission of Matters to a Vote of Security Holders.............9
PART II
Item 5. Market for the Registrant's Common Equity
and Related Stockholder Matter.................................10
Item 6. Selected Financial Data........................................11
Item 7. Management's Discussion and Analysis of
Financial Conditions and Results of Operations.................12
Item 8. Financial Statements and Supplementary Data....................17
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.........................17
PART III
Item 10. Directors and Executive Officers of the Registrant.............18
Item 11. Executive Compensation.........................................18
Item 12. Security Ownership of Certain
Beneficial Owners and Management...............................18
Item 13. Certain Relationships and Related Transactions.................18
PART IV
Item 14. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K.............................19
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
Gibraltar Packaging Group, Inc. ("Gibraltar" or the "Company") designs,
manufactures and markets packaging products for a number of consumer and
industrial markets. The Company is the combination of several previously
independent packaging companies, each with its own distinctive products,
customer base and geographic focus. The acquisitions of Standard Packaging &
Printing Corp. ("Standard"), Niemand Industries, Inc. ("Niemand"), and GB
Labels, Inc. ("GB Labels") in 1993 expanded the Company's products from folding
cartons and specialty laminated containers to include tubular, spiral-wound
paper packaging, flexible poly-film packaging, contract packaging and filling
and pressure-sensitive labels. Although most of the Company's sales are made to
customers located in the central and southern regions of the United States, the
Company sells its products to customers throughout the nation. The Company
derives its sales from a diverse market base, primarily comprised of the
following markets: pharmaceutical, textiles, office supplies and paper products,
cosmetics and personal care, auto aftermarket parts, toys and hardware.
The Company serves approximately 1,200 customers from five divisions:
Great Plains Packaging in Hastings, Nebraska; Flashfold Carton in Fort Wayne,
Indiana; Niemand in Marion, Alabama; Standard in Mount Gilead, North Carolina
and GB Labels in Burlington, North Carolina. The Company believes that its five
divisions enhance its competitive position by providing it with multiple
products and broader geographic coverage, enabling the Company to serve
customers that operate from several locations.
The Company's business strategy is to grow internally through increased
sales and profitability of its existing packaging products.
Gibraltar's predecessor was incorporated under the name GPC Co. in
Nebraska in 1967 and subsequently changed its name to Great Plains Packaging Co.
in 1986. In 1991 Great Plains Packaging Co. was reincorporated in Delaware, and
its name was changed to Gibraltar Packaging Group, Inc. Gibraltar relocated its
executive offices in June 1996, and the new offices are located at 274 Riverside
Avenue, Westport, Connecticut 06880 and its telephone number is (203) 227-0400.
MANAGEMENT CHANGES
On November 7, 1995, David G. Chandler, a Gibraltar director and shareholder,
was named Chairman of the Board by unanimous consent of the directors. Deke C.
Abbott, Jr. continued on in the role of division president of the Company's
Niemand Industries division.
In February 1996 John W. Lloyd, a Gibraltar director, was named Executive Vice
President and Chief Financial Officer of the Company.
In October 1995 Jon P. Crane, the former division president of Great Plains
Packaging, returned to the Company as division president of Standard Packaging
and Printing Corp.
In February 1996 James A. Stajkowski was hired for the position of division
president of Flashfold Carton.
In July 1996, following the corporate office relocation, Sidney F. Gale was
hired as Corporate Controller.
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MANUFACTURING PRODUCTS AND PROCESSES
The Company offers its customers six types of packaging products, as
described below.
FOLDING CARTONS
The Company designs, manufactures and markets a variety of printed
folding cartons, which are purchased by customers in a variety of consumer and
industrial markets. The Company's customers use folding cartons for both the
shipment and retail display of the customers' products. Sales of folding cartons
represented approximately 62% of the Company's net sales for the twelve months
ended June 29, 1996, approximately 56% of the Company's net sales for the twelve
months ended July 1, 1995 and approximately 58% of the Company's net sales for
the twelve months ended July 2, 1994.
The Company believes that recent trends in the folding carton market
favor manufacturers that can produce creative graphics to enhance visual
presentation, point-of-sale appeal and product differentiation. Specialty
packaging designed to address these needs often includes graphics with
high-resolution print, more colors and innovative designs. The Company's
internal design teams have won numerous industry awards, due, in part, to the
Company's emphasis on product design. The Company believes that its design
resources enhance the Company's competitiveness in the folding carton market and
result in increased profitability.
Folding cartons are produced at the Company's production facilities in
Hastings, Fort Wayne and Mount Gilead. After a customer's order is received,
paperboard purchased from outside suppliers in rolled form is converted into
sheets of specified sizes by sheeting equipment. Specialized printing plates are
created from specifications, artwork or film supplied by the Company's customers
or developed by the Company's design teams. The paperboard sheets are then
printed on multicolor offset printing presses. The printed board is then cut,
creased, embossed, folded and glued into individual cartons and packaged for
shipment to customers.
In fiscal 1996, the Company's Hastings Nebraska facility became the sixth
folding carton plant in the United States to achieve ISO 9001 certification, the
rigorous international quality standard. ISO (International Organization for
Standardization) certification is required for doing business with European
Community companies and is steadily becoming a worldwide standard for quality
management. It requires a company to codify its quality program by defining and
documenting its Quality System.
TUBULAR, SPIRAL-WOUND PAPER PACKAGING
The Company began offering its customers tubular paper packaging products
with the April 1993 acquisition of Niemand. Tubular paper packaging products
represented approximately 18% of the Company's net sales for the twelve months
ended June 29, 1996, approximately 18% of the Company's net sales for the twelve
months ended July 1, 1995 and approximately 16% of the Company's net sales for
the twelve months ended July 2, 1994. The Company's tubular packaging is
structurally strong, high-quality, spiral-wound paper packaging that is suitable
for direct labeling with high-quality graphics. Tubular paper packaging offers a
biodegradable product that is, in smaller quantities, generally cheaper than
plastic alternatives. Tubular paper packaging is used widely for personal care
products (talcum powders, bath powders and scented products), for food products
(spices, breadcrumbs and non-dairy creamer) and for household products (carpet
freshener). The Company believes that it holds a strong market position in the
cosmetics and personal care applications of tubular paper packaging.
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The Company manufactures tubular paper packaging at its Marion, Alabama
facility. Several pieces of equipment used in this process are proprietary to
the Company. The process of producing tubular paper packaging begins with
slitting various types of rolled paper, then winding the paper into tubes by
gluing the individual strips or plies of paper together. The tubes are then
labeled with printed paper labels (typically of higher graphic quality) and cut
into individual canisters. Canisters may have closure/dispenser tops that offer
a variety of dispensing features - for example, sifting features as in the case
of salt and pepper shakers and talcum powder containers. The empty canisters are
filled by the Company or the customer with a variety of products. The canisters
are then sealed with a metal or plastic plug at the bottom.
FLEXIBLE POLY-FILM PACKAGING
The Company began offering its customers flexible poly-film packaging
with the January 1993 acquisition of Standard. Flexible packaging sales
represented approximately 8% of the Company's net sales for the twelve months
ended June 29, 1996, approximately 10% of the Company's net sales for the twelve
months ended July 1, 1995 and approximately 12% of the Company's net sales for
the twelve months ended July 2, 1994. Flexible packaging offers light-weight,
low-bulk, resource-conserving packaging that also protects perishable products
by creating a barrier against air and moisture. For consumer marketing purposes,
flexible packaging combines high-quality, multicolor graphics, similar to
folding carton graphics, with a see-through feature that enables the consumer to
see the product itself along with the package graphics. Although the Company
sells most of its flexible packaging for use in the textile, food and household
products markets, flexible packaging is also used for many other products,
including pharmaceuticals and other medical products, snacks and frozen foods,
apparel and toys.
Flexible packaging is produced at the Standard plant in Mount Gilead from
polyethylene, polypropylene and similar plastic materials. The Company purchases
its plastic films from film manufacturers rather than producing its own plastic
films. The film is printed at the Company's facilities using multicolor printing
presses that are functionally similar to those used in folding carton
manufacture. The printed rolls are slit into smaller rolls. Some printed film is
shipped in roll form to customers who then convert it into its final package
form (for example, bags, pouches or overwrap). Some of the printed film is
converted into bags or pouches by the Company and then shipped to customers.
SPECIALTY LAMINATED CONTAINERS
At the Company's Hastings facility, the Company manufactures a
specialized type of folding carton, specialty laminated packaging, which it
markets to customers throughout the United States, primarily in the automotive
aftermarket parts, frozen food and toy markets. Laminated packages are used for
retail sales of products and offer customers a number of visual marketing
benefits. Specialty laminated container sales represented approximately 5% of
the Company's net sales for each of the twelve-month periods ended June 29,
1996, July 1, 1995 and July 2, 1994. During the manufacturing process, laminated
sheets, which are composed of a printed paperboard folding carton sheet glued
onto single face corrugate, are die cut, glued and folded into containers.
Laminated packaging offers a structurally stronger package suitable for
packaging heavier contents, protecting products during shipping or meeting other
package performance needs, while at the same time providing high-resolution
graphics. The Company believes that the resolution of the print and graphics
enhances the product's appeal, and that the lamination provides increased
product visibility with a large, exposed graphics area.
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CONTRACT PACKAGING AND FILLING
The Company's facility in Marion provides contract packaging and filling
services, which represented approximately 2% of the Company's net sales for the
twelve months ended June 29, 1996, approximately 4% of the Company's net sales
for the twelve months ended July 1, 1995 and approximately 6% of the Company's
net sales for the twelve months ended July 2, 1994. The Company fills
manufactured tubular spiral-wound paper containers. Contract packaging and
filling can provide a cost-effective alternative for customers with small
in-house purchasing departments with the Company taking responsibility for
obtaining materials as well as packaging the product. The Company believes that
the combination of container manufacture and contract filling provides an
attractive product for its customers. With a single purchase order, a customer
can contract for container procurement, product specification and procurement,
blending, filling, packaging and shipment to a distribution center.
The Company fills spices; other food products, including non-dairy
creamer and bread crumbs; household products such as carpet freshener; and other
types of dry, granular products using a similar process. The Company may
formulate, procure, blend and fill the container or it may package product
supplied by a customer. Machines using gravity or vacuum-based filling
techniques carry out the filling. Once the containers are filled, the Company
packs them in shipping containers for delivery to its customers.
In connection with its filling operations, the Company maintains an
environmentally controlled work area for food packaging and other services that
require specific cleanliness and quality standards.
PRESSURE-SENSITIVE LABELS
At the Company's GB Labels plant in Burlington, the Company manufactures
pressure-sensitive labels, which are printed by multicolor printing presses
functionally similar to those used in printing paperboard and flexible films.
Pressure-sensitive labels accounted for approximately 5% of the Company's net
sales in the twelve months ended June 29, 1996, approximately 7% of the
Company's net sales for the twelve months ended July 1, 1995 and approximately
4% of the Company's net sales for the twelve months ended July 2, 1994. The
labels are backed with adhesive, mounted on paper backing and typically shipped
in rolls to customers. Customers use the Company's labels for a variety of
applications, including product promotions, packaging modifications, clothing
packaging and labeling and other applications.
Labels provide a cost-effective means of altering other packaging (for
example, folding cartons or flexible packaging) in connection with product
promotions or tie-ins. Labels also may be used to highlight pricing or product
features or for other purposes. Labels themselves, typically in the form of
adhesive-backed bands, can be used as a form of packaging. Socks and hosiery
represent the most common application for the Company's label packaging.
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<PAGE>
COMPETITION
The packaging markets in which the Company competes are highly
fragmented. The Company competes with numerous small, non-integrated companies
that produce one or more packaging products and, to a lesser extent, with
divisions or subsidiaries of large integrated packaging producers as well as
in-house packaging operations. The vertically integrated paperboard, oil and
chemical companies that the Company competes with may have many lines of
business and produce their own raw materials. In general, the integrated
companies focus primarily on producing large quantities of basic, commodity
packaging and often provide their products to large companies nationwide. The
non-integrated manufacturers generally operate only one or two production
facilities and emphasize higher-margin, value-added packaging, often with
specialized or customized graphics. Unlike the integrated manufacturers, these
manufacturers produce smaller orders of packaging with quick turnaround, in many
cases also working with the customer in designing the packaging. The Company
believes that it offers a broader range of packaging products than most other
non-integrated manufacturers that produce similar packaging.
Competition among the non-integrated packaging manufacturers, against
which the Company primarily competes, is based on product quality, service,
timeliness of delivery, manufacturing capabilities and, to a lesser extent than
with commodity packaging, price. The Company believes that its expertise and
reputation within the packaging industry for providing timely service and
high-quality packaging, as well as its six types of products, enable it to
compete effectively with other non-integrated packaging companies.
The Company's largest competitors in the flexible packaging market
operate as vertically integrated divisions or subsidiaries of large oil and
chemical companies. If the supply of oil-based resins or plastic films should
tighten in the future, large vertically integrated producers may have an
advantage over the Company, as such competitors could allocate scarce resin
resources to their own flexible packaging units or transfer them at advantageous
prices to their own flexible packaging units. Other competitors in the flexible
packaging market are part of diversified packaging companies like the Company
and offer both paper-based and film-based packaging. Some of the Company's other
flexible packaging competitors are smaller packaging companies that offer only
flexible film packaging.
Competition in the tubular packaging, contract filling and label markets
is highly fragmented. Tubular packaging is provided by a large number of
relatively small competitors and by a few large packaging companies. Competition
among the smaller, non-integrated packagers is based on product quality,
service, timeliness of delivery, manufacturing capabilities and, to a lesser
extent than with large packagers, price. Contract filling is provided not only
by a large number of relatively small competitors, but also internally by goods
and food producers themselves. The Company's filling capability is limited to
dry-granular types of products, and, therefore, the Company competes only in
this area of the contract filling market. In comparison with the Company's other
packaging markets, the label market is generally characterized by lower barriers
to entry.
Mergers and acquisitions of packaging suppliers have occurred recently
and may continue to take place in the future. The size of the Company has
increased as a result of its acquisitions, and the average size of the Company's
competitors may also increase as a result of mergers and acquisitions. Many of
the Company's competitors have greater financial and other resources than the
Company. In addition, to the extent that packaging methods are developed and
successfully marketed as alternatives to the Company's products, the Company may
compete with producers of such alternative packaging methods.
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<PAGE>
RAW MATERIALS
Raw materials used in the Company's production process include
paperboard, paper labels, inks, flexible films, resin and adhesives, all of
which the Company purchases from more than one supplier. Costs for these
materials have stabilized over the past year.
The supply of materials such as polyethylene, polypropylene, other
plastic films and plastic resins used in the Company's flexible packaging and
contract packaging products is subject to the disruptions generally associated
with the petroleum and petroleum product markets. The supply of plastic
materials depends upon factors beyond the control of the Company, including,
directly or indirectly, changes in the economy, price levels and seasons, the
level of domestic oil production, the availability of imports and the actions of
OPEC.
Although the Company's supply of raw materials is presently sufficient,
its business could be adversely affected by a prolonged shortage of raw
materials, the resulting higher costs and diminished availability of such
materials.
CUSTOMERS
The Company derives its sales from a diverse market base. The Company
sells its products throughout the United States to over 1,200 different
customers for use in a variety of industries. The table below sets forth the
Company's percent of net sales by market for each of the periods indicated:
TWELVE MONTHS ENDED
JUNE 29 JULY 1 JULY 2
1996 1995 1994
---- ---- ----
Textile 15% 16% 17%
Pharmaceutical 19% 15% 13%
Food 11% 13% 11%
Cosmetics and personal care 7% 11% 15%
Auto aftermarket parts and hardware 14% 11% 12%
Office supplies and paper products 17% 11% 11%
Household and industrial 4% 9% 8%
Toy 5% 4% 5%
Other 8% 10% 8%
------- ----- ------
Total net sales 100% 100% 100%
==== ==== ====
Sales to the Company's top three customers accounted for approximately
20% of the Company's net sales for the twelve-month period ended June 29, 1996.
This compares to approximately 16% and 14% for the twelve-month periods ended
July 1, 1995 and July 2, 1994, respectively. One customer, Smead Manufacturing,
generated 10.6% of net sales for fiscal 1996.
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<PAGE>
The Company's customers include: Abbott Laboratories, Anchor Foods, Avon,
Baldwin Filters, Becton Dickinson, Burlington Packaging, Copley Pharmaceutical,
Electronite, General Motors, McCormick, Ortho, Purdue Farms, Sherwood Medical,
and Smead Manufacturing. Customers generally purchase products and services
under firm purchase orders rather than long-term contracts, although the Company
does have several customers with contracts ranging from nine months to three
years.
The Company markets its products and services primarily through about 21
employee salesmen, as well as several commissioned brokers or agents.
The Company believes that developing long-term relationships with
customers is critical to success in the packaging industry.
PATENTS
Niemand holds several patents which cover proprietary technology and
packaging solutions, including a patent for the spiral-wound applicator used for
products that treat yeast infections. Although the Company believes these
patents to be economically valuable in the conduct of its business, the Company
does not believe that expiration or invalidation of any of these patents would
have a material adverse effect on the Company.
EMPLOYEES
As of June 29, 1996, the Company employed approximately 758 full-time
employees, of whom 155 are salaried and of whom 603 are hourly. The Graphics
Communication Union, No. 19-M, represents the 109 hourly employees at Fort
Wayne, Indiana and their union contract expires in November 1998. The Retail,
Wholesale and Department Store Workers Union represents approximately 215 hourly
employees at Niemand's Marion, Alabama plant, and their union contract expires
in August 2000. None of the Hastings, Nebraska, Mount Gilead, North Carolina or
Burlington, North Carolina employees are covered by union contracts or
collective bargaining agreements.
The Company considers its relationship with its employees and unions to
be generally satisfactory. The Company is unable to forecast the outcome of
negotiations between the Company and any union or the potential impact any
dispute could have on the Company's financial position or results of operations.
REGULATION
The Company's activities are subject to various environmental, health and
worker safety laws. The Company has expended resources, both financial and
managerial, to comply with applicable environmental, health and worker safety
laws in its operations and at its facilities and anticipates that it will
continue to do so in the future. Compliance with environmental laws has not
historically had a material effect on the Company's capital expenditures,
earnings or competitive position. However, as part of the environmental
investigation carried out in connection with proposed merger with Caraustar, the
Company became aware of groundwater contamination at its GB Labels facility in
Burlington, North Carolina.
The groundwater testing, performed in May 1995, revealed the presence of
tetrachlorethelene (commonly called "PCE") and related compounds in the
groundwater at the site. Immediately upon receiving the written results of the
tests, the Company notified the North Carolina Division of Environmental
Management ("DEM"), a unit of the Department of Environment, Health and Natural
Resources, of the contamination at the site.
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The Company then undertook sampling of water wells on neighboring
properties to determine whether contaminants were present in those wells.
Several wells were tested and contamination was revealed in three neighborhood
wells. The Company notified the County Health Department which notified affected
residents and instructed them not to use the well water. The Company provided
bottled water to any affected residents and offered to interconnect, at its
cost, any resident wishing to be connected to the municipal water supply. The
Company performed sampling and other investigations on vacant land adjacent to
the site and believes that this adjacent parcel also has contaminated
groundwater.
The Company met with a representative of the DEM at the Burlington site
to review the situation and outline a timetable for site assessment and
remediation. In August 1995, the Company filed a preliminary site assessment
with the DEM. This document summarized all that was currently known about the
site at that time, and outlined a plan for additional investigation and
submission of a comprehensive site assessment, which would include a proposed
remediation plan.
In December 1995 the Company had its environmental consultants prepare an
additional report summarizing the additional investigative work performed in the
area since the submission of the August 1995 report. The consultants had planned
to install additional groundwater monitoring wells in the area but were unable
to obtain permission from local property owners. The report so advised the DEM,
and the Company along with the consultants have indicated to the DEM their
desire to meet with them to review the report. To date, the DEM has yet to
request or schedule such a meeting and has not otherwise commented on the
report.
Following the August 1995 preliminary site assessment, the Company had
its environmental consultants prepare an estimate of likely remediation costs
based on all of the information known at that time. These estimated costs ranged
from $750,000 to $1.1 million over a period of seven to ten years. Accordingly,
the Company recorded a liability for such remediation costs of $750,000 in
fiscal year 1995. Subsequent work in connection with the December 1995 report
has not caused the Company to change this estimate of costs. This estimate may
be affected by new information learned, any modifications to any remediation
plan that may be proposed by the DEM and the actual costs incurred as part of
evaluation and remediation. At June 29, 1996 the accrual for such remediation
costs was $605,000 reflecting legal and environmental consulting expenses
incurred in fiscal 1996.
If the Company's expansion program results in significant growth in
production with associated increases in discharges and emissions, additional
capital expenditures could be required for the Company to comply with applicable
environmental laws and regulations and to maintain, renew or obtain necessary
environmental compliance permits.
ITEM 2. PROPERTIES
The Company owns offices and manufacturing facilities in Hastings,
Nebraska; Fort Wayne, Indiana; Mount Gilead and Burlington, North Carolina; and
Marion, Alabama. It leases warehouse facilities in Hastings, Nebraska; and Fort
Wayne, Indiana. The Company's manufacturing facilities consist of more than
600,000 square feet. In addition, the Company leases approximately 2,700 square
feel of office space in Westport, Connecticut. The Company owns and leases
vehicles for use by sales and delivery personnel and also owns and leases
various manufacturing, computer and other equipment used for product
development, customer technical support services and administrative purposes.
The Company's products are distributed to customers primarily utilizing
commercial transportation and, to a limited extent, Company-owned trucks.
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The Company's facilities have been expanded through a capital expenditure
program, which resulted in total expenditures of approximately $1.5 million,
$2.4 million and $6.7 million in fiscal 1996, fiscal 1995 and fiscal 1994
respectively.
The management of the Company believes that, after giving effect to its
capital expansion program, the Company's current facilities are equipped to
accommodate internal growth through fiscal 1997.
The Company maintains business property and other insurance, covering its
facilities and its operations, in amounts and covering such risks as are
generally consistent with industry practice for companies of similar size.
ITEM 3. LEGAL PROCEEDINGS
From time to time the Company is a party to certain lawsuits and
administrative proceedings that arise in the conduct of its business. While the
outcome of these lawsuits and proceedings cannot be predicted with certainty,
management believes that, if adversely determined, the lawsuits and proceedings,
either singularly or in the aggregate, would not have a material adverse effect
on the financial condition or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of stockholders of Gibraltar during
the fourth quarter of Gibraltar's fiscal year ended June 29, 1996.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
PRICE RANGE OF COMMON STOCK
The Company's common stock has been traded over-the-counter and quoted on
the NASDAQ National Market System since the Company's initial public offering on
March 5, 1992. The trading symbol for the Company's common stock is "PACK." The
following table sets forth, for the periods indicated, the high and low sale
prices for the Company's common stock on the NASDAQ National Market System, as
reported by NASDAQ.
HIGH LOW
FISCAL 1995
First Quarter 8 5 1/2
Second Quarter 8 3/4 6
Third Quarter 9 6
Fourth Quarter 7 5 3/8
FISCAL 1996
First Quarter 6 3 3/8
Second Quarter 4 1/2 3 1/2
Third Quarter 5 3 3/4
Fourth Quarter 5 3/4 3 1/2
There were approximately 140 holders of record of the Company's common
stock as of September 20, 1996. The Company believes that the number of
beneficial owners of its common stock is greater than 1,500.
DIVIDEND POLICY
The Company has never paid cash dividends on its common stock. Management
currently intends to retain earnings to finance the growth and development of
the Company's business and does not intend to pay cash dividends in the
foreseeable future. Any payment of cash dividends in the future will depend upon
the terms of the Company's debt instruments, the financial condition, capital
requirements and earnings of the Company, as well as other factors the Board of
Directors may deem relevant. In addition, the Company's old credit facility,
and, in certain circumstances, the new Harris Bank credit facility, restricts
the ability of the Company to pay dividends. See "Management's Discussion and
Analysis, Liquidity and Capital Resources."
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ITEM 6. SELECTED FINANCIAL DATA
The following selected historical financial information has been derived
from the Company's audited financial statements. This information should be read
in connection with the Company's Consolidated Financial Statements and the Notes
thereto, as well as "Management's Discussion and Analysis of Financial Condition
and Results of Operations," included elsewhere in this Annual Report.
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED
JUNE 29 JULY 1 JULY 2 JUNE 30 JUNE 30
1996 1995 1994(1) 1993(2) 1992(3)
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net Sales $74,384 $76,456 $75,574 $51,055 $25,498
Cost of Goods Sold 58,328 64,045 58,769 39,712 20,651
Gross Profit 16,056 12,411 16,805 11,343 4,847
Operating Expenses 11,481 14,061 10,143 6,520 3,186
Income (Loss) From Operations 4,575 (1,650) 6,662 4,823 1,661
Other Expense, Net 3,208 3,652 2,624 759 302
Income Taxes 666 (1,617) 1,235 1,898 729
Net Income (Loss) 701 (3,685) 2,803 2,166 630
Net Income (Loss) Per Share 0.14 (0.73) 0.56 0.48 0.24
Weighted Average
Shares Outstanding 5,042 5,040 5,037 4,474 2,676
BALANCE SHEET DATA:
Working Capital 6,455 5,940 10,669 7,339 6,073
Total Assets 74,045 79,036 86,934 79,358 30,175
Long-Term Debt 27,834 31,527 34,540 28,058 13
Stockholders' Equity 31,006 30,305 33,968 31,086 24,427
</TABLE>
(1) Includes the assets and liabilities and results of operations of GB
Labels since November 8, 1993.
(2) Includes the assets and liabilities and results of operations of
Standard and Niemand since the respective effective dates of the
acquisition for financial reporting purposes. For Standard the
effective date was January 31, 1993. For Niemand the effective date was
April 25, 1993.
(3) Includes the assets and liabilities and results of operations of
RidgePak since March 1, 1992.
-11-
<PAGE>
Item 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Gibraltar Packaging Group, Inc. manufactures high-quality custom-printed
packaging products, including folding cartons, specialty laminated containers,
pressure-sensitive labels, flexible packaging, tubular packaging and contract
packaging and filling. The Company operates through its wholly-owned
subsidiaries - RidgePak Corporation (dba "Flashfold Carton"), Standard Packaging
& Printing, Niemand Industries and GB Labels, each of which was acquired during
fiscal year 1992, 1993 or 1994, as well as the Great Plains Packaging division.
As further detailed in Liquidity and Capital Resources, in September 1996
the Company refinanced its NationsBank credit agreement with Harris Trust and
Savings Bank. This credit facility provides for a $25 million term loan and a
$10 million revolving credit facility.
RESULTS OF OPERATIONS
The following table presents, for the periods indicated, the percentage
relationship that certain items in the Company's income statement bear to net
sales. The following data should be read in conjunction with the Company's
Consolidated Financial Statements and the notes thereto included elsewhere in
this Annual Report.
<TABLE>
<CAPTION>
YEARS ENDED
JUNE 29 JULY 1 JULY 2 JUNE 30 JUNE 30
1996 1995 1994(1) 1993(2) 1992(3)
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Net Sales 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of Goods Sold 78.4 83.8 77.8 77.8 81.0
Gross Profit 21.6 16.2 22.2 22.2 19.0
Operating Expenses 15.4 18.4 13.4 12.8 12.5
Income (Loss)
from Operations 6.2 (2.2) 8.8 9.4 6.5
Other Expense 4.3 4.8 3.5 1.5 1.2
Income Taxes 1.0 (2.1) 1.6 3.7 2.9
Net Income (Loss) 1.0% (4.8)% 3.7% 4.2% 2.4%
</TABLE>
(1) Includes the assets and liabilities and results of operations of GB
Labels since November 8, 1993.
(2) Includes the assets and liabilities and results of operations of
Standard and Niemand since the respective effective dates of the
acquisition for financial reporting purposes. For Standard the
effective date of the acquisition was January 31, 1993. For Niemand the
effective date was April 25, 1993.
(3) Includes the assets and liabilities and results of operations of
RidgePak since March 1, 1992.
FISCAL YEAR 1996 VS. 1995
Although the Company experienced a 2.7% decline in sales to $74.4 million
in 1996, this was more than offset by a $5.7 million decrease in cost of goods
sold, or 8.9%, as well as reductions in operating and other expenses as
discussed below. As a result net income (loss) improved $4.4 million to $0.7
million, compared with fiscal 1995 loss of $3.7 million. Additionally, the
Company reduced its total debt in fiscal 1996 by $6.0 million.
-12-
<PAGE>
Fiscal year 1996 net sales of $74.4 million represented a decrease of
$2.1 million, or 2.7% compared with fiscal year 1995. Sales of folding cartons
increased $3.0 million, or 6.8%, as a result of increased sales to the
pharmaceutical and the office supplies markets. Sales of pressure-sensitive
labels decreased $1.1 million, or 22.8%, due primarily to reduced sales to the
textile market. Laminated product sales decreased $1.1 million, or 23.1%
reflecting lower sales of these products to the foods market. Tubular packaging
and contract filling sales decreased $0.5 million and $0.3 million, or 3.9% and
15.6%, respectively, as sales of these product lines to the cosmetic and
personal care industry declined in fiscal 1996. Flexible packaging sales
decreased $2.0 million, or 25.8% as a result of decreased demand from textile
customers.
Cost of goods sold decreased $5.7 million in fiscal 1996 compared with
the prior year. As a percentage of sales, cost of goods sold also improved to
78.4% from 83.8%. Significant improvements in this ratio occurred at Niemand and
GB Labels in the current year. In the prior year, inventory adjustments totaling
$1.6 million and $0.3 million were incurred at Niemand and GB Labels,
respectively. No such adjustments were incurred in the current year. Niemand
also benefited from a favorable shift in its product mix, lower overhead of $1.8
million primarily as a result of reduced personnel, and an increase in
productivity due to the completed plant consolidation.
Selling expenses decreased $0.3 million in the current year compared with
the prior year due to a reduction in personnel.
General and administrative expenses decreased $1.2 million, or 17.6% in
fiscal year 1996. A reduction in corporate office overhead of $1.0 million
accounted for substantially all of this decrease. Salary, rental, travel and
professional expenses declined reflecting primarily the decentralization of the
corporate office.
In the fourth quarter of fiscal 1995, a charge of $0.8 million was
recorded for the estimated cost of environmental remediation at GB Labels. The
Company has estimated that the total costs to remediate this site will range
from $0.8 million to $1.1 million over a seven to ten year period. No additional
amounts were recorded in 1996.
In fiscal 1996 a restructuring charge of $1.0 million was recorded as
compared to 1.4 million in fiscal 1995. The fiscal 1996 amount includes
severance for nine members of senior management of $0.9 million, and $0.1
million of costs for moving the corporate office from Charlotte, North Carolina,
to Westport, Connecticut.
Interest and amortization of deferred finance costs increased $0.2
million. This reflects higher interest rates on the Company's bank debt
partially offset by the impact of reductions in outstanding long-term debt
balances.
In fiscal 1995 other (income) expense, net included $0.7 million of costs
related to a terminated merger agreement. No such charges were incurred in the
current year.
The provision for income taxes as a percentage of pre-tax income was
48.7%, which differs from the statutory rate primarily as a result of
non-deductible amortization of excess of purchase price over net assets
acquired.
The Company's fiscal 1996 net income of $0.7 million represents an
improvement of $4.4 million compared to fiscal 1995 as a result of the foregoing
factors.
-13-
<PAGE>
FISCAL YEAR 1995 VS. 1994
Fiscal year 1995 net sales of $76.5 million represented an increase of
$0.9 million, or 1.2% compared with fiscal year 1994. Sales of folding cartons
decreased $0.5 million, or 1.5%. Laminated product sales increased $1.5 million,
or 47.5%. At Niemand, sales decreased $0.2 million, or 1.1% as increased sales
of tubular packaging were offset by a decrease in contract filling sales.
Flexible packaging sales decreased $1.6 million, or 17%, due to lower sales to
the textile markets. Sales of pressure-sensitive labels increased $1.8 million
in fiscal 1995 compared with fiscal 1994 as the prior year only included sales
for GB Labels since November 1993, its date of acquisition. On a pro forma
basis, sales at GB Labels declined $1.3 million, or 25%, due to decreased sales
to the textile and hosiery markets.
Cost of goods sold increased $5.3 million or 9% compared to the fiscal
year ended July 2, 1994. The major source of the $5.3 million increase in cost
of sales is attributed to Niemand, where these costs increased $3.8 million over
fiscal 1994 on volume that was essentially flat. Direct labor associated with
the consolidation of Niemand's Statesville operation increased by approximately
$0.7 million. Overhead at Niemand increased by $1.7 million, with the balance
resulting from inventory adjustments of approximately $1.9 million relating to a
physical inventory shortage and reserves for obsolescence at Niemand totaling
approximately $1.6 million and a similar adjustment totaling approximately $0.3
million at GB Labels.
Selling expenses and general and administrative expenses increased $0.4
million and $1.4 million, respectively, in fiscal 1995. The increase reflects
higher professional fees and travel expenses and severance paid as a result of a
reduction in the salaried work force at the corporate office, increased
incentive pay expense at the Great Plains division, and a full year of these
expenses for GB Labels in fiscal 1995 compared with 8 months in fiscal 1994, the
year of its acquisition.
The $0.8 million environmental remediation charge incurred in fiscal 1995
represents the estimated cost of environmental remediation at GB Labels. The
Company has estimated that the total costs to remediate this site will range
between $0.8 million and $1.1 million over a seven to ten year period.
The $1.4 million restructuring charge incurred in fiscal 1995 represents
additional costs related to the consolidation of Niemand's Statesville, North
Carolina facility into the Marion, Alabama facility which included a $0.8
million loss on disposition of machinery and equipment, a $0.4 million
write-down of the value of the Statesville plant to record the assets at their
net realizable value, and a $0.2 million accrual for severance of personnel.
Interest expense for fiscal 1995 increased by $0.5 million compared to
the previous fiscal year, due to higher interest rates.
Included in other (income) expense, net in fiscal 1995 are $0.7 million
of costs associated with a terminated merger agreement.
The benefit for income taxes as a percentage of pre-tax loss in fiscal
1995 was 30.5%, which differs from the statutory rate primarily as a result of
non-deductible amortization of excess of purchase price over net assets
acquired. The Company has recorded the benefits of the net operating loss for
federal tax purposes that was incurred in the current year and expires in 2010,
as well as investment tax credit carry forwards which expire in 2005 and net
operating loss carry forwards of an acquired subsidiary, expiring in 2006 -
2008, which are available to be utilized only against future taxable income of
such subsidiary, since management believes that it is more likely than not that
future taxable income will be sufficient, in the applicable jurisdictions, to
offset such carry forwards.
-14-
<PAGE>
The Company's net loss of $3.7 million represents an unfavorable decline
of $6.5 million compared to fiscal 1994, primarily as a result of the foregoing
factors.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity improved significantly in September 1996 when the
Company refinanced its credit facility. The refinancing is discussed below.
At June 29, 1996, the Company had working capital of $6.5 million, as
compared to $5.9 million at July 1, 1995. Historically, the Company's liquidity
requirements have been met by a combination of funds provided by operations and
its revolving credit agreements. Funds provided by operations totaled $7.0
million, $2.8 million and $7.1 million in fiscal 1996, 1995 and 1994,
respectively. The significant increase in 1996 was primarily due to the
Company's net income of $0.7 million in 1996 compared with the net loss of $3.7
million in 1995 and a decrease of $1.3 million in inventory balances in the
current year.
During fiscal 1996, 1995 and 1994 capital expenditures by the Company
totaled $1.5 million, $2.4 million and $6.7 million, respectively. In order to
accommodate continued growth, Gibraltar makes capital improvements to improve
efficiency and product quality. Gibraltar frequently upgrades its equipment by
purchasing or leasing used equipment, thereby reducing capital expenditures.
At March 31, 1996, the Company was not in compliance with certain
covenants of its credit facility with NationsBank. The bank issued waivers of
these covenants. The credit facility was also amended on March 31, 1996, to
extend the expiration of the revolving credit facility to April 1, 1997, from
January 2, 1997, and to renegotiate the repayment terms of the revolving credit
facility. As a result of this amendment, the Company had an available line of
credit of $18 million through May 31, 1996, $17.5 million through July 2, 1996
and $16 million up until the expiration date of the facility, April 1, 1997.
In June 1996 the credit facility was again amended. As a result of this
amendment, the maturity dates of all borrowings under the facility with
NationsBank were accelerated to October 15, 1996. Several covenants related to
the credit facility were eliminated, and the interest rate on the debt was
increased effective June 30, 1996. The Company was in compliance with its
remaining covenants at June 29, 1996.
In September 1996 the Company refinanced its NationsBank credit agreement
with Harris Trust and Savings Bank. This credit facility provides for a $25
million term loan and a $10 million revolving credit facility.
The term loan is a seven-year loan requiring quarterly principal payments
of $625,000 in the first year of the loan, with the first quarterly payment due
December 31, 1996. The balance of the term loan is due in quarterly principal
payments of $937,500. The revolving credit facility matures five years from the
closing date. Both facilities bear interest at rates based on Harris Bank's
prime rate or the London Interbank Offered Rate ("LIBOR").
The proceeds of the new credit facility will be used to refinance the
NationsBank credit facility, to pay the related transaction costs, and to fund
the future working capital and capital expenditure needs of the Company.
-15-
<PAGE>
The credit facility is secured by substantially all of the assets of the
Company. In addition to certain financial covenants, the credit facility
includes customary covenants which restrict the Company's ability to (1) incur
debt or create loans or encumbrances on its assets, (2) merge with or otherwise
acquire another company, (3) sell assets other than in the ordinary course of
business, and (4) make capital expenditures in excess of specified amounts. The
credit facility also restricts the ability of the Company to pay dividends.
Management believes that funds provided by operations and borrowings
under its new credit facility with Harris Bank will be sufficient to meet
requirements for working capital and capital expenditures in fiscal 1997. The
Company may be required or choose to obtain additional capital through public or
private debt, equity offerings or additional bank borrowing to fund future
developments. There is no assurance that Gibraltar will be able to obtain such
additional capital.
IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of", which will be effective during the Company's 1997 fiscal year.
The impact of this standard is not expected to be significant.
FORWARD-LOOKING STATEMENTS
Statements that are not historical facts, including statements about our
confidence in the Company's prospects and strategies and our expectations about
the Company's sales expansion, are forward-looking statements that involve risks
and uncertainties. These risks and uncertainties include, but are not limited
to, (1) market acceptance risks, including whether or not the Company will be
able to successfully gain market share against competitors many of which have
greater financial and other resources than the Company; (2) manufacturing
capacity constraints, including whether or not as the Company increases its
sales it will be able to successfully integrate its new customers into its
existing manufacturing and distribution system; (3) continued stability in raw
material prices, including whether or not the relatively stable market for its
raw materials that the Company has recently experienced will continue; and (4)
the impact of government regulation on the Company's manufacturing, including
whether or not additional capital expenditures will be needed to comply with
applicable environmental laws and regulations as the Company's production
increases. Investors and potential investors are cautioned not to place undue
reliance on these forward-looking statements, which reflect the Company's
analysis only as of the date hereof. Gibraltar undertakes no obligation to
publicly revise these forward-looking statements to reflect events or
circumstances that arise after the date hereof. These risks and others that are
detailed in this Form 10-K and other documents that the Company files from time
to time with the Securities and Exchange Commission, including quarterly reports
on Form 10-Q and any current reports on Form 8-K must be considered by any
investor or potential investor in the Company.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the financial statements, the report thereon, the
notes thereto, and supplementary data commencing at page F-1 of this Annual
Report on Form 10-K which financial statements, report, notes, and data are
incorporated herein by reference.
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
-16-
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information relating to the identification, business experience and
directorships of each director and nominee for director of Gibraltar and the
information relating to the identification and business experience of
Gibraltar's executive officers, required by Item 401 of Regulation S-K, will be
presented in the sections entitled "Election of Directors -Nominees for
Director" and "Executive Compensation and Other Information Executive Officers"
of Gibraltar's definitive proxy statement for the Annual Meeting of Stockholders
for fiscal 1996, and is hereby incorporated by reference. If the definitive
proxy statement for the 1996 annual meeting is not filed with the Securities and
Exchange Commission within 120 days of the end of Gibraltar's 1996 fiscal year,
Gibraltar will amend this Annual Report and include such information in the
amendment.
ITEM 11. EXECUTIVE COMPENSATION
The information relating to the cash compensation of directors and
officers required by Item 402 of Regulation S-K will be presented in the
sections entitled "Election of Directors - Director Compensation" and "Executive
Compensation and Other Information" of Gibraltar's definitive proxy statement
for the Annual Meeting of Stockholders for fiscal 1996 and is hereby
incorporated by reference. If the definitive proxy statement for the 1996 annual
meeting is not filed with the Securities and Exchange Commission within 120 days
of the end of Gibraltar's 1996 fiscal year, Gibraltar will amend this Annual
Report and include such information in the amendment.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information relating to security ownership required by Item 403 of
Regulation S-K will be presented in the section entitled "Voting Securities and
Principal Stockholders" of Gibraltar's definitive proxy statement for the Annual
Meeting of Stockholders for fiscal 1996 and is hereby incorporated by reference.
If the definitive proxy statement for the 1996 annual meeting is not filed with
the Securities and Exchange Commission within 120 days of the end of Gibraltar's
1996 fiscal year, Gibraltar will amend this Annual Report and include such
information in the amendment.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information relating to certain relationships and transactions
required by Item 404 of Regulation S-K will be presented in the section
"Executive Compensation and Other Information - Certain Transactions" of
Gibraltar's definitive proxy statement for the Annual Meeting of Stockholders
for fiscal 1996 and is hereby incorporated by reference. If the definitive proxy
statement for the 1996 annual meeting is not filed with the Securities and
Exchange Commission within 120 days of the end of Gibraltar's 1996 fiscal year,
Gibraltar will amend this Annual Report and include such information in the
amendment.
-17-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
<TABLE>
<CAPTION>
Page
<S> <C>
Independent Auditors' Report F-1
Consolidated Balance Sheets,
June 29, 1996 and July 1,1995 F-2
Consolidated Statements of Income,
Years Ended June 29, 1996, July 1, 1995 and July 2, 1994 F-3
Consolidated Statements of Stockholders' Equity,
Years Ended June 29, 1996, July 1, 1995 and July 2, 1994 F-4
Consolidated Statements of Cash Flows,
Years Ended June 29, 1996, July 1, 1995 and July 2, 1994 F-5
Notes to Consolidated Financial Statements F-6 to F-16
</TABLE>
All schedules of the Registrant for which provision is made in the
applicable accounting regulations of the Securities and Exchange Commission are
not required under the related instructions, are inapplicable, or have been
disclosed in the Notes to Consolidated Financial Statements and, therefore, have
been omitted.
(2) Exhibits
EXHIBITS
3.1 Certificate of Incorporation, as amended, of Gibraltar
Packaging Group, Inc. (incorporated by reference to Exhibit
3.1 to Gibraltar's Registration Statement on Form S-1 (File
No. 33-44965), as amended, filed January 9, 1992).
3.2 By-Laws of Gibraltar Packaging Group, Inc. (incorporated by
reference to Exhibit 3.2 to Gibraltar's Registration
Statement on Form S-1 (File No. 33-44965), as amended, filed
January 9, 1992).
4.1 Specimen Common Stock Certificate (incorporated by reference
to Exhibit 4.1 to Gibraltar's Registration Statement on Form
S-1 (File No. 33-44965), as amended, filed January 9, 1992).
10.1 Agreement and Plan of Reorganization, dated as of January 7,
1992, among Gibraltar Packaging Group, Inc., RidgePak
Acquisition Corporation, RidgePak Corporation, and the
Shareholders of RidgePak Corporation (incorporated by
reference to Exhibit 10.1 to Gibraltar's Registration
Statement on Form S-1 (File No. 33-44965), as amended, filed
January 9, 1992).
10.2 Registration Rights Agreement, dated March 4, 1992, by and
among Gibraltar Packaging Group, Inc. and certain
stockholders of Gibraltar Packaging Group, Inc.
(incorporated by reference to Exhibit 4.2 to Gibraltar's
Annual Report on Form 10-K for the year ended June 30, 1992
(File No. 00-19800)).
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<PAGE>
10.3 Employment Agreement, dated February 10, 1992, between
Gibraltar Packaging Group, Inc. and Deke C. Abbott, Jr.
(incorporated by reference to Exhibit 10.6 to Gibraltar's
Registration Statement on Form S-1 (File No. 33-44965), as
amended, filed January 9, 1992).
10.4 Employment Agreement, dated January 8, 1990, as amended,
between RidgePak Corporation and Clyde Potts (incorporated
by reference to Exhibit 10.8 to Gibraltar's Registration
Statement on Form S-1 (File No. 33-44965), as amended, filed
January 9, 1992).
10.5 Gibraltar Packaging Group, Inc. 1992 Incentive Stock Option
Plan, dated March 5, 1992 and amended as of April 28, 1994
(incorporated by reference to Exhibit 10.5 to Gibraltar's
Annual Report on Form 10-K for the year ended July 2, 1994
(File No. 00-19800)).
10.6 Gibraltar Packaging Group, Inc. Director Stock Option Plan
dated July 13, 1992 and amended as of April 28, 1994
(incorporated by reference to Exhibit 10.6 to Gibraltar's
Annual Report on Form 10-K for the year ended July 2, 1994
(File No. 00-19800)).
10.7 Employment Agreement, dated December 1, 1992, between
Gibraltar Packaging Group, Inc. and Richard Hinrichs
(incorporated by reference to Exhibit 28.1 to Gibraltar's
Quarterly Report on Form 10-Q for the quarterly period ended
December 31, 1992 (File No. 00-19800)).
10.8 Stock Purchase Agreement, dated January 28, 1993, by and
among Gibraltar Packaging Group, Inc., Standard Packaging
and Printing Corp. and each of the shareholders of Standard
Packaging and Printing Corp. (incorporated by reference to
Exhibit 2.1 to Gibraltar's Current Report on Form 8-K dated
January 28, 1993 (File No. 00-19800)).
10.9 Registration Rights Agreement, dated as of January 28, 1993,
between Gibraltar Packaging Group, Inc. and Brady W. Dickson
and Joan H. Dickson (incorporated by reference to Exhibit
28.1 to Gibraltar's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1993 (File No. 00-19800)).
10.10 Employment Agreement, dated January 28, 1993, between
Gibraltar Packaging Group, Inc. and Brady W. Dickson
(incorporated by reference to Exhibit 28.2 to Gibraltar's
Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1993 (File No. 00-19800)).
10.11 Agreement and Plan of Reorganization, dated April 28, 1993,
by and among Gibraltar Packaging Group, Inc., Niemand
Acquisition Corporation, Niemand Holdings, Inc., Niemand
Industries, Inc., and each of the stockholders of Niemand
Holdings, Inc. (incorporated by reference to Exhibit 2.1 to
Gibraltar's Current Report on Form 8-K dated April 28, 1993
(File No. 00-19800)).
10.12 Registration Rights Agreement, dated April 28, 1993, by and
among Gibraltar Packaging Group, Inc. and the former
stockholders of Niemand Holdings, Inc. listed on Schedule I
thereto (incorporated by reference to Exhibit 28.1 to
Gibraltar's Current Report on Form 8-K dated April 28, 1993
(File No.00-19800)).
10.13 Employment Agreement dated April 28, 1993, by and among
Gibraltar Packaging Group, Inc., Niemand Industries, Inc.
and Donald R. Geerdes (incorporated by reference to Exhibit
28.3 to Gibraltar's Current Report on Form 8-K dated April
28, 1993 (File No. 00-19800)).
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<PAGE>
10.14 Amended, Restated and Substituted Credit Agreement, dated
April 28, 1993, and amended on November 8, 1993, March 21,
1994, April 15, 1994, May 11, 1994 and December 30, 1994, by
and among Gibraltar Packaging Group, Inc. and NationsBank of
North Carolina, N.A. ("NationsBank").
10.15 Promissory Note, dated April 28, 1993, from Gibraltar
Packaging Group, Inc. to NationsBank (Niemand Term Note)
(incorporated by reference to Exhibit 28.5 to Gibraltar's
Current Report on Form 8-K dated April 28, 1993 (File No.
00-19800)).
10.16 Amended, Restated and Substituted Promissory Note, dated
April 28, 1993 from Gibraltar Packaging Group, Inc. to
NationsBank (Standard Term Note) (incorporated by reference
to Exhibit 28.6 to Gibraltar's Current Report on Form 8-K
dated April 28, 1993 (File No. 00-19800)).
10.17 Amended, Restated and Substituted Promissory Note, dated
December 30 1994, from Gibraltar Packaging Group, Inc. to
NationsBank (Revolving Note).
10.18 Amended and Restated Guaranty Agreement, dated April 28,
1993, by and between RidgePak Corporation and NationsBank
(incorporated by reference to Exhibit 10.19 to Gibraltar's
Annual Report on Form 10-K for the year ended June 30, 1993
(File No. 00-19800)).
10.19 Amended and Restated Guaranty Agreement, dated April 28,
1993, by and between Standard Packaging and Printing Corp.
and NationsBank (incorporated by reference to Exhibit 10.20
to Gibraltar's Annual Report on Form 10-K for the year ended
June 30, 1993 (File No. 00-19800)).
10.20 Guaranty Agreement, dated April 28, 1993, by and between
Niemand Holdings, Inc. and NationsBank (incorporated by
reference to Exhibit 10.21 to Gibraltar's Annual Report on
Form 10-K for the year ended June 30, 1993 (File No.
00-19800)).
10.21 Guaranty Agreement, dated April 28, 1993, by and between
Niemand Industries, Inc. and NationsBank (incorporated by
reference to Exhibit 10.22 to Gibraltar's Annual Report on
Form 10-K for the year ended June 30, 1993 (File No.
00-19800)).
10.22 Security Agreement, dated April 28, 1993, by and between
Gibraltar Packaging Group, Inc. and NationsBank
(incorporated by reference to Exhibit 10.23 to Gibraltar's
Annual Report on Form 10-K for the year ended June 30, 1993
(File No. 00-19800)).
10.23 Security Agreement, dated April 28, 1993, by and between
RidgePak Corporation and NationsBank (incorporated by
reference to Exhibit 10.24 to Gibraltar's Annual Report on
Form 10-K for the year ended June 30, 1993 (File No.
00-19800)).
10.24 Security Agreement, dated April 28, 1993, by and between
Standard Packaging and Printing Corp. and NationsBank
(incorporated by reference to Exhibit 10.25 to Gibraltar's
Annual Report on Form 10-K for the year ended June 30, 1993
(File No. 00-19800)).
10.25 Security Agreement, dated April 28, 1993, by and between
Niemand Holdings, Inc. and NationsBank (incorporated by
reference to Exhibit 10.26 to Gibraltar's Annual Report on
Form 10-K for the year ended June 30, 1993 (File No.
00-19800)).
10.26 Security Agreement, dated April 28, 1993, by and between
Niemand Industries, Inc. and NationsBank (incorporated by
reference to Exhibit 10.27 to Gibraltar's Annual Report on
Form 10-K for the year ended June 30, 1993 (File No.
00-19800)).
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<PAGE>
10.27 Deed of Trust dated April 28, 1993, by and among Gibraltar
Packaging Group, Inc., NationsBank as Trustee and
NationsBank (incorporated by reference to Exhibit 10.28 to
Gibraltar's Annual Report on Form 10-K for the year ended
June 30, 1993 (File No. 00-19800)).
10.28 Real Estate Mortgage, dated April 28, 1993, by and between
RidgePak Corporation and NationsBank (incorporated by
reference to Exhibit 10.29 to Gibraltar's Annual Report on
Form 10-K for the year ended June 30, 1993 (File No.
00-19800)).
10.29 Open-End Mortgage Deed and Security Agreement, dated April
28, 1993, by and between RidgePak Corporation and
NationsBank (incorporated by reference to Exhibit 10.30 to
Gibraltar's Annual Report on Form 10-K for the year ended
June 30, 1993 (File No. 00-19800)).
10.30 Deed of Trust and Security Agreement, dated April 28, 1993,
by and among Standard Packaging and Printing Corp.,
Christopher C. Kupec, Trustee, and NationsBank (incorporated
by reference to Exhibit 10.31 to Gibraltar's Annual Report
on Form 10-K for the year ended June 30, 1993 (File No.
00-19800)).
10.31 Corporation Mortgage and Security Agreement, dated April 28,
1993, by and between Niemand Industries, Inc. and
NationsBank (incorporated by reference to Exhibit 10.32 to
Gibraltar's Annual Report on Form 10-K for the year ended
June 30, 1993 (File No. 00-19800)).
10.32 Deed of Trust and Security Agreement, dated April 28, 1993,
by and among Niemand Industries, Inc., Christopher C. Kupec,
Trustee, and NationsBank (incorporated by reference to
Exhibit 10.33 to Gibraltar's Annual Report on Form 10-K for
the year ended June 30, 1993 (File No. 00-19800)).
10.33 Letter Agreement, dated June 2, 1993, between Gibraltar
Packaging Group, Inc. and Jay F. Kilkenny (incorporated by
reference to Exhibit 10.34 to Gibraltar's Annual Report on
Form 10-K for the year ended June 30, 1993 (File No.
00-19800)).
10.34 Stock Sale Agreement, dated November 8, 1993, between
Gibraltar Packaging Group, Inc. and Golden Belt
Manufacturing Company (incorporated by reference to Exhibit
10.35 to Gibraltar's Annual Report on Form 10-K for the year
ended July 2, 1994 (File No. 00-19800)).
10.35 Employment Agreement, dated March 1, 1994 and amended as of
July 27, 1994, between Jay F. Kilkenny and Gibraltar
Packaging Group, Inc. (incorporated by reference to Exhibit
10.36 to Gibraltar's Annual Report on Form 10-K for the year
ended July 2, 1994 (File No. 00-19800)).
10.36 1994 Long-Term Incentive Plan, dated August 16, 1994
(incorporated by reference to Exhibit 10.37 to Gibraltar's
Annual Report on Form 10-K for the year ended July 2, 1994
(File No. 00-19800)).
10.37 Agreement and Plan of Merger, dated as of March 17, 1995, as
extended by letter agreement dated June 15, 1995 and as
terminated by letter agreement dated August 3, 1995, among
Caraustar Industries, Inc., GibPac Acquisition Company and
Gibraltar Packaging Group, Inc. (incorporated by reference
to Exhibit 10.37 to Gibraltar's Annual Report on Form 10-K
for the year ended July 1, 1995 (File No. 00-19800)).
-21-
<PAGE>
10.38 Letter Agreement, dated September 28, 1995, RE: Waiver of
Events of Default, from NationsBank, N.A. (Carolinas) to
Gibraltar Packaging Group, Inc. (incorporated by reference
to Exhibit 10.38 to Gibraltar's Annual Report on Form 10-K
for the year ended July 1, 1995 (File No. 00-19800)).
*10.39 Gibraltar Packaging Group, Inc. 1996 Non-Qualified Stock
Option Plan.
*10.40 Credit Agreement, dated September 25, 1996, among Gibraltar
Packaging Group, Inc., various financial institutions and
Harris Trust and Savings Bank, Individually and as Agent.
*10.41 Revolving Note, dated September 25, 1996, in favor of Harris
Trust and Savings Bank, executed by Gibraltar Packaging
Group, Inc. In the principal amount of $10,000,000.
*10.42 Term Note, dated September 25, 1996, in favor of Harris
Trust and Savings Bank, executed by Gibraltar Packaging
Group, Inc. In the principal amount of $25,000,000.
*10.43 Guaranty, dated September 25, 1996, in favor of Harris Trust
and Savings Bank, executed by RidgePak Corporation, Standard
Packaging and Printing Co., Niemand Holdings, Inc., Niemand
Industries, Inc. and GB Labels, Inc.
*10.44 Security Agreement, dated September 25, 1996, among
Gibraltar Packaging Group, Inc., RidgePak Corporation,
Standard Packaging and Printing Corp., Niemand Holdings,
Inc., Niemand Industries, Inc., GB Labels, Inc. And Harris
Trust and Savings Bank.
*10.45 Pledge Agreement executed by Gibraltar Packaging Group,
Inc., dated September 25, 1996, in favor of Harris Trust and
Savings Bank.
*10.46 Pledge Agreement executed by Niemand Holdings, Inc., dated
September 25, 1996, in favor of Harris Trust and Savings
Bank.
*10.47 Patent Security Agreement, dated as of September 25, 1996,
in favor of Harris Trust and Savings Bank, executed by
Niemand Industries, Inc.
*10.48 Letter Agreement, dated September 21, 1996 between Gibraltar
Packaging Group, Inc. and Jon P. Crane regarding employment.
*10.49 Letter Agreement, dated January 29, 1996 between Gibraltar
Packaging Group, Inc. and James A. Stajkowski regarding
employment.
21.1 Subsidiaries of Gibraltar Packaging Group, Inc.
(incorporated by reference to Exhibit 21.1 to Gibraltar's
Annual Report on Form 10-K for the year ended July 1, 1995
(File No. 00-19800)).
*23.1 Consent of Deloitte & Touche LLP.
- -----------------
* Filed herewith.
(b) Reports on Form 8-K.
NONE.
-22-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
GIBRALTAR PACKAGING GROUP, INC.
By: /s/ John W. Lloyd
------------------------
John W. Lloyd
Chief Financial Officer
Date: September 30, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ Walter E. Rose /s/ John W. Lloyd
- ----------------------------- -------------------------------
Walter E. Rose John W. Lloyd
Chief Executive Officer and Chief Financial Officer
President (Principal Financial and
(Principal Executive Officer) Accounting Officer)
September 30, 1996 September 30, 1996
/s/ David G. Chandler /s/ Robert G. Shaw
- ----------------------------- -------------------------------
David G. Chandler Robert G. Shaw
Chairman of the Board Director
September 30, 1996 September 30, 1996
/s/ Edgar D. Jannotta, Jr. /s/ John D. Strautnieks
- ----------------------------- -------------------------------
Edgar D. Jannotta, Jr. John D. Strautnieks
Director Director
September 30, 1996 September 30, 1996
-23-
<PAGE>
INDEPENDENT AUDITORS' REPORT
BOARD OF DIRECTORS
GIBRALTAR PACKAGING GROUP, INC.
WE HAVE AUDITED THE ACCOMPANYING CONSOLIDATED BALANCE SHEETS OF GIBRALTAR
PACKAGING GROUP, INC. AND ITS SUBSIDIARIES (THE COMPANY) AS OF JUNE 29, 1996 AND
JULY 1, 1995, AND THE RELATED CONSOLIDATED STATEMENTS OF INCOME(LOSS),
STOCKHOLDERS' EQUITY, AND CASH FLOWS FOR EACH OF THE THREE YEARS IN THE PERIOD
ENDED JUNE 29, 1996. 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. THESE 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, SUCH CONSOLIDATED FINANCIAL STATEMENTS PRESENT FAIRLY, IN ALL
MATERIAL RESPECTS, THE FINANCIAL POSITION OF GIBRALTAR PACKAGING GROUP, INC. AND
ITS SUBSIDIARIES AT JUNE 29, 1996 AND JULY 1, 1995, AND THE RESULTS OF THEIR
OPERATIONS AND THEIR CASH FLOWS FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED
JUNE 29, 1996 IN CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
CHARLOTTE, NORTH CAROLINA
AUGUST 5, 1996 (SEPTEMBER 25, 1996 WITH RESPECT TO NOTE 4)
F-1
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 29 JULY 1
1996 1995
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Accounts receivable (NET OF ALLOWANCE FOR DOUBTFUL ACCOUNTS OF $231 AND $6,860 $7,684
$211, RESPECTIVELY (NOTES 1, 4 AND 9)
Inventories (NOTES 1, 2 AND 4) 9,172 10,487
Refundable income taxes (NOTE 5) 274
Deferred income taxes (NOTE 5) 713 717
Prepaid and other assets 809 403
-------- -------
Total current assets 17,554 19,565
PROPERTY AND EQUIPMENT - Net (NOTES 1, 3 AND 4) 35,167 36,941
EXCESS OF PURCHASE PRICE OVER NET ASSETS ACQUIRED
(NET OF ACCUMULATED AMORTIZATION OF $2,197 AND
$1,615, RESPECTIVELY) (NOTE 1) 21,109 21,691
OTHER ASSETS (NET OF ACCUMULATED AMORTIZATION OF $84 AND
$212, RESPECTIVELY) 215 839
------- ---------
TOTAL $74,045 $79,036
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Checks not yet presented $1,042 $744
Current portion of long-term debt (NOTE 4) 2,115 4,389
Accounts payable 5,261 6,067
Accrued expenses and other liabilities 2,362 2,425
Income taxes payable 319
-------- --------
Total current liabilities 11,099 13,625
LONG-TERM DEBT - Net of current portion (NOTE 4) 27,834 31,527
DEFERRED INCOME TAXES (NOTE 5) 3,278 2,829
OTHER LONG-TERM LIABILITIES (NOTE 11) 828 750
COMMITMENTS AND CONTINGENCIES (NOTES 11 AND 12)
------ ------
TOTAL LIABILITIES 43,039 48,731
------ ------
STOCKHOLDERS' EQUITY (NOTES 1 AND 7):
Preferred stock, $.01 par value; 1,000,000
shares authorized; none issued
Common stock, $.01 par value; 10,000,000 shares
authorized; 5,041,544 issued and outstanding 50 50
Additional paid-in capital 28,162 28,162
Retained earnings 2,794 2,093
----- -----
Total stockholders' equity 31,006 30,305
------ ------
TOTAL $74,045 $79,036
======= =======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-2
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
YEARS ENDED JUNE 29, 1996, JULY 1, 1995 AND JULY 2, 1994
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
NET SALES (NOTE 13) $74,384 $76,456 $75,574
COST OF GOODS SOLD 58,328 64,045 58,769
------ ------ ------
GROSS PROFIT 16,056 12,411 16,805
OPERATING EXPENSES:
Selling expenses 4,128 4,382 3,978
General and administrative expenses (NOTE 10) 5,733 6,956 5,591
Environmental remediation costs (NOTE 11) 750
Amortization of excess of purchase price
over net assets acquired (NOTE 1) 582 587 574
Severance, office moving and restructuring
charges (NOTE 10) 1,038 1,386
------- ------- ------
Total operating expenses 11,481 14,061 10,143
------ ------ ------
INCOME (LOSS) FROM OPERATIONS 4,575 (1,650) 6,662
OTHER EXPENSE (INCOME)
Interest and amortization of deferred finance costs 3,218 2,970 2,435
Interest income (5) (5) (13)
Other (income) expense, net (5) 687 202
-------- ------ ------
Other expense, net 3,208 3,652 2,624
----- ----- -----
INCOME (LOSS) BEFORE INCOME TAXES 1,367 (5,302) 4,038
PROVISION (BENEFIT) FOR INCOME TAXES (NOTE 5) 666 (1,617) 1,235
----- ------- -----
NET INCOME (LOSS) $701 ($3,685) $2,803
==== ======== ======
INCOME (LOSS) PER SHARE $0.14 ($0.73) $0.56
===== ======= =====
WEIGHTED AVERAGE SHARES OUTSTANDING 5,042 5,040 5,037
===== ===== =====
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-3
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED JUNE 29, 1996, JULY 1, 1995 AND JULY 2, 1994
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
NUMBER OF PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
<S> <C> <C> <C> <C> <C>
BALANCE, June 30, 1993 5,027,382 $50 $28,061 $2,975 $31,086
Issuance of common stock in connection with
the exercise of incentive stock options 10,831 79 79
Net income 2,803 2,803
---------------- ---------------------- ------- -------
BALANCE, July 2, 1994 5,038,213 50 28,140 5,778 33,968
Issuance of common stock in connection with
the exercise of incentive stock options 3,331 22 22
Net loss (3,685) (3,685)
--------------- ---------------------- ------ ------
BALANCE, July 1, 1995 5,041,544 50 28,162 2,093 30,305
Net income 701 701
---------------- ---------------------- -------- ----------
BALANCE, June 29, 1996 5,041,544 $ 50 $28,162 $2,794 $31,006
========= ===== ======= ====== =======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-4
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 29, 1996, JULY 1, 1995 AND JULY 2, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $701 $(3,685) $ 2,803
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,892 3,745 3,356
Loss (gain) on sale of fixed assets 31 293 (2)
Deferred income taxes 551 (1,848) 2,579
Non-cash portion of restructuring charge 1,125
Changes in operating assets and liabilities, net of effects of
acquisitions:
Accounts receivable - net 824 1,428 940
Inventories 1,315 229 989
Income taxes 495 2,070
Prepaid expenses and other assets 23 (112) (328)
Accounts payable (806) 1,123 1,199
Accrued expenses and other liabilities 15 (1,586) (4,476)
------- ------ -------
Net cash provided by operating activities 7,041 2,782 7,060
----- ----- -----
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment 108 1,171 665
Purchases of property and equipment (1,480) (2,381) (6,673)
Acquisition of businesses, net of cash acquired (6,448)
----------- ----------- --------
Net cash used in investing activities (1,372) (1,210) (12,456)
------ ------ -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (payments) borrowings under revolving credit agreement (2,196) 1,073 10,322
Borrowings under long-term debt agreements 350
Principal payments under long-term debt agreements (3,765) (3,767) (4,178)
Payments under finance lease agreement (10) (69)
Net (payments) borrowings under capital leases (6) 307
Net proceeds from issuance of common stock 22 79
----------- -------- --------
Net cash (used in) provided by financing activities (5,967) (2,375) 6,504
------ ------ -----
NET (DECREASE) INCREASE IN (CHECKS NOT YET
PRESENTED) CASH (298) (803) 1,108
(CHECKS NOT YET PRESENTED) CASH AT
BEGINNING OF YEAR (744) 59 (1,049)
---------- ------- ------
(CHECKS NOT YET PRESENTED) CASH AT
END OF YEAR $(1,042) $(744) $59
======= ===== ========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-5
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED JUNE 29, 1996, JULY 1, 1995 AND JULY 2, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - The accompanying consolidated financial statements
include the accounts of Gibraltar Packaging Group, Inc. (the Company) and its
wholly owned subsidiaries - RidgePak Corporation, Standard Packaging & Printing,
Niemand Industries and GB Labels. All significant intercompany accounts and
transactions have been eliminated.
DESCRIPTION OF BUSINESS - The Company manufactures high quality specialty
packaging products in facilities located in Nebraska, Indiana, Alabama and North
Carolina, and markets these products to customers throughout the United States
and Canada. The Company's products include folding cartons, specialty laminated
containers, pressure-sensitive labels, flexible packaging, tubular packaging and
contract packaging and filling for a wide range of businesses.
FISCAL YEAR - The Company ends its fiscal year on the Saturday closest to June
30.
ACCOUNTS RECEIVABLE - The changes in the allowance for doubtful accounts
receivable consists of the following (in thousands):
YEARS ENDED
JUNE 29 JULY 1 JULY 2
1996 1995 1994
Allowance, Beginning of Year $211 $107 $301
Provision for Uncollectible Accounts 171 305 18
Write-off of Uncollectible Accounts (151) (201) (174)
Effect of Acquisitions and Other - - (38)
-------- ------- ------
Allowance, End of Year $231 $ 211 $107
==== ===== ====
INVENTORIES - Inventories are valued at the lower of cost or market on a
first-in, first-out (FIFO) basis.
PROPERTY - Property and equipment are valued at cost. Depreciation is computed
using the straight-line method over the estimated useful lives as follows:
Buildings 30 years
Machinery and equipment 2-20 years
Automobiles and trucks 3-8 years
Furniture and fixtures 3-10 years
INCOME TAXES- Income taxes are accounted for pursuant to SFAS 109, "Accounting
for Income Taxes." Under SFAS 109, deferred income tax assets and liabilities
represent the future income tax effect of temporary differences between book and
tax bases of assets and liabilities assuming they will be realized and settled
in amounts reported in the financial statements.
REVENUE RECOGNITION - Sales and related cost of sales are recognized primarily
upon shipment of products.
EARNINGS PER SHARE - Earnings per share is calculated based on the weighted
average number of shares of common stock and common stock equivalents
outstanding during the year.
F-6
<PAGE>
CASH FLOW REPORTING - For purposes of statement of cash flows, the Company
considers all temporary investments purchased with a maturity of three months
or less to be cash equivalents.
<TABLE>
<CAPTION>
YEARS ENDED
JUNE 29 JULY 1 JULY 2
1996 1995 1994
<S> <C> <C> <C>
Cash paid during the period for (in thousands):
Interest on
borrowings $2,902 $2,857 $2,515
====== ====== ======
Income taxes $ 59 $ 71 $ 941
======== ======== =======
Schedule of non-cash investing and financing activities(in thousands):
Capital lease obligation: $301 $307
Acquisitions of businesses:
Cash acquired $101
Fair value of assets acquired (less cash) $2,623
Fair value of liabilities assumed $(2,783)
Excess of purchase price over net assets acquired $2,262
</TABLE>
RECLASSIFICATIONS - Certain 1995 and 1994 amounts have been reclassified to
conform with the classifications used in the 1996 financial statements.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. These estimates include allowance for doubtful accounts
receivable and the liabilities for certain long-term benefit plans such as
described in Note 6. Actual results could differ from those estimates.
IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS - The Financial Accounting Standards
Board has issued Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to Be
Disposed Of" which will be effective during the Company's fiscal year ending
June 28, 1997. The impact of this new standard on Fiscal 1997 earnings is not
expected to be significant.
EXCESS OF PURCHASE PRICE OVER NET ASSETS ACQUIRED - The excess of purchase price
over net assets acquired is being amortized over a forty-year period on a
straight-line basis. The Company regularly evaluates the recoverability of
goodwill using estimates of undiscounted future cash flows and operating
earnings of the businesses acquired.
FAIR VALUE OF FINANCIAL INSTRUMENTS - The Company's financial instruments
include cash, accounts receivable, and current and long-term debt. Management
estimates that the carrying value of such instruments approximates fair value.
F-7
<PAGE>
2. INVENTORIES
Inventories consisted of the following (in thousands):
JUNE 29 JULY 1
1996 1995
Finished goods $4,727 $5,879
Work in progress 1,395 1,273
Raw materials 2,739 3,063
Manufacturing supplies 311 272
--------- ---------
Total inventories $ 9,172 $10,487
======= =======
3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following (in thousands):
JUNE 29 JULY 1
1996 1995
Land $ 676 $ 676
Buildings 11,292 11,252
Machinery, equipment
and vehicles 32,445 31,396
Furniture and fixtures 1,584 1,456
Construction-in-progress 682 677
--------- ----------
Total property and equipment 46,679 45,457
Less accumulated depreciation 11,512 8,516
-------- --------
Property and equipment - net $35,167 $36,941
======= =======
F-8
<PAGE>
4. FINANCING AGREEMENTS
Long-term debt consisted of (in thousands):
<TABLE>
<CAPTION>
JUNE 29 JULY 1
1996 1995
<S> <C> <C>
Revolving credit facility, proceeds used for working capital needs and capital
expenditures, interest is payable monthly based on fluctuating rates tied
to the prime rate, matures October 15, 1996. The rate was 10.25% and 9.5%
as of June 29, 1996 and July 1, 1995, respectively. $15,329 $17,525
Bank term loan, proceeds used for the acquisition of Standard, due October 15,
1996. Interest is payable quarterly based on fluctuating rates tied to the
prime rate. The rate was 10.25% and 7.5% as of June 29, 1996 and July 1,
1995, respectively. 6,500 8,357
Bank term loan, proceeds used for the acquisition of Niemand, due October 15,
1996. Interest is payable quarterly based on fluctuating rates tied to the
prime rate. The rate was 10.25% and 7.0% as of June 29, 1996 and July 1,
1995, respectively. 6,964 8,821
Note payable, for capital expansion of Marion, Alabama facility, due in monthly
principal and interest installments of $8 through June, 2008. Note bears
interest at 5% per annum. 855 906
Other 301 307
--------- ---------
Total 29,949 35,916
Less current portion (2,115) (4,389)
-------- --------
Long-term debt $27,834 $31,527
====== ======
</TABLE>
The Company's bank credit agreement with NationsBank, N.A. provided for a
revolving credit facility of $17,500,000 with sublimits of $9,500,000 for
working capital requirements and $8,000,000 for capital expenditures.
As of March 31, 1996, the Company was not in compliance with certain covenants
of its credit facility. The bank waived such violations and extended the
maturity of the agreement to April 1, 1997. Subsequently, in June, 1996, the
Company and the bank agreed to accelerate the maturity of the agreement to
October 15, 1996, and to eliminate several covenants as of June 29, 1996. The
Company was in compliance with its remaining covenants at June 29, 1996.
Borrowings under the revolving credit facility bore interest at a rate tied to
the bank's prime rate. The bank's prime rate was 8.25% at June 29, 1996, while
the rate paid by the Company at June 29, 1996 was 10.25%.
In addition to the revolving bank credit facility, the bank credit agreement
with NationsBank, N.A. provided the Company with a $12,535,714 term loan and a
$13,000,000 term loan. The term loans bore interest at a rate tied to the bank's
prime rate. The bank's prime rate was 8.25% at June 29, 1996, while the rate
paid by the Company at June 29, 1996 was 10.25%.
All of the Company's accounts receivable, inventory and property, plant and
equipment were pledged as collateral under the bank credit agreement.
F-9
<PAGE>
In September, 1996, the Company refinanced its NationsBank credit agreement with
Harris Trust and Savings Bank. The new credit facility provides for a $25
million term loan and a $10 million revolving credit facility.
The term loan is a seven year loan requiring quarterly principal payments of
$625,000 in the first year of the loan, with the first quarterly payment due
December 31, 1996. The balance of the term loan is due in quarterly principal
payments of $937,500. The revolving credit facility matures five years from the
closing date. Both facilities bear interest at rates based on Harris Bank's
prime rate or the London Interbank Offered Rate ("LIBOR").
The proceeds of the new credit facility will be used to refinance the
NationsBank credit facility, to pay the related transaction costs and to fund
the future working capital and capital expenditure needs of the Company.
The new credit facility is secured by substantially all of the assets of the
Company.
Anticipated maturities of long-term debt subsequent to June 29, 1996, pursuant
to the new credit facility, are as follows (in thousands):
AMOUNTS
1997 $2,115
1998 3,595
1999 3,798
2000 3,798
2001 3,798
Thereafter 12,845
------
Total $29,949
=======
5. INCOME TAXES
The provision for income taxes consisted of the following (in thousands):
JUNE 29 JULY 1 JULY 2
1996 1995 1994
Currently Payable:
Federal $30 $193 $(1,441)
State 85 38 97
Deferred 551 (1,848) 2,579
----- -------- -------
Total $666 $(1,617) $1,235
==== ======= ======
F-10
<PAGE>
The following represents a reconciliation between the actual income tax expense
and income taxes computed by applying the statutory Federal income tax rate to
income (loss) before income taxes:
JUNE 29 JULY 1 JULY 2
1996 1995 1994
Statutory rate 34.0% (34.0%) 34.0%
State income tax
effect 5.9% (1.8%) 2.5%
Reduction of
valuation allowance (8.7)% (11.6%)
Amortization of excess
of purchase price over
net assets acquired 14.5% 3.8% 4.8%
Other 3.0% 1.5% 0.9%
------ -------- ------
Total 48.7% (30.5%) 30.6%
===== ===== =====
Deferred income tax (liabilities) assets result from reporting income and
expenses in different periods for tax and financial reporting purposes. The tax
effects of such cumulative temporary differences were as follows (in thousands):
JUNE 29 JULY 1
1996 1995
Deferred income tax assets:
Non-deductible accrued liabilities $639 $616
Net operating loss carryforwards of
a subsidiary company 699 699
State net operating loss carryforwards 579 451
State tax credits carryforward 615 667
Federal net operating loss carryforward 1,520 1,734
AMT credit carryforward 259 193
Differences in the basis of inventory
for tax purposes 241 262
Other 305 619
------- -------
Total 4,857 5,241
Deferred tax asset valuation allowance (137) (256)
------- ------
Net 4,720 4,985
------ ------
Deferred tax liabilities:
Difference in basis of property
and equipment (7,130) (6,643)
Unamortized balance of
tax LIFO reserve (39) (86)
Other (116) (368)
--------- ---------
Total (7,285) (7,097)
-------- --------
Net deferred income tax liability $(2,565) $(2,112)
======= =======
F-11
<PAGE>
At June 29, 1996, the Company had the following tax net operating losses for
federal income tax purposes (in thousands):
EXPIRATION
2006 $447
2007 664
2008 889
2009 -
2010 4,511
------
Total $6,511
======
Approximately $2.1 million of such losses relate to a subsidiary company, which
are available to be utilized only against future taxable income of such
subsidiary.
At June 29, 1996, the Company had a state investment tax credit carryforward of
$615,000 which expires if unutilized in the year 2005. These credits are
available to offset both Nebraska state income tax and Nebraska sales tax on
qualifying purchases.
6. EMPLOYEE BENEFIT PLANS
The Company maintains a noncontributory defined benefit pension plan for
substantially all of the RidgePak Corporation hourly employees with benefits
based on the employee's years of credited service. The Company's funding policy
is to contribute annually the minimum amount required under ERISA. Plan assets
are held by an independent trustee and consist of U.S. Government securities,
time deposits, common stocks, corporate bonds and collective investment funds.
Net periodic pension cost of the Company's defined benefit plan included the
following components (in thousands):
JUNE 29 JULY 1 JULY 2
1996 1995 1994
Service cost-benefits
earned during the period $36 $28 $31
Interest cost on projected
benefit obligation 27 24 26
Return on plan assets (53) (29) (18)
Net amortization and deferral 33 10 (14)
------ ------ -----
Net periodic pension cost $ 43 $ 33 $ 25
===== ===== =====
The following table sets forth the plan's funded status and the amount
recognized in the Company's balance sheet (in thousands):
1996 1995 1994
Actuarial present value of benefit obligations:
Vested benefit obligation $319 $307 $274
Nonvested benefit obligation 78 65 48
------- ------ ------
Accumulated benefit obligation $ 397 $372 $322
====== ==== ====
Projected benefit obligation for
service rendered to date (397) (372) (322)
Plan assets at fair value 421 357 323
---- ----- ----
Plan assets in excess of (less than)
projected benefit obligation 24 (15) 1
Unrecognized loss 113 154 135
---- ----- ----
Prepaid pension cost $137 $139 $136
==== ==== ====
F-12
The weighted average discount rate was 7.75% (changed from 7.5% effective June
30, 1996). The assumed rate of return was 8% for fiscal years 1996 and 1995.
The Company sponsors a defined contribution 401(k) plan (the Gibraltar Plan).
Employees are eligible to participate in the Gibraltar Plan upon completion of
six months of credited service. Participants fully vest in Company contributions
after five years with partial vesting after one year. An employee may contribute
up to 15% of his or her earnings on a pre-tax basis subject to IRS limitations.
The Company matches 25% of an employee's contribution up to a maximum of 4% of
eligible compensation. The Company also makes a quarterly profit sharing
contribution which is based on the earnings per share of Gibraltar stock for the
quarter. The profit sharing portion of each participant's account is invested in
Gibraltar stock.
The Company's contributions to the Gibraltar Plan for the years ended June 29,
1996, July 1, 1995 and July 2, 1994 approximated $76,000, $119,000 and $93,000,
respectively.
7. STOCK OPTION PLANS
Effective January 30, 1992, Gibraltar adopted the Gibraltar Packaging Group,
Inc. 1992 Incentive Stock Option Plan (the Plan). Under the Plan, Gibraltar may
grant to key employees options to purchase in the aggregate up to 300,000 shares
of Gibraltar's common stock with exercise prices equal to or greater than the
market value at the date of grant. Options granted under the Plan are
exercisable no earlier than six months and no later than ten years from the
grant date.
As of June 29, 1996, the following options were outstanding under the plan:
GRANT DATE NUMBER OF SHARES EXERCISE PRICE
July 13, 1992 35,334 $6.00
January 28, 1993 9,000 $6.50
April 28, 1993 10,000 $6.75
July 1, 1993 29,000 $8.00
July 1, 1994 34,000 $9.00
--------
Total 117,334
========
During fiscal year 1996, no shares were exercised and 89,000 shares were
canceled. As of June 29, 1996, 85,002 shares were exercisable.
Effective July 13, 1992, Gibraltar adopted the Gibraltar Packaging Group, Inc.
Director Stock Option Plan (Directors Plan), subject to approval by the
stockholders. Under the Directors Plan, each independent director may receive a
grant of an option to purchase 3,000 shares of Gibraltar's common stock at an
exercise price equal to the fair market value at the date such person is elected
to the board. Options granted under the Directors Plan are exercisable no
earlier than six months and no later than ten years from the grant date. As of
June 29, 1996, the following options were outstanding under the plan:
GRANT DATE NUMBER OF SHARES EXERCISE PRICE
July 13, 1992 6,000 $6.00
July 1, 1993 6,000 $8.00
July 1, 1994 10,000 $9.00
--------
Total 22,000
========
During fiscal year 1996, no shares were exercised or canceled. As of June 29,
1996; 13,334 shares were exercisable.
F-13
<PAGE>
8. COMMITMENTS
The Company leases office space, manufacturing equipment, computer equipment,
vehicles and warehouse space under non-cancelable operating leases. Rent expense
for the years ended June 29, 1996, July 1, 1995, and July 2, 1994 under such
lease agreements was approximately $933,000, $912,000 and $986,000,
respectively. In addition, rental income related to sub-leases on office space
for the years ended June 29, 1996, July 1, 1995 and July 2, 1994 approximated
$139,000, $92,000 and $0, respectively. Due to the relocation of the Corporate
office (Note 10), all sub-leases were terminated during fiscal year 1996. As of
June 29, 1996, approximate minimum future lease commitments were as follows (in
thousands):
AMOUNT
1997 $714
1998 433
1999 308
2000 146
2001 94
Thereafter 393
------
Total $2,088
======
9. RELATED PARTY TRANSACTIONS
During fiscal year 1994, the Company leased an airplane from Duke Leasing
Company for business travel by certain key employees. The Company's former Chief
Operating Officer is a partial owner of Duke Leasing Company. Total lease
expense paid by the company to Duke Leasing amounted to $34,025 during the
fiscal year 1994.
During fiscal year 1995 the Company paid $175,000 in fees to William Blair &
Company (a major stockholder) for advisory services relating to a terminated
merger agreement.
Certain officers of the Company hold an equity interest in Rostra Technologies,
Inc. (Rostra), a related party. During fiscal year 1996, the Company paid
$228,834 to Rostra in management fees for services provided by the Company's CEO
and CFO. As of June 29, 1996, the Company owed Rostra $81,726 for such fees.
Additionally, total non-interest bearing note and accounts receivable from
former and current employees was $46,408 at June 29, 1996.
10. SEVERANCE, OFFICE MOVING AND RESTRUCTURING CHARGES
In fiscal year 1996, the Company recorded a pre-tax charge of $1,038,000 for
severance of nine members of senior management ($937,000) and other costs with
no future benefits resulting from the move of the corporate office ($101,000)
from Charlotte, North Carolina to Westport, Connecticut. The charge was largely
recorded in the second ($249,000) and third ($745,000) quarters of the fiscal
year.
At June 29, 1996, the remaining severance liability approximated $621,000.
The costs related to the office move included amounts for lease terminations and
the write-off of leasehold improvements. The move was completed by June 29,
1996. The remaining liability at year end for this move was approximately
$50,000 and related to the termination of the Charlotte office lease.
F-14
<PAGE>
In the second quarter of fiscal year 1995, the Company recorded a pretax charge
of approximately $1.4 million related to its Niemand Industries division. The
charge was comprised of the following elements: a $0.8 million loss on
disposition of machinery and equipment which was deemed excess following the
consolidation of Niemand's Statesville, North Carolina and Marion, Alabama
facilities, a writedown of $0.4 million in the value of the Statesville building
which was subsequently sold and a charge of $0.2 million related to severance of
personnel as a result of the plant consolidation. All funds related to the 1995
restructuring charges have been spent.
11. ENVIRONMENTAL MATTERS
In May 1995 the Company discovered groundwater contamination at its Burlington,
North Carolina facility. Based on work performed by its environmental
consultants, the Company estimated that the total costs to remediate this site
will range between $750,000 and $1.1 million over a seven to ten year period.
The Company's accrual for such remediation costs approximates $605,000 and
$750,000 as of June 29, 1996 and July 1, 1995, respectively. The Company is
unable to determine whether amounts in excess of this amount will be incurred as
a result of the remediation efforts or other related claims, if any. Management
believes that the ultimate resolution of this and other environmental matters
will not materially affect the financial position or results of future
operations of the Company.
12. LEGAL PROCEEDINGS
From time to time the Company is a party to certain lawsuits and administrative
proceedings that arise in the conduct of its business. While the outcome of
these lawsuits and proceedings cannot be predicted with certainty, management
believes that, if adversely determined, the lawsuits and proceedings, either
singularly or in the aggregate, would not have a material adverse effect on the
financial condition or results of operations of the Company.
13. CUSTOMER CONCENTRATION
Sales to one customer, Smead Manufacturing, aggregated 10.6% of net sales in
fiscal year 1996. At June 29, 1996, accounts receivable due from this same
customer represent 4.9% of accounts receivable.
F-15
<PAGE>
14. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Summarized quarterly financial information for 1996 and 1995 are as follows (in
thousands, except per share data):
QUARTER ENDED
1996 SEPTEMBER 30 DECEMBER 31 MARCH 31 JUNE 29 TOTAL
Net sales $ 19,109 $ 17,867 $ 19,135 $18,273 $ 74,384
Gross profit 4,015 3,792 4,282 3,967 16,056
Net income (loss) 471 84 (66) 212 701
Net income (loss)
per share $0.09 $0.02 $(0.01) $0.04 $0.14
QUARTER ENDED
1995 SEPTEMBER 30 DECEMBER 31 MARCH 31 JULY 1 TOTAL
Net sales $19,869 $17,503 $19,892 $19,192 $76,456
Gross profit 4,349 664 4,218 3,180 12,411
Net income (loss) 741 (2,807) 271 (1,890) (3,685)
Net income (loss)
per share $0.15 $(0.56) $0.05 $(0.37) $(0.73)
F-16
<PAGE>
<PAGE>
GIBRALTAR PACKAGING GROUP, INC.
1996 NON-QUALIFIED STOCK OPTION PLAN
1. PURPOSE
The purpose of the Gibraltar Packaging Group, Inc. 1996 Non-Qualified
Stock Option Plan (the "1996 Plan") is to enhance the ability of Gibraltar
Packaging Group, Inc. (the "Company") and its Subsidiaries (as defined below) to
attract and retain individuals possessing superior managerial talent to serve as
employees of the Company and its Subsidiaries, and to provide long-term
incentives to such persons to contribute to the future success and prosperity of
the Company and its Subsidiaries. Accordingly, under the 1996 Plan the Company
may grant to key employees options ("Options") to purchase shares of the
Company's common stock, par value $.01 per share ("Common Stock").
For purposes of the 1996 Plan, a "Subsidiary" shall be any corporation
in which the Company has a direct or indirect ownership interest of 50% or more
of the total combined voting power of all classes of stock in such corporation.
2. ADMINISTRATION AND INTERPRETATION
A. ADMINISTRATION. The 1996 Plan shall be administered by the
Compensation Committee (the "Committee") of the Board of Directors of the
Company (the "Board"). The Committee may prescribe, amend and rescind the rules
and regulations for administration of the 1996 Plan and shall have full power
and authority to construe and interpret the 1996 Plan. The Committee may correct
any defect or any omission or reconcile any inconsistency in the 1996 Plan or in
any grant made under the 1996 Plan in the manner and to the extent it shall deem
desirable.
Committee members shall be appointed by and shall serve at the
pleasure of the Board. All members of the Committee shall be "disinterested
persons" within the meaning of Rule 16b-3 of the General Rules and Regulations
of the Securities Exchange Act of 1934 (the "1934 Act"). The Board may from time
to time appoint members of the Committee in substitution for or in addition to
members previously appointed and may fill vacancies, however caused, in the
Committee. A majority of the members of the Committee shall constitute a quorum,
and the acts of a majority of the members present at a meeting, or the acts of a
majority of the members evidenced in writing, shall be the acts of the
Committee. Members of the Committee may, in the discretion of the Board, receive
compensation for their services as members, and all expenses and liabilities
they incur in connection with the administration of the 1996 Plan shall be borne
by the Company.
<PAGE>
The day-to-day administration of the 1996 Plan may be carried
out by such officers and employees of the Company or its Subsidiaries as shall
be designated from time to time by the Committee. The Committee may employ
attorneys, consultants, accountants, appraisers, brokers or other persons, and
the Committee, the Company and the officers and employees of the Company shall
be entitled to rely upon the advice, opinions or valuations of any such persons.
The Committee shall have the authority (i) to make all
decisions concerning Options granted under the 1996 Plan, including without
limitation the selection of the persons to whom Options are granted, the number
of shares of Common Stock subject to each Option and the terms and conditions of
each Option; (ii) to construe the terms and provisions of the 1996 Plan and the
option agreements ("Agreements") under which Options are granted; and (iii) to
adopt, from time to time, such rules and regulations, not inconsistent with the
terms of the 1996 Plan, as it may deem advisable to carry out the 1996 Plan. All
decisions by the Committee shall be final. The effective date of an Option, as
determined by the Committee, is referred to herein as the "Grant Date."
B. INTERPRETATION. The interpretation and construction by the
Committee of any provisions of the 1996 Plan or of any grant under the 1996 Plan
and any determination by the Committee under any provision of the 1996 Plan
or any such grant shall be final and conclusive for all purposes.
C. LIMITATION ON LIABILITY. Neither the Committee nor any member
thereof shall be liable for any act, omission, interpretation, construction or
determination made in connection with the 1996 Plan in good faith, and the
members of the Committee shall be entitled to indemnification and reimbursement
by the Company in respect of any claim, loss, damage or expense (including
counsel fees) arising therefrom to the full extent permitted by law and the
certificate of incorporation of the Company. The members of the Committee, if
appointed, shall be named as insureds under any directors and officers liability
insurance coverage that may be in effect from time to time.
3. SHARES SUBJECT TO GRANTS UNDER THE 1996 PLAN
The aggregate number of shares which may be issued under Options
granted under the 1996 Plan shall not exceed 300,000 shares of Common Stock.
Such shares may consist of authorized but unissued shares of Common Stock or
previously issued shares of Common Stock reacquired by the Company. Any of such
shares which remain unissued and which are not subject to outstanding Options at
the termination of the 1996 Plan shall cease to be subject to the 1996 Plan, but
until termination of the 1996 Plan, the Company shall at all times make
available a sufficient number of shares to meet the requirements of the 1996
Plan and the outstanding Options. The number of shares of Common Stock that are
available for Options under the 1996 Plan shall be decreased by each exercise of
an Option, and to the extent that such Option lapses the shares theretofore
subject to such Option may again be subject to other Options granted under the
1996 Plan. If any Option, in whole or in part, expires or terminates unexercised
or is canceled or forfeited, the shares theretofore subject to such Option may
be subject to another Option
2
<PAGE>
granted under the 1996 Plan. The aggregate number of shares which may be issued
under Options granted under the 1996 Plan shall be subject to adjustment as
provided in Section 6 hereof.
4. ELIGIBILITY
The individuals who shall be eligible to receive Options under the 1996
Plan shall be such key employees of the Company and its Subsidiaries as the
Committee from time to time shall determine. In granting Options, the Committee
shall take into consideration the contribution an individual has made or may
make to the success of the Company or its Subsidiaries and such other factors as
the Committee shall determine. The Committee shall also have the authority to
consult with and receive recommendations from officers and other employees of
the Company and its Subsidiaries with regard to these matters. In no event shall
any individual or his legal representatives, heirs, legatees, distributees or
successors have any right to participate in the 1996 Plan except to such extent,
if any, as the Committee shall determine.
Options may be granted under the 1996 Plan from time to time in
substitution for stock options, restricted stock or other stock-based
compensation granted by other corporations where, as a result of a merger or
consolidation of such other corporation with the Company or a Subsidiary, or the
acquisition by the Company or a Subsidiary of the assets of such other
corporation, or the acquisition by the Company or a Subsidiary of stock of, or
other beneficial ownership interest in, such other corporation, the individuals
who held such other stock options, restricted stock or other stock-based
compensation become eligible to receive Options under the 1996 Plan.
5. GRANTS AND TERMS OF OPTIONS
A. GRANTS OF OPTIONS. Grants of Options under the 1996 Plan
shall be for such number of shares of Common Stock and shall be subject to such
terms and conditions as the Committee shall designate.
B. TERMS OF OPTIONS. Each grant of an Option shall be evidenced by an
Agreement executed by the recipient of the Option (the "Optionee") and an
authorized officer of the Company. Each Agreement shall be in a form approved by
the Committee, shall comply with and be subject to the terms and conditions of
the 1996 Plan and may contain such other provisions, consistent with the terms
and conditions of the 1996 Plan, as the Committee shall deem advisable.
References herein to an Agreement shall include, to the extent applicable, any
amendment to the Agreement and any interpretation or construction thereof by the
Committee pursuant to this 1996 Plan.
(1) EXERCISE OF OPTIONS. Options shall not be exercisable
prior to the date six months following the Grant Date. In addition, the
Committee may include in each Agreement a provision stating that the
Option granted therein may not be exercised in whole or in part for an
additional period of time specified in such Agreement, and may
3
<PAGE>
further limit the exercisability of the Option in such manner as the
Committee deems appropriate, including, without limitation, the
achievement of specified performance goals or other criteria. Except as
provided herein or as so specified in the Agreement or in a resolution
of the Committee, any Option may be exercised in whole at any time or
in part from time to time during its term. The Committee may, in its
discretion, at any time and from time to time accelerate the
exercisability of all or part of any Option, provided such Option shall
not be exercisable prior to the date six months following its Grant
Date. An Optionee may exercise an Option by providing written notice to
the Company at any time or from time to time during the period such
Option is exercisable and by satisfying such other conditions as are
set forth in the Agreement relating to the Option including, without
limitation, satisfying the requirements for tax withholding, if any,
with respect to such exercise in a manner acceptable to the Committee,
which may include, in its discretion, withholding of shares to be
acquired upon such exercise.
(2) PAYMENT OF OPTION EXERCISE PRICE. Upon exercise
of an Option, the full price per share (the "Exercise Price") for
the shares with respect to which the Option is being exercised shall
be payable to the Company (i) in cash or by check payable and
acceptable to the Company or (ii) subject to the approval of the
Committee, (a) by tendering to the Company shares of Common Stock
owned by the Optionee having an aggregate Market Value Per Share
(as defined below) as of the date of exercise and tender that is not
greater than the Exercise Price for the shares with respect to
which the Option is being exercised and by paying any remaining
amount of the Exercise Price as provided in (i) above; PROVIDED,
HOWEVER, that the Committee may, upon confirming that the
Optionee owns the number of additional shares being tendered,
authorize the issuance of a new certificate for the number of shares
being acquired pursuant to the exercise of the Option less the number
of shares being tendered upon the exercise, and return to the
Optionee (or not require surrender of) the certificate for the shares
being tendered upon the exercise; or (b) by the Optionee delivering
to the Company a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the
Company cash or a check payable and acceptable to the Company to pay
the option exercise price; PROVIDED that in the event the Optionee
chooses to pay the Option exercise as provided in (ii)(b) above, the
Optionee and the broker shall comply with such procedures and enter
into such agreements of indemnity and other agreements as the
Committee shall prescribe as a condition of such payment
procedure. Payment instructions will be received subject to collection.
(3) NUMBER OF SHARES. Each Agreement shall state the total
number of shares of Common Stock that is subject to the Option, which
option shall be subject to adjustment pursuant to Section 6.
(4) EXERCISE PRICE. The Exercise Price for each Option shall
be fixed by the Committee on the Grant Date. The Exercise Price shall
be in no event less than the par value of the Common Stock. The
Exercise Price shall be subject to adjustment pursuant to Section 6.
4
<PAGE>
(5) TERM. The term of each Option shall be determined by the
Committee at the Grant Date; PROVIDED, HOWEVER, that each Option shall
expire no later than ten years from the Grant Date (such date, as
determined by the Committee or provided for herein, being referred to
hereafter as the "Expiration time"); provided further, however, if the
initial term of an Option is for less than 10 years, the Committee, in
its discretion, may modify the Expiration Time to a date that is no
later than 10 years from the initial Grant Date.
(6) TERMINATION OF EMPLOYMENT. If the employment of an
Optionee is terminated for any reason other than a Qualified
Termination (defined below), the Option granted to such Optionee shall
automatically expire simultaneously with such termination. In the event
of termination of an Optionee's employment due to death, retirement, on
or after reaching age 65 (or if prior to age 65, with the consent of
the Committee), permanent disability (as determined under the standards
of the Company's long-term disability program) or termination by the
Company for any reason other than "cause" (each of such four events
being a "Qualified Termination"), the Option may be exercised by the
Optionee (or his estate, personal representative or beneficiary) at any
time within the three-month period commencing on the day next following
such Qualified Termination (or within the next succeeding three months
if the Optionee dies or becomes disabled within the three-month period
following a Qualified Termination relating to other than the Optionee's
death or disability) to the full extent that the Optionee was entitled
to exercise the same on the day immediately prior to such Qualified
Termination. For purposes of this clause, "cause" shall mean:
(i) Final conviction of the Optionee of a felony
under the laws of the United States or any state thereof which
results or was intended to result directly or indirectly in
gain or personal enrichment by the Optionee at the expense of
the Company;
(ii) Participation by the Optionee as an employee,
officer or principal shareholder in any business engaged in
activities in direct competition with the Company without the
consent of the Company; or
(iii) Gross and willful inattention to Optionee's
duties as an employee for a continuous period of three months
other than due to Optionee's total physical disability, or
other cause reasonably beyond the control of Optionee, which
inattention to duty has a material adverse effect on the
Company.
Notwithstanding the foregoing however, the Committee
may, in its discretion provide that an Option shall remain outstanding
and be exercisable following termination of employment on such other
terms and conditions as the Committee shall approve.
5
<PAGE>
6. RECAPITALIZATION OR REORGANIZATION
A. The existence of the 1996 Plan and the Options granted hereunder
shall not affect in any way the right or power of the Board or the shareholders
of the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company's capital structure or its
business, any merger or consolidation of the Company, any issue of bonds,
debentures, or shares of preferred stock ahead of or affecting Common Stock or
the rights thereof, the dissolution or liquidation of the Company or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding.
B. The shares with respect to which Options may be granted are shares
of Common Stock as presently constituted. If, and whenever, prior to the
termination of the 1996 Plan or the expiration of an outstanding Option, the
Company shall effect a subdivision of shares of Common Stock or the payment of a
stock dividend on Common Stock without receipt of consideration by the Company,
the remaining shares of Common Stock available under the 1996 Plan and the
number of shares of Common Stock with respect to which outstanding Options may
thereafter be exercised shall be proportionately increased, and the Exercise
Price under outstanding Options shall be proportionately reduced. If, and
whenever, prior to the termination of the 1996 Plan or the expiration of an
outstanding Option, the Company shall effect a consolidation of shares of Common
Stock, the remaining shares of Common Stock available under the 1996 Plan and
the number of shares of Common Stock with respect to which any outstanding
Option may thereafter be exercised shall be proportionately reduced, and the
Exercise Price under the outstanding Options shall be proportionately increased.
C. Except as may otherwise be expressly provided in the 1996 Plan, the
issuance by the Company of shares of stock of any class or securities
convertible into shares of stock of any class, for cash, property, labor or
services, upon direct sale, upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, and in any case whether or not for fair
value, shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares of Common Stock available under the 1996 Plan
or subject to Options theretofore granted or the Exercise Price per share.
D. Unless otherwise provided in any Option, each outstanding
Option shall become immediately fully exercisable:
(1) if there occurs any transaction (which shall include a
series of transactions occurring within 60 days or occurring pursuant to a
plan), that has the result that stockholders of the Company immediately before
such transaction cease to own at least 51% of the voting stock of the Company or
of any entity that results from the participation of the Company in a
reorganization, consolidation, merger, liquidation or any other form of
corporate transaction;
(2) if the stockholders of the Company approve a plan of merger,
consolidation, reorganization, liquidation or dissolution in which the Company
does not survive (unless the
6
<PAGE>
approved merger, consolidation, reorganization, liquidation or dissolution is
subsequently abandoned); or
(3) if the stockholders of the Company approve a plan for the
sale, lease, exchange, transfer, assignment or other disposition of all or
substantially all the property and assets of the Company (unless such plan is
subsequently abandoned).
E. Any adjustment provided for above shall be subject to any
required shareholder action.
7. RECIPIENT'S AGREEMENT
If, in the opinion of counsel for the Company, at the time of the
exercise of any Option it is necessary or desirable, in order to comply with any
then applicable laws or regulations relating to the sale of securities, for the
individual exercising the Option to agree to hold any shares issued to the
individual for investment and without intention to resell or distribute the same
and for the individual to agree to dispose of such shares only in compliance
with such laws and regulations, the individual shall be required, upon the
request of the Company, to execute and deliver to the Company a further
agreement to such effect.
8. MISCELLANEOUS
A. NO EMPLOYMENT CONTRACT. Nothing contained in the 1996 Plan
shall be construed as conferring upon any employee the right to continue in the
employ of the Company or any Subsidiary.
B. EMPLOYMENT WITH SUBSIDIARIES. Employment by the Company for
the purpose of this 1996 Plan shall be deemed to include employment by, and to
continue during any period in which an employee is in the employment of, any
Subsidiary.
C. NO RIGHTS AS A SHAREHOLDER. A person granted an Option under the 1996
Plan shall have no rights as a shareholder with respect to shares covered by
such person's Option until the date of the issuance of shares to the person upon
the exercise of the Option. No adjustment will be made for dividends or other
distributions or rights for which the record date is prior to the date of such
issuance.
D. NO RESTRICTION ON CORPORATE ACTION. Nothing contained in the 1996
Plan shall be construed to prevent the Company or any Subsidiary from taking any
corporate action that is deemed by the Company or such Subsidiary to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on the 1996 Plan or any Option granted under the 1996 Plan. No
person that receives, or is eligible to receive, Options under the 1996 Plan
shall have any claim against the Company or any Subsidiary as a result of any
such action.
E. NON-ASSIGNABILITY. Neither a person that receives Options
under the 1996 Plan nor such person's beneficiary shall have the power or right
to sell, exchange, pledge, transfer, assign
7
<PAGE>
or otherwise encumber or dispose of such person's or beneficiary's Options
received under the 1996 Plan except by will or the laws of intestate
succession; and to the extent any such Option received under the 1996 Plan
is awarded to a spouse pursuant to any divorce proceeding, such interest
shall be deemed to be terminated and forfeited notwithstanding any vesting
provisions or other terms herein or in the Agreement evidencing such Option.
F. GOVERNING LAW; CONSTRUCTION. All rights and obligations under the
1996 Plan shall be governed by, and the 1996 Plan shall be construed in
accordance with, the laws of the State of Delaware without regard to the
principles of conflicts of laws. Titles and headings to Sections herein are for
purposes of reference only, and shall in no way limit, define or otherwise
affect the meaning or interpretation of any provisions of the 1996 Plan.
G. AMENDMENT AND TERMINATION. The Committee may from time to time and at
any time alter, amend, suspend, discontinue or terminate this 1996 Plan and any
grants of Options hereunder. The 1996 Plan shall terminate on the tenth
anniversary date of the effective date of the 1996 Plan and no Options shall be
awarded after such date.
H. PREEMPTION BY APPLICABLE LAWS AND REGULATIONS. Anything in the 1996
Plan or any Agreement to the contrary notwithstanding, if, at any time specified
herein or therein for the making of any determination or the taking of any
action, any law, regulation or requirements of any governmental authority having
jurisdiction in the premises shall require the Company to take any additional
action not otherwise required by the 1996 Plan or an Agreement in connection
with any such determination or action, the making of such determination or the
taking of such action, as the case may be, shall be deferred until such
additional action shall have been taken.
I. EFFECTIVE DATE. The 1996 Plan was adopted by the Board on
August 1, 1996, and shall be deemed to have become effective on that date.
<PAGE>
CREDIT AGREEMENT
dated as of September 25, 1996
among
GIBRALTAR PACKAGING GROUP, INC.,
VARIOUS FINANCIAL INSTITUTIONS
and
HARRIS TRUST AND SAVINGS BANK,
individually and as Agent
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Page
SECTION 1 DEFINITIONS.......................................................................................... 1
1.1 Definitions............................................................................. 2
1.2 Other Definitional Provisions........................................................... 15
SECTION 2 COMMITMENTS OF THE BANKS; TYPES OF LOANS; LETTERS
OF CREDIT; BORROWING AND CONVERSION PROCEDURES....................................................... 15
2.1 Commitments..................................................................................... 15
2.2 Various Types of Loans.......................................................................... 16
2.3 Borrowing Procedures............................................................................ 16
2.4 Procedures for Conversion of Type of Loan....................................................... 17
2.5 Letter of Credit Procedures..................................................................... 17
2.6 Participations in Letters of Credit............................................................. 17
2.7 Reimbursement Obligations....................................................................... 18
2.8 Limitation on Harris's Obligations.............................................................. 18
2.9 Funding by Banks to Harris...................................................................... 18
2.10 Warranty....................................................................................... 19
2.11 Conditions..................................................................................... 19
2.12 Commitments Several............................................................................ 20
SECTION 3 NOTES EVIDENCING LOANS............................................................................... 20
3.1 Notes........................................................................................... 20
3.2 Recordkeeping................................................................................... 20
SECTION 4 INTEREST............................................................................................. 21
4.1 Interest Rates.................................................................................. 21
4.2 Interest Payment Dates.......................................................................... 21
4.3 Interest Periods................................................................................ 21
4.4 Setting and Notice of Eurodollar Rates.......................................................... 22
4.5 Computation of Interest......................................................................... 22
SECTION 5 FEES................................................................................................. 23
5.1 Non-Use Fee..................................................................................... 23
5.2 Letter of Credit Fees........................................................................... 23
5.3 Agent's Fees.................................................................................... 23
SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENTS; PREPAYMENTS............................................. 24
6.1 Reduction or Termination of the Commitments..................................................... 24
6.1.1 Termination of Term Commitments.................................................. 24
6.1.2 Voluntary Reduction or Termination of Commitments................................ 24
6.1.3 Reductions Pro Rata.............................................................. 24
6.2 Prepayments..................................................................................... 24
6.2.1 Mandatory Prepayments............................................................ 24
6.2.2 Voluntary Prepayments............................................................ 25
<PAGE>
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES...................................................... 25
7.1 Making of Payments.............................................................................. 25
7.2 Application of Certain Payments................................................................. 25
7.3 Due Date Extension.............................................................................. 26
7.4 Setoff.......................................................................................... 26
7.5 Proration of Payments........................................................................... 26
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR LOANS............................................. 27
8.1 Increased Costs................................................................................. 27
8.2 Basis for Determining Interest Rate Inadequate or Unfair........................................ 28
8.3 Changes in Law Rendering Eurodollar Loans Unlawful.............................................. 29
8.4 Funding Losses.................................................................................. 29
8.5 Right of Banks to Fund through Other Offices.................................................... 30
8.6 Discretion of Banks as to Manner of Funding..................................................... 30
8.7 Conclusiveness of Statements; Survival of Provisions............................................ 30
SECTION 9 WARRANTIES........................................................................................... 30
9.1 Organization, etc............................................................................... 30
9.2 Authorization; No Conflict...................................................................... 31
9.3 Validity and Binding Nature..................................................................... 31
9.4 Financial Information........................................................................... 31
9.5 No Material Adverse Change...................................................................... 32
9.6 Litigation and Contingent Liabilities........................................................... 32
9.7 Ownership of Properties; Liens.................................................................. 32
9.8 Subsidiaries.................................................................................... 32
9.9 Pension and Welfare Plans....................................................................... 32
9.10 Investment Company Act.......................................................................... 33
9.11 Public Utility Holding Company Act.............................................................. 33
9.12 Regulation U.................................................................................... 33
9.13 Taxes........................................................................................... 33
9.14 Solvency, etc................................................................................... 33
9.15 Environmental Warranties........................................................................ 33
9.16 Information..................................................................................... 34
SECTION 10 COVENANTS........................................................................................... 32
10.1 Reports, Certificates and Other Information.................................................... 32
10.1.1 Audit Report.................................................................... 32
10.1.2 Quarterly Reports............................................................... 33
10.1.3 Monthly Reports................................................................. 33
10.1.4 Borrowing Base Certificate...................................................... 34
10.1.5 Compliance Certificates......................................................... 34
10.1.6 Reports to SEC and to Shareholders.............................................. 34
10.1.7 Notice of Default, Litigation and
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<PAGE>
ERISA Matters................................................................... 37
10.1.8 Subsidiaries.................................................................... 37
10.1.9 Management Reports.............................................................. 37
10.1.10 Other Information.............................................................. 38
10.2 Books, Records and Inspections................................................................. 38
10.3 Insurance...................................................................................... 38
10.4 Compliance with Laws; Payment of Taxes and Liabilities......................................... 38
10.5 Maintenance of Existence, etc.................................................................. 39
10.6 Financial Covenants............................................................................ 39
10.6.1 Minimum Net Worth............................................................... 39
10.6.2 Minimum Interest Coverage....................................................... 39
10.6.3 Debt Ratio...................................................................... 39
10.7 Liens.......................................................................................... 39
10.8 Limitations on Debt............................................................................ 40
10.9 Guaranties..................................................................................... 40
10.10 Mergers and Consolidations; Acquisitions...................................................... 41
10.11 Asset Dispositions............................................................................ 41
10.12 Capital Expenditures.......................................................................... 41
10.13 Restricted Payments........................................................................... 42
10.14 Modification of Organizational Documents...................................................... 42
10.15 Use of Proceeds............................................................................... 42
10.16 Further Assurances............................................................................ 42
10.17 Transactions with Affiliates.................................................................. 43
10.18 Employee Benefit Plans........................................................................ 43
10.19 Lease Rentals................................................................................. 43
10.20 Environmental Covenants....................................................................... 43
10.20.1 Environmental Response Obligation.............................................. 43
10.20.2 Environmental Liabilities...................................................... 44
10.21 Unconditional Purchase Obligations............................................................ 44
10.22 Maintenance of Properties..................................................................... 44
10.23 Investments................................................................................... 44
10.24 Interest Rate Protection...................................................................... 45
10.25 Hedging Agreements............................................................................ 45
10.26 Other Agreements.............................................................................. 45
SECTION 11 CONDITIONS TO EFFECTIVENESS; CONDITIONS OF
LENDING...................................................................... 45
11.1 Effective Date................................................................................. 45
11.1.1 Notes........................................................................... 45
11.1.2 Resolutions..................................................................... 46
11.1.3 Consents, etc................................................................... 46
11.1.4 Incumbency and Signature Certificates........................................... 46
11.1.5 Guaranty........................................................................ 46
11.1.6 Security Agreement.............................................................. 46
11.1.7 Pledge Agreements............................................................... 46
11.1.8 Mortgages....................................................................... 47
11.1.9 Evidence of the Payment of Debt to be
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<PAGE>
Repaid; Releases............................................................... 47
11.1.10 Insurance Certificate.......................................................... 47
11.1.11 Opinions of Counsel for the Company and the Guarantors......................... 47
11.1.12 Other.......................................................................... 47
11.2 All Loans and Letters of Credit................................................................ 47
11.2.1 No Default, etc................................................................. 47
11.2.2 Confirmatory Certificate........................................................ 48
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.................................................................. 48
12.1 Events of Default.............................................................................. 48
12.1.1 Non-Payment of the Loans, etc................................................... 48
12.1.2 Non-Payment of Other Debt....................................................... 48
12.1.3 Other Material Obligations...................................................... 48
12.1.4 Bankruptcy, Insolvency, etc..................................................... 49
12.1.5 Non-Compliance with Provisions of This Agreement................................ 49
12.1.6 Warranties...................................................................... 49
12.1.7 Pension Plans................................................................... 50
12.1.8 Judgments....................................................................... 50
12.1.9 Invalidity of Guaranty, etc..................................................... 50
12.1.10 Invalidity of Collateral Documents, etc........................................ 50
12.1.11 Change of Control.............................................................. 50
12.2 Effect of Event of Default..................................................................... 50
SECTION 13 THE AGENT........................................................................................... 51
13.1 Authorization.................................................................................. 51
13.2 Indemnification................................................................................ 51
13.3 Exculpation.................................................................................... 52
13.4 Credit Investigation........................................................................... 52
13.5 Agent and Affiliates........................................................................... 52
13.6 Action on Instructions of the Required Banks................................................... 53
13.7 Funding Reliance............................................................................... 53
13.8 Resignation.................................................................................... 54
SECTION 14 GENERAL............................................................................................. 54
14.1 Waiver; Amendments............................................................................. 54
14.2 Confirmations.................................................................................. 55
14.3 Notices........................................................................................ 55
14.4 Computations................................................................................... 55
14.5 Regulation U................................................................................... 55
14.6 Costs, Expenses and Taxes...................................................................... 55
14.7 Subsidiary References.......................................................................... 56
14.8 Captions....................................................................................... 56
14.9 Assignments; Participations.................................................................... 56
14.9.1 Assignments..................................................................... 56
14.9.2 Participations.................................................................. 58
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<PAGE>
14.10 Governing Law................................................................................. 59
14.11 Counterparts.................................................................................. 59
14.12 Successors and Assigns........................................................................ 59
14.13 Indemnification by the Company................................................................ 60
14.14 Forum Selection and Consent to Jurisdiction................................................... 60
14.15 Waiver of Jury Trial.......................................................................... 61
14.16 References to Banks and Agents................................................................ 61
</TABLE>
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<PAGE>
SCHEDULE I Commitments and Percentages
EXHIBIT A-1 Form of Revolving Note (Section 3.1(a))
EXHIBIT A-2 Form of Term Note (Section 3.1(b))
EXHIBIT B Litigation and Contingent Liabilities
(Section 9.6)
EXHIBIT C Subsidiaries (Section 9.8)
EXHIBIT D Welfare Plans (Section 9.9)
EXHIBIT E Environmental Compliance (Section 9.15)
EXHIBIT F Form of Compliance Certificate
(Section 10.1.5)
EXHIBIT G Liens (Section 10.7)
EXHIBIT H Debt (Section 10.8)
EXHIBIT I-1 Form of Opinion
(Section 11.1.11(a))
EXHIBIT I-2 Form of Opinion
(Section 11.1.11(b))
EXHIBIT I-3 Form of Opinion
(Section 11.1.11(c))
EXHIBIT I-4 Form of Opinion
(Section 11.1.11(d))
EXHIBIT I-5 Form of Opinion
EXHIBIT J Form of Assignment Agreement
(Section 14.9)
EXHIBIT K Form of Guaranty
(Section 11.1.5)
EXHIBIT L Form of Borrowing Base Certificate
(Section 10.1.4)
EXHIBIT M Form of Security Agreement
(Section 11.1.6)
EXHIBIT N-1 Form of Company Pledge Agreement
(Section 11.1.7(a))
EXHIBIT N-2 Form of Subsidiary Pledge Agreement
(Section 11.1.7(b))
EXHIBIT O List of Mortgaged Property
(Section 11.1.8)
EXHIBIT P Investments (Section 10.23)
EXHIBIT Q Material Changes (Section 9.5)
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<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT dated as of September 25, 1996 (as amended or
otherwise modified from time to time, this "Agreement") is entered into among
GIBRALTAR PACKAGING GROUP, INC., a Delaware corporation (the "Company"), the
undersigned financial institutions (together with their respective successors
and assigns, collectively the "Banks" and individually each a "Bank") and HARRIS
TRUST AND SAVINGS BANK (in its individual capacity, "Harris"), as agent for the
Banks.
In consideration of the premises and the mutual agreements herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1 DEFINITIONS.
1.1 Definitions. When used herein the following terms shall have the
following meaning (such definitions to be applicable to both the singular and
plural forms of such terms):
Account Debtor means the party who is obligated on or under any
Receivable.
Affected Loan - see Section 8.3.
Affiliate of any Person means any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person. For purposes of the definition of Affiliate, "control" means the
possession directly or indirectly of the power to direct or cause the direction
of the management and policies of a Person, whether through ownership of voting
securities, by contract, or otherwise; it being understood that Rostra
Technologies, Inc. and its Subsidiaries shall not be deemed to be Affiliates of
the Company for purposes of this Agreement.
Agent means Harris in its capacity as agent for the Banks hereunder and
any successor thereto in such capacity.
Agreement - see the Preamble.
Alternate Reference Rate means at any time the greater of (a) the
Federal Funds Rate plus 1/2 of 1% and (b) the rate per annum then most recently
announced by Harris as its prime rate at Chicago, Illinois.
<PAGE>
Assignee - see Section 14.9.1.
Assignment Agreement - see Section 14.9.1.
Bank - see the Preamble.
Borrowing Base means an amount equal to the sum of (i) 85% of the
amount of all Eligible Receivables plus (ii) 60% of the amount, based on the
lower of cost or market value, of all Eligible Inventory consisting of raw
materials plus (iii) 50% of the amount, based on the lower of cost or market
value, of all Eligible Inventory consisting of finished goods.
Business Day means any day on which Harris is open for commercial
banking business in Chicago and, in the case of a Business Day which relates to
a Eurodollar Loan, on which dealings are carried on in the interbank eurodollar
market.
Capital Expenditures means all expenditures which, in accordance with
generally accepted accounting principles, would be required to be capitalized
and shown on the consolidated balance sheet of the Company including without
limitation all obligations in respect of Capitalized Leases, but excluding
expenditures made in connection with the replacement, substitution or
restoration of assets to the extent financed (i) from insurance proceeds (or
other similar recoveries) paid on account of the loss of or damage to the assets
being replaced or restored or (ii) with awards of compensation arising from the
taking by eminent domain or condemnation of the assets being replaced.
Capital Lease means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property by such
Person which, in conformity with generally accepted accounting principles, is
accounted for as a capital lease on the balance sheet of such Person.
Cash Equivalent Investment means, at any time:
(a) any evidence of Debt, maturing not more than one year after such
time, issued or guaranteed by the United States Government;
(b) commercial paper, maturing not more than one year from the date of
issue, which is issued by
(i) a corporation (except an Affiliate of the
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<PAGE>
Company) organized under the laws of any State of the United
States of America or of the District of Columbia and rated at
least A-1 by Standard & Poor's Corporation or P-1 by Moody's
Investors Service, Inc., at the time of investment, or
(ii) any Bank (or its holding company);
(c) any certificate of deposit or bankers' acceptance or
eurodollar time deposit, maturing not more than one year after the date
of issue, which is issued by either
(i) a financial institution that is a member of the
Federal Reserve System and has a combined capital and surplus
and undivided profits of not less than $100,000,000, or
(ii) any Bank;
(d) any repurchase agreement with a term of one year or less which
(i) is entered into with
(A) any Bank, or
(B) any other commercial banking
institution of the stature referred to in
clause (c)(i),
(ii) is secured by a fully perfected Lien in any
obligation of the type described in any of clauses (a) through
(c), and
(iii) has a market value at the time such repurchase
agreement is entered into of not less than 100% of the
repurchase obligation of such Bank (or other commercial
banking institution) thereunder;
(e) investments in money market funds that invest solely in
Cash Equivalent Investments described in clauses (a) through (d); or
(f) any deposit account with any Bank.
Change of Control means (a) the William Blair Leveraged Capital Fund,
Walter E. Rose and John D. Strautnieks, collectively, shall at any time be the
legal and equitable owner
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<PAGE>
of less than (i) prior to June 30, 1998, 22.5% in the
aggregate of the outstanding shares of common stock of the Company and (ii) on
or after June 30, 1998, 12.5% in the aggregate of the outstanding shares of
common stock of the Company; or (b) any Person or group of Persons (within the
meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as amended,
but excluding the William Blair Leveraged Capital Fund, Walter E. Rose and John
D. Strautnieks) shall acquire beneficial ownership (within the meaning of Rule
13d-3 promulgated under such Act) of more of the outstanding shares of common
stock of the Company than is owned by the William Blair Leveraged Capital Fund,
Walter E. Rose and John D. Strautnieks, collectively; or (c) during any 24-month
period, individuals who at the beginning of such period constituted the
Company's Board of Directors (together with any new directors whose election by
the Company's Board of Directors or whose nomination for election by the
Company's shareholders was approved by a vote of a majority of the directors who
either were directors at the beginning of such period or whose election or
nomination was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company.
Collateral Documents means the Company Pledge Agreement, the Subsidiary
Pledge Agreement, the Security Agreement and any Mortgage.
Commitment means, as to any Bank, such Bank's Revolving Commitment or
Term Commitment.
Commitment Termination Date means September 25, 2001 or such earlier
date on which the Commitments shall terminate pursuant to Section 6 or 12.
Company - see the Preamble.
Company Pledge Agreement - see Section 11.1.7(a).
Computation Period means any period of four consecutive Fiscal Quarters
ending on the last day of a Fiscal Quarter.
Consolidated Net Income means, with respect to the Company and its
Subsidiaries for any period, the net income (or loss) of the Company and its
Subsidiaries for such period; provided that there shall be excluded therefrom
the income of all Subsidiaries to the extent that the declaration or payment of
dividends or similar distributions by any Subsidiary of such income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to such Subsidiary.
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<PAGE>
Contingent Liability means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to or otherwise to invest in a
debtor, or otherwise to assure a creditor against loss) any indebtedness,
obligation or other liability of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of dividends
or other distributions upon the shares of any other Person. The amount of any
Person's obligation under any Contingent Liability shall (subject to any
limitation set forth therein) be deemed to be the principal amount of the debt,
obligation or other liability guaranteed thereby.
Debt of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money, whether or not evidenced by bonds, debentures,
notes or similar instruments, (b) all obligations of such Person as lessee under
Capital Leases which have been recorded as liabilities on a balance sheet of
such Person, (c) all obligations of such Person to pay the deferred purchase
price of property or services (other than current accounts payable in the
ordinary course of business), (d) all indebtedness secured by a Lien on the
property of such Person, whether or not such indebtedness shall have been
assumed by such Person (it being understood that if such Person has not assumed
or otherwise become personally liable for any such indebtedness, the amount of
the Debt of such Person in connection therewith shall be limited to the lesser
of the face amount of such indebtedness or the fair market value of all property
of such Person securing such indebtedness), (e) all obligations, contingent or
otherwise, with respect to the face amount of all letters of credit (whether or
not drawn) and banker's acceptances issued for the account of such Person
(including, without limitation, the Letters of Credit), and (f) all Contingent
Liabilities of such Person.
Debt Ratio means the ratio of Total Debt as of the last day of any
Fiscal Quarter to EBITDA for the Computation Period ending on such day.
Debt to be Repaid means all Debt listed on Exhibit H under the heading
"Debt to be Repaid."
Dollar and the sign "$" mean lawful money of the United States of
America.
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<PAGE>
EBIT means, for any Computation Period, Consolidated Net Income for
such Computation Period plus, to the extent deducted in determining Consolidated
Net Income for such Computation Period, Interest Expense and income taxes for
such Computation Period (excluding, for any applicable Computation Period, the
unusual charges taken by the Company prior to the Effective Date in amounts not
exceeding $20,000 for the first Fiscal Quarter of Fiscal Year 1996, $290,000 for
the second Fiscal Quarter of Fiscal Year 1996, $949,000 for the third Fiscal
Quarter of Fiscal Year 1996, $190,000 for the fourth Fiscal Quarter of Fiscal
Year 1996, and $226,000 for the first Fiscal Quarter of Fiscal Year 1997, in
each case as previously described in writing to the Agent and the Banks).
EBITDA means, for any Computation Period, EBIT for such Computation
Period plus, to the extent deducted in determining Consolidated Net Income for
such Computation Period, depreciation and amortization for such Computation
Period.
Effective Date - see Section 11.1.
Eligible Inventory means all Inventory of the Company or any Subsidiary
which meets each of the following requirements: (a) it is in marketable
condition; (b) it is owned solely by the Company or such Subsidiary and is not
subject to any Lien whatsoever other than pursuant to the Security Agreement;
(c) it is new and unused; (d) it is Inventory constituting finished goods or raw
materials; (e) it is located at real property which is owned by the Company or
such Subsidiary or, if located on leased premises, is located at real property
with respect to which the landlord of such real property has delivered to the
Agent a landlord's consent in form and substance satisfactory to the Agent; and
(f) it is not Inventory which the Agent, acting in its discretion reasonably
exercised, shall have notified the Company in writing is not deemed to
constitute Eligible Inventory. Any Inventory which is at any time Eligible
Inventory, but which subsequently fails to meet any of the foregoing
requirements, shall forthwith cease to be Eligible Inventory.
Eligible Receivable means a Receivable of the Company or any Subsidiary
which meets each of the following requirements: (a) if it arises from the sale
or lease of goods, such goods have been shipped or delivered to the Account
Debtor under such Receivable; (b) it is a valid, legally enforceable obligation
of the Account Debtor thereunder, and is not subject to any offset, counterclaim
or other defense on the part of such Account Debtor; (c) it is not subject to
any Lien whatsoever other than the
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<PAGE>
security interest under the Security
Agreement; (d) it is evidenced by an invoice (dated not later than the date of
shipment or performance and having payment terms acceptable to the Agent)
rendered to such Account Debtor, and is not evidenced by any instrument or
chattel paper; (e) it is not owing by any Account Debtor whose obligations the
Agent or any Bank, acting in its discretion reasonably exercised, shall have
notified the Company in writing are not deemed to constitute Eligible
Receivables; (f) it is not owing by an Account Debtor who, as of the computation
date of the Borrowing Base most recently received by the Banks, shall have
failed to pay within 90 days of their due date more than 25% of the aggregate
dollar amount of the invoices of the Company or such Subsidiary evidencing any
Receivable billed to such Account Debtor; (g) it is not owing by an Account
Debtor who is an Affiliate of the Company; (h) it is not owing by an Account
Debtor who is not a permanent resident of or incorporated in any state of the
United States or the Province of Ontario, Canada; and (i) it has not been
outstanding for more than 90 days from the date of the invoice which evidences
such Receivable. A Receivable which is at any time an Eligible Receivable, but
which subsequently fails to meet any of the foregoing requirements, shall
forthwith cease to be an Eligible Receivable.
Environmental Laws means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA also refer to any successor sections.
Eurocurrency Reserve Percentage means, with respect to any Eurodollar
Loan for any Interest Period, a percentage (expressed as a decimal) equal to the
daily average during such Interest Period of the percentage in effect on each
day of such Interest Period, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor), for determining the aggregate maximum
reserve requirements applicable to "Eurocurrency Liabilities" pursuant to
Regulation D or any other then applicable regulation of such Board of Governors
which prescribes reserve requirements applicable to "Eurocurrency Liabilities"
as presently defined in Regulation D.
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<PAGE>
Eurodollar Loan means any Loan which bears interest at a rate
determined by reference to the Eurodollar Rate (Reserve Adjusted).
Eurodollar Office means with respect to any Bank the office or offices
of such Bank which shall be making or maintaining the Eurodollar Loans of such
Bank hereunder or such other office or offices through which such Bank
determines its Eurodollar Rate. A Eurodollar Office of any Bank may be, at the
option of such Bank, either a domestic or foreign office.
Eurodollar Rate means, with respect to any Eurodollar Loan for any
Interest Period, the rate per annum at which Dollar deposits in immediately
available funds are offered to the Eurodollar Office of Harris two Business Days
prior to the beginning of such Interest Period by major banks in the interbank
eurodollar market as at or about 10:00 A.M., Chicago time, for delivery on the
first day of such Interest Period, for the number of days comprised therein and
in an amount equal or comparable to the amount of the Eurodollar Loan of Harris
for such Interest Period.
Eurodollar Rate (Reserve Adjusted) means, with respect to any
Eurodollar Loan for any Interest Period, a rate per annum (rounded upwards, if
necessary, to the nearest 1/16 of 1%) determined pursuant to the following
formula:
Eurodollar Rate = Eurodollar Rate
(Reserve Adjusted) 1-Eurocurrency
Reserve Percentage
Event of Default means any of the events described in Section 12.1.
Excess Cash means, for any Fiscal Quarter or Fiscal Year, as the case
may be, an amount equal to Consolidated Net Income for such period plus
consolidated depreciation, amortization and other non-cash charges of the
Company and its Subsidiaries for such period minus an amount equal to the
increase in Working Capital (plus any decrease in Working Capital) of the
Company and its Subsidiaries for such period minus scheduled payments of Debt
during such period minus the amount of Capital Expenditures made by the Company
during such period to the extent such Capital Expenditures were not made with
the proceeds of Debt.
Federal Funds Rate means, for any day, the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor
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<PAGE>
publication, published by the Federal
Reserve Bank of New York (including any such successor publication, the
"Composite 3:30 p.m. Quotations") for such day under the caption "Federal Funds
Effective Rate". If such rate is not published in the Composite 3:30 p.m.
Quotations for any Business Day, the rate for such day will be the arithmetic
mean of the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m., New York City time, on such day by each of three leading
brokers of Federal funds transactions in New York City, selected by the Agent.
The rate for any day which is not a Business Day shall be the rate for the
immediately preceding Business Day.
Fiscal Year means the fiscal year of the Company and its Subsidiaries,
which period shall be the 12-month period ending on the Saturday nearest to June
30 of each year. References to a Fiscal Year with a number corresponding to any
calendar year (e.g., "Fiscal Year 1996") refer to the Fiscal Year ending on the
Saturday nearest to June 30 of such calendar year.
Fiscal Quarter means a fiscal quarter of a Fiscal Year.
Floating Rate Loan means any Loan which bears interest at or by
reference to the Alternate Reference Rate.
Group - see Section 2.2.
Guarantor means (a) as of the Effective Date, RidgePak Corporation,
Standard Packaging and Printing Co., Niemand Holdings, Inc., Niemand Industries,
Inc. and GB Labels, Inc. and (b) thereafter, the entities referred to in clause
(a) and each other Person which from time to time executes and delivers a
counterpart of the Guaranty.
Guaranty - see Section 11.1.5.
Harris - see the Preamble.
Hazardous Material means any hazardous, toxic or dangerous substance or
material defined as such in (or for purposes of) any Environmental Law.
Hedging Agreement means any interest rate, currency and commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designed to protect a Person against fluctuations in
interest rates, currency exchange rates or commodity prices.
Interest Coverage Ratio means the ratio of (a) EBIT for any
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Computation Period to (b) Interest Expense for such Computation Period.
Interest Expense means for any period the consolidated interest expense
(including, without limitation, all imputed interest on Capital Leases) of the
Company and its Subsidiaries for such period; it being understood that for
purposes of calculating the Interest Coverage Ratio, Interest Expense shall be
deemed to be $726,000 for the Fiscal Quarter ending December 31, 1995, $692,000
for the Fiscal Quarter ending March 31, 1996, $656,000 for the Fiscal Quarter
ending June 30, 1996, and $653,000 for the Fiscal Quarter ending September 30,
1996 .
Interest Period - see Section 4.3.
Inventory means, at any time with respect to any Person, any goods held
for sale or lease, or furnished or to be furnished by such Person under any
contract of service, or held by such Person as raw materials, work in process or
materials used or consumed in a business.
Investment of any Person means any investment in any other Person,
whether by acquisition of shares of stock or similar interest, Debt or other
obligation or security, deposit, or by loan, advance or capital contribution, or
otherwise.
Letter of Credit - see Section 2.1.
Letter of Credit Application means a letter of credit application in
the form then used by Harris for the type of letter of credit requested (with
appropriate adjustments to indicate that any letter of credit issued thereunder
is to be issued pursuant to, and subject to the terms and conditions of, this
Agreement).
Lien means, when used with respect to any Person, any interest granted
by such Person in any real or personal property, asset or other right owned or
being purchased or acquired by such Person which secures payment or performance
of any obligation and shall include any mortgage, lien, encumbrance, charge or
other security interest of any kind, whether arising by contract, as a matter of
law, by judicial process or otherwise.
Loans means Revolving Loans and Term Loans.
Loan Documents means this Agreement, the Notes, the Guaranty, the
Letter of Credit Applications and the Collateral Documents.
Margin means the rate per annum set forth in the table below
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for the non-use fee, or the applicable type of Loan opposite the applicable Debt
Ratio:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------==================
Margin Margin for
for Floating Floating Rate Margin for
Rate Term Margin for Revolving Eurodollar Margin for
Loans Eurodollar Term Loans Revolving Non-Use Fee
Debt Ratio Loans Loans
- --------------------------------------------------------------------------------------------------==================
<S> <C> <C> <C> <C> <C>
Greater than 3.25 0.50% 2.50% 0.25% 2.25% 0.50%
to 1
- --------------------------------------------------------------------------------------------------==================
Equal to or less 0.25% 2.25% 0.00% 2.00% 0.375%
than 3.25 to 1 but
greater than 2.75
to 1
- --------------------------------------------------------------------------------------------------==================
Equal to or less 0.00% 2.00% 0.00% 1.75% 0.375%
than 2.75 to 1 but
greater than 2.25
to 1
====================================================================================================================
Equal to or less 0.00% 1.75% 0.00% 1.50% 0.25%
than 2.25 to 1
====================================================================================================================
</TABLE>
The Margin shall be adjusted, to the extent applicable, 30 days (or, in the case
of the last Fiscal Quarter of any Fiscal Year, 60 days) after the end of each
Fiscal Quarter based on the Debt Ratio as of the last day of such Fiscal
Quarter; it being understood that if the Company fails to deliver the financial
statements required by Section 10.1.1 or 10.1.2, as applicable, by the 30th day
(or, if applicable, the 60th or 90th day, as the case may be) after any Fiscal
Quarter, the Margin shall be 0.25% for Floating Rate Revolving Loans, 2.25% for
Eurodollar Revolving Loans, 0.50% for Floating Rate Term Loans, 2.50% for
Eurodollar Term Loans and 0.50% for the non-use fee, respectively, until such
financial statements are delivered; it being further understood that if the
financial statements delivered pursuant to Section 10.1.1(a) result in a
different Margin than that determined pursuant to the financial statements
delivered pursuant to Section 10.1.1(b), then the Company shall pay such
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higher Margin retroactively from the 60th day after such Fiscal Quarter. The
initial Margin shall be deemed to be 0.50% for Floating Rate Term Loans, 2.50%
for Eurodollar Term Loans, 0.25% for Floating Rate Revolving Loans, 2.25% for
Eurodollar Revolving Loans and 0.50% for the non-use fee.
Margin Stock means any "margin stock" as defined in Regulation U of the
Board of Governors of the Federal Reserve System.
Material Adverse Effect means a material adverse effect on (a) the
financial condition, operations, business, assets or prospects of the Company
and its Subsidiaries taken as a whole or (b) the ability of the Company to
timely and fully perform any of its payment or other material obligations under
this Agreement or any other Loan Document to which it is a party.
Mortgage means a mortgage, deed of trust or similar document granting
to the Agent a Lien on real property of the Company or any Guarantor.
Net Worth means the Company's consolidated stockholders' equity.
Notes means Revolving Notes and Term Notes.
Participant - see Section 14.9.
PBGC means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
Pension Plan means a "pension plan", as such term is defined in section
3(2) of ERISA, which is subject to title IV of ERISA (other than a multiemployer
plan as defined in section 4001(a)(3) of ERISA), and to which the Company or any
corporation, trade or business that is, along with the Company, a member of a
controlled group of corporations or a controlled group of trades or businesses,
as described in section 414 of the Internal Revenue Code of 1986, as amended, or
section 4001 of ERISA, may have any liability, including any liability by reason
of having been a substantial employer within the meaning of section 4063 of
ERISA at any time during the preceding five years or by reason of being deemed
to be a contributing sponsor under section 4069 of ERISA.
Percentage means a Revolving Loan Percentage, a Term Loan Percentage or
a Total Percentage, as the context may require.
Person means any natural person, corporation, partnership, trust,
association, governmental authority or unit, or any other
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entity, whether acting in an individual, fiduciary or other capacity.
Receivable means, with respect to any Person, any right of such Person
to payment for goods sold or leased or services rendered.
Required Banks means (i) so long as three or more Banks are party to
this Agreement, Banks having an aggregate Total Percentage of 66-2/3% or more
and (ii) at any other time, Banks having an aggregate Total Percentage of 85% or
more.
Revolving Commitment means, as to any Bank, such Bank's commitment to
make Revolving Loans, and to issue or participate in Letters of Credit, pursuant
to this Agreement. The amount of each Bank's initial Revolving Commitment is set
forth on Schedule I. The initial amount of the aggregate Revolving Commitments
of all Banks is $10,000,000.
Revolving Loans - see Section 2.1.
Revolving Loan Percentage means, as to any Bank, the percentage which
(a) the aggregate amount of such Bank's Revolving Commitment (or after
termination of the Revolving Commitments, the outstanding principal amount of
such Bank's Revolving Loans) is of (b) the aggregate amount of the Revolving
Commitments of all Banks (or, after termination of the Revolving Commitments,
the outstanding principal amount of all Revolving Loans).
Revolving Note - see Section 3.1(a).
SEC means the Securities and Exchange Commission.
Security Agreement - see Section 11.1.6.
Stated Amount means with respect to any Letter of Credit at any date of
determination, the maximum aggregate amount available thereunder at any time
during the then ensuing term of such Letter of Credit under any and all
circumstances, plus the aggregate amount of all unreimbursed payments and
disbursements under such Letter of Credit.
Subsidiary means, with respect to any Person, a corporation of which
such Person and/or its other Subsidiaries own, directly or indirectly, such
number of outstanding shares as have more than 50% of the ordinary voting power
for the election of directors. Unless the context otherwise requires, each
reference to Subsidiaries herein shall be a reference to Subsidiaries of the
Company.
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Subsidiary Pledge Agreement - see Section 11.1.7(b).
Term Commitment means, as to any Bank, such Bank's commitment to make
Term Loans pursuant to this Agreement. The amount of each Bank's Term Commitment
is set forth on Schedule I. The amount of the aggregate Term Commitments of all
Banks is $25,000,000.
Term Loans - see Section 2.1.
Term Loan Percentage means, as to any Bank, the percentage which (x)
the Term Commitment of such Bank (or, after the making of the Term Loans, the
principal amount of such Bank's Term Loan) is of (y) the aggregate amount of the
Term Commitments of all Banks (or, after the making of the Term Loans, the
aggregate principal amount of all Term Loans).
Term Note - see Section 3.1(b).
Total Debt means all Debt of the Company and its Subsidiaries
determined on a consolidated basis.
Total Percentage means as to any Bank the percentage which (a) the
aggregate amount of such Bank's Revolving Commitment (or, after termination of
the Revolving Commitments, the outstanding principal amount of such Bank's
Revolving Loans) plus the outstanding principal amount of such Bank's Term Loan
is of (b) the aggregate amount of the Revolving Commitments of all Banks (or,
after termination of the Revolving Commitments, the outstanding principal amount
of all Revolving Loans) plus the outstanding principal amount of all Term Loans.
The initial Total Percentage for each Bank is set forth opposite such Bank's
name on Schedule I.
Type of Loan or Borrowing - see Section 2.2. The types of Loans or
borrowings under this Agreement are as follows: Floating Rate Loans or
borrowings and Eurodollar Loans or borrowings.
Unmatured Event of Default means any event which if it continues
uncured will, with lapse of time or notice or lapse of time and notice,
constitute an Event of Default.
Welfare Plan means a "welfare plan", as such term is defined in section
3(1) of ERISA.
Working Capital means, at any date, the excess of (i) the consolidated
current assets of the Company and its Subsidiaries as of such date over (ii) the
consolidated current liabilities of
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the Company and its Subsidiaries as of such date (but excluding current
maturities of indebtedness for borrowed money which indebtedness by its terms is
due more than one year from such date).
1.2 Other Definitional Provisions. Unless otherwise defined or the
context otherwise requires, all financial and accounting terms used herein or in
any of the Loan Documents or any certificate or other document made or delivered
pursuant hereto shall be defined in accordance with generally accepted
accounting principles consistently applied; provided that if the Company
notifies the Agent that the Company wishes to amend any covenant (including any
financial covenant) to eliminate the effect of any change in generally accepted
accounting principles on the operation of such covenant (or if the Agent
notifies the Company that the Agent and the Banks wishes to amend any covenant
for such purpose), then the Company's compliance with such covenant shall be
determined on the basis of generally accepted accounting principles in effect
immediately before the relevant change in generally accepted accounting
principles became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Company and the Required
Banks. When used in this Agreement, the term "financial statements" shall
include the notes and schedules thereto.
SECTION 2 COMMITMENTS OF THE BANKS; TYPES OF LOANS; LETTERS OF
CREDIT; BORROWING AND CONVERSION PROCEDURES.
2.1 Commitments. On and subject to the terms and conditions of this Agreement,
each of the Banks, severally and for itself alone, agrees as follows:
(a) each Bank agrees to make loans on a revolving basis ("Revolving
Loans") from time to time before the Commitment Termination Date in such Bank's
Revolving Loan Percentage of such aggregate amounts as the Company may from time
to time request from all Banks, provided that (i) the aggregate principal amount
which any Bank shall be committed to have outstanding hereunder on loan to the
Company shall not at any one time exceed such Bank's Revolving Commitment and
(ii) the sum of (x) the aggregate outstanding principal amount of all Revolving
Loans plus (y) the aggregate Stated Amount of all Letters of Credit shall not at
any time exceed the lesser of (A) the aggregate amount of the Revolving
Commitments and (B) the amount of the Borrowing Base;
(b) on the Effective Date each Bank agrees to make a term loan (a "Term
Loan") in such Bank's Term Loan Percentage of such aggregate amounts as the
Company may request on such date from all Banks, provided that the aggregate
principal amount of all Term Loans which all Banks shall be committed to lend on
the
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<PAGE>
Effective Date shall not exceed $25,000,000; and
(c) Harris agrees to issue letters of credit, in each case containing
such terms and conditions as are permitted by this Agreement and are
satisfactory to Harris (collectively the "Letters of Credit" and individually
each a "Letter of Credit"), at the request of and for the account of the Company
from time to time before the Commitment Termination Date and, as more fully set
forth in Section 2.6, each Bank agrees to purchase a participation in each such
Letter of Credit, provided that (i) the aggregate Stated Amount of all Letters
of Credit shall not at any time exceed $1,000,000 and (ii) the sum of (x) the
aggregate outstanding principal amount of all Revolving Loans plus (y) the
aggregate Stated Amount of all Letters of Credit shall not at any time exceed
the lesser of (A) the aggregate amount of the Revolving Commitments and (B) the
amount of the Borrowing Base.
2.2 Various Types of Loans. Each Revolving Loan shall be, and each Term
Loan may be divided into tranches which are, either a Floating Rate Loan or a
Eurodollar Loan (each a "type" of Loan), as the Company shall specify in the
related notice of borrowing or conversion pursuant to Section 2.3 or 2.4.
Eurodollar Loans having the same Interest Period are sometimes called a "Group"
or collectively "Groups". Floating Rate Loans and Eurodollar Loans may be
outstanding at the same time, provided that (i) not more than five different
Groups of Eurodollar Loans shall be outstanding at any one time and (ii) the
aggregate principal amount of each Group of Eurodollar Loans shall at all times
be at least $1,000,000 and an integral multiple of $100,000. All borrowings,
conversions and repayments of Loans shall be effected so that each Bank will
have a pro rata share (according to the applicable Percentage) of all types and
Groups of Loans.
2.3 Borrowing Procedures. The Company shall give written or telephonic
notice to the Agent of each proposed borrowing not later than (a) in the case of
a Floating Rate borrowing, 10:00 A.M., Chicago time, on the proposed date of
such borrowing, and (b) in the case of a Eurodollar borrowing, 12:00 noon,
Chicago time, at least three Business Days prior to the proposed date of such
borrowing. Each such notice shall be effective upon receipt by the Agent, shall
be irrevocable, and shall specify the date, amount and type of borrowing and, in
the case of a Eurodollar borrowing, the initial Interest Period therefor.
Promptly upon receipt of such notice, the Agent shall advise each Bank thereof.
Not later than 1:00 p.m., Chicago time, on the date of a proposed borrowing,
each Bank shall provide the Agent at the principal office of the Agent in
Chicago with immediately available funds in the amount of such Bank's Percentage
of such borrowing and, subject to the satisfaction of the conditions
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precedent set forth in Section 11 with respect to such borrowing, the Agent
shall pay over the requested amount to the Company on the requested borrowing
date. Each borrowing shall be on a Business Day and shall be in an aggregate
amount of at least (i) $1,000,000 and an integral multiple of $100,000, in the
case of Eurodollar Loans, and (ii) $100,000 and an integral multiple of $50,000,
in the case of Floating Rate Loans. Unless the Company shall otherwise direct in
writing, the proceeds of all borrowings shall be deposited to the Company's
demand deposit account no. 2708915 maintained with Harris.
2.4 Procedures for Conversion of Type of Loan. Subject to the
provisions of Section 2.2, the Company may convert all or any part of any
outstanding Loan into a Loan of a different type by giving written or telephonic
notice to the Agent not later than (a) in the case of conversion into a Floating
Rate Loan, 10:00 A.M., Chicago time, on the proposed date of such conversion,
and (b) in the case of a conversion into a Eurodollar Loan, 12:00 noon, Chicago
time, at least three Business Days prior to the proposed date of such
conversion. Each such notice shall be effective upon receipt by the Agent, shall
be irrevocable, and shall specify the date and amount of such conversion, the
Loan to be so converted, the type of Loan to be converted into and, in the case
of a conversion into a Eurodollar Loan, the initial Interest Period therefor.
Promptly upon receipt of such notice, the Agent shall advise each Bank thereof.
Subject to Sections 2.10 and 2.11, such Loan shall be so converted on the
requested date of conversion. Each conversion shall be on a Business Day.
2.5 Letter of Credit Procedures. The Company shall give notice to
Harris of the proposed issuance of each Letter of Credit on a Business Day which
is at least three Business Days (or such lesser period as Harris may agree)
prior to the proposed date of issuance of such Letter of Credit. Each such
notice shall be accompanied by a Letter of Credit Application, duly executed by
the Company and in all material respects satisfactory to Harris, together with
such other documentation as Harris may reasonably request in support thereof, it
being understood that each Letter of Credit Application shall specify, among
other things, the date on which the proposed Letter of Credit is to be issued,
the expiration date of such Letter of Credit (which shall not be later than the
then-scheduled Commitment Termination Date) and whether such Letter of Credit is
to be transferable in whole or in part. Subject to the satisfaction of the
conditions precedent set forth in Section 11 with respect to the issuance of
such Letter of Credit, Harris shall issue such Letter of Credit on the requested
issuance date.
2.6 Participations in Letters of Credit. Concurrently with
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the issuance of each Letter of Credit, Harris shall be deemed to have sold and
transferred to each other Bank, and each other Bank shall be deemed irrevocably
and unconditionally to have purchased and received from Harris, without recourse
or warranty, an undivided interest and participation, to the extent of such
other Bank's Percentage, in such Letter of Credit and the Company's
reimbursement obligations with respect thereto. For the purposes of this
Agreement, the unparticipated portion of each Letter of Credit shall be deemed
to be Harris's "participation" therein. Harris hereby agrees, upon issuance of
any Letter of Credit, to deliver to each Bank a description of the type, stated
amount and expiry date of such Letter of Credit, together with such other
information related thereto as such other Bank may reasonably request.
2.7 Reimbursement Obligations. The Company hereby unconditionally and
irrevocably agrees to reimburse Harris for each payment or disbursement made by
Harris under any Letter of Credit honoring any demand for payment made by the
beneficiary thereunder, in each case on the date that such payment or
disbursement is made. Any amount not reimbursed on the date of such payment or
distribution shall bear interest from and including the date of such payment or
disbursement to but not including the date that Harris is reimbursed by the
Company therefor, payable on demand, at a rate per annum equal to the sum of the
Alternate Reference Rate from time to time in effect plus 2%. Harris shall
notify the Company whenever any demand for payment is made under any Letter of
Credit by the beneficiary thereunder; provided, however, that the failure of
Harris to so notify the Company shall not affect the rights of Harris or the
Banks in any manner whatsoever.
2.8 Limitation on Harris's Obligations. In determining whether to pay
under any Letter of Credit, Harris shall have no obligation to the Company or
any Bank other than to confirm that any documents required to be delivered under
such Letter of Credit appear to have been delivered and appear to comply on
their face with the requirements of such Letter of Credit. Any action taken or
omitted to be taken by Harris under or in connection with any Letter of Credit,
if taken or omitted in the absence of gross negligence or willful misconduct,
shall not impose upon Harris any liability to the Company or any Bank and shall
not reduce or impair the Company's reimbursement obligations set forth in
Section 2.7 or the obligations of the Banks pursuant to Section 2.9.
2.9 Funding by Banks to Harris. If Harris makes any payment or
disbursement under any Letter of Credit and the Company has not reimbursed
Harris in full for such payment or disbursement by 11:00 A.M., Chicago time, on
the date of such
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payment or disbursement, or if any reimbursement received by
Harris from the Company is or must be returned or rescinded upon or during any
bankruptcy or reorganization of the Company or otherwise, each other Bank shall
be obligated to pay to Harris, in full or partial payment of the purchase price
of its participation in such Letter of Credit, its pro rata share (according to
its Percentage) of such payment or disbursement (but no such payment shall
diminish the obligations of the Company under Section 2.8), and the Agent shall
promptly notify each other Bank thereof. Each other Bank irrevocably and
unconditionally agrees, severally and for itself alone, to so pay to the Agent
in immediately available funds for Harris's account the amount of such other
Bank's Percentage of such payment or disbursement. If and to the extent any Bank
shall not have made such amount available to the Agent by 2:00 P.M., Chicago
time, on the Business Day on which such Bank receives notice from the Agent of
such payment or disbursement (it being understood that any such notice received
after noon, Chicago time, on any Business Day shall be deemed to have been
received on the next following Business Day), such Bank agrees to pay interest
on such amount to the Agent for Harris's account forthwith on demand for each
day from and including the date such amount was to have been delivered to the
Agent to but excluding the date such amount is paid, at a rate per annum equal
to (a) for the first three days after demand, the Federal Funds Rate from time
to time in effect and (b) thereafter, the Alternate Reference Rate from time to
time in effect. Any Bank's failure to make available to the Agent its Percentage
of any such payment or disbursement shall not relieve any other Bank of its
obligation hereunder to make available to the Agent such other Bank's Percentage
of such payment, but no Bank shall be responsible for the failure of any other
Bank to make available to the Agent such other Bank's Percentage of any such
payment or disbursement.
2.10 Warranty. Each notice of borrowing and/or of conversion pursuant
to Section 2.3 or 2.4 and the delivery of each Letter of Credit Application
pursuant to Section 2.5 shall automatically constitute a warranty by the Company
to the Agent and each Bank to the effect that on the date of such requested
borrowing or conversion or the issuance of the requested Letter of Credit, as
the case may be, (a) the warranties of the Company contained in Section 9 of
this Agreement shall be true and correct as of such requested date as though
made on the date thereof and (b) no Event of Default or Unmatured Event of
Default shall have then occurred and be continuing or will result therefrom.
2.11 Conditions. Notwithstanding any other provision of this Agreement,
(a) no Bank shall be obligated to make any Loan, (b) no Bank shall be obligated
to convert into or permit the
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continuation at the end of the applicable Interest Period of any Eurodollar Loan
and (c) Harris shall not be obligated to issue any Letter of Credit if, in any
such case, an Event of Default or Unmatured Event of Default exists or would
result therefrom.
2.12 Commitments Several. The failure of any Bank to make a requested
Loan on any date shall not relieve any other Bank of its obligation to make a
Loan on such date, but no Bank shall be responsible for the failure of any other
Bank to make any Loan to be made by such other Bank.
SECTION 3 NOTES EVIDENCING LOANS.
3.1 Notes. (a) The Revolving Loans of each Bank shall be evidenced by a
promissory note (as amended, supplemented, replaced or otherwise modified from
time to time, individually each a "Revolving Note" and collectively for all
Banks the "Revolving Notes") substantially in the form of Exhibit A-1, with
appropriate insertions, dated the Effective Date (or such earlier date as shall
be satisfactory to the Agent), payable to the order of such Bank in an amount
equal to such Bank's Revolving Commitment (or, if less, in the aggregate unpaid
principal amount of all of such Bank's Revolving Loans) in full on the
Commitment Termination Date.
(b) The Term Loan of each Bank shall be evidenced by a promissory note
(as amended, supplemented, replaced or otherwise modified from time to time,
individually each a "Term Note" and collectively for all Banks the "Term Notes")
substantially in the form of Exhibit A-2, with appropriate insertions, dated the
Effective Date (or such earlier date as shall be satisfactory to the Agent)
payable to the order of such Bank in an amount equal to the amount of such
Bank's Term Loan and payable in 28 consecutive quarterly installments equal to
such Bank's Term Loan Percentage of (i) $625,000 in the case of the first four
installments and (ii) $937,500 in the case of the remaining 24 installments.
Such installments shall be payable on the last day of each March, June,
September and December, commencing December 31, 1996.
3.2 Recordkeeping. Each Bank shall record in its records the date and
amount of each Loan made by such Bank, each repayment or conversion thereof and,
in the case of each Eurodollar Loan, the dates on which each Interest Period for
such Loan shall begin and end. The aggregate unpaid principal amount so recorded
shall be rebuttable presumptive evidence of the principal amount owing and
unpaid on such Bank's Notes. The failure to so record any such amount or any
error in so recording any such amount shall not, however, limit or otherwise
affect the obligations of the Company hereunder or under any Note to repay
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the principal amount of the Loans evidenced by such Note together with all
interest accruing thereon.
SECTION 4 INTEREST
4.1 Interest Rates. The Company promises to pay interest on the unpaid
principal amount of each Loan for the period commencing on the date of such Loan
until such Loan is paid in full, as follows:
(a) at all times while such Loan is a Floating Rate Loan, at a
rate per annum equal to the sum of the Alternate Reference Rate from
time to time in effect plus the Margin from time to time in effect; and
(b) at all times while such Loan is a Eurodollar Loan, at a
rate per annum equal to the sum of the Eurodollar Rate (Reserve
Adjusted) applicable to each Interest Period for such Loan plus the
Margin from time to time in effect;
provided, however, that at any time an Event of Default exists, the interest
rate applicable to each Loan shall be increased by 2%.
4.2 Interest Payment Dates. Accrued interest on each Floating Rate Loan
shall be payable on the last day of each calendar quarter and at maturity,
commencing with the first of such dates to occur after the date of such Loan.
Accrued interest on each Eurodollar Loan shall be payable on the last day of
each Interest Period relating to such Loan (and, in the case of each Eurodollar
Loan with an Interest Period in excess of three months, on each three-month
anniversary of such Loan) and at maturity. After maturity, accrued interest on
all Loans shall be payable on demand.
4.3 Interest Periods. Each "Interest Period" for a Eurodollar Loan
shall commence on the date such Eurodollar Loan is made or converted from a
Floating Rate Loan, or on the expiration of the immediately preceding Interest
Period for such Eurodollar Loan, and shall end on the date which is one, two,
three or six months thereafter, as the Company may specify:
(a) in the case of an Interest Period which commences on the
date a Eurodollar Loan is made or converted from a Floating Rate Loan,
in the related notice of borrowing or conversion pursuant to Section
2.3 or 2.4, or
(b) in the case of a succeeding Interest Period with respect
to any Eurodollar Loan, by written or telephonic notice to the Agent
(which shall promptly advise each Bank
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thereof) not later than 12:00 noon, Chicago time, at least three
Business Days prior to the first day of such succeeding Interest
Period, it being understood that (i) each such notice shall be
effective upon receipt by the Agent and (ii) if the Company fails to
give such notice, such Loan shall automatically become a Floating Rate
Loan at the end of its then-current Interest Period.
Each Interest Period for a Eurodollar Loan which would otherwise end on a day
which is not a Business Day shall end on the immediately succeeding Business Day
(unless such immediately succeeding Business Day is the first Business Day of a
calendar month, in which case such Interest Period shall end on the immediately
preceding Business Day). The Company may not select any Interest Period (a) for
a Revolving Loan which would end after the then-scheduled Commitment Termination
Date or (b) for any Term Loan if, after giving effect to such selection, the
Company would have to prepay any Eurodollar Loan in order to make any scheduled
prepayment of such Term Loan.
4.4 Setting and Notice of Eurodollar Rates. The applicable Eurodollar
Rate for each Interest Period shall be determined by the Agent, and notice
thereof shall be given by the Agent promptly to the Company and each Bank. Each
determination of the applicable Eurodollar Rate by the Agent shall be conclusive
and binding upon the parties hereto, in the absence of demonstrable error. The
Agent shall, upon written request of the Company or any Bank, deliver to the
Company or such Bank a statement showing the computations used by the Agent in
determining any applicable Eurodollar Rate hereunder.
4.5 Computation of Interest. Interest on all Loans shall be computed
for the actual number of days elapsed on the basis of a year of 360 days. The
applicable interest rate for each Floating Rate Loan shall change simultaneously
with each change in the Alternate Reference Rate.
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SECTION 5 FEES.
5.1 Non-Use Fee. The Company agrees to pay to the Agent for the account
of each Bank a non-use fee for the period from and including the date of the
execution and delivery of this Agreement to but excluding the Commitment
Termination Date equal to the Margin multiplied by the unused amount of such
Bank's Revolving Commitment without regard to any limitation on borrowings
resulting from the amount of the Borrowing Base. Such non-use fee shall be
payable in arrears on the last day of each calendar quarter and on the
Commitment Termination Date, in each such case for the period then ending for
which such non-use fee shall not have been theretofore paid. The non-use fee
shall be computed for the actual number of days elapsed on the basis of a year
of 360 days.
5.2 Letter of Credit Fees. (a) The Company agrees to pay to the Agent
for the account of the Banks pro rata according to their respective Percentages
a letter of credit fee (1) in the case of each stand-by Letter of Credit, at a
rate per annum equal to the Margin with respect to Eurodollar Revolving Loans
multiplied by the aggregate daily average amount available to be drawn under
such stand-by Letter of Credit, computed for the actual number of days elapsed
on the basis of a year of 360 days, and (2) in the case of each commercial
Letter of Credit, in an amount equal to Harris's standard fee with respect
thereto, in each case payable in arrears on the last day of each calendar
quarter and on the Commitment Termination Date for the period from and including
the date of the issuance of such Letter of Credit to but excluding the date such
payment is due or, if earlier, the date on which such Letter of Credit expired
or was terminated.
(b) In addition, with respect to each Letter of Credit, the Company
agrees to pay to Harris such fees and expenses as Harris customarily requires in
connection with the issuance, negotiation, processing and/or administration of
letters of credit in similar situations.
5.3 Agent's Fees. The Company agrees to pay to the Agent periodic
agent's fees, in each case at such times and in such amounts as are mutually
agreed upon by the Company and the Agent.
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SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENTS; PREPAYMENTS.
6.1 Reduction or Termination of the Commitments.
6.1.1 Termination of Term Commitments. After the making of the Term
Loans on the Effective Date, the Term Commitments shall be terminated in their
entirety.
6.1.2 Voluntary Reduction or Termination of Commitments. The Company
may from time to time on at least five Business Days' prior written notice
received by the Agent (which shall promptly advise each Bank thereof)
permanently reduce the amount of the Revolving Commitments to an amount not less
than the sum of (A) the aggregate unpaid principal amount of the Revolving Loans
plus (B) the aggregate Stated Amount of all Letters of Credit. Any such
reduction shall be in an amount not less than $1,000,000. The Company may at any
time on like notice terminate the Revolving Commitments upon payment in full of
all Revolving Loans and all other then-payable obligations of the Company
hereunder in respect of the Revolving Commitments and cash collateralization in
full, pursuant to documentation in form and substance satisfactory to the
Required Banks, of all obligations arising with respect to the Letters of
Credit.
6.1.3 Reductions Pro Rata. All reductions of the Commitments shall be
pro rata among the Banks according to their respective Percentages.
6.2 Prepayments.
6.2.1 Mandatory Prepayments. On each date on which the Revolving
Commitments are reduced pursuant to Section 6.1.2, the Company shall also make a
prepayment of the applicable Revolving Loans in the amount (if any) by which the
outstanding principal amount of such Revolving Loans exceeds the Revolving
Commitments. The Company shall make a prepayment of the Revolving Loans on each
date on which the sum of (i) the aggregate principal amount of the Revolving
Loans plus (ii) the aggregate Stated Amount of all Letters of Credit exceeds the
Borrowing Base, in an amount equal to such excess (rounded upward, if necessary,
to the nearest multiple of $100,000). In addition, the Company shall make a
prepayment of the Term Loans on each of September 30, 1997 and September 30,
1998 in an amount equal to 50% of the Excess Cash for the Fiscal Year most
recently ended. Any prepayment of a Term Loan shall be applied to the unpaid
installments of such Term Loan in the inverse order of the maturity of such
installments. Each such prepayment shall be applied, first, to the Floating Rate
Loans then outstanding, second, to Eurodollar Loans having an Interest Period
ending on the date of such
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prepayment and, then (subject to Section 8.4), to such Eurodollar Loans as the
Company may specify by notice to the Agent prior to or concurrently with such
prepayment (or, in the absence of such notice, to such Eurodollar Loans as the
Agent may elect).
6.2.2 Voluntary Prepayments. The Company may from time to time prepay
the Loans in whole or in part, provided that (a) the Company shall give the
Agent (which shall promptly advise each Bank) not less than one Business Day's
prior written notice thereof, specifying the Loans to be prepaid and the date
and amount of prepayment, (b) any prepayment of a Eurodollar Loan prior to the
end of an Interest Period therefor shall be subject to Section 8.4, (c) each
partial prepayment shall be in a principal amount of at least (i) $1,000,000 and
an integral multiple of $100,000, in the case of Eurodollar Loans, and (ii)
$100,000 and an integral multiple of $50,000, in the case of Floating Rate
Loans, (d) any prepayment of a Eurodollar Loan shall include accrued interest to
the date of prepayment on the principal amount being repaid, and (e) any
prepayment of a Term Loan shall be applied to the unpaid installments of such
Term Loan in the inverse order of the maturity of such installments.
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
7.1 Making of Payments. All payments of principal of or interest on the
Loans, and of all fees, shall be made by the Company to the Agent in immediately
available funds at its office in Chicago not later than noon, Chicago time, on
the date due; and funds received after that hour shall be deemed to have been
received by the Agent on the next following Business Day. The Company hereby
authorizes the Agent to charge the Company's demand deposit account no. 2708915
maintained with Harris for the amount of any such payment on the due date
therefor, but the Agent's failure to so charge such account shall in no way
affect the obligation of the Company to make any such payment. The Agent shall
promptly remit to each Bank its share of all such payments received in collected
funds by the Agent for the account of such Bank.
All payments under Sections 8.1 and 8.4 shall be made by the Company
directly to the Bank or Banks entitled thereto.
7.2 Application of Certain Payments. Each payment of principal shall be
applied to such Loans as the Company shall direct by notice to be received by
the Agent on or before the date of such payment or, in the absence of such
notice, as the Agent shall determine in its reasonable discretion. Concurrently
with each remittance to any Bank of its share of any such payment, the Agent
shall advise such Bank as to the application of such payment.
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7.3 Due Date Extension. If any payment of principal or interest with
respect to any of the Notes, or of any fees, falls due on a day which is not a
Business Day, then such due date shall be extended to the next following
Business Day (unless, in the case of a Eurodollar Loan, such next following
Business Day is the first Business Day of a calendar month, in which case such
due date shall be the immediately preceding Business Day) and, in the case of
principal, additional interest shall accrue and be payable for the period of any
such extension.
7.4 Setoff. The Company agrees that the Agent and each Bank have all
rights of set-off and bankers' lien provided by applicable law, and in addition
thereto, the Company agrees that at any time (i) any payment or other amount
owing by the Company under this Agreement is then due to the Agent or any Bank
or (ii) any Unmatured Event of Default under Section 12.1.4 or any Event of
Default exists, the Agent and each Bank may apply to the payment of such payment
or other amount (or, in the case of clause (ii), to any obligations of the
Company hereunder, whether or not then due) any and all balances, credits,
deposits, accounts or moneys of the Company then or thereafter with the Agent or
such Bank.
7.5 Proration of Payments. If any Bank shall obtain any payment or
other recovery (whether voluntary, involuntary, by application of offset or
otherwise) on account of principal of or interest on any Loan (or on account of
its participation in any Letter of Credit) in excess of its pro rata share of
payments and other recoveries obtained by all Banks on account of principal of
and interest on Loans (or such participations) then held by them (other than in
respect of an Affected Loan), such Bank shall purchase from the other Banks such
participations in the Loans (or sub-participations in Letters of Credit) held by
them as shall be necessary to cause such purchasing Bank to share the excess
payment or other recovery ratably with each of them; provided, however, that if
all or any portion of the excess payment or other recovery is thereafter
recovered from such purchasing Bank, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery.
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SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR
LOANS.
8.1 Increased Costs. (a) If, after the date hereof, the adoption of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or any Eurodollar Office of such Bank) with
any request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency
(A) shall subject any Bank (or any Eurodollar Office of such
Bank) to any tax, duty or other charge with respect to its Eurodollar
Loans, its Notes or its obligation to make Eurodollar Loans, or shall
change the basis of taxation of payments to any Bank of the principal
of or interest on its Eurodollar Loans or any other amounts due under
this Agreement in respect of its Eurodollar Loans or its obligation to
make Eurodollar Loans (except for changes in the rate of tax on the
overall net income of such Bank or its Eurodollar Office imposed by the
jurisdiction in which such Bank's principal executive office or
Eurodollar Office is located); or
(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System, but excluding any reserve
included in the determination of interest rates pursuant to Section 4),
special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by any Bank (or any
Eurodollar Office of such Bank); or
(C) shall impose on any Bank (or its Eurodollar Office) any
other condition affecting its Eurodollar Loans, its Notes or its
obligation to make Eurodollar Loans;
and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D of the Board of Governors of the Federal Reserve System, to
impose a cost on) such Bank (or any Eurodollar Office of such Bank) of making or
maintaining any Eurodollar Loan, or to reduce the amount of any sum received or
receivable by such Bank (or its Eurodollar Office) under this Agreement or under
its Notes with respect thereto, then upon demand by such Bank (which demand
shall be accompanied by a statement setting forth in reasonable detail the basis
for and a calculation of the amount of such demand, a copy of which shall be
furnished to the Agent), the Company shall pay directly to such Bank such
additional amount or amounts as will compensate
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such Bank for such increased cost or such reduction.
(b) If any Bank shall reasonably determine that the adoption or
phase-in of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Bank (or
its Eurodollar Office) or any Person controlling such Bank with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Bank's or such controlling
Person's capital as a consequence of such Bank's obligations hereunder
(including, without limitation, such Bank's obligations under its Commitments)
to a level below that which such Bank or such controlling Person could have
achieved but for such adoption, change or compliance (taking into consideration
such Bank's or such controlling Person's policies with respect to capital
adequacy) by an amount deemed by such Bank or such controlling Person to be
material, then from time to time, upon demand by such Bank (which demand shall
be accompanied by a statement setting forth in reasonable detail the basis for
and a calculation of the amount of such demand, a copy of which shall be
furnished to the Agent), the Company shall pay to such Bank such additional
amount or amounts as will compensate such Bank or such controlling Person for
such reduction.
8.2 Basis for Determining Interest Rate Inadequate or Unfair. If with
respect to any Interest Period:
(a) deposits in Dollars (in the applicable amounts) are not
being offered to the Agent in the interbank eurodollar market for such
Interest Period, or the Agent otherwise reasonably determines (which
determination shall be binding and conclusive on the Company) that by
reason of circumstances affecting the interbank eurodollar market
adequate and reasonable means do not exist for ascertaining the
applicable Eurodollar Rate;
(b) Banks having an aggregate Percentage of 33% or more advise
the Agent that the Eurodollar Rate (Reserve Adjusted) as determined by
the Agent will not adequately and fairly reflect the cost to such Banks
of maintaining or funding such Loans for such Interest Period, or that
the making or funding of Eurodollar Loans has become impracticable as a
result of an event occurring after the Effective Date which in the
opinion of such Banks materially affects such Loans,
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then the Agent shall promptly notify the other parties thereof and, so long as
such circumstances shall continue, (i) no Bank shall be under any obligation to
make or convert into Eurodollar Loans and (ii) on the last day of the current
Interest Period for each Eurodollar Loan, such Loan shall, unless then repaid in
full, automatically convert to a Floating Rate Loan.
8.3 Changes in Law Rendering Eurodollar Loans Unlawful. In the event
that any change in (including the adoption of any new) applicable laws or
regulations, or any change in the interpretation of applicable laws or
regulations by any governmental or other regulatory body charged with the
administration thereof, should make it (or in the good faith judgment of any
Bank cause a substantial question as to whether it is) unlawful for any Bank to
make, maintain or fund Eurodollar Loans, then such Bank shall promptly notify
each of the other parties hereto and, so long as such circumstances shall
continue, (a) such Bank shall have no obligation to make or convert into
Eurodollar Loans (but shall make Floating Rate Loans concurrently with the
making of or conversion into Eurodollar Loans by the Banks which are not so
affected, in each case in an amount equal to such Bank's applicable Percentage
of all Eurodollar Loans which would be made or converted into at such time in
the absence of such circumstances) and (b) on the last day of the current
Interest Period for each Eurodollar Loan of such Bank (or, in any event, on such
earlier date as may be required by the relevant law, regulation or
interpretation), such Eurodollar Loan shall, unless then repaid in full,
automatically convert to a Floating Rate Loan. Each Floating Rate Loan made by a
Bank which, but for the circumstances described in the foregoing sentence, would
be a Eurodollar Loan (an "Affected Loan") shall remain outstanding for the same
period as the Group of Eurodollar Loans of which such Affected Loan would be a
part absent such circumstances.
8.4 Funding Losses. The Company hereby agrees that upon demand by any
Bank (which demand shall be accompanied by a statement setting forth the basis
for the calculations of the amount being claimed, a copy of which shall be
furnished to the Agent) the Company will indemnify such Bank against any net
loss or expense which such Bank may sustain or incur (including, without
limitation, any net loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Bank to fund or
maintain any Eurodollar Loan), as reasonably determined by such Bank, as a
result of (a) any payment or prepayment or conversion of any Eurodollar Loan of
such Bank on a date other than the last day of an Interest Period for such Loan
(including, without limitation, any conversion pursuant to Section 8.3) or (b)
any failure of the Company to borrow or convert any Loans on a date specified
therefor in a notice of borrowing or conversion pursuant to this Agreement.
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For this purpose, all notices to the Agent pursuant to this Agreement shall be
deemed to be irrevocable.
8.5 Right of Banks to Fund through Other Offices. Each Bank may, if it
so elects, fulfill its commitment as to any Eurodollar Loan by causing a foreign
branch or affiliate of such Bank to make such Loan, provided that in such event
for the purposes of this Agreement such Loan shall be deemed to have been made
by such Bank and the obligation of the Company to repay such Loan shall
nevertheless be to such Bank and shall be deemed held by it, to the extent of
such Loan, for the account of such branch or affiliate.
8.6 Discretion of Banks as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, each Bank shall be entitled to fund
and maintain its funding of all or any part of its Loans in any manner it sees
fit, it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if such Bank had actually funded and
maintained each Eurodollar Loan during each Interest Period for such Loan
through the purchase of deposits having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the Eurodollar Rate for
such Interest Period.
8.7 Conclusiveness of Statements; Survival of Provisions.
Determinations and statements of any Bank pursuant to Section 8.1, 8.2, 8.3 or
8.4 shall be conclusive absent demonstrable error. Banks may use reasonable
averaging and attribution methods in determining compensation under Sections 8.1
and 8.4, and the provisions of such Sections shall survive repayment of the
Loans, cancellation of the Notes, cancellation or expiration of the Letters of
Credit and any termination of this Agreement.
SECTION 9 WARRANTIES.
To induce Harris to issue Letters of Credit and to induce the Agent and
the Banks to enter into this Agreement and to induce the Banks to make Loans and
purchase participations in Letters of Credit hereunder, the Company warrants to
the Agent and the Banks that:
9.1 Organization, etc. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware;
each Subsidiary is a corporation duly organized, validly existing and in good
standing under the state of its incorporation; and each of the Company and each
Subsidiary is duly qualified to do business in each jurisdiction where the
nature of its business makes such qualification necessary.
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9.2 Authorization; No Conflict. The execution and delivery by the
Company of this Agreement and each other Loan Document to which it is a party,
the borrowings hereunder, the execution and delivery by each Guarantor of each
Loan Document to which it is a party and the performance by each of the Company
and each Guarantor of its obligations under each Loan Document to which it is a
party are within the corporate powers of the Company and each Guarantor, have
been duly authorized by all necessary corporate action on the part of the
Company and each Guarantor (including any necessary shareholder action), have
received all necessary governmental approval (if any shall be required), and do
not and will not (a) violate any provision of law or any order, decree or
judgment of any court or other government agency which is binding on the Company
or any Guarantor, (b) contravene or conflict with, or result in a breach of, any
provision of the Certificate of Incorporation, By-Laws or other organizational
documents of the Company or any Guarantor or of any material agreement,
indenture, instrument or other document, or any material judgment, order or
decree, which is binding on the Company, any Guarantor or any other Subsidiary
or (c) result in, or require, the creation or imposition of any Lien on any
property of the Company, any Guarantor or any other Subsidiary (other than Liens
arising under the Loan Documents).
9.3 Validity and Binding Nature. Each of this Agreement and each other
Loan Document to which the Company is a party is, or upon the execution and
delivery thereof will be, the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
that enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, fraudulent transfer, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and by
general principles of equity (regardless of whether enforcement is sought in
equity or at law); and each Loan Document to which any Guarantor is a party is
or upon the execution and delivery thereof by such Guarantor will be, the legal,
valid and binding obligation of such Guarantor, enforceable against such
Guarantor in accordance with its terms, except that enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in equity or at law).
9.4 Financial Information. The audited consolidated financial
statements of the Company and its Subsidiaries at July 1, 1995 and the unaudited
consolidated financial statements of the Company and its Subsidiaries at March
31, 1996, copies of which have been delivered to each Bank, have been prepared
in
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accordance with generally accepted accounting principles and present fairly
the consolidated financial condition of the Company and its Subsidiaries as at
such dates and the results of their operations for the Fiscal Year and Fiscal
Quarter then ended.
9.5 No Material Adverse Change. Since the date of the audited
consolidated financial statements described in Section 9.4, except as set forth
in Exhibit Q, no event or events have occurred which, individually or in the
aggregate, has had or is reasonably likely to have a Material Adverse Effect.
9.6 Litigation and Contingent Liabilities. No litigation (including,
without limitation, derivative actions), arbitration proceeding or governmental
proceeding is pending or, to the Company's knowledge, threatened against the
Company or any Subsidiary which is reasonably likely to have a Material Adverse
Effect except as set forth in Exhibit B. Other than any liability incident to
such litigation or proceedings, neither the Company nor any Subsidiary has any
material contingent liabilities not provided for or disclosed in the financial
statements referred to in Section 9.4 or listed in Exhibit B.
9.7 Ownership of Properties; Liens. Each of the Company and each
Subsidiary owns good and marketable title to, or a valid leasehold interest in,
all of its properties and assets, real and personal, tangible and intangible, of
any nature whatsoever (including patents, trademarks, trade names, service marks
and copyrights), free and clear of all Liens, charges and claims (including
infringement claims with respect to patents, trademarks, copyrights and the
like) except as permitted pursuant to Section 10.7.
9.8 Subsidiaries. The Company has no Subsidiaries except those listed
in Exhibit C.
9.9 Pension and Welfare Plans. Except as disclosed to the Banks in
writing prior to the Effective Date, during the twelve-consecutive-month period
prior to the Effective Date or the making of any Loan hereunder, (a) no steps
have been taken to terminate any Pension Plan which would be reasonably likely
to result in the Company being required to make a contribution to such Pension
Plan, or incurring a liability or obligation to such Pension Plan, in excess of
$250,000, and (b) no contribution failure has occurred with respect to any
Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA. No
condition exists or event or transaction has occurred with respect to any
Pension Plan which could result in the incurrence by the Company of any material
liability, fine or penalty. Except as set forth on Exhibit D, the Company has no
contingent
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liability with respect to any post-retirement benefit under a Welfare
Plan, other than liability for continuation coverage described in Part 6 of
subtitle B of title I of ERISA.
9.10 Investment Company Act. Neither the Company nor any Subsidiary is
an "investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
9.11 Public Utility Holding Company Act. Neither the Company nor any
Subsidiary is a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
9.12 Regulation U. The Company is not engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
9.13 Taxes. The United States federal income tax returns of the Company
for the Fiscal Year ended June 30, 1991 and for all Fiscal Years ended prior to
such date are "closed years" and are not subject to review by the Internal
Revenue Service due to the running of the statute of limitations. The Company's
tax years ended June 30, 1992, June 30, 1993, July 2, 1994 and July 1, 1995 are
currently under examination by the Internal Revenue Service. The Company and
each Subsidiary has filed all tax returns and reports required by law to have
been filed by it and has paid all taxes and governmental charges required to be
paid, except for any taxes or charges for which adequate reserves in accordance
with generally accepted accounting principles have been set aside on its books.
9.14 Solvency, etc. On the Effective Date (or, in the case of any
Person which becomes a Guarantor after the Effective Date, on the date such
Person becomes a Guarantor), and immediately prior to and after giving effect to
the issuance of each Letter of Credit and each borrowing hereunder and the use
of the proceeds thereof, (a) each of the Company's and each Guarantor's assets
will exceed its liabilities and (b) each of the Company and each Guarantor will
be solvent, will be able to pay its debts as they mature, will own property with
fair saleable value greater than the amount required to pay its debts and will
have capital sufficient to carry on its business as then constituted.
9.15 Environmental Warranties. Except as disclosed in Exhibit E:
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(a) all facilities and property owned or leased by the Company
have been, and continue to be, owned or leased by the Company in
material compliance with all Environmental Laws;
(b) to the best knowledge of the Company, there have been no
releases of Hazardous Materials at, on or under any property now or
previously owned or leased by the Company that, singly or in the
aggregate, have, or may reasonably be expected to have, a Material
Adverse Effect;
(c) the Company has been issued and is in material compliance
with all permits, certificates, approvals, licenses and other
authorizations relating to environmental matters and necessary or
desirable for its business;
(d) no real property owned, leased or operated by the Company
or any Subsidiary has ever been used (by the Company or any Subsidiary
or to the best of the Company's knowledge, by any other Person) as a
site for intentional disposal of any Hazardous Material or a permanent
storage site for any Hazardous Material;
(e) except in compliance with applicable law, neither the
Company nor any Subsidiary nor, to the best of the Company's knowledge,
any other Person has ever caused or permitted any Hazardous Material to
be treated or stored on, under or at any real property owned, leased or
operated by the Company or any Subsidiary; and
(f) the Company has not transported or arranged for the
transportation of any Hazardous Materials to any location which is
listed or proposed by regulation for listing in the National Priorities
List pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act, or is listed on the Comprehensive Environmental
Response Compensation Liability Information System List or any similar
state list or which is the subject of any federal, state or local
enforcement action or other investigation which, singly or in the
aggregate, have, or may reasonably be expected to have, a Material
Adverse Effect.
9.16 Information. All written information heretofore or
contemporaneously herewith furnished by the Company or any Subsidiary to any
Bank for purposes of or in connection with this Agreement and the transactions
contemplated hereby is, and all written information hereafter furnished by or on
behalf of the Company or any Subsidiary to any Bank pursuant hereto or in
connection herewith will be, true and accurate in every material
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respect on the date as of which such information is dated or certified, and none
of such information is or will be incomplete by omitting to state any material
fact necessary to make such information not misleading.
SECTION 10 COVENANTS.
Until the expiration or termination of the Commitments and thereafter
until all obligations of the Company hereunder and under the other Loan
Documents are paid in full and all Letters of Credit have been terminated, the
Company agrees that, unless at any time the Required Banks shall otherwise
expressly consent in writing, it will:
10.1 Reports, Certificates and Other Information. Furnish to the Agent
with sufficient copies for each Bank:
10.1.1 Audit Report. (a) Promptly when available and in any event
within 90 days after the close of each Fiscal Year, a copy of the annual audit
report of the Company and its Subsidiaries for such Fiscal Year, including
therein consolidated balance sheets of the Company and its Subsidiaries as of
the end of such Fiscal Year and consolidated statements of earnings and cash
flow of the Company and its Subsidiaries for such Fiscal Year, which audit
report shall be without qualification as to going concern or scope and shall be
prepared by Deloitte & Touche LLP or other independent auditors of recognized
standing selected by the Company and reasonably acceptable to the Agent,
together with a written statement from such auditors to the effect that in
making the audit necessary for the signing of such audit report by such
accountants, they have not become aware of any Event of Default or Unmatured
Event of Default that has occurred and is continuing or, if they have become
aware of any such event, describing it in reasonable detail; and (b) promptly
when available and in any event within 60 days after the close of each Fiscal
Year, consolidated and consolidating balance sheets of the Company and its
Subsidiaries as of the end of such Fiscal Year and consolidated and
consolidating statements of earnings for the Company and its Subsidiaries for
such Fiscal Year, together with a certificate of the Chief Executive Officer,
the Chief Financial Officer or the Treasurer of the Company certifying that such
financial statements fairly present the financial condition and results of
operations of the Company and its Subsidiaries as of the dates and periods
indicated.
10.1.2 Quarterly Reports. Promptly when available and in any event
within 30 days after the end of each Fiscal Quarter (except the last Fiscal
Quarter) of each Fiscal Year, consolidated and consolidating balance sheets of
the Company and its Subsidiaries as of the end of such Fiscal Quarter and
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consolidated and consolidating statements of earnings for such Fiscal Quarter
and for the period beginning with the first day of such Fiscal Year and ending
on the last day of such Fiscal Quarter and for the corresponding Fiscal Quarter
of the immediately preceding Fiscal Year, together with a certificate of the
Chief Executive Officer, the Chief Financial Officer or the Treasurer of the
Company, certifying that such financial statements fairly present the financial
condition and results of operations of the Company and its Subsidiaries as of
the dates and periods indicated, subject to changes resulting from audit and
normal year-end adjustments.
10.1.3 Monthly Reports. Promptly when available and in any event within
30 days after the end of each month of each Fiscal Year (except the last month
of each Fiscal Quarter), a financial report substantially in the form of the
monthly reports customarily prepared by the Company as of the date of this
Agreement, including, without limitation, a balance sheet and a statement of
earnings for such month and for the period beginning with the first day of such
Fiscal Year and ending on the last day of such month and for the corresponding
month of the immediately preceding Fiscal Year, together with a certificate of
the Chief Executive Officer, the Chief Financial Officer or the Treasurer of the
Company, certifying that such financial statements fairly present the financial
condition and results of operations of the Company and its Subsidiaries as of
the dates and periods indicated, subject to changes resulting from audit and
normal year-end adjustments.
10.1.4 Borrowing Base Certificate. Furnish to the Banks within 10
Business Days after the end of each month, a borrowing base certificate
substantially in the form of Exhibit L, together with an aging of Receivables by
Account Debtor (in the case of the 10 Account Debtors with the largest aggregate
amount of outstanding Receivables) and in aggregate (in the case of all other
Account Debtors).
10.1.5 Compliance Certificates. Contemporaneously with the furnishing
of a copy of each annual audit report pursuant to Section 10.1.1 and of each set
of quarterly statements pursuant to Section 10.1.2, a duly completed certificate
in the form of Exhibit F, with appropriate insertions, dated the date of such
annual report or such quarterly statements and signed by the Chief Executive
Officer, the Chief Financial Officer or the Treasurer of the Company, containing
a computation of each of the financial ratios and restrictions set forth in this
Section 10 and to the effect that such officer has not become aware of any Event
of Default or Unmatured Event of Default that has occurred and is continuing or,
if there is any such event, describing it and the steps, if any, being taken to
cure it.
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10.1.6 Reports to SEC and to Shareholders. Promptly upon the filing or
sending thereof, a copy of (a) any annual, periodic or special report or
registration statement (inclusive of exhibits thereto other than those exhibits
incorporated by reference therein) filed with the SEC or any securities exchange
and (b) any report, proxy statement or other communication to the Company's
shareholders generally.
10.1.7 Notice of Default, Litigation and ERISA Matters. Promptly (and
in any event within three Business Days (or, in the case of clause (a) below,
one Business Day)) after any officer of the Company learns of any of the
following, written notice describing the same and the steps being taken by the
Company or the Subsidiary affected thereby with respect thereto: (a) the
occurrence of an Event of Default or an Unmatured Event of Default; (b) any
litigation, arbitration or governmental investigation or proceeding not
previously disclosed by the Company to the Banks which has been instituted or,
to the knowledge of the Company, is threatened against the Company or any
Subsidiary or to which any of the properties of any thereof is subject which has
had or is reasonably likely to have a Material Adverse Effect; (c) any material
adverse development which occurs in any litigation, arbitration or governmental
investigation or proceeding previously disclosed pursuant to clause (b); (d) the
institution of any steps by the Company, any of its Subsidiaries or any other
Person to terminate any Pension Plan, or the failure to make a required
contribution to any Pension Plan if such failure is sufficient to give rise to a
Lien under Section 302(f) of ERISA, or the taking of any action with respect to
a Pension Plan which could result in the requirement that the Company furnish a
bond or other security to the PBGC or such Pension Plan, or the occurrence of
any event with respect to any Pension Plan which could result in the incurrence
by the Company of any material liability, fine or penalty, or any material
increase in the contingent liability of the Company with respect to any
post-retirement Welfare Plan benefit; and (e) the occurrence of any other event
or circumstance which has had or is reasonably likely to have a Material Adverse
Effect.
10.1.8 Subsidiaries. Promptly upon the occurrence thereof, a written
report of any change in the list of its Subsidiaries attached as Exhibit C.
10.1.9 Management Reports. Promptly upon the request of the Agent or
any Bank, copies of all detailed financial and management reports submitted to
the Company by independent auditors in connection with any annual or interim
audit made by such auditors of the books of the Company.
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10.1.10 Other Information. Promptly from time to time, such other
information concerning the Company and its Subsidiaries as any Bank or the Agent
may reasonably request.
10.2 Books, Records and Inspections. Keep, and cause each Subsidiary to
keep, its books and records in accordance with sound business practices
sufficient to allow the preparation of financial statements in accordance with
generally accepted accounting principles; permit, and cause each Subsidiary to
permit, on reasonable notice and at reasonable times and intervals (or at any
time without notice during the existence of an Event of Default) any Bank or the
Agent or any representative thereof to inspect the properties and operations of
the Company and of such Subsidiary; and permit, and cause each Subsidiary to
permit, on reasonable notice and at reasonable times and intervals (or at any
time without notice during the existence of an Event of Default) any Bank or the
Agent or any representative thereof to visit any or all of its offices, to
discuss its financial matters with its officers and its independent auditors
(and the Company hereby authorizes such independent auditors to discuss such
financial matters with any Bank or the Agent or any representative thereof), and
to examine (and, at the expense of the Company or the applicable Subsidiary,
photocopy extracts from) any of its books or other corporate records.
10.3 Insurance. Maintain, and cause each Subsidiary to maintain, with
reputable, financially sound insurance companies, insurance to such extent and
against such hazards and liabilities as is customarily maintained by companies
similarly situated (and, in any event, such insurance as may be required by any
law or governmental regulation or any court order or decree); and, upon request
of the Agent or any Bank, furnish to the Agent or such Bank a certificate
setting forth in reasonable detail the nature and extent of all insurance
maintained by the Company and its Subsidiaries.
10.4 Compliance with Laws; Payment of Taxes and Liabilities. (a)
Comply, and cause each Subsidiary to comply, in all material respects with all
applicable laws, rules, regulations and orders the noncompliance with which
would be reasonably likely to have a Material Adverse Effect; and (b) pay, and
cause each Subsidiary to pay, prior to delinquency, all taxes and other
governmental charges against it or any of its property; provided, however, that
the foregoing shall not require the Company or any Subsidiary to pay any such
tax or charge so long as it shall contest the validity thereof in good faith by
appropriate proceedings and shall set aside on its books adequate reserves with
respect thereto in accordance with generally accepted accounting principles.
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10.5 Maintenance of Existence, etc. Maintain and preserve, and cause
each Subsidiary to maintain and preserve, (a) its existence and good standing in
the jurisdiction of its incorporation and (b) its qualification and good
standing as a foreign corporation in each jurisdiction where the nature of its
business makes such qualification necessary.
10.6 Financial Covenants.
10.6.1 Minimum Net Worth. Not permit Net Worth at any time to be less
than (a) $27,500,000 plus (b) 50% of Consolidated Net Income for the period
beginning June 30, 1996 and ending on the last day of the most recently ended
Fiscal Quarter (excluding any loss for any Fiscal Quarter in such period).
10.6.2 Minimum Interest Coverage. Not permit the Interest Coverage
Ratio for any Computation Period, beginning with the Computation Period ending
September 30, 1996, to be less than (i) 1.75 to 1.00 for each Computation Period
ending prior to June 30, 1997, (ii) 2.0 to 1.00 for each Computation Period
ending on or after June 30, 1997 but prior to June 30, 1998, and (iii) 2.50 to
1.00 for each Computation Period ending on or after June 30, 1998.
10.6.3 Debt Ratio. Not permit the Debt Ratio as of the end of any
Fiscal Quarter to exceed (i) in the case of any Fiscal Quarter ending on or
before March 31, 1997, 3.75 to 1.00, (ii) in the case of any Fiscal Quarter
ending after March 31, 1997 but on or before March 31, 1998, 3.125 to 1.00, and
(iii) in the case of any Fiscal Quarter ending after March 31, 1998, 2.50 to
1.00.
10.7 Liens. Not, and not permit any Subsidiary to, create or permit to
exist any Lien on any of its real or personal properties, assets or rights of
whatsoever nature (whether now owned or hereafter acquired), except (a) Liens
for taxes or other governmental charges not at the time delinquent or thereafter
payable without penalty or being contested in good faith by appropriate
proceedings and, in each case, for which it maintains adequate reserves; (b)
Liens arising in the ordinary course of business (such as (i) Liens of carriers,
warehousemen, mechanics and materialmen and other similar Liens imposed by law
and (ii) Liens incurred in connection with worker's compensation, unemployment
compensation and other types of social security (excluding Liens arising under
ERISA) or in connection with surety and appeal bonds, bids, performance bonds
and similar obligations) for sums not overdue or being contested in good faith
by appropriate proceedings and not involving any deposits or advances or
borrowed money or the deferred purchase price of property or services, and, in
each case, for which it maintains adequate reserves; (c) Liens identified on
Exhibit G; (d) Liens
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in respect of Capital Leases entered into in connection
with, or any Lien arising in connection with, the acquisition of Capital
Expenditures permitted hereunder and attaching only to the property being
acquired, if the Debt secured thereby does not exceed $3,000,000 in the
aggregate for all such Debt of the Company and all Subsidiaries at any one time
outstanding; (e) attachments, judgments and other similar Liens, for sums not
exceeding $500,000 arising in connection with court proceedings, provided the
execution or other enforcement of such Liens is effectively stayed and claims
secured thereby are being actively contested in good faith and by appropriate
proceedings; (f) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering in any material
respect with the ordinary conduct of the business of the Company and its
Subsidiaries taken as a whole; (g) Liens in favor of the Agent arising under the
Loan Documents; (h) Liens securing obligations of a Subsidiary to the Company or
to a wholly-owned Subsidiary; and (i) extensions, renewals or replacements of
any Lien permitted by the foregoing provisions of this Section 10.7, but only if
the principal amount of the Debt secured thereby immediately prior to such
extension, renewal or replacement is not increased and such Lien is not extended
to any other property.
10.8 Limitations on Debt. Not, and not permit any Subsidiary to,
create, incur, assume or suffer to exist any Debt, except (a) obligations
arising under the Loan Documents; (b) Debt in respect of Liens permitted
pursuant to Section 10.7(d); (c) Debt of Subsidiaries to the Company or to other
Subsidiaries; (d) liabilities in respect of Hedging Agreements entered into by
the Company or any Subsidiary; (e) Contingent Liabilities in respect of any
obligation of the Company or any Subsidiary permitted under this Agreement; (f)
Debt in respect of taxes, assessments or governmental charges to the extent that
payment thereof shall not at the time be required to be made in accordance with
Section 10.4; (g) Debt in respect of judgments or awards not constituting an
Event of Default under Section 12.1.8; (h) other Debt outstanding on the date
hereof and listed in Exhibit H or hereafter incurred in connection with Liens
permitted by Section 10.7, (i) other Debt at any time outstanding, in addition
to Debt permitted by clauses (a) through (h), not exceeding $1,000,000 at any
time outstanding, and (j) extensions, renewals and refinancings of any Debt
described in clauses (b), (h) or (i) so long as the principal amount thereof is
not increased and is on terms, in the aggregate, not materially less favorable
to the Company or such Subsidiary than the terms of such Debt prior to such
extension, renewal or refinancing.
10.9 Guaranties. Not, and not permit any Subsidiary to,
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become or be a guarantor or surety of, or otherwise become or be responsible in
any manner (whether by agreement to purchase any obligations, stock, assets,
goods or services, or to supply any assets, goods or services, or otherwise)
for, any obligations of any other Person, except for (i) the endorsement, in the
ordinary course of collection, of instruments payable to it or to its order and
(ii) the Guaranty.
10.10 Mergers and Consolidations; Acquisitions. Not, and not permit any
Subsidiary to, be a party to any merger or consolidation, or purchase or
otherwise acquire all or substantially all of the assets or any stock of any
class of, or any partnership or joint venture interest in, any other Person,
except (a) any such merger or consolidation of or by any wholly-owned Subsidiary
into the Company or any Guarantor, (b) any such purchase or other acquisition by
the Company or any Guarantor of the assets or stock of any wholly-owned
Subsidiary, and (c) any other merger, purchase or acquisition by the Company
provided that (i) in the case of any such merger, the Company is the surviving
entity, (ii) the consideration (including, without limitation, any Debt assumed
by the Company in connection with such merger, purchase or acquisition but less
any cash acquired by the Company in connection with any such merger, purchase or
acquisition) paid for such stock or assets or in connection with such merger
shall not exceed $3,000,000 in the aggregate for all such mergers, purchases and
acquisitions in any Fiscal Year and $5,000,000 in the aggregate for all such
mergers, purchases and acquisitions during the term of this Agreement, and (iii)
no Event of Default or Unmatured Event of Default exists or would result
therefrom.
10.11 Asset Dispositions. Not, and not permit any Subsidiary to, sell,
transfer, convey, lease or otherwise dispose of, or grant options, warrants or
other rights with respect to, any of its assets, or sell, assign, pledge or
otherwise transfer any receivables, contract rights, general intangibles,
chattel paper or instruments, with or without recourse, except the disposition
of inventory or obsolete assets in the ordinary course of business consistent
with past practices.
10.12 Capital Expenditures. Not, and not permit any Subsidiary to, make
or commit to make any Capital Expenditure in any Fiscal Year unless, after
giving effect to such Capital Expenditure, the aggregate amount of all Capital
Expenditures made by the Company and its Subsidiaries during such Fiscal Year
(less, in the case of Capital Expenditures incurred to replace existing
equipment of the Company or any Subsidiary, an amount equal to the amount of
proceeds received by the Company or such
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Subsidiary from the sale of such replaced equipment within six months of the
acquisition of such replacement equipment) shall not exceed (a) $2,500,000 in
Fiscal Year 1997 and (b) $3,500,000 for each Fiscal Year thereafter.
10.13 Restricted Payments. Not, and not permit any Subsidiary to, (a)
declare or pay any dividends on any of its capital stock (other than stock
dividends), (b) purchase or redeem any such stock or any warrants, options or
other rights in respect of such stock, (c) make any other distribution to
shareholders (other than the issuance of stock, or options in respect thereof,
to directors, officers and employees), (d) prepay, purchase or redeem any
subordinated Debt or (e) set aside funds for any of the foregoing (any of the
foregoing, a "Restricted Payment"); provided that (i) any Subsidiary may declare
and pay dividends to the Company or to another wholly-owned Subsidiary; and (ii)
so long as (x) no Event of Default or Unmatured Event of Default exists or would
result therefrom, (y) the Debt Ratio is less than 2.50 to 1.00 as of the last
day of the Fiscal Quarter most recently ended and (z) after giving effect to
such Restricted Payment, the sum of all Restricted Payments made since the
Effective Date will be equal to or less than the sum of (A) 50% of Excess Cash
for the period from the first date on which the Debt Ratio was less than 2.50 to
1.00 to the last day of the Fiscal Quarter most recently ended plus (B) the
aggregate net cash proceeds from the issuance of common stock by the Company
since the Effective Date, then the Company may make any Restricted Payments.
10.14 Modification of Organizational Documents. Not permit the
Certificate of Incorporation, By-Laws or other organizational documents of the
Company or any Subsidiary to be amended or modified in any way which would
materially adversely affect the interests of the Banks.
10.15 Use of Proceeds. Use the proceeds of the Loans solely for general
corporate purposes and to repay Debt to be Repaid; and not use or permit any
proceeds of any Loan to be used, either directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of "purchasing or carrying" any
Margin Stock.
10.16 Further Assurances. Take, and cause each Subsidiary to take, such
actions as the Agent may reasonably request from time to time (including,
without limitation, the execution and delivery of guaranties, security
agreements, pledge agreements, mortgages, financing statements and other
documents, the filing or recording of any of the foregoing, and the delivery of
stock
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certificates and other collateral with respect to which perfection is
obtained by possession) to ensure that (i) the obligations of the Company
hereunder and under the other Loan Documents are secured by substantially all of
the assets of the Company and guarantied by all Subsidiaries of the Company
(including, promptly upon the acquisition or creation thereof, any Subsidiary
acquired or created after the date hereof) and (ii) the obligations of each
Subsidiary under the Guaranty are secured by substantially all of the assets of
such Subsidiary.
10.17 Transactions with Affiliates. Not, and not permit any Subsidiary
to, enter into, or cause, suffer or permit to exist any transaction, arrangement
or contract with any of its other Affiliates (other than the Company and its
Subsidiaries) which is on terms which are less favorable than are obtainable
from any Person which is not one of its Affiliates.
10.18 Employee Benefit Plans. Maintain, and cause each Subsidiary to
maintain, each Pension Plan in compliance with all applicable requirements of
law and regulations.
10.19 Lease Rentals. Not, and not permit any Subsidiary to, enter into,
or permit to remain in effect any operating lease for the leasing by it as
lessee of any real or personal property (or any interest therein) which requires
the payment by the Company and its Subsidiaries of amounts of rental in excess
of an aggregate, for all such leases of the Company and its Subsidiaries at any
one time outstanding, of $2,500,000 in any Fiscal Year.
10.20 Environmental Covenants.
10.20.1 Environmental Response Obligation. (a) Comply, and cause each
Subsidiary to comply, with any Federal or state judicial or administrative order
requiring the performance at any real property owned, operated or leased by the
Company or any Subsidiary of activities in response to the release or threatened
release of a Hazardous Material, except for the period of time that the Company
or such Subsidiary is diligently in good faith contesting such order; (b) notify
the Agent and each Bank within ten days of the receipt of any written claim,
demand, proceeding, action or notice of liability by any Person arising out of
or relating to the release or threatened release of a Hazardous Material; and
(c) notify the Agent and each Bank within ten days of any release, threat of
release, or disposal of Hazardous Material reported by the Company or any
Subsidiary to any governmental or regulatory authority at any real property
owned, operated, or leased by the Company or any Subsidiary.
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10.20.2 Environmental Liabilities. (a) Comply, and cause each
Subsidiary to comply, in all material respects with all material Environmental
Laws; (b) without limiting clause (a), not commence disposal of any Hazardous
Material into or onto any real property owned, operated or leased by the Company
or any Subsidiary; and (c) without limiting clause (a), not allow any Lien
imposed pursuant to any law, regulation or order relating to Hazardous Materials
or the disposal thereof to remain on any real property owned, operated or leased
by the Company or any Subsidiary.
10.21 Unconditional Purchase Obligations. Not, and not permit any
Subsidiary to, enter into or be a party to any contract for the purchase of
materials, supplies or other property or services, if such contract requires
that payment be made by it regardless of whether or not delivery is ever made of
such materials, supplies or other property or services.
10.22 Maintenance of Properties. Maintain, and cause each of its
Subsidiaries to maintain, its equipment, improvements and other property in good
repair, working order and condition, ordinary wear and tear excepted, and will
make, and cause each Subsidiary to make, such repairs, replacements and
additions as may be necessary to maintain such condition.
10.23 Investments. The Company will not, nor will it permit any
Subsidiary to, make, incur, assume or suffer to exist any Investment in any
other Person, except:
(a) Investments existing on the Effective Date and identified
in Exhibit P;
(b) Cash Equivalent Investments;
(c) Investments by the Company in its Subsidiaries or by any
Subsidiary in any other Subsidiary, in the form of contributions to
capital or loans or advances; provided that, immediately before or
after giving effect to such Investment, no Event of Default or
Unmatured Event of Default shall have occurred and be continuing;
(e) loans or advances made by any Subsidiary to the Company;
and
(f) advances not to exceed, in the aggregate for the Company
and all Subsidiaries at any one time outstanding, $250,000 to officers
and employees in connection with
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travel, housing and other expenses in the ordinary course of business.
10.24 Interest Rate Protection. Within 30 days after the Effective
Date, enter into and maintain one or more interest rate swaps, interest rate
caps or similar arrangements with counterparties reasonably acceptable to the
Agent, which arrangements will ensure that the effective interest rate (after
taking account of such arrangements) will not exceed 10% per annum with respect
to not less than $12,500,000 of the Term Loans at any time prior to June 30,
1998.
10.25 Hedging Agreements. Not, and not permit any Subsidiary to, enter
into any Hedging Agreement other than any Hedging Agreement required to be
entered into pursuant to Section 10.24.
10.26 Other Agreements. Not, and not permit any Subsidiary to, enter
into any agreement containing any provision which would restrict the ability of
the Company or any Subsidiary to grant a Lien on any of its assets or which
would be violated or breached by any borrowing by the Company hereunder or by
the performance by the Company or any Subsidiary of any of its obligations
hereunder or under any other Loan Document.
SECTION 11 CONDITIONS TO EFFECTIVENESS; CONDITIONS OF LENDING.
The effectiveness of this Agreement and the obligation of each Bank to
make any Loan and of Harris to issue any Letter of Credit is subject to the
following conditions precedent:
11.1 Effective Date. The effectiveness of this Agreement is subject to
the conditions precedent and concurrent (and the date on which all such
conditions precedent and concurrent have been satisfied or waived in writing by
the Banks is called the "Effective Date") that the Agent shall have received, on
or prior to the Effective Date, all of the following, each duly executed and
dated the Effective Date (or such earlier date as shall be satisfactory to the
Agent), in form and substance satisfactory to the Agent, and each (except for
the Notes, of which only the originals shall be signed) in sufficient number of
signed counterparts to provide one for each Bank:
11.1.1 Notes. The Notes.
11.1.2 Resolutions. Certified copies of resolutions of the Board of
Directors of the Company authorizing or ratifying the
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execution, delivery and performance by the Company of this Agreement, the Notes
and the other Loan Documents to which the Company is a party; and certified
copies of resolutions of the Board of Directors of each Guarantor authorizing or
ratifying the execution, delivery and performance by such Guarantor of each Loan
Document to which such Guarantor is a party.
11.1.3 Consents, etc. Certified copies of all documents evidencing any
necessary corporate action, consents and governmental approvals (if any)
required for the execution, delivery and performance of the Loan Documents by
the Company and each Guarantor.
11.1.4 Incumbency and Signature Certificates. A certificate of the
Secretary or an Assistant Secretary of the Company and each Guarantor certifying
the names of the officer or officers of such entity authorized to sign the Loan
Documents to which such entity is a party, together with a sample of the true
signature of each such officer (it being understood that the Agent and each Bank
may conclusively rely on each such certificate until formally advised by a like
certificate of any changes therein).
11.1.5 Guaranty. A guaranty (as amended or otherwise modified from time
to time, the "Guaranty"), substantially in the form of Exhibit K, executed by
each Guarantor.
11.1.6 Security Agreement. A security agreement, substantially in the
form of Exhibit M, issued by the Company and each Guarantor (as amended,
supplemented or otherwise modified from time to time, the "Security Agreement"),
together with evidence, satisfactory to the Agent, that substantially all
filings necessary to perfect the Agent's Lien on any collateral granted under
the Security Agreement have been duly made and are in full force and effect.
11.1.7 Pledge Agreements. (a) A pledge agreement, substantially in the
form of Exhibit N-1, issued by the Company (as amended or otherwise modified
from time to time, the "Company Pledge Agreement").
(b) A pledge agreement substantially in the form of Exhibit N-2, issued
by Niemand Holdings, Inc. (as amended or otherwise modified from time to time,
the "Subsidiary Pledge Agreement").
11.1.8 Mortgages. Mortgages, each in form and substance satisfactory to
the Agent (and together with such other documents, such as surveys, title
reports and title insurance
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policies, as the Agent may reasonably request), with respect to the real
property of the Company and the Guarantors listed in Exhibit O.
11.1.9 Evidence of the Payment of Debt to be Repaid; Releases. Evidence
that all Debt to be Repaid, together with all interest, all prepayment premiums
(if any) and all other amounts due and payable with respect thereto, shall have
been paid in full (including, to the extent necessary, from the proceeds of the
initial Loans), together with all releases and other instruments necessary to
release all Liens securing payment of any such Debt to be Repaid.
11.1.10 Insurance Certificate. A certificate setting forth in
reasonable detail the nature and extent of all insurance maintained by the
Company and its Subsidiaries.
11.1.11 Opinions of Counsel for the Company and the Guarantors. The
opinions of (a) Kohrman Jackson & Krantz, counsel to the Company and the
Guarantors, substantially in the form of Exhibit I-1, (b) Robinson, Bradshaw &
Hinson, P.A., North Carolina counsel to the Company and the Guarantors,
substantially in the form of Exhibit I-2, (c) Dunmire, Fisher & Hastings,
Nebraska counsel to the Company and the Guarantors, substantially in the form of
Exhibit I-3, (d) Lewis & Kappes, Indiana counsel to the Company and the
Guarantors, substantially in the form of Exhibit I-4, and (e) Robison & Belser,
P.A., Alabama counsel to the Company and the Guarantors, substantially in the
form of Exhibit I-5.
11.1.12 Other. Such other documents as the Agent or any Bank may
reasonably request.
11.2 All Loans and Letters of Credit. The obligation of each Bank to
make each Loan and of Harris to issue each Letter of Credit is subject to the
following further conditions precedent that:
11.2.1 No Default, etc. (a) No Event of Default or Unmatured Event of
Default has occurred and is continuing or will result from the making of such
Loan or the issuance of such Letter of Credit, (b) the warranties of the Company
contained in Section 9 are true and correct as of the date of such requested
Loan or Letter of Credit, with the same effect as though made on such date and
(c) since the date of the audited consolidated financial statements described in
Section 9.4 or, if later, the date of the most recent financial statements
delivered to the Banks pursuant to Section 10.1.1, 10.1.2, or 10.1.3, no event
has
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occurred or condition exists that results in a Material Adverse Effect.
11.2.2 Confirmatory Certificate. The Agent shall have received (in
sufficient counterparts to provide one to each Bank), if requested by the Agent
or any Bank, a certificate dated the date of such requested Loan or Letter of
Credit and signed by a duly authorized representative of the Company as to the
matters set out in Section 11.2.1 (it being understood that each request by the
Company for the making of a Loan or the issuance of a Letter of Credit shall be
deemed to constitute a warranty by the Company that the conditions precedent set
forth in Section 11.2.1 will be satisfied at the time of the making of such Loan
or the issuance of such Letter of Credit), together with such other documents as
the Agent or any Bank may reasonably request in support thereof.
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.
12.1 Events of Default. Each of the following shall constitute an Event
of Default under this Agreement:
12.1.1 Non-Payment of the Loans, etc. Default in the payment when due
of the principal of any Loan; or default, and continuance thereof for five days,
in the payment when due of any interest, fees, reimbursement obligation with
respect to any Letter of Credit or other amounts payable by the Company
hereunder or under any other Loan Document.
12.1.2 Non-Payment of Other Debt. Any default shall occur under the
terms applicable to any Debt of the Company or any Subsidiary in an aggregate
amount (for all Debt so affected) exceeding $1,000,000 and such default shall
(a) consist of the failure to pay such Debt when due (subject to any applicable
grace period), whether by acceleration or otherwise, or (b) accelerate the
maturity of such Debt or permit the holder or holders thereof, or any trustee or
agent for such holder or holders, to cause such Debt to become due and payable
prior to its expressed maturity.
12.1.3 Other Material Obligations. Default in the payment when due, or
in the performance or observance of, any material obligation of, or condition
agreed to by, the Company or any Subsidiary with respect to any material
purchase or lease of goods or services (except only to the extent that the
existence of any such default is being contested by the Company or such
Subsidiary in good faith and by appropriate proceedings and all necessary
reserves, if any, have been made in respect of such
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default) if, in the reasonable judgment of the Required Banks, such default has
had, or is reasonably likely to have, a Material Adverse Effect.
12.1.4 Bankruptcy, Insolvency, etc. The Company or any Guarantor
becomes insolvent or generally fails to pay, or admits in writing its inability
or refusal to pay, debts as they become due; or the Company or any Guarantor
applies for, consents to, or acquiesces in the appointment of a trustee,
receiver or other custodian for the Company or such Guarantor or any property
thereof, or makes a general assignment for the benefit of creditors; or, in the
absence of such application, consent or acquiescence, a trustee, receiver or
other custodian is appointed for the Company or any Guarantor or for a
substantial part of the property of any thereof and is not discharged within 30
days; or any bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding (except the voluntary dissolution, not under any
bankruptcy or insolvency law, of a Subsidiary), is commenced in respect of the
Company or any Guarantor, and if such case or proceeding is not commenced by the
Company or such Guarantor, it is consented to or acquiesced in by the Company or
such Guarantor, or remains for 30 days undismissed; or the Company or any
Guarantor takes any corporate action to authorize, or in furtherance of, any of
the foregoing.
12.1.5 Non-Compliance with Provisions of This Agreement. Failure by the
Company to comply with or to perform any covenant set forth in Sections 10.6
through 10.15, Section 10.19 and Section 10.23 or failure by the Company to
comply with or to perform any other provision of this Agreement (and not
constituting an Event of Default under any of the other provisions of this
Section 12) and continuance of such failure for 30 days after notice thereof to
the Company from the Agent or any Bank.
12.1.6 Warranties. Any warranty made by the Company or any Guarantor
herein or in any other Loan Document is breached or is false or misleading in
any material respect, or any schedule, certificate, financial statement, report,
notice or other writing furnished by the Company or any Guarantor to the Agent
or any Bank is false or misleading in any material respect on the date as of
which the facts therein set forth are stated or certified.
12.1.7 Pension Plans. (i) Institution of any steps by the Company or
any other Person to terminate a Pension Plan if as a result of such termination
the Company could be required to make a contribution to such Pension Plan, or
could incur a liability
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or obligation to such Pension Plan, in excess of $500,000, or (ii) a
contribution failure occurs with respect to any Pension Plan sufficient to give
rise to a Lien under section 302(f) of ERISA.
12.1.8 Judgments. Final judgments which exceed an aggregate of
$1,000,000 (excluding any portion thereof which is covered by insurance so long
as the insurer is reasonably likely to be able to pay and has accepted a tender
of defense and indemnification without reservation of rights) shall be rendered
against the Company or any Subsidiary and shall not have been discharged or
vacated or had execution thereof stayed pending appeal within 30 days after
entry or filing of such judgments.
12.1.9 Invalidity of Guaranty, etc. The Guaranty shall cease to be in
full force and effect with respect to any Guarantor, any Guarantor shall fail
(subject to any applicable grace period) to comply with or to perform any
applicable provision of the Guaranty, or any Guarantor (or any Person by,
through or on behalf of such Guarantor) shall contest in any manner the
validity, binding nature or enforceability of the Guaranty with respect to such
Guarantor.
12.1.10 Invalidity of Collateral Documents, etc. Any Collateral
Document shall cease to be in full force and effect with respect to the Company
or any Guarantor, the Company or any Guarantor shall fail (subject to any
applicable grace period) to comply with or to perform any applicable provision
of any Collateral Document to which such entity is a party, or the Company or
any Guarantor (or any Person by, through or on behalf of the Company or such
Guarantor) shall contest in any manner the validity, binding nature or
enforceability of any Collateral Document.
12.1.11 Change of Control. A Change of Control shall have occurred.
12.2 Effect of Event of Default. If any Event of Default described in
Section 12.1.4 shall occur, the Commitments (if they have not theretofore
terminated) shall immediately terminate and the Notes and all other obligations
hereunder shall become immediately due and payable and the Company shall become
immediately obligated to deliver to the Agent cash collateral in an amount equal
to the outstanding face amount of all Letters of Credit, all without
presentment, demand, protest or notice of any kind; and, in the case of any
other Event of Default, the Agent may (and upon written request of the Required
Banks shall) declare the Commitments (if they have not theretofore terminated)
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to be terminated and/or declare all Notes and all other obligations hereunder to
be due and payable and/or demand that the Company immediately deliver to the
Agent cash collateral in an amount equal to the outstanding face amount of all
Letters of Credit, whereupon the Commitments (if they have not theretofore
terminated) shall immediately terminate and/or all Notes and all other
obligations hereunder shall become immediately due and payable and/or the
Company shall immediately become obligated to deliver to the Agent cash
collateral in an amount equal to the face amount of all Letters of Credit, all
without presentment, demand, protest or notice of any kind. The Agent shall
promptly advise the Company of any such declaration, but failure to do so shall
not impair the effect of such declaration. Notwithstanding the foregoing, the
effect as an Event of Default of any event described in Section 12.1.1 or
Section 12.1.4 may be waived by the written concurrence of all of the Banks, and
the effect as an Event of Default of any other event described in this Section
12 may be waived by the written concurrence of the Required Banks. Any cash
collateral delivered hereunder shall be held by the Agent (without liability for
interest thereon) and applied to obligations arising in connection with any
drawing under a Letter of Credit. After the expiration or termination of all
Letters of Credit, such cash collateral shall be applied by the Agent to any
remaining obligations hereunder and any excess shall be delivered to the Company
or as a court of competent jurisdiction may direct.
SECTION 13 THE AGENT.
13.1 Authorization. Each Bank authorizes the Agent to act on behalf of
such Bank to the extent provided herein or in any other Loan Document or any
other document or instrument delivered hereunder or in connection herewith, and
to take such other action as may be reasonably incidental thereto.
13.2 Indemnification. Each Bank agrees to reimburse and indemnify the
Agent for, and hold the Agent harmless against, a share (determined in
accordance with the percentage which (x) the sum of (A) the participations in
all Letters of Credit of such Bank plus (B) the principal amount of the Loans of
such Bank is of (y) the sum of (A) the Stated Amount of all Letters of Credit
plus (B) the aggregate principal amount of all Loans) of any loss, damage,
penalty, action, judgment, obligation, cost, disbursement, liability or expense
(including attorneys' fees) incurred without gross negligence or willful
misconduct on the part of the Agent arising out of or in connection with the
performance of its obligations or the exercise of its powers hereunder or under
any other Loan Document or any other document
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or instrument delivered hereunder or in connection herewith, as well as the
costs and expenses of defending against any claim against the Agent arising
hereunder or thereunder.
13.3 Exculpation. The Agent shall be entitled to rely upon advice of
counsel concerning legal matters, and upon this Agreement, any other Loan
Document and any schedule, certificate, statement, report, notice or other
writing which it believes to be genuine or to have been presented by a proper
person. Neither the Agent nor any of its directors, officers, employees or
agents shall (i) be responsible for any recital, representation or warranty
contained in, or for the execution, validity, genuineness, effectiveness or
enforceability of, this Agreement, any other Loan Document or any other
instrument or document delivered hereunder or in connection herewith, (ii) be
responsible for the validity, genuineness, perfection, effectiveness,
enforceability, existence, value or enforcement of any collateral security,
(iii) be under any duty to inquire into or pass upon any of the foregoing
matters, or to make any inquiry concerning the performance by the Company or any
other obligor of its obligations, or (iv) in any event, be liable as such for
any action taken or omitted by it or them, except for its or their own gross
negligence or willful misconduct. The agency hereby created shall in no way
impair or affect any of the rights and powers of, or impose any duties or
obligations upon, the Agent in its individual capacity.
13.4 Credit Investigation. Each Bank acknowledges that it has made such
inquiries and taken such care on its own behalf as would have been the case had
such Bank's Commitments been granted, the Letters of Credit been issued and such
Bank's Loans been made directly by such Bank to the Company without the
intervention of the Agent or any other Bank. Each Bank agrees and acknowledges
that the Agent makes no representation or warranty about the creditworthiness of
the Company or any other party to this Agreement or any other Loan Document or
with respect to the legality, validity, sufficiency or enforceability of this
Agreement or any other Loan Document or the value of any security therefor.
13.5 Agent and Affiliates. The Agent in its individual capacity shall
have the same rights and powers hereunder as any other Bank and may exercise or
refrain from exercising the same as though it were not the Agent, and the Agent
and its Affiliates may accept deposits from and generally engage in any kind of
business with the Company or any Affiliate thereof as if the Agent were not the
Agent hereunder.
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13.6 Action on Instructions of the Required Banks. As to any matters
not expressly provided for by this Agreement (including, without limitation,
enforcement of any Loan Document or collection of the Loans), the Agent shall
not be required to exercise any discretion or take any action, but the Agent
shall in all cases be fully protected in acting or refraining from acting upon
the written instructions from (i) the Required Banks, except for instructions
which under the express provisions hereof must be received by the Agent from all
Banks, and (ii) in the case of such instructions, from all Banks. In no event
will the Agent be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement, any other Loan
Document or applicable law. The relationship between the Agent and the Banks is
and shall be that of agent and principal only and nothing herein contained shall
be construed to constitute the Agent a trustee for any Bank or any holder of a
participation in any Loan nor to impose on the Agent duties and obligations
other than those expressly provided for herein.
13.7 Funding Reliance. (a) Unless the Agent receives notice from a Bank
by 11:00 a.m., Chicago time, on the day of a proposed borrowing that such Bank
will not make available to the Agent the amount which would constitute its
Percentage of such borrowing in accordance with Section 2.3, the Agent may
assume that such Bank has made such amount available to the Agent and, in
reliance upon such assumption, make a corresponding amount available to the
Company. If and to the extent such Bank has not made any such amount available
to the Agent, such Bank and the Company jointly and severally agree to repay
such amount to the Agent forthwith on demand, together with interest thereon at
the interest rate applicable to Loans comprising such borrowing (or, in the case
of any Bank which repays such amount within three Business Days, the Federal
Funds Rate). Nothing set forth in this clause (a) shall relieve any Bank of any
obligation it may have to make any Loan hereunder.
(b) Unless the Agent receives notice from the Company prior to the due
date for any payment hereunder that the Company does not intend to make such
payment, the Agent may assume that the Company has made such payment and, in
reliance upon such assumption, make available to each Bank its share of such
payment. If and to the extent that the Company has not made any such payment to
the Agent, each Bank which received a share of such payment shall repay such
share (or the relevant portion thereof) to the Agent forthwith on demand,
together with interest thereon at the Federal Funds Rate. Nothing set forth in
this clause (b) shall relieve the Company of any obligation it may have to make
any payment hereunder.
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13.8 Resignation. The Agent may resign as such at any time upon at
least 30 days' prior notice to the Company and the Banks. In the event of any
such resignation, the Required Banks shall as promptly as practicable appoint a
successor Agent. If no successor shall have been so appointed, and shall have
accepted such appointment, within 30 days after the giving of notice of such
resignation, then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a commercial bank organized under the laws of
the United States of America having a combined capital, surplus and undivided
profits of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from all further
duties and obligations under this Agreement. After any resignation pursuant to
this Section 13.8, the provisions of this Section 13 shall inure to the benefit
of the retiring Agent as to any actions taken or omitted to be taken by it while
it was Agent hereunder.
SECTION 14 GENERAL.
14.1 Waiver; Amendments. No delay on the part of the Agent or any Bank
in the exercise of any right, power or remedy shall operate as a waiver thereof,
nor shall any single or partial exercise by any of them of any right, power or
remedy preclude other or further exercise thereof, or the exercise of any other
right, power or remedy. No amendment, modification or waiver of, or consent with
respect to, any provision of this Agreement or the Notes shall in any event be
effective unless the same shall be in writing and signed and delivered by Banks
having an aggregate Percentage of not less than the aggregate Percentage
expressly designated herein with respect thereto or, in the absence of such
designation as to any provision of this Agreement or the Notes, by the Required
Banks, and then any such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No amendment, modification, waiver or consent shall (i) extend or
increase the amount of the Commitments, (ii) extend the date for payment of any
principal of or interest on the Loans or any fees payable hereunder, (iii)
reduce the principal amount of any Loan, the rate of interest thereon or any
fees payable hereunder, or (iv) change the aggregate Percentage required to
effect an amendment, modification, waiver or consent without, in each case, the
consent of all Banks. No provisions of Section 13 shall be amended, modified or
waived without the consent of the Agent.
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14.2 Confirmations. The Company and each holder of a Note agree from
time to time, upon written request received by it from the other, to confirm to
the other in writing (with a copy of each such confirmation to the Agent) the
aggregate unpaid principal amount of the Loans then outstanding under such Note.
14.3 Notices. Except as otherwise provided in Sections 2.3, 2.4 and
4.3, all notices hereunder shall be in writing (including, without limitation,
facsimile transmission) and shall be sent to the applicable party at its address
shown below its signature hereto or at such other address as such party may, by
written notice received by the other parties hereto, have designated as its
address for such purpose. Notices sent by facsimile transmission shall be deemed
to have been given when sent; notices sent by mail shall be deemed to have been
given three Business Days after the date when sent by registered or certified
mail, postage prepaid; and notices sent by hand delivery shall be deemed to have
been given when received. For purposes of Sections 2.3, 2.4, 2.5 and 4.3, the
Agent shall be entitled to rely on telephonic instructions from any person that
the Agent in good faith believes is an authorized officer or employee of the
Company, and the Company shall hold the Agent and each Bank harmless from any
loss, cost or expense resulting from any such reliance.
14.4 Computations. Where the character or amount of any asset or
liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for the
purpose of this Agreement, such determination or calculation shall, to the
extent applicable and except as otherwise specified in this Agreement, be made
in accordance with generally accepted accounting principles applied on a basis
consistent with those used in the preparation of the Company's audited financial
statements for the 1995 Fiscal Year.
14.5 Regulation U. Each Bank represents that it in good faith is not relying,
either directly or indirectly, upon any Margin Stock as collateral security
for the extension or maintenance by it of any credit provided for in this
Agreement.
14.6 Costs, Expenses and Taxes. The Company agrees to pay on demand (a)
all reasonable out-of-pocket costs and expenses of the Agent (including the fees
and charges of counsel for the Agent and of local counsel, if any, who may be
retained by said counsel) in connection with the preparation, execution,
delivery and administration of this Agreement, the other Loan Documents and all
other documents provided for herein or delivered or to be delivered hereunder or
in connection herewith (including, without
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limitation, any amendment, supplement or waiver to any Loan Document), and (b)
all reasonable out-of-pocket costs and expenses (including reasonable attorneys'
fees, court costs and other legal expenses) incurred by the Agent and each Bank
after an Event of Default in connection with the enforcement of this Agreement,
the other Loan Documents or any such other documents. Each Bank agrees to
reimburse the Agent for such Bank's pro rata share (based on its respective
Percentage) of any such costs and expenses of the Agent not paid by the Company.
In addition, the Company agrees to pay, and to save the Agent and the Banks
harmless from all liability for, any stamp or other taxes which may be payable
in connection with the execution and delivery of this Agreement, the borrowings
hereunder, the issuance of the Notes or the execution and delivery of any other
Loan Document or any other document provided for herein or delivered or to be
delivered hereunder or in connection herewith. All obligations provided for in
this Section 14.6 shall survive repayment of the Loans, cancellation of the
Notes and any termination of this Agreement.
14.7 Subsidiary References. The provisions of this Agreement relating
to Subsidiaries shall apply only during such times as the Company has one or
more Subsidiaries.
14.8 Captions. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
14.9 Assignments; Participations.
14.9.1 Assignments. Any Bank may, with the prior written consent of the
Company (which consent shall not be unreasonably delayed or withheld), at any
time assign and delegate to one or more commercial banks or other Persons (any
Person to whom such an assignment and delegation is to be made being herein
called an "Assignee"), all or any fraction of such Bank's Loans and Commitments
(which assignment and delegation shall be of an equal percentage of each of such
Bank's Loans and Commitments and shall be of a constant, and not a varying,
percentage of all the assigning Bank's Loans and of such Bank's obligations in
respect of its Commitments) in a minimum aggregate amount equal to the lesser of
(i) the assigning Bank's remaining Loans and (to the extent not used)
Commitments and (ii) $5,000,000; provided, however, that (a) no assignment and
delegation may be made to any Person if, at the time of such assignment and
delegation, the Company would be obligated to pay any greater amount under
Section 8 to the Assignee than the Company is then obligated to pay to the
assigning Bank under such Section, (b) after giving
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effect to any such assignment, no Bank shall have a Total Percentage of less
than one seventh, and (c) the Company and the Agent shall be entitled to
continue to deal solely and directly with such Bank in connection with the
interests so assigned and delegated to an Assignee until the date when all of
the following conditions shall have been met:
(x) five Business Days (or such lesser period of time as the
Agent and the assigning Bank shall agree) shall have passed after
written notice of such assignment and delegation, together with payment
instructions, addresses and related information with respect to such
Assignee, shall have been given to the Company and the Agent by such
assigning Bank and the Assignee,
(y) the assigning Bank and the Assignee shall have executed
and delivered to the Company and the Agent an assignment agreement
substantially in the form of Exhibit J (an "Assignment Agreement"),
together with any documents required to be delivered thereunder, which
Assignment Agreement shall have been accepted by the Company and the
Agent, and
(z) the assigning Bank or the Assignee shall have paid the
Agent a processing fee of $3,000.
From and after the date on which the conditions described above have been met,
(x) such Assignee shall be deemed automatically to have become a party hereto
and, to the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee pursuant to such Assignment Agreement, shall have the
rights and obligations of a Bank hereunder, and (y) the assigning Bank, to the
extent that rights and obligations hereunder have been assigned and delegated by
it pursuant to such Assignment Agreement, shall be released from its obligations
hereunder. Within five Business Days after the effectiveness of any assignment
and delegation, the Company shall execute and deliver to the Agent (for delivery
to the Assignee and the assigning Bank, as applicable) a new Revolving Note in
the principal amount of the Assignee's Revolving Commitment and a new Term Note
in the principal amount of the Assignee's Term Loan and, if the assigning Bank
has retained any Revolving Commitment or Term Loan hereunder, a replacement
Revolving Note in the principal amount of the Revolving Commitment retained by
the assigning Bank and a replacement Term Note in the principal amount of the
assigning Bank's retained Term Loan (such Notes to be in exchange for, but not
in payment of, the predecessor Notes held by such assigning Bank). Each such
Note shall be dated the effective date of such
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assignment. The assigning Bank shall mark the predecessor Notes "exchanged" and
deliver them to the Company. Accrued interest on that part of any predecessor
Note being assigned shall be paid as provided in the Assignment Agreement.
Accrued interest and fees on that part of any predecessor Note not being
assigned shall be paid to the assigning Bank. Accrued interest and accrued fees
shall be paid at the same time or times provided in the predecessor Notes and in
this Agreement. Any attempted assignment and delegation not made in accordance
with this Section 14.9.1 shall be null and void.
Notwithstanding the foregoing provisions of this Section 14.9.1 or any
other provision of this Agreement, any Bank may at any time assign all or any
portion of its Loans and its Notes to a Federal Reserve Bank (but no such
assignment shall release any Bank from any of its obligations hereunder).
14.9.2 Participations. Any Bank may, with the prior written consent of
the Company (which consent shall not be unreasonably delayed or withheld), at
any time sell to one or more commercial banks or other Persons participating
interests in any Loan owing to such Bank, the Notes held by such Bank, the
Commitments of such Bank, the direct or participation interest of such Bank in
any Letter of Credit or any other interest of such Bank hereunder (any Person
purchasing any such participating interest being herein called a "Participant").
In the event of a sale by a Bank of a participating interest to a Participant,
(x) such Bank shall remain the holder of its Notes for all purposes of this
Agreement, (y) the Company and the Agent shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
hereunder and (z) all amounts payable by the Company shall be determined as if
such Bank had not sold such participation and shall be paid directly to such
Bank. No Participant shall have any direct or indirect voting rights hereunder
except with respect to any of the events described in the penultimate sentence
of Section 14.1. Each Bank agrees to incorporate the requirements of the
preceding sentence into each participation agreement which such Bank enters into
with any Participant. The Company agrees that if amounts outstanding under this
Agreement and the Notes are due and payable (as a result of acceleration or
otherwise), each Participant shall be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement and
any Note and with respect to any Letter of Credit to the same extent as if the
amount of its participating interest were owing directly to it as a Bank under
this Agreement; provided that such right of setoff shall be subject to the
obligation of each Participant to share with the Banks, and the
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Banks agree to share with each Participant, as provided in Section 7.5. The
Company also agrees that each Participant shall be entitled to the benefits of
Section 8 as if it were a Bank (provided that no Participant shall receive any
greater compensation pursuant to Section 8 than would have been paid to the
participating Bank if no participation had been sold).
14.10 Governing Law. This Agreement and each Note shall be a contract
made under and governed by the internal laws of the State of Illinois. Whenever
possible each provision of this Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. All obligations of the Company and rights of the Agent and the Banks
expressed herein or in any other Loan Document shall be in addition to and not
in limitation of those provided by applicable law.
14.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement. When
counterparts executed by all of the parties hereto shall have been lodged with
the Agent (or, in the case of any Bank as to which an executed counterpart shall
not have been so lodged, the Agent shall have received confirmation from such
Bank of execution of a counterpart hereof by such Bank), this Agreement shall
become effective as of the date hereof, and at such time the Agent shall notify
the Company and each Bank.
14.12 Successors and Assigns. This Agreement shall be binding upon the
Company, the Banks and the Agent and their respective successors and assigns,
and shall inure to the benefit of the Company, the Banks and the Agent and the
permitted successors and assigns of the Banks and the Agent.
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14.13 Indemnification by the Company.
(a) In consideration of the execution and delivery of this Agreement by
the Agent and the Banks and the agreement to extend the Commitments provided
hereunder, the Company hereby agrees to indemnify, exonerate and hold the Agent,
each Bank and each of the officers, directors, employees and agents of the Agent
and each Bank (collectively the "Bank Parties" and individually each a "Bank
Party") free and harmless from and against any and all actions, causes of
action, suits, losses, liabilities, damages and expenses, including, without
limitation, reasonable attorneys' fees and charges (collectively therein called
the "Indemnified Liabilities"), incurred by the Bank Parties or any of them as a
result of, or arising out of, or relating to (i) any tender offer, merger,
purchase of stock, purchase of assets or other similar transaction financed or
proposed to be financed in whole or in part, directly or indirectly, with the
proceeds of any of the Loans or (ii) the execution, delivery, performance or
enforcement of this Agreement or any other Loan Document by any of the Bank
Parties, except for any such Indemnified Liabilities arising on account of such
Bank Party's bad faith, gross negligence or willful misconduct. If and to the
extent that the foregoing undertaking may be unenforceable for any reason, the
Company hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. Nothing set forth above shall be construed to relieve any Bank
Party from any obligation it may have under this Agreement.
(b) Without limiting the provisions of clause (a) above, the Company
agrees to reimburse each Bank Party against any and all losses, claims, damages,
penalties, judgments, liabilities and expenses (including reasonable attorneys'
and consultant's fees) which any Bank Party may pay, incur or become subject to
arising out of or relating to the use, handling, release, emission, discharge,
transportation, storage, treatment or disposal of any Hazardous Material at any
real property owned or leased by the Company or any Subsidiary or used by the
Company or any Subsidiary in its business or operations, except to the extent
caused by the acts or omissions of such Bank Party.
(c) All obligations provided for in this Section 14.13 shall survive
repayment of the Loans, cancellation of the Notes and any termination of this
Agreement.
14.14 Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, SHALL
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BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OF THE
COMPANY, THE AGENT AND EACH BANK HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE. EACH OF THE COMPANY, THE AGENT AND EACH BANK
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS.
THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND
ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO
THE EXTENT THAT THE COMPANY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE COMPANY HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
14.15 Waiver of Jury Trial. EACH OF THE COMPANY, THE AGENT AND EACH
BANK HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN
DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING
FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
14.16 References to Banks and Agent. So long as this Agreement has not
been amended by the Company and Harris to add additional parties hereto,
references in this Agreement and any instrument or document executed in
connection herewith to the "Banks" or the "Required Banks" shall be deemed to
refer to Harris and references to the "Agent" shall be deemed to be references
to Harris in its individual capacity as the sole Bank hereunder.
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<PAGE>
Delivered at Chicago, Illinois, as of the day and year first above written.
GIBRALTAR PACKAGING GROUP, INC.
By __/s/ W E Rose
Title: __President_
274 Riverside Avenue
Westport, Connecticut 16880
Attention: John W. Lloyd
Facsimile: (203) 227-0887
HARRIS TRUST AND SAVINGS BANK,
individually and as Agent
By /s/ John M. Dillon_____
Vice President
111 West Monroe Street
Chicago, Illinois 60690
Attention: John M. Dillon
Facsimile: (312) 461-2591
<PAGE>
<PAGE>
REVOLVING NOTE
$10,000,000 September 25, 1996
Chicago, Illinois
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
HARRIS TRUST AND SAVINGS BANK at the principal office of Harris Trust and
Savings Bank (the "Agent"), in Chicago, Illinois, TEN MILLION DOLLARS
($10,000,000) or, if less, the aggregate unpaid amount of all Revolving Loans
made by the payee to the undersigned pursuant to the Credit Agreement referred
to below, such amount to be paid at the times set forth in the Credit Agreement.
The undersigned further promises to pay interest on the unpaid
principal amount of each Revolving Loan evidenced hereby from the date of such
Revolving Loan until such Revolving Loan is paid in full, payable at the rates
and at the times set forth in the Credit Agreement. Payments of both principal
and interest are to be made in lawful money of the United States of America.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement dated as of September 25, 1996
(herein, as amended or otherwise modified from time to time, called the "Credit
Agreement") between the undersigned, certain financial institutions (including
the payee) and the Agent, to which Credit Agreement reference is hereby made for
a statement of the terms and provisions under which this Note may or must be
paid prior to its due date or may have its due date accelerated.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the undersigned further agrees, subject only
to any limitation imposed by applicable law, to pay all reasonable expenses,
including reasonable attorneys' fees and legal expenses, incurred by the holder
of this Note in endeavoring to collect any amounts payable hereunder which are
not paid when due, whether by acceleration or otherwise.
This Note is made under and governed by the internal laws of the State
of Illinois.
GIBRALTAR PACKAGING GROUP, INC.
By /s/ W E Rose
Title President
<PAGE>
<PAGE>
TERM NOTE
$25,000,000 September 25, 1996
Chicago, Illinois
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
HARRIS TRUST AND SAVINGS BANK, at the principal office of Harris Trust and
Savings Bank (the "Agent"), in Chicago, Illinois, TWENTY-FIVE MILLION DOLLARS
($25,000,000), such amount to be paid at the times set forth in the Credit
Agreement referred to below.
The undersigned further promises to pay interest on the unpaid
principal amount of the Term Loan evidenced hereby from the date of such Term
Loan until such Term Loan is paid in full, payable at the rates and at the times
set forth in the Credit Agreement. Payments of both principal and interest are
to be made in lawful money of the United States of America.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement dated as of September 25, 1996
(herein, as amended or otherwise modified from time to time, called the "Credit
Agreement") between the undersigned, certain financial institutions (including
the payee) and the Agent, to which Credit Agreement reference is hereby made for
a statement of the terms and provisions under which this Note may or must be
paid prior to its due date or may have its due date accelerated.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the undersigned further agrees, subject only
to any limitation imposed by applicable law, to pay all reasonable expenses,
including reasonable attorneys' fees and legal expenses, incurred by the holder
of this Note in endeavoring to collect any amounts payable hereunder which are
not paid when due, whether by acceleration or otherwise.
This Note is made under and governed by the internal laws of the State
of Illinois.
GIBRALTAR PACKAGING GROUP, INC.
By /s/ W E Rose
Title President
<PAGE>
EXHIBIT K
GUARANTY
THIS GUARANTY dated as of September 25, 1996 is executed in favor of
HARRIS TRUST AND SAVINGS BANK, as Agent, and the Banks which are parties to the
Credit Agreement referred to below.
W I T N E S S E T H:
WHEREAS, Gibraltar Packaging Group, Inc. (the "Company") has entered
into a Credit Agreement dated as of even date herewith (as amended or otherwise
modified from time to time, the "Credit Agreement") with certain financial
institutions (collectively the "Banks" and individually each a "Bank") and
Harris Trust and Savings Bank, as agent (in its capacity as agent, the "Agent"),
pursuant to which the Banks have agreed to make loans to, and issue (or purchase
participations in) letters of credit for the account of, the Company;
WHEREAS, the operations of each of the undersigned are integrated with
those of the Company to such an extent that the financial strength and
flexibility of the Company have a direct impact on each of the undersigned; and
WHEREAS, each of the undersigned will benefit from the making of loans
and the issuance of letters of credit pursuant to the Credit Agreement and is
willing to guaranty the Liabilities (as defined below) as hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each of the undersigned hereby
jointly and severally unconditionally, as primary obligor and not merely as
surety, guarantees the full and prompt payment when due, whether by acceleration
or otherwise, and at all times thereafter, of all obligations (monetary or
otherwise) of the Company to each of the Banks and the Agent, howsoever created,
arising or evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due, which arise out of or in connection
with the Credit Agreement, the Notes (as defined in the Credit Agreement), any
other Loan Document (as defined in the Credit Agreement) or any document or
instrument (including any Hedging Agreement (as defined in the Credit Agreement)
entered into with any Bank or any affiliate thereof) executed in connection
therewith, in each case as the same may be amended, modified, extended or
renewed from time to time (all such obligations being herein collectively called
the "Liabilities"); provided, however, that the liability of each of the
undersigned hereunder shall be limited to the maximum amount of the Liabilities
which such undersigned may guaranty without violating any fraudulent conveyance
or fraudulent transfer law (plus all costs and expenses paid or incurred by the
Agent or any Bank in enforcing
<PAGE>
this Guaranty against such undersigned).
Each of the undersigned agrees that, in the event of the dissolution or
insolvency of the Company or any undersigned, or the inability or failure of the
Company or any undersigned to pay debts as they become due, or an assignment by
the Company or any undersigned for the benefit of creditors, or the occurrence
of any other Event of Default (as defined in the Credit Agreement) under Section
12.1.4 of the Credit Agreement, and if such event shall occur at a time when any
of the Liabilities may not then be due and payable, such undersigned will pay to
the Agent for the account of the Banks forthwith the full amount which would be
payable hereunder by such undersigned if all Liabilities were then due and
payable.
To secure all obligations of each of the undersigned hereunder, the
Agent and each Bank shall have a lien on and security interest in (and may,
without demand or notice of any kind, at any time and from time to time when any
amount shall be due and payable by such undersigned hereunder, appropriate and
apply toward the payment of such amount, in such order of application as the
Agent or the Banks may elect) any and all balances, credits, deposits, accounts
or moneys of or in the name of such undersigned now or hereafter with the Agent
or such Bank and any and all property of every kind or description of or in the
name of such undersigned now or hereafter, for any reason or purpose whatsoever,
in the possession or control of, or in transit to, the Agent or such Bank or any
agent or bailee for the Agent or such Bank.
This Guaranty shall in all respects be a continuing, absolute and
unconditional guaranty, and shall remain in full force and effect
(notwithstanding, without limitation, the dissolution of any of the undersigned
or that at any time or from time to time no Liabilities are outstanding) until
all Commitments (as defined in the Credit Agreement) have terminated and all
Liabilities have been paid in full.
The undersigned further agree that if at any time all or any part of
any payment theretofore applied by the Agent or any Bank to any of the
Liabilities is or must be rescinded or returned by the Agent or such Bank for
any reason whatsoever (including, without limitation, the insolvency, bankruptcy
or reorganization of the Company or any of the undersigned), such Liabilities
shall, for the purposes of this Guaranty, to the extent that such payment is or
must be rescinded or returned, be deemed to have continued in existence,
notwithstanding such application by the Agent or such Bank, and this Guaranty
shall continue to be effective or be reinstated, as the case may be, as to such
Liabilities, all as though such application by the Agent or such Bank had not
been made.
The Agent or any Bank may, from time to time, at its sole
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<PAGE>
discretion and without notice to the undersigned (or any of them), take any or
all of the following actions: (a) retain or obtain a security interest in any
property to secure any of the Liabilities or any obligation hereunder, (b)
retain or obtain the primary or secondary obligation of any obligor or obligors,
in addition to the undersigned, with respect to any of the Liabilities, (c)
extend or renew any of the Liabilities for one or more periods (whether or not
longer than the original period), alter or exchange any of the Liabilities, or
release or compromise any obligation of any of the undersigned hereunder or any
obligation of any nature of any other obligor with respect to any of the
Liabilities, (d) release its security interest in, or surrender, release or
permit any substitution or exchange for, all or any part of any property
securing any of the Liabilities or any obligation hereunder, or extend or renew
for one or more periods (whether or not longer than the original period) or
release, compromise, alter or exchange any obligations of any nature of any
obligor with respect to any such property, and (e) resort to the undersigned (or
any of them) for payment of any of the Liabilities when due, whether or not the
Agent or such Bank shall have resorted to any property securing any of the
Liabilities or any obligation hereunder or shall have proceeded against any
other of the undersigned or any other obligor primarily or secondarily obligated
with respect to any of the Liabilities.
Any amounts received by the Agent or any Bank from whatever source on
account of the Liabilities may be applied by it toward the payment of the
Liabilities; and, notwithstanding any payments made by or for the account of any
of the undersigned pursuant to this Guaranty, the undersigned shall not be
subrogated to any rights of the Agent or any Bank until such time as this
Guaranty shall have been discontinued as to all of the undersigned and the Agent
and the Banks shall have received payment of the full amount of all liabilities
of the undersigned hereunder.
The undersigned hereby expressly waive: (a) notice of the acceptance by
the Agent or any Bank of this Guaranty, (b) notice of the existence or creation
or non-payment of all or any of the Liabilities, (c) presentment, demand, notice
of dishonor, protest, and all other notices whatsoever, and (d) all diligence in
collection or protection of or realization upon any Liabilities or any security
for or guaranty of any Liabilities.
Each of the undersigned further agrees to pay all expenses (including
attorneys' fees and legal expenses) paid or incurred by the Agent or any Bank in
endeavoring to collect the Liabilities of such undersigned, or any part thereof,
and in enforcing this Guaranty against such undersigned.
The creation or existence from time to time of additional Liabilities
to the Agent or the Banks or any of them is hereby
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<PAGE>
authorized, without notice to the undersigned (or any of them), and shall in no
way affect or impair the rights of the Agent or the Banks or the obligations of
the undersigned under this Guaranty.
The Agent and any Bank may from time to time, without notice to the
undersigned (or any of them), assign or transfer any or all of the Liabilities
or any interest therein; and, notwithstanding any such assignment or transfer or
any subsequent assignment or transfer thereof, such Liabilities shall be and
remain Liabilities for the purposes of this Guaranty, and each and every
immediate and successive assignee or transferee of any of the Liabilities or of
any interest therein shall, to the extent of the interest of such assignee or
transferee in the Liabilities, be entitled to the benefits of this Guaranty to
the same extent as if such assignee or transferee were a Bank.
No delay on the part of the Agent or any Bank in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by the Agent or any Bank of any right or remedy shall preclude other or
further exercise thereof or the exercise of any other right or remedy; nor shall
any modification or waiver of any provision of this Guaranty be binding upon the
Agent or the Banks except as expressly set forth in a writing duly signed and
delivered on behalf of the Agent. No action of the Agent or any Bank permitted
hereunder shall in any way affect or impair the rights of the Agent or any Bank
or the obligations of the undersigned under this Guaranty. For purposes of this
Guaranty, Liabilities shall include all obligations of the Company to the Agent
or any Bank arising under or in connection with the Credit Agreement, any Note
or any other Loan Document, notwithstanding any right or power of the Company or
anyone else to assert any claim or defense as to the invalidity or
unenforceability of any obligation, and no such claim or defense shall affect or
impair the obligations of the undersigned hereunder.
Pursuant to the Credit Agreement, (a) this Guaranty has been delivered
to the Agent and (b) the Agent has been authorized to enforce this Guaranty on
behalf of itself and each of the Banks. All payments by the undersigned pursuant
to this Guaranty shall be made to the Agent for the ratable benefit of the
Banks.
This Guaranty shall be binding upon the undersigned and the successors
and assigns of the undersigned; and to the extent that the Company or any of the
undersigned is either a partnership or a corporation, all references herein to
the Company and to the undersigned, respectively, shall be deemed to include any
successor or successors, whether immediate or remote, to such partnership or
corporation. The term "undersigned" as used herein shall mean all parties
executing this Guaranty and each of them, and all such parties shall be jointly
and severally
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<PAGE>
obligated hereunder.
This Guaranty has been delivered at Chicago, Illinois, and shall be
construed in accordance with and governed by the internal laws of the State of
Illinois. Wherever possible each provision of this Guaranty shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Guaranty shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
This Guaranty may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, and each such counterpart
shall be deemed to be an original but all such counterparts shall together
constitute one and the same Guaranty as if only one original had been executed.
At any time after the date of this Guaranty, one or more additional persons or
entities may become parties hereto by executing and delivering to the Agent a
counterpart of this Guaranty. Immediately upon such execution and delivery (and
without any further action), each such additional person or entity will become a
party to, and will be bound by all of the terms of, this Guaranty.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OF THE UNDERSIGNED HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE
OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH OF THE
UNDERSIGNED FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, TO THE ADDRESS SET FORTH OPPOSITE ITS SIGNATURE HERETO
(OR SUCH OTHER ADDRESS AS IT SHALL HAVE SPECIFIED IN WRITING TO THE AGENT AS ITS
ADDRESS FOR NOTICES HEREUNDER) OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF ILLINOIS. EACH OF THE UNDERSIGNED HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY OF THE UNDERSIGNED HAS
OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE)
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<PAGE>
WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH UNDERSIGNED HEREBY IRREVOCABLY
WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS GUARANTY AND THE
OTHER LOAN DOCUMENTS.
EACH OF THE UNDERSIGNED, AND (BY ACCEPTING THE BENEFITS HEREOF) EACH OF THE
AGENT AND EACH BANK, HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY, ANY OTHER LOAN
DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING
FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
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<PAGE>
IN WITNESS WHEREOF, this Guaranty has been duly executed and delivered
as of the day and year first above written.
Address: RIDGEPAK CORPORATION
1140 Hayden Street
Ft. Wayne, IN 46803
By: /s/ W E Rose
Title: President
Address: STANDARD PACKAGING AND PRINTING CO.
HWY 73 West
Mt. Gilead, NC 27306
By: /s/ W E Rose
Title: CEO
Address: NIEMAND HOLDINGS, INC.
274 Riverside Ave.
Westport, CT 06880
By: /s/ W E Rose
Title: President
Address: NIEMAND INDUSTRIES, INC.
1410 S. Washington Street
Marion, AL 36756
By: /s/ W E Rose
Title: Vice President
Address: GB LABELS, INC.
1070 S. Riverview Drive
Burlington, NC 27217
By: /s/ W E Rose
Title: Senior Vice President
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<PAGE>
<PAGE>
EXHIBIT M
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") dated as of September 25, 1996,
is among GIBRALTAR PACKAGING GROUP, INC. (the "Company"), RIDGEPAK CORPORATION,
STANDARD PACKAGING AND PRINTING CO., NIEMAND HOLDINGS, INC., NIEMAND INDUSTRIES,
INC., GB LABELS, INC., such other persons or entities which from time to time
become parties hereto (collectively, including the Company, the "Debtors" and
individually each a "Debtor") and HARRIS TRUST AND SAVINGS BANK in its capacity
as agent for the Banks referred to below (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Company has entered into a Credit Agreement dated as of
September 25, 1996 (as amended or otherwise modified from time to time, the
"Credit Agreement") with various financial institutions (collectively the
"Banks" and individually each a "Bank") and the Agent, pursuant to which the
Banks have agreed to make loans to, and issue letters of credit for the account
of, the Company;
WHEREAS, each of the other Debtors has executed and delivered a guaranty
(the "Guaranty") of the obligations of the Company under the Credit Agreement;
and
WHEREAS, the obligations of the Company under the Credit Agreement and the
obligations of each other Debtor under the Guaranty are to be secured pursuant
to this Agreement;
NOW, THEREFORE, for and in consideration of any loan, advance or other
financial accommodation heretofore or hereafter made to the Company by the Banks
or any of them, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
I. Definitions. When used herein, (a) the terms Certificated Security,
Chattel Paper, Deposit Account, Document, Equipment, Financial Asset, Fixture,
Goods, Inventory, Instrument, Investment Property, Security and Uncertificated
Security shall have the respective meanings assigned to such terms in the
Uniform Commercial Code (as defined below) and (b) the following terms have the
following meanings (such definitions to be applicable to both the singular and
plural forms of such terms):
Account Debtor means the party who is obligated on or under any Account
Receivable, Contract Right or General Intangible.
<PAGE>
Account Receivable means, with respect to any Debtor, any right of such
Debtor to payment for goods sold or leased or for services rendered.
Agent - see Preamble.
Assignee Deposit Account - see Section 4.
Collateral means, with respect to any Debtor, all property and rights of
such Debtor in which a security interest is granted hereunder.
Commitments has the meaning assigned to such term in the Credit Agreement.
Computer Hardware and Software means, with respect to any Debtor, (i) all
computer and other electronic data processing hardware, whether now owned,
licensed or leased or hereafter acquired by such Debtor, including, without
limitation, all integrated computer systems, central processing units, memory
units, display terminals, printers, features, computer elements, card readers,
tape drives, hard and soft disk drives, cables, electrical supply hardware,
generators, power equalizers, accessories and all peripheral devices and other
related computer hardware; (ii) all software programs, whether now owned,
licensed or leased or hereafter acquired by such Debtor, designed for use on the
computers and electronic data processing hardware described in clause (i) above,
including, without limitation, all operating system software, utilities and
application programs in whatsoever form (source code and object code in magnetic
tape, disk or hard copy format or any other listings whatsoever); (iii) all
firmware associated therewith, whether now owned, licensed or leased or
hereafter acquired by such Debtor; and (iv) all documentation for such hardware,
software and firmware described in the preceding clauses (i), (ii) and (iii)
above, whether now owned, licensed or leased or hereafter acquired by such
Debtor, including, without limitation, flow charts, logic diagrams, manuals,
specifications, training materials, charts and pseudo codes.
Contract Right means, with respect to any Debtor, any right of such Debtor
to payment under a contract for the sale or lease of goods or the rendering of
services, which right is at the time not yet earned by performance.
Default means the occurrence of any of the following events: (a) any
Unmatured Event of Default under Section 12.1.4 of the Credit Agreement; (b) any
Event of Default; or (c) any warranty of any Debtor herein is untrue or
misleading in any material respect.
Event of Default has the meaning assigned to such term in
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<PAGE>
the Credit Agreement.
General Intangibles means, with respect to any Debtor, all of such Debtor's
"general intangibles" as defined in Uniform Commercial Code as in effect in
Illinois on the date hereof and, in any event, includes (without limitation) all
of such Debtor's trademarks, trade names, patents, copyrights, trade secrets,
customer lists, inventions, designs, software programs, mask works, goodwill,
registrations, licenses, franchises, tax refund claims, guarantee claims,
security interests and rights to indemnification.
Guarantors has the meaning assigned to such term in the Credit Agreement.
Intellectual Property shall mean all past, present and future: trade
secrets and other proprietary information; trademarks, service marks, business
names, designs, logos, indicia, and/or other source and/or business identifiers
and the goodwill of the business relating thereto and all registrations or
applications for registrations which have heretofore been or may hereafter be
issued thereon throughout the world; copyrights (including, without limitation,
copyrights for computer programs) and copyright registrations or applications
for registrations which have heretofore been or may hereafter be issued
throughout the world and all tangible property embodying the copyrights;
unpatented inventions (whether or not patentable); patent applications and
patents; industrial designs, industrial design applications and registered
industrial designs; license agreements related to any of the foregoing set forth
in this definition and income therefrom; books, records, writings, computer
tapes or disks, flow diagrams, specification sheets, source codes, object codes
and other physical manifestations, embodiments or incorporations of any of the
foregoing set forth in this definition; the right to sue for all past, present
and future infringements of any of the foregoing set forth in this definition;
and all common law and other rights throughout the world in and to all of the
foregoing set forth in this definition.
Liabilities means, as to each Debtor, all obligations (monetary or
otherwise) of such Debtor under the Credit Agreement, any Note, the Guaranty,
any other Loan Document or any document or instrument (including any agreement
entered into with any Bank or any affiliate thereof relating to any Hedging
Obligation (as defined in the Credit Agreement)) executed in connection
therewith, howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due or to become due.
Loan Document has the meaning assigned to such term in the Credit
Agreement.
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<PAGE>
Non-Tangible Collateral shall mean, with respect to any Debtor,
collectively, such Debtor's Accounts Receivable, Contract Rights and General
Intangibles.
Notes has the meaning assigned to such term in the Credit Agreement.
Permitted Liens - see Section 3.
Subsidiary has the meaning assigned to such term in the Credit Agreement.
Trademark - see Section 3.
Uniform Commercial Code shall mean the Uniform Commercial Code as in effect
in the State of Illinois on the date of this Agreement; provided, however, as
used in Section 8 hereof, "Uniform Commercial Code" shall mean the Uniform
Commercial Code as in effect from time to time in the applicable jurisdiction.
Unmatured Event of Default has the meaning assigned to such term in the
Credit Agreement.
Terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Credit Agreement.
2. Grant of Security Interest. As security for the payment of all
Liabilities, each Debtor hereby assigns to the Agent for the benefit of the
Banks, and grants to the Agent for the benefit of the Banks a continuing
security interest in, the following, whether now or hereafter existing or
acquired:
All of such Debtor's:
(i) Accounts Receivable;
(ii) Certificated Securities;
(iii) Chattel Paper;
(iv) Computer Hardware and Software and all rights with
respect thereto, including, without limitation, any and
all licenses, options, warranties, service contracts,
program services, test rights, maintenance rights,
support rights, improvement rights, renewal rights and
indemnifications, and any substitutions, replacements,
additions or model conversions of any of the foregoing;
(v) Contract Rights;
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<PAGE>
(vi) Deposit Accounts;
(vii) Documents;
(viii) Financial Assets;
(ix) General Intangibles (including, without limitation, any
rights of such Debtor arising from time to time to
receive payment under a billing to a person or other
entity representing such person's or entity's obligation
to reimburse such Debtor for indebtedness paid or to be
paid by such Debtor for the account of such person or
entity);
(x) Goods (including, without limitation, all its Equipment,
Fixtures and Inventory), and together with all
accessions, additions, attachments, improvements,
substitutions and replacements thereto and therefor;
(xi) Instruments;
(xii) Intellectual Property;
(xiii) Investment Property;
(xiv) money (of every jurisdiction whatsoever);
(xv) Uncertificated Securities;
(xvi) to the extent not included in the foregoing, other
personal property of any kind or description;
together with all books, records, writings, data bases, information and
other property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to any of the
foregoing, and all proceeds, products, offspring, rents, issues,
profits and returns of and from any of the foregoing.
3. Warranties. Each Debtor warrants that: (i) no financing statement (other
than any which may have been filed on behalf of the Agent or which may have been
filed with respect to liens and claims expressly permitted by the Credit
Agreement ("Permitted Liens")) covering any of the Collateral is on file in any
public office; (ii) such Debtor is and will be the lawful owner of all
Collateral (or, in the case of any Collateral which is licensed or leased by
such Debtor, such Debtor is the lawful lessee or licensee of such Collateral),
free of all liens and claims whatsoever, other than the security interest
hereunder and Permitted Liens, with full power and authority to execute this
Agreement and perform such Debtor's obligations hereunder, and to
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subject the Collateral to the security interest hereunder; (iii) all information
with respect to Collateral and Account Debtors set forth in any schedule,
certificate or other writing at any time heretofore or hereafter furnished by
such Debtor to the Agent or any Bank, and all other written information
heretofore or hereafter furnished by such Debtor to the Agent or any Bank, is
and will be true and correct as of the date furnished; (iv) such Debtor's chief
executive office and principal place of business are as set forth on Schedule I
hereto (and such Debtor has not maintained its chief executive office and
principal place of business at any other location at any time after July 1,
1996); (v) each other location where such Debtor maintains a place of business
is set forth on Schedule II hereto; (vi) such Debtor is not now known and during
the five years preceding the date hereof has not previously been known by any
trade name except as previously disclosed to the Banks in writing prior to the
date hereof; (vii) during the five years preceding the date hereof, such Debtor
has not been known by any legal name different from the one set forth on the
signature page of this Agreement except as previously disclosed to the Banks in
writing prior to the date hereof, nor has such Debtor been the subject of any
merger or other corporate reorganization except as previously disclosed to the
Banks in writing prior to the date hereof; (viii) Schedule III hereto contains a
complete listing of all of such Debtor's Intellectual Property which is subject
to registration statutes; (ix) such Debtor is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation; (x) the execution and delivery of this Agreement and the
performance by such Debtor of its obligations hereunder are within such Debtor's
corporate powers, have been duly authorized by all necessary corporate action,
have received all necessary governmental approval (if any shall be required),
and do not and will not contravene or conflict with any provision of law or of
the charter or by-laws of such Debtor or of any material agreement, indenture,
instrument or other document, or any material judgment, order or decree, which
is binding upon such Debtor; (xi) this Agreement is a legal, valid and binding
obligation of such Debtor, enforceable in accordance with its terms, except that
the enforceability of this Agreement may be limited by bankruptcy, insolvency,
fraudulent conveyance, fraudulent transfer, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and by general principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law); and (xii) such Debtor is in compliance
with the requirements of all applicable laws (including, without limitation, the
provisions of the Fair Labor Standards Act), rules, regulations and orders of
every governmental authority, the non-compliance with which would materially
adversely affect the business, properties, assets, operations or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole or
the value of the Collateral or the worth of
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the Collateral as collateral security; (xiii) to the knowledge of such Debtor,
all of such Debtor's Intellectual Property remains in existence and none has
been adjudged invalid or unenforceable, in whole or in part; (xiv) to the best
of such Debtor's knowledge, all of such Debtor's Intellectual Property is valid
and enforceable and, in the case of the patents and patent applications included
in such Debtor's Intellectual Property, such Debtor has notified the Banks in
writing of all prior uses (including public uses and sales) of which it is
aware; (xv) except to the extent that the Agent shall consent in writing (which
consent shall not be unreasonably withheld), such Debtor (either itself or
through licensees) will, unless such Debtor shall reasonably determine that a
trademark which (or an application for which) is included as part of the
Intellectual Property (any "Trademark") is of negligible economic value to such
Debtor, (A) continue to use each Trademark on each and every trademark class of
goods applicable to its current line as reflected in its current catalogs,
brochures and price lists in order to maintain each Trademark in full force free
from any claim of abandonment for non-use, (B) maintain as in the past the
quality of products and services offered under each Trademark, (C) employ each
Trademark with the appropriate notice of application or registration, (D) not
use any Trademark except for the uses for which registration or application for
registration of such Trademark has been made, and (E) not (and not permit any
licensee or sublicensee thereof to) abandon any Trademark or do any act or
knowingly omit to do any act whereby any Trademark may become invalidated or
abandoned; and (xvi) unless such Debtor shall reasonably determine that a
patent, patent application or Trademark is of negligible economic value to such
Debtor, such Debtor shall use its best efforts to maintain all registrations of
such Intellectual Property in full force and effect by, without limitation,
preparing and filing in a timely manner and with the appropriate offices all
necessary applications for renewal or to extend the term thereof and all
documents required to be filed therewith.
4. Collections, etc. Until such time as the Agent shall notify such Debtor
of the revocation of such power and authority, each Debtor (a) may, in the
ordinary course of its business, at its own expense, sell, lease or furnish
under contracts of service any of the Inventory normally held by such Debtor for
such purpose, use and consume, in the ordinary course of its business, any raw
materials, work in process or materials normally held by such Debtor for such
purpose, and use, in the ordinary course of its business (but subject to the
terms of the Credit Agreement), the cash proceeds of Collateral and other money
which constitutes Collateral, (b) will, at its own expense, endeavor to collect,
as and when due, all amounts due under any of the Non-Tangible Collateral,
including the taking of such action with respect to such collection as the Agent
may reasonably request or, in the absence of such request, as such
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<PAGE>
Debtor may deem advisable, and (c) may grant, in the ordinary course of
business, to any party obligated on any of the Non-Tangible Collateral, any
rebate, refund or allowance to which such party may be lawfully entitled, and
may accept, in connection therewith, the return of Goods, the sale or lease of
which shall have given rise to such Non-Tangible Collateral. The Agent, however,
may, at any time that a Default exists, whether before or after any revocation
of such power and authority or the maturity of any of the Liabilities, notify
any parties obligated on any of the Non-Tangible Collateral to make payment to
the Agent of any amounts due or to become due thereunder and enforce collection
of any of the Non-Tangible Collateral by suit or otherwise and surrender,
release or exchange all or any part thereof, or compromise or extend or renew
for any period (whether or not longer than the original period) any indebtedness
thereunder or evidenced thereby. Upon request of the Agent during the existence
of a Default, each Debtor will, at its own expense, notify any parties obligated
on any of the Non-Tangible Collateral to make payment to the Agent of any
amounts due or to become due thereunder.
Upon request by the Agent during the existence of a Default, each Debtor
will forthwith, upon receipt, transmit and deliver to the Agent, in the form
received, all cash, checks, drafts and other instruments or writings for the
payment of money (properly endorsed, where required, so that such items may be
collected by the Agent) which may be received by such Debtor at any time in full
or partial payment or otherwise as proceeds of any of the Collateral. Except as
the Agent may otherwise consent in writing, any such items which may be so
received by any Debtor will not be commingled with any other of its funds or
property, but will be held separate and apart from its own funds or property and
upon express trust for the Agent until delivery is made to the Agent. Each
Debtor will comply with the terms and conditions of any consent given by the
Agent pursuant to the foregoing sentence.
During the existence of a Default, all items or amounts which are delivered
by any Debtor to the Agent on account of partial or full payment or otherwise as
proceeds of any of the Collateral shall be deposited to the credit of a deposit
account (each an "Assignee Deposit Account") of such Debtor with the Agent, as
security for payment of the Liabilities. No Debtor shall have any right to
withdraw any funds deposited in the applicable Assignee Deposit Account. The
Agent may, from time to time, in its discretion, and shall upon request of the
applicable Debtor made not more than once in any week, apply all or any of the
then balance, representing collected funds, in the Assignee Deposit Account,
toward payment of the Liabilities, whether or not then due, in such order of
application as the Agent may determine, and the Agent may, from time to time, in
its discretion, release all or any of such balance to the applicable
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Debtor.
If and to the extent that a perfected security interest hereunder in any
Collateral shall cease to be perfected for any reason whatsoever (including,
without limitation, release of all or any balance in any Assignee Deposit
Account or use or disposition by any Debtor of any proceeds of Collateral), then
such Collateral (referred to in this paragraph as "released Collateral") shall
be deemed thereby released from the security interest hereunder in exchange, as
of the time of such release, for any other Collateral of equivalent value in
which a perfected security interest hereunder is being obtained
contemporaneously or has been most recently obtained, but only to the extent
such other Collateral does not represent either (a) Collateral in exchange for
which any previously released Collateral shall have been deemed released, or (b)
Collateral of equivalent value to any loan or advance (otherwise than by renewal
or extension) from the Agent to the Company in which Collateral a perfected
security interest hereunder shall have been obtained contemporaneously with or
most recently prior to such loan or advance.
The Agent is authorized to endorse, in the name of the applicable Debtor,
any item, howsoever received by the Agent, representing any payment on or other
proceeds of any of the Collateral.
5. Certificates, Schedules and Reports. Each Debtor will from time to time,
as the Agent may request, deliver to the Agent such schedules, certificates and
reports respecting all or any of the Collateral at the time subject to the
security interest hereunder, and the items or amounts received by such Debtor in
full or partial payment of any of the Collateral, as the Agent may reasonably
request. Any such schedule, certificate or report shall be executed by a duly
authorized officer of such Debtor and shall be in such form and detail as the
Agent may specify. Each Debtor shall immediately notify the Agent of the
occurrence of any event causing any loss or depreciation in the value of its
Inventory or other Goods which is material to the Company and its Subsidiaries
taken as a whole, and such notice shall specify the amount of such loss or
depreciation.
6. Agreements of the Debtors. Each Debtor (a) will, upon request of the
Agent, execute such financing statements and other documents (and pay the cost
of filing or recording the same in all public offices reasonably deemed
appropriate by the Agent) and do such other acts and things (including, without
limitation, delivery to the Agent of any Instruments or Certificated Securities
which constitute Collateral), all as the Agent may from time to time reasonably
request, to establish and maintain a valid security interest in the Collateral
(free of all other liens, claims and rights of third parties whatsoever, other
than Permitted Liens) to secure the payment of the Liabilities; (b)
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<PAGE>
will keep all its Inventory at, and will not maintain any place of business at
any location other than, its address(es) shown on Schedules I and II hereto or
at such other addresses of which such Debtor shall have given the Agent not less
than 10 days' prior written notice; (c) will keep its records concerning the
Non-Tangible Collateral in such a manner as will enable the Agent or its
designees to determine at any time the status of the Non-Tangible Collateral;
(d) will furnish the Agent such information concerning such Debtor, the
Collateral and the Account Debtors as the Agent may from time to time reasonably
request; (e) will permit the Agent and its designees, from time to time, on
reasonable notice and at reasonable times and intervals during normal business
hours (or at any time without notice during the existence of a Default) to
inspect such Debtor's Inventory and other Goods, and to inspect, audit and make
copies of and extracts from all records and all other papers in the possession
of such Debtor pertaining to the Collateral and the Account Debtors, and will,
upon request of the Agent during the existence of a Default, deliver to the
Agent all of such records and papers; (f) will, upon request of the Agent, stamp
on its records concerning the Collateral and add on all Chattel Paper
constituting a portion of the Collateral, a notation, in form satisfactory to
the Agent, of the security interest of the Agent hereunder; (g) except for the
sale or lease of Inventory in the ordinary course of its business and sales of
Equipment which is no longer useful in its business or which is being replaced
by similar Equipment, will not sell, lease, assign or create or permit to exist
any lien on or security interest in any Collateral other than Permitted Liens
and liens and security interests in favor of the Agent; (h) without limiting the
provisions of Section 10.3 of the Credit Agreement, will at all times keep all
its Inventory and other Goods insured under policies maintained with reputable,
financially sound insurance companies against loss, damage, theft and other
risks to such extent as is customarily maintained by companies similarly
situated, and cause all such policies to provide that loss thereunder shall be
payable to the Agent as its interest may appear (it being understood that (A) so
long as no Default shall be existing, the Agent shall deliver any proceeds of
such insurance which may be received by it to such Debtor and (B) whenever a
Default shall be existing, the Agent may apply any proceeds of such insurance
which may be received by it toward payment of the Liabilities, whether or not
due, in such order of application as the Agent may determine) and such policies
or certificates thereof shall, if the Agent so requests, be deposited with or
furnished to the Agent; (i) will take such actions as are reasonably necessary
to keep its Inventory in good repair and condition, ordinary wear and tear
excepted; (j) will take such actions as are reasonably necessary to keep its
Equipment in good repair and condition and in good working or running order,
ordinary wear and tear excepted; (k) will promptly pay when due all license
fees, registration fees, taxes,
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assessments and other charges which may be levied upon or assessed against the
ownership, operation, possession, maintenance or use of its Equipment and other
Goods (as applicable); provided, however, that such Debtor shall not be required
to pay any such fee, tax, assessment or other charge if the validity thereof is
being contested by such Debtor in good faith by appropriate proceedings, so long
as forfeiture of any substantial part of its Equipment or other Goods will not
result from the failure of such Debtor to pay any such fee, tax, assessment or
other charge during the period of such contest; (l) will, upon request of the
Agent, cause to be noted on the applicable certificate, in the event any of its
Equipment is covered by a certificate of title, the security interest of the
Agent in the Equipment covered thereby and deliver all such certificates to the
Agent or its designees; (m) will take all steps reasonably necessary to protect,
preserve and maintain all of its rights in the Collateral; (n) will keep all of
the tangible Collateral in the United States; and (o) will reimburse the Agent
for all expenses, including reasonable attorneys' fees and legal expenses,
incurred by the Agent in seeking to collect or enforce any rights in respect of
such Debtor's Collateral.
Any expenses incurred in protecting, preserving and maintaining any
Collateral shall be borne by the applicable Debtor. Whenever a Default shall be
existing, the Agent shall have the right to bring suit to enforce any or all of
the Intellectual Property or licenses thereunder, in which event the applicable
Debtor shall at the request of the Agent do any and all lawful acts and execute
any and all proper documents required by the Agent in aid of such enforcement
and such Debtor shall promptly, upon demand, reimburse and indemnify the Agent
for all costs and expenses, including reasonable attorneys' fees and legal
expenses, incurred by the Agent in the exercise of its rights under this Section
6. Notwithstanding the foregoing, the Agent shall have no obligations or
liabilities regarding the Collateral or any thereof by reason of, or arising out
of, this Agreement.
7. Default. Whenever a Default shall be existing, the Agent may exercise
from time to time any rights and remedies available to it under applicable law.
Each Debtor agrees, in case of Default, (i) to assemble, at its expense, all its
Inventory and other Goods (other than Fixtures) at a convenient place or places
acceptable to the Agent, and (ii) at the Agent's request, to execute all such
documents and do all such other things which may be necessary or desirable in
order to enable the Agent or its nominee to be registered as owner of the
Intellectual Property with any competent registration authority. Any
notification of intended disposition of any of the Collateral required by law
shall be deemed reasonably and properly given if given at least five days before
such disposition. Any proceeds of any disposition by the Agent of any
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of the Collateral may be applied by the Agent to payment of expenses in
connection with the Collateral, including audit fees and reasonable attorneys'
fees and legal expenses, and any balance of such proceeds may be applied by the
Agent toward the payment of such of the Liabilities, and in such order of
application, as the Agent may from time to time elect.
8. General. The Agent shall be deemed to have exercised reasonable care in
the custody and preservation of any of the Collateral in its possession if it
takes such action for that purpose as any applicable Debtor requests in writing,
but failure of the Agent to comply with any such request shall not of itself be
deemed a failure to exercise reasonable care, and no failure of the Agent to
preserve or protect any rights with respect to such Collateral against prior
parties, or to do any act with respect to the preservation of such Collateral
not so requested by any Debtor, shall be deemed a failure to exercise reasonable
care in the custody or preservation of such Collateral.
Any notice from the Agent to any Debtor, if mailed, shall be deemed given
five days after the date mailed, postage prepaid, addressed to such Debtor
either at such Debtor's address shown on Schedule I hereto or at such other
address as such Debtor shall have specified in writing to the Agent as its
address for notices hereunder.
Each of the Debtors agrees to pay all expenses (including reasonable
attorney's fees and legal expenses) paid or incurred by the Agent or any Bank in
endeavoring to collect the Liabilities of such Debtor, or any part thereof, and
in enforcing this Agreement against such Debtor, and such obligations will
themselves be Liabilities.
No delay on the part of the Agent in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by the
Agent of any right or remedy shall preclude other or further exercise thereof or
the exercise of any other right or remedy.
This Security Agreement shall remain in full force and effect until all
Liabilities have been paid in full and all Commitments have terminated. If at
any time all or any part of any payment theretofore applied by the Agent or any
Bank to any of the Liabilities is or must be rescinded or returned by the Agent
or such Bank for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy or reorganization of any Debtor), such Liabilities shall,
for the purposes of this Agreement, to the extent that such payment is or must
be rescinded or returned, be deemed to have continued in existence,
notwithstanding such application by the Agent or such Bank, and this Agreement
shall continue to be effective or be reinstated, as the case may be, as to such
Liabilities, all as though such
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<PAGE>
application by the Agent or such Bank had not been made.
This Agreement has been delivered at Chicago, Illinois, and shall be
construed in accordance with and governed by the internal laws of the State of
Illinois, subject, however, to the applicability of the Uniform Commercial Code
of any jurisdiction in which any Goods of any Debtor may be located at any given
time. Whenever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
The rights and privileges of the Agent hereunder shall inure to the benefit
of its successors and assigns.
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, and each such counterpart
shall be deemed to be an original, but all such counterparts shall together
constitute one and the same Agreement. At any time after the date of this
Agreement, one or more additional persons or entities may become parties hereto
by executing and delivering a counterpart to the Agent of this Agreement.
Immediately upon such execution and delivery (and without any further action),
each such additional person or entity will become a party to, and will be bound
by all the terms of, this Agreement.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH DEBTOR HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS
AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH DEBTOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, TO THE ADDRESS SET FORTH ON SCHEDULE I HERETO (OR SUCH OTHER ADDRESS AS
IT SHALL HAVE SPECIFIED IN WRITING TO THE AGENT AS ITS ADDRESS FOR NOTICES
HEREUNDER) OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. EACH
DEBTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM
THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
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INCONVENIENT FORUM. TO THE EXTENT THAT ANY DEBTOR HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH DEBTOR
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
EACH OF EACH DEBTOR, THE AGENT AND (BY ACCEPTING THE BENEFITS HEREOF) EACH
BANK HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN
DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING
FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
SIGNATURES BEGIN ON THE NEXT PAGE
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year first above written.
GIBRALTAR PACKAGING GROUP, INC.
By: /s/ W E Rose
Title: President
RIDGEPAK CORPORATION
By: /s/ W E Rose
Title: President
STANDARD PACKAGING AND PRINTING CO.
By: /s/ W E Rose
Title: CEO
NIEMAND HOLDINGS, INC.
By: /s/ W E Rose
Title: President
NIEMAND INDUSTRIES, INC.
By: /s/ W E Rose
Title: Vice President
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<PAGE>
GB LABELS, INC.
By: /s/ W E Rose
Title: Senior Vice President
HARRIS TRUST AND SAVINGS BANK,
as Agent for the Banks
By: /s/ John M. Dillon
Title: Vice President
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<PAGE>
SCHEDULE I
TO SECURITY AGREEMENT
CHIEF EXECUTIVE OFFICES
Gibraltar Packaging Group, Inc.
274 Riverside Ave.
Westport, CT 06880
(Fairfield County)
RidgePak Corporation
1140 Hayden Street
Ft. Wayne, IN 46803
(Allen County)
Standard Packaging and Printing Corp.
HWY 73 West
Mt. Gilead, NC 27306
(Montgomery County)
GB Labels, Inc.
1070 S. Riverview Drive
Burlington, NC 27217
(Alamance County)
Niemand Industries, Inc.
1410 S. Washington Street
Marion, AL 36756
(Perry County)
Niemand Holdings, Inc.
274 Riverside Ave.
Westport, CT 06880
(Fairfield County)
<PAGE>
SCHEDULE II
TO SECURITY AGREEMENT
ADDRESSES
Company Address
Gibraltar Packaging Group, Inc. 274 Riverside Ave.
Westport, CT 06880
(Fairfield County)
RidgePak Corporation
dba Flashfold Carton Co. 1140 Hayden Street
Ft. Wayne, IN 46803
(Allen County)
1113 Hayden Street
1127 Hayden Street
Ft. Wayne, IN 46803
(Allen County)
901 Hayden Street
Ft. Wayne, IN 46803
(Allen County)
1413 Division
Ft. Wayne, IN 46803
(Allen County)
1605 Winter Street
Ft. Wayne, IN 46803
(Allen County)
Standard Packaging and
Printing Corp. HWY 73 West
Mt. Gilead, NC 27306
(Montgomery County)
811 Concord Road
Albemarle, NC 28001
(Stanly County)
GB Labels, Inc. 1070 S. Riverview Drive
Burlington, NC 27217
(Alamance County)
533 North Park Avenue
Burlington, NC 27217
(Alamance County)
<PAGE>
Niemand Industries, Inc. 1410 S. Washington Street
Marion, AL 36756
(Perry County)
244 Westchester Avenue
White Plains, NY 10604
(Westchester County)
102 Valley Road
104 Valley Road
105 Valley Road
208 Crestwood Road
209 Crestwood Road
210 Crestwood Road
212 Crestwood Road
Marion, AL 26756
(Perry County)
Gibraltar Packaging Group, Inc.
dba Great Plains Packaging 2000 Smmit Avenue
Hastings, NE 68902-2148
(Adams County)
700 East Side Boulevard
Hastings, NE 68901
(Adams County)
1501 S. Burlington
Hastings, NE 68901
(Adams County)
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SCHEDULE III
TO SECURITY AGREEMENT
INTELLECTUAL PROPERTY
The following patents have been issued to Niemand Industries, Inc. by
the U.S. Patent and Trademark Office:
Registration No. Date Product
4,608,107 August 26, 1986 High temperature probe lance cover
4,674,520 June 23, 1987 Powder drum
5,282,789 February 1, 1994 Disposable medicine applicator
<PAGE>
<PAGE>
EXHIBIT N-1
FORM OF
COMPANY PLEDGE AGREEMENT
THIS COMPANY PLEDGE AGREEMENT (this "Agreement") dated as of September 25,
1996 is between GIBRALTAR PACKAGING GROUP, INC., a Delaware corporation (the
"Company"), and HARRIS TRUST AND SAVINGS BANK, as agent for the Banks referred
to below (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement dated as of even date herewith (as
amended or otherwise modified from time, the "Credit Agreement") among the
Company, various financial institutions (such financial institutions, together
with their respective successors and assigns, collectively the "Banks" and
individually each a "Bank") and the Agent, the Banks have agreed to make loans
to, and issue (or purchase participations in) letters of credit for the account
of, the Company from time to time; and
WHEREAS, it is a condition precedent to the making of loans and the
issuance of letters of credit under the Credit Agreement that the Company
execute and deliver to the Agent a pledge agreement in the form of this
Agreement;
NOW, THEREFORE, for and in consideration of any loan, advance or other
financial accommodation heretofore or hereafter made to the Company under or in
connection with the Credit Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. When used herein, the following terms shall have the
following meanings (such definitions to be applicable to both the singular and
plural forms of such terms):
Collateral - see Section 2.
Default means the occurrence of any of the following events: (a)
any Unmatured Event of Default under Section 12.1.4 of the Credit
Agreement; (b) any Event of Default; or (c) any warranty of the Company
herein is untrue or misleading in any material respect.
Event of Default has the meaning assigned to such term in the
Credit Agreement.
Issuer means the issuer of any of the shares of stock or
<PAGE>
other securities representing all or any of the Collateral.
Liabilities means all obligations (monetary or otherwise) of the
Company, howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent, now or hereafter existing, or due or
to become due, which arise out of or in connection with the Credit
Agreement, the Notes, this Agreement, or any other Loan Document.
Loan Document has the meaning assigned to such term in the Credit
Agreement.
Unmatured Event of Default has the meaning assigned to such term
in the Credit Agreement.
2. Pledge. As security for the payment of all Liabilities, the Company
hereby pledges to the Agent, and grants to the Agent, a security interest in,
all of the following:
A. All of the shares of stock and other securities described in Schedule I
hereto, all of the certificates and/or instruments representing such shares of
stock and other securities, and all cash, securities, dividends, rights and
other property at any time and from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such shares
or other securities;
B. All additional shares of stock of any of the Issuers listed in Schedule
I hereto at any time and from time to time acquired by the Company in any
manner, all of the certificates representing such additional shares, and all
cash, securities, dividends, rights and other property at any time and from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares;
C. All other property hereafter delivered to the Agent in substitution for
or in addition to any of the foregoing, all certificates and instruments
representing or evidencing such property, and all cash, securities, interest,
dividends, rights and other property at any time and from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
thereof; and
D. All products and proceeds of all of the foregoing.
All of the foregoing are herein collectively called the "Collateral".
The Company agrees to deliver to the Agent, promptly upon receipt and in
due form for transfer (i.e., endorsed in blank or
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<PAGE>
accompanied by stock or bond powers executed in blank), any Collateral which may
at any time or from time to time be in or come into the possession or control of
the Company; and prior to the delivery thereof to the Agent, such Collateral
shall be held by the Company separate and apart from its other property and in
express trust for the Agent.
3. Warranties; Further Assurances. The Company warrants to the Agent and
each Bank that: (a) the Company is (or at the time of any future delivery,
pledge, assignment or transfer thereof will be) the legal and equitable owner of
the Collateral free and clear of all liens, security interests and encumbrances
of every description whatsoever other than the security interest created
hereunder; (b) the pledge and delivery of the Collateral pursuant to this
Agreement will create a valid perfected security interest in the Collateral in
favor of the Agent; (c) all shares of stock referred to in Schedule I hereto are
duly authorized, validly issued, fully paid and non-assessable; (d) as to each
Issuer whose name appears in Schedule I hereto, the Collateral represents on the
date hereof not less than the applicable percent (as shown in Schedule I hereto)
of the total shares of capital stock issued and outstanding of such Issuer; and
(e) the information contained in Schedule I hereto is true and accurate in all
respects.
So long as any of the Liabilities shall be outstanding or any commitment
shall exist on the part of the Agent or any Bank with respect to the creation of
any Liabilities, the Company (i) shall not, without the express prior written
consent of the Agent, sell, assign, exchange, pledge or otherwise transfer,
encumber, or grant any option, warrant or other right to purchase the stock of
any Issuer which is pledged hereunder, or otherwise diminish or impair any of
its rights in, to or under any of the Collateral; (ii) shall execute such
Uniform Commercial Code financing statements and other documents (and pay the
costs of filing and recording or re-filing and re-recording the same in all
public offices deemed necessary or appropriate by the Agent) and do such other
acts and things, all as the Agent may from time to time reasonably request, to
establish and maintain a valid, perfected security interest in the Collateral
(free of all other liens, claims and rights of third parties whatsoever) to
secure the performance and payment of the Liabilities; (iii) will execute and
deliver to the Agent such stock powers and similar documents relating to the
Collateral, satisfactory in form and substance to the Agent, as the Agent may
reasonably request; and (iv) will furnish the Agent or any Bank such information
concerning the Collateral as the Agent or such Bank may from time to time
reasonably request, and will permit the Agent or any Bank or any designee of the
Agent or any Bank, from time to time at reasonable times and on reasonable
notice, to inspect, audit and make copies of and extracts from all records and
all other papers in the possession of the Company which pertain to
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<PAGE>
the Collateral, and will, upon request of the Agent at any time when a Default
has occurred and is continuing, deliver to the Agent all of such records and
papers.
4. Holding in Name of Agent, etc. The Agent may from time to time after the
occurrence and during the continuance of a Default, without notice to the
Company, take all or any of the following actions: (a) transfer all or any part
of the Collateral into the name of the Agent or any nominee or sub-agent for the
Agent, with or without disclosing that such Collateral is subject to the lien
and security interest hereunder, (b) appoint one or more sub-agents or nominees
for the purpose of retaining physical possession of the Collateral, (c) notify
the parties obligated on any of the Collateral to make payment to the Agent of
any amounts due or to become due thereunder, (d) endorse any checks, drafts or
other writings in the name of the Company to allow collection of the Collateral,
(e) enforce collection of any of the Collateral by suit or otherwise, and
surrender, release or exchange all or any part thereof, or compromise or renew
for any period (whether or not longer than the original period) any obligations
of any nature of any party with respect thereto, and (f) take control of any
proceeds of the Collateral.
5. Voting Rights, Dividends, etc. (a) Notwithstanding certain
provisions of Section 4 hereof, so long as the Agent has not given the notice
referred to in paragraph (b) below:
A. The Company shall be entitled to exercise any and all voting or
consensual rights and powers and stock purchase or subscription rights
(but any such exercise by the Company of stock purchase or subscription
rights may be made only from funds of the Company not comprising part
of the Collateral) relating or pertaining to the Collateral or any part
thereof for any purpose; provided, however, that the Company agrees
that it will not exercise any such right or power in any manner which
would have a material adverse effect on the value of the Collateral or
any part thereof.
B. The Company shall be entitled to receive and retain any and all
lawful dividends payable in respect of the Collateral which are paid in
cash by any Issuer if such dividends are permitted by the Credit
Agreement, but all dividends and distributions in respect of the
Collateral or any part thereof made in shares of stock or other
property or representing any return of capital, whether resulting from
a subdivision, combination or reclassification of Collateral or any
part thereof or received in exchange for Collateral or any part thereof
or as a result of any merger, consolidation, acquisition or other
exchange of assets to which any Issuer may be a party or otherwise or
as a result of any exercise of
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<PAGE>
any stock purchase or subscription right, shall be and become part of
the Collateral hereunder and, if received by the Company, shall be
forthwith delivered to the Agent in due form for transfer (i.e.,
endorsed in blank or accompanied by stock or bond powers executed in
blank) to be held for the purposes of this Agreement.
C. The Agent shall execute and deliver, or cause to be executed
and delivered, to the Company, all such proxies, powers of attorney,
dividend orders and other instruments as the Company may request for
the purpose of enabling the Company to exercise the rights and powers
which it is entitled to exercise pursuant to clause (A) above and to
receive the dividends which it is authorized to retain pursuant to
clause (B) above.
(b) Upon notice from the Agent during the existence of a Default, and so
long as the same shall be continuing, all rights and powers which the Company is
entitled to exercise pursuant to Section 5(a)(A) hereof, and all rights of the
Company to receive and retain dividends pursuant to Section 5(a)(B) hereof,
shall forthwith cease, and all such rights and powers shall thereupon become
vested in the Agent which shall have, during the continuance of such Default,
the sole and exclusive authority to exercise such rights and powers and to
receive such dividends. Any and all money and other property paid over to or
received by the Agent pursuant to this paragraph (b) shall be retained by the
Agent as additional Collateral hereunder and applied in accordance with the
provisions hereof.
6. Remedies. Whenever a Default shall exist, the Agent may exercise from
time to time any rights and remedies available to it under the Uniform
Commercial Code as in effect in Illinois or otherwise available to it. Without
limiting the foregoing, whenever a Default shall exist the Agent (a) may, to the
fullest extent permitted by applicable law, without notice, advertisement,
hearing or process of law of any kind, (i) sell any or all of the Collateral,
free of all rights and claims of the Company therein and thereto, at any public
or private sale or brokers' board and (ii) bid for and purchase any or all of
the Collateral at any such public sale and (b) shall have the right, for and in
the name, place and stead of the Company, to execute endorsements, assignments,
stock powers and other instruments of conveyance or transfer with respect to all
or any of the Collateral. The Company hereby expressly waives, to the fullest
extent permitted by applicable law, any and all notices, advertisements,
hearings or process of law in connection with the exercise by the Agent of any
of its rights and remedies during the continuance of a Default. If any
notification of intended disposition of any of the Collateral is required by
law, such notification, if mailed, shall be deemed
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<PAGE>
reasonably and properly given if mailed at least ten (10) days before such
disposition, postage prepaid, addressed to the Company, either at the address of
the Company shown below, or at any other address of the Company appearing on the
records of the Agent. Any proceeds of any of the Collateral may be applied by
the Agent to the payment of expenses in connection with the Collateral,
including, without limitation, reasonable attorneys' fees and legal expenses,
and any balance of such proceeds may be applied by the Agent toward the payment
of such of the Liabilities, and in such order of application, as the Agent may
from time to time elect (and, after payment in full of all Liabilities, any
excess shall be delivered to the Company or as a court of competent jurisdiction
shall direct).
The Agent is hereby authorized to comply with any limitation or restriction
in connection with any sale of Collateral as it may be advised by counsel is
necessary in order to (a) avoid any violation of applicable law (including,
without limitation, compliance with such procedures as may restrict the number
of prospective bidders and purchasers and/or further restrict such prospective
bidders or purchasers to Persons who will represent and agree that they are
purchasing for their own account for investment and not with a view to the
distribution or resale of such Collateral) or (b) obtain any required approval
of the sale or of the purchase by any governmental regulatory authority or
official, and the Company agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a commercially
reasonable manner and that the Agent shall not be liable or accountable to the
Company for any discount allowed by reason of the fact that such Collateral is
sold in compliance with any such limitation or restriction.
7. General. The Agent shall be deemed to have exercised reasonable care in
the custody and preservation of the Collateral if it takes such action for that
purpose as the Company shall request in writing, but failure of the Agent to
comply with any such request shall not of itself be deemed a failure to exercise
reasonable care, and no failure of the Agent to preserve or protect any rights
with respect to the Collateral against prior parties, or to do any act with
respect to preservation of the Collateral not so requested by the Company, shall
be deemed a failure to exercise reasonable care in the custody or preservation
of any Collateral.
No delay on the part of the Agent in exercising any right, power or remedy
shall operate as a waiver thereof, and no single or partial exercise of any such
right, power or remedy shall preclude any other or further exercise thereof, or
the exercise of any other right, power or remedy. No amendment, modification or
waiver of, or consent with respect to, any provision of this Agreement shall be
effective unless the same shall be in writing and signed and
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<PAGE>
delivered by the Agent, and then such amendment, modification, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
All obligations of the Company and all rights, powers and remedies of the
Agent and the Banks expressed herein are in addition to all other rights, powers
and remedies possessed by them, including, without limitation, those provided by
applicable law or in any other written instrument or agreement relating to any
of the Liabilities or any security therefor.
This Agreement has been delivered at Chicago, Illinois, and shall be
construed in accordance with and governed by the internal laws of the State of
Illinois. Wherever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
This Agreement shall be binding upon the Company and the Agent and their
respective successors and assigns, and shall inure to the benefit of the Company
and the Agent and the successors and assigns of the Agent.
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, and each such counterpart
shall be deemed an original but all such counterparts shall together constitute
but one and the same Agreement.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE COMPANY HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS
AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. THE COMPANY FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, TO THE ADDRESS OF THE COMPANY SPECIFIED IN, OR PURSUANT TO, THE CREDIT
AGREEMENT, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE
COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
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<PAGE>
OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM
THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE
EXTENT THAT THE COMPANY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE COMPANY HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
EACH OF THE COMPANY, THE AGENT AND (BY ACCEPTING THE BENEFITS HEREOF) EACH
BANK HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN
DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING
FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
SIGNATURES BEGIN ON THE NEXT PAGE
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as
of the day and year first written above.
GIBRALTAR PACKAGING GROUP, INC.
Address:
274 Riverside Avenue By: /s/ W. E. Rose
Westport, Connecticut 06880 Title: President
Attention: ____________________
HARRIS TRUST AND SAVINGS BANK,
as Agent
Address:
111 West Monroe Street By: /s/ John M. Dillon
Chicago, Illinois 60690 Vice President
Attention: ____________________
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<PAGE>
SCHEDULE I
TO
COMPANY PLEDGE AGREEMENT
STOCK
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Pledged Shares
No. of as % of Total Total Shares of
Certificate Pledged Shares Issued Issuer
Issuer No. Shares and Outstanding Outstanding
Ridgepak Corporation 13 100 100% 100
Standard Packaging and 158 154,553 100% 154,553
Printing Corp.
Niemand Holdings, Inc. 002 1,000 100% 1,000
GB Labels, Inc. 4 1,000 100% 1,000
</TABLE>
<PAGE>
<PAGE>
SUBSIDIARY PLEDGE AGREEMENT
THIS SUBSIDIARY PLEDGE AGREEMENT (this "Agreement") dated as of September
25, 1996 is between NIEMAND HOLDINGS, INC., a Delaware corporation (the
"Pledgor"), and HARRIS TRUST AND SAVINGS BANK, as agent for the Banks referred
to below (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement dated as of even date herewith (as
amended or otherwise modified from time, the "Credit Agreement") among Gibraltar
Packaging Group, Inc. (the "Company"), various financial institutions (such
financial institutions, together with their respective successors and assigns,
collectively the "Banks" and individually each a "Bank") and the Agent, the
Banks have agreed to make loans to, and issue (or purchase participations in)
letters of credit for the account of, the Company from time to time; and
WHEREAS, the Pledgor has executed and delivered a guaranty (the
"Guaranty") of the obligations of the Company under the Credit Agreement; and
WHEREAS, the obligations of the Pledgor under the Guaranty are to be
secured pursuant to this Agreement;
NOW, THEREFORE, for and in consideration of any loan, advance or other
financial accommodation heretofore or hereafter made to the Company under or in
connection with the Credit Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. When used herein, the following terms shall have the
following meanings (such definitions to be applicable to both the singular and
plural forms of such terms):
Collateral - see Section 2.
Default means the occurrence of any of the following events: (a)
any Unmatured Event of Default under Section 12.1.4 of the Credit
Agreement; (b) any Event of Default; or (c) any warranty of the Pledgor
herein is untrue or misleading in any material respect.
Event of Default has the meaning assigned to such term in the
Credit Agreement.
Issuer means the issuer of any of the shares of stock or other
securities representing all or any of the Collateral.
<PAGE>
Liabilities means all obligations (monetary or otherwise) of the
Pledgor under the Guaranty, howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter
existing, or due or to become due.
Loan Document has the meaning assigned to such term in the Credit
Agreement.
Loan has the meaning assigned to such term in the Credit
Agreement.
Unmatured Event of Default has the meaning assigned to such term
in the Credit Agreement.
2. Pledge. As security for the payment of all Liabilities, the Pledgor
hereby pledges to the Agent, and grants to the Agent, a security interest in,
all of the following:
A. All of the shares of stock and other securities described in
Schedule I hereto, all of the certificates and/or instruments representing such
shares of stock and other securities, and all cash, securities, dividends,
rights and other property at any time and from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
shares or other securities;
B. All additional shares of stock of any of the Issuers listed in
Schedule I hereto at any time and from time to time acquired by the Pledgor in
any manner, all of the certificates representing such additional shares, and all
cash, securities, dividends, rights and other property at any time and from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares;
C. All other property hereafter delivered to the Agent in substitution
for or in addition to any of the foregoing, all certificates and instruments
representing or evidencing such property, and all cash, securities, interest,
dividends, rights and other property at any time and from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
thereof; and
D. All products and proceeds of all of the foregoing.
All of the foregoing are herein collectively called the "Collateral".
The Pledgor agrees to deliver to the Agent, promptly upon
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<PAGE>
receipt and in due form for transfer (i.e., endorsed in blank or accompanied by
stock or bond powers executed in blank), any Collateral which may at any time or
from time to time be in or come into the possession or control of the Pledgor;
and prior to the delivery thereof to the Agent, such Collateral shall be held by
the Pledgor separate and apart from its other property and in express trust for
the Agent.
3. Warranties; Further Assurances. The Pledgor warrants to the Agent and
each Bank that: (a) the Pledgor is (or at the time of any future delivery,
pledge, assignment or transfer thereof will be) the legal and equitable owner of
the Collateral free and clear of all liens, security interests and encumbrances
of every description whatsoever other than the security interest created
hereunder; (b) the pledge and delivery of the Collateral pursuant to this
Agreement will create a valid perfected security interest in the Collateral in
favor of the Agent; (c) all shares of stock referred to in Schedule I hereto are
duly authorized, validly issued, fully paid and non-assessable; (d) as to each
Issuer whose name appears in Schedule I hereto, the Collateral represents on the
date hereof not less than the applicable percent (as shown in Schedule I hereto)
of the total shares of capital stock issued and outstanding of such Issuer; and
(e) the information contained in Schedule I hereto is true and accurate in all
respects.
So long as any Loans shall be outstanding or any of the Liabilities shall
be outstanding or any commitment shall exist on the part of the Agent or any
Bank with respect to the making of any Loans or the creation of any Liabilities,
the Pledgor (i) shall not, without the express prior written consent of the
Agent, sell, assign, exchange, pledge or otherwise transfer, encumber, or grant
any option, warrant or other right to purchase the stock of any Issuer which is
pledged hereunder, or otherwise diminish or impair any of its rights in, to or
under any of the Collateral; (ii) shall execute such Uniform Commercial Code
financing statements and other documents (and pay the costs of filing and
recording or re-filing and re-recording the same in all public offices deemed
necessary or appropriate by the Agent) and do such other acts and things, all as
the Agent may from time to time reasonably request, to establish and maintain a
valid, perfected security interest in the Collateral (free of all other liens,
claims and rights of third parties whatsoever) to secure the performance and
payment of the Liabilities; (iii) will execute and deliver to the Agent such
stock powers and similar documents relating to the Collateral, satisfactory in
form and substance to the Agent, as the Agent may reasonably request; and (iv)
will furnish the Agent or any Bank such information concerning the Collateral as
the Agent or such Bank may from time to time reasonably request, and will permit
the Agent or any Bank or any designee of the Agent or any Bank, from time to
time at reasonable times and on reasonable notice, to
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<PAGE>
inspect, audit and make copies of and extracts from all records and all other
papers in the possession of the Pledgor which pertain to the Collateral, and
will, upon request of the Agent at any time when a Default has occurred and is
continuing, deliver to the Agent all of such records and papers.
4. Holding in Name of Agent, etc. The Agent may from time to time after the
occurrence and during the continuance of a Default, without notice to the
Pledgor, take all or any of the following actions: (a) transfer all or any part
of the Collateral into the name of the Agent or any nominee or sub-agent for the
Agent, with or without disclosing that such Collateral is subject to the lien
and security interest hereunder, (b) appoint one or more sub-agents or nominees
for the purpose of retaining physical possession of the Collateral, (c) notify
the parties obligated on any of the Collateral to make payment to the Agent of
any amounts due or to become due thereunder, (d) endorse any checks, drafts or
other writings in the name of the Pledgor to allow collection of the Collateral,
(e) enforce collection of any of the Collateral by suit or otherwise, and
surrender, release or exchange all or any part thereof, or compromise or renew
for any period (whether or not longer than the original period) any obligations
of any nature of any party with respect thereto, and (f) take control of any
proceeds of the Collateral.
5. Voting Rights, Dividends, etc. (a) Notwithstanding certain provisions of
Section 4 hereof, so long as the Agent has not given the notice referred to in
paragraph (b) below:
A. The Pledgor shall be entitled to exercise any and all voting or
consensual rights and powers and stock purchase or subscription rights
(but any such exercise by the Pledgor of stock purchase or subscription
rights may be made only from funds of the Pledgor not comprising part
of the Collateral) relating or pertaining to the Collateral or any part
thereof for any purpose; provided, however, that the Pledgor agrees
that it will not exercise any such right or power in any manner which
would have a material adverse effect on the value of the Collateral or
any part thereof.
B. The Pledgor shall be entitled to receive and retain any and all
lawful dividends payable in respect of the Collateral which are paid in
cash by any Issuer if such dividends are permitted by the Credit
Agreement, but all dividends and distributions in respect of the
Collateral or any part thereof made in shares of stock or other
property or representing any return of capital, whether resulting from
a subdivision, combination or reclassification of Collateral or any
part thereof or received in exchange for Collateral or any part thereof
or as a result of any merger, consolidation,
-4-
<PAGE>
acquisition or other exchange of assets to which any Issuer may be a
party or otherwise or as a result of any exercise of any stock purchase
or subscription right, shall be and become part of the Collateral
hereunder and, if received by the Pledgor, shall be forthwith delivered
to the Agent in due form for transfer (i.e., endorsed in blank or
accompanied by stock or bond powers executed in blank) to be held for
the purposes of this Agreement.
C. The Agent shall execute and deliver, or cause to be executed
and delivered, to the Pledgor, all such proxies, powers of attorney,
dividend orders and other instruments as the Pledgor may request for
the purpose of enabling the Pledgor to exercise the rights and powers
which it is entitled to exercise pursuant to clause (A) above and to
receive the dividends which it is authorized to retain pursuant to
clause (B) above.
(b) Upon notice from the Agent during the existence of a Default, and so
long as the same shall be continuing, all rights and powers which the Pledgor is
entitled to exercise pursuant to Section 5(a)(A) hereof, and all rights of the
Pledgor to receive and retain dividends pursuant to Section 5(a)(B) hereof,
shall forthwith cease, and all such rights and powers shall thereupon become
vested in the Agent which shall have, during the continuance of such Default,
the sole and exclusive authority to exercise such rights and powers and to
receive such dividends. Any and all money and other property paid over to or
received by the Agent pursuant to this paragraph (b) shall be retained by the
Agent as additional Collateral hereunder and applied in accordance with the
provisions hereof.
6. Remedies. Whenever a Default shall exist, the Agent may exercise from
time to time any rights and remedies available to it under the Uniform
Commercial Code as in effect in Illinois or otherwise available to it. Without
limiting the foregoing, whenever a Default shall exist the Agent (a) may, to the
fullest extent permitted by applicable law, without notice, advertisement,
hearing or process of law of any kind, (i) sell any or all of the Collateral,
free of all rights and claims of the Pledgor therein and thereto, at any public
or private sale or brokers' board and (ii) bid for and purchase any or all of
the Collateral at any such public sale and (b) shall have the right, for and in
the name, place and stead of the Pledgor, to execute endorsements, assignments,
stock powers and other instruments of conveyance or transfer with respect to all
or any of the Collateral. The Pledgor hereby expressly waives, to the fullest
extent permitted by applicable law, any and all notices, advertisements,
hearings or process of law in connection with the exercise by the Agent of any
of its rights and remedies during the continuance of a Default. If
-5-
<PAGE>
any notification of intended disposition of any of the Collateral is required by
law, such notification, if mailed, shall be deemed reasonably and properly given
if mailed at least ten (10) days before such disposition, postage prepaid,
addressed to the Pledgor, either at the address of the Pledgor shown below, or
at any other address of the Pledgor appearing on the records of the Agent. Any
proceeds of any of the Collateral may be applied by the Agent to the payment of
expenses in connection with the Collateral, including, without limitation,
reasonable attorneys' fees and legal expenses, and any balance of such proceeds
may be applied by the Agent toward the payment of such of the Liabilities, and
in such order of application, as the Agent may from time to time elect (and,
after payment in full of all Liabilities, any excess shall be delivered to the
Pledgor or as a court of competent jurisdiction shall direct).
The Agent is hereby authorized to comply with any limitation or restriction
in connection with any sale of Collateral as it may be advised by counsel is
necessary in order to (a) avoid any violation of applicable law (including,
without limitation, compliance with such procedures as may restrict the number
of prospective bidders and purchasers and/or further restrict such prospective
bidders or purchasers to Persons who will represent and agree that they are
purchasing for their own account for investment and not with a view to the
distribution or resale of such Collateral) or (b) obtain any required approval
of the sale or of the purchase by any governmental regulatory authority or
official, and the Pledgor agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a commercially
reasonable manner and that the Agent shall not be liable or accountable to the
Pledgor for any discount allowed by reason of the fact that such Collateral is
sold in compliance with any such limitation or restriction.
7. General. The Agent shall be deemed to have exercised reasonable care in
the custody and preservation of the Collateral if it takes such action for that
purpose as the Pledgor shall request in writing, but failure of the Agent to
comply with any such request shall not of itself be deemed a failure to exercise
reasonable care, and no failure of the Agent to preserve or protect any rights
with respect to the Collateral against prior parties, or to do any act with
respect to preservation of the Collateral not so requested by the Pledgor, shall
be deemed a failure to exercise reasonable care in the custody or preservation
of any Collateral.
No delay on the part of the Agent in exercising any right, power or remedy
shall operate as a waiver thereof, and no single or partial exercise of any such
right, power or remedy shall preclude any other or further exercise thereof, or
the exercise of any other right, power or remedy. No amendment, modification or
waiver of,
-6-
<PAGE>
or consent with respect to, any provision of this Agreement shall be effective
unless the same shall be in writing and signed and delivered by the Agent, and
then such amendment, modification, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
All obligations of the Pledgor and all rights, powers and remedies of the
Agent and the Banks expressed herein are in addition to all other rights, powers
and remedies possessed by them, including, without limitation, those provided by
applicable law or in any other written instrument or agreement relating to any
of the Liabilities or any security therefor.
This Agreement has been delivered at Chicago, Illinois, and shall be
construed in accordance with and governed by the internal laws of the State of
Illinois. Wherever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
This Agreement shall be binding upon the Pledgor and the Agent and their
respective successors and assigns, and shall inure to the benefit of the Pledgor
and the Agent and the successors and assigns of the Agent.
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, and each such counterpart
shall be deemed an original but all such counterparts shall together constitute
but one and the same Agreement.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE PLEDGOR HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS
AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. THE PLEDGOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, TO THE ADDRESS OF THE PLEDGOR SHOWN BELOW OR AT ANY OTHER ADDRESS OF
THE PLEDGOR APPEARING ON THE RECORDS OF THE AGENT, OR BY PERSONAL SERVICE WITHIN
OR WITHOUT THE STATE OF
-7-
<PAGE>
ILLINOIS. THE PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. TO THE EXTENT THAT THE PLEDGOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY
FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH
SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION
OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE PLEDGOR HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
EACH OF THE PLEDGOR, THE AGENT AND (BY ACCEPTING THE BENEFITS HEREOF) EACH
BANK HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN
DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING
FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
SIGNATURES BEGIN ON THE NEXT PAGE
-8-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as
of the day and year first written above.
NIEMAND HOLDINGS, INC.
Address:
274 Riverside Avenue By: /s/ W E Rose
Westport, Connecticut 06880 Title: President
Attention: ____________________
HARRIS TRUST AND SAVINGS BANK,
as Agent
Address:
111 West Monroe Street By: /s/ John M. Dillon
--------------------
Chicago, Illinois 60690 Vice President
Attention: _John M. Dillon
-9-
<PAGE>
SCHEDULE I
TO
SUBSIDIARY PLEDGE AGREEMENT
STOCK
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Pledged Shares
No. of as % of Total Total Shares of
Certificate Pledged Shares Issued Issuer
Issuer No. Shares and Outstanding Outstanding
Niemand Industries, 2 3,000 100% 3,000
Inc.
</TABLE>
<PAGE>
<PAGE>
PATENT AGREEMENT
THIS PATENT SECURITY AGREEMENT, is made as of
September 25,1996 (as amended, supplemented, amended and restated or otherwise
modified from time to time, this "Agreement"), by NIEMAND INDUSTRIES, INC., a
Delaware corporation, (the "Grantor"), in favor of HARRIS TRUST AND SAVINGS
BANK, as agent (the "Agent");
W I T N E S S E T H :
WHEREAS, the Grantor and others have entered into a Credit Agreement
dated as of September 25, 1996 (as the same may be amended, modified,
supplemented, restated or replaced from time to time, the "Credit Agreement";
terms used herein and not otherwise defined herein are used herein as defined in
the Credit Agreement), among the Grantor, various financial institutions from
time to time party thereto and the Agent;
WHEREAS, in connection with the Credit Agreement, the Grantor has
executed and delivered a Security Agreement, dated as of the date hereof
(together with all amendments and other modifications, if any, from time to time
thereafter made thereto, the "Security Agreement"); and
WHEREAS, as a condition precedent to extending credit under the Credit
Agreement, the Grantor is required to execute and deliver this Agreement and to
grant to the Agent a continuing security interest in all of the Patent
Collateral (as defined below) to secure the Liabilities.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the Grantor agrees, for the benefit of the Agent,
as follows:
SECTION I. Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Agreement, including its
preamble and recitals, have the meanings provided in the Security Agreement.
SECTION II. Grant of Security Interest
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, to secure the due and punctual performance and payment of
all Liabilities, the Grantor does hereby mortgage, pledge and hypothecate to the
Agent, and grant to the Agent a security interest in, all of the following
property (the "Patent Collateral"), whether now owned or hereafter acquired or
existing: All foreign and United States patents and applications for patents,
including, without limitation, those listed on
<PAGE>
Attachment 1 hereto and any and all applications for, reissues, divisions,
continuations, renewals, extensions, and continuations-in-part thereof, the
right to sue for past, present and future infringements thereof, all rights
corresponding thereto throughout the world, and all proceeds of the foregoing,
including, without limitation, license royalties, and proceeds of infringement
suits.
SECTION III. Security Agreement. This Agreement
has been executed and delivered by the Grantor for the purpose of registering
the security interest of the Agent in the Patent Collateral with the United
States Patent and Trademark Office and corresponding offices in other countries
of the world. The security interest granted hereby has been granted as a
supplement to, and not in limitation of, the security interest granted to the
Agent under the Security Agreement. The Security Agreement (and all rights and
remedies of the Agent thereunder) shall remain in full force and effect in
accordance with its terms.
SECTION IV. Release of Security Interest. Upon payment in full
of all Liabilities, the Agent shall, at the Grantor's expense, execute and
deliver to the Grantor all instruments and other documents as may be necessary
or proper to release the lien on and security interest in the Patent
Collateral which has been granted hereunder.
SECTION V. Acknowledgment. The Grantor does hereby further acknowledge
and affirm that the rights and remedies of the Agent with respect to the
security interest in the Patent Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which (including
the remedies provided for therein) are incorporated by reference herein as if
fully set forth herein.
SECTION VI. Loan Document, etc. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Credit Agreement.
SECTION VII. Counterparts. This Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
NIEMAND INDUSTRIES INC.
By: _/s/ W E Rose
Name: Walter E. Rose
Title: Vice President
HARRIS TRUST AND SAVINGS BANK, as Agent
By: _/s/John M. Dillon
Name: John M. Dillon
Title: Vice President
<PAGE>
ATTACHMENT 1
to
AGREEMENT
(Patent)
Item A. Patents
Registered Patents
Country Patent Registration No. Registration Date
United States High temperature 4,608,107 August 26, 1986
probe lance cover
United States Power drum 4,674,520 June 23, 1987
United States Disposable medicine 5,282,789 February 1, 1994
applicator
Pending Patent Applications
Country Patent Serial No. Filing Date
NONE
Patent Applications in Preparation
Expected
Products/
Country Patent Docket No. Filing Date Services
NONE
Item B. Patent Licenses
Country or Effective Expiration
Territory Patent Licensor Licensee Date Date
NONE
<PAGE>
<PAGE>
GIBRALTAR logo
September 21, 1995
Mr. Jon P. Crane
9 Red Start Path
Hilton Head, SC 29926
Dear Jon,
The following is an offer to employ you as President of Standard Packaging and
Printing Corp. We would like for you to start on October 1, 1995. Your base
salary will be $126,000 per year, and you will receive the standard Gibraltar
benefit package.
In addition, you will be given a company car per the attached policy(I agree
that you can expense you current lease until it expires), and the company will
pay for insurance and maintenance on the vehicle. You will also be be eligible
to receive a bonus of up to 30% of your salary based on an assessment of the
divisions performance each fiscal year by myself and the compensation committee
of the board as compared against objectives that you and I will agree to.
You will receive 4 weeks of vacation per year.
The company will pay all of your actual moving expenses, and make a one month
salary allowance to cover all other expenses associated with the move. For up to
three months, the company will pay your temporary living expenses before you
relocate. If you should be asked to leave for any reason other than cause during
your employment by the company, you will be entitled to receive as severance you
current base salary for a period of six months.
If you are in agreement with this proposed offer, please indicate by signing
below.
I look forward to working with you again, and want to wish you much success in
this new challenge.
Sincerely,
/s/ Walter E. Rose Agreed to by: /s/ Jon P. Crane
Walter E. Rose Jon P. Crane
2115 Rexford Road o Suite 215 o Charlotte, NC 28211
Phone (704) 366-2929 o Fax (704) 366-6717
<PAGE>
GIBRALTAR logo appears here
January 29, 1996
Mr. James A. Stajkowski
7964 West 115th Place
Overland Park, KS 66210
Dear Jim,
The following is an offer to employ you as President of Flashfold Carton. Your
base salary will be $130,000 per year, and you will receive the standard
Gibraltar benefit package.
In addition, you will be given a company car per the attached policy, and the
company will pay for insurance and maintenance on the vehicle. You will also be
eligible to receive a bonus of up to 30% of your salary based on an assessment
of the divisions and your performance at the end of each fiscal year (6/30 by
myself and the compensation committee of the board as compared against
objectives that you and I will agree to.
You will receive 4 weeks of vacation per year.
The company will pay all of your actual moving expenses, and make a one month
salary allowance to cover all other expenses associated with the move.
The company will pay your temporary living expenses for up to six months before
you relocate, and if your current home does not sell in this period, the company
will pay your out of pocket housing costs for you and your family in Fort Wayne
until your current home is sold. The total period will not exceed one year. The
company will also pay all out of pocket costs incurred by you in selling your
current home including real estate commissions, and the legal costs incurred in
buying a new home. The company will also compensate you for any taxes you may
have to pay as a result of the items in this paragraph.
If you are in agreement with this proposed offer, please indicate by signing
below.
I look forward to working with you, and want to wish you much success in this
new challenge.
Sincerely, Accepted,
/s/ Walter E. Rose /s/ James A. Stajkowski
Walter E. Rose James A. Stajkowski
2115 Rexford Road o Suite 215 o Charlotte, NC 28211
Phone (704) 366-2929 o Fax (704) 366-6717
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
33-66790 and 33-66844 of Gibraltar Packaging Group, Inc. on Form S-8 of our
report dated August 5, 1996 (September 25, 1996 with respect to Note 4),
appearing in this Annual Report on Form 10-K of Gibraltar Packaging Group, Inc.
for the year ended June 29, 1996.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Charlotte, North Carolina
October 8, 1996
<PAGE>
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-29-1996
<PERIOD-START> JUL-02-1995
<PERIOD-END> JUN-29-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 7,091
<ALLOWANCES> 231
<INVENTORY> 9,172
<CURRENT-ASSETS> 17,554
<PP&E> 46,679
<DEPRECIATION> 11,512
<TOTAL-ASSETS> 74,045
<CURRENT-LIABILITIES> 11,099
<BONDS> 0
0
0
<COMMON> 50
<OTHER-SE> 30,956
<TOTAL-LIABILITY-AND-EQUITY> 74,045
<SALES> 74,384
<TOTAL-REVENUES> 74,384
<CGS> 58,328
<TOTAL-COSTS> 58,328
<OTHER-EXPENSES> 11,471
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,218
<INCOME-PRETAX> 1,367
<INCOME-TAX> 666
<INCOME-CONTINUING> 1,367
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 701
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.14
</TABLE>
