UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: December 31, 1998
Commission File Number: 00-19800
GIBRALTAR PACKAGING GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 47-0496290
(State of incorporation) (I.R.S. Employer
Identification Number)
2000 Summit Avenue
Hastings, Nebraska 68902-2148
(Address of principal executive offices) (Zip Code)
(402) 463-1366
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. |X| Yes |_| No
As of December 31, 1998, there were 5,041,544 shares of the Company's
common stock, par value $0.01 per share, issued and outstanding.
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GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
<S> <C>
Consolidated Balance Sheets 1
As of December 31, 1998 and June 27, 1998
Consolidated Statements of Operations for the 2
Three Months Ended December 31, 1998 and 1997 and
Six Months Ended December 31, 1998 and 1997
Consolidated Statements of Cash Flows for the 3
Six Months Ended December 31, 1998 and 1997
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial 6
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
Signature 14
</TABLE>
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands except share and per share data)
<TABLE>
<CAPTION>
December 31, June 27,
1998 1998
------------------- --------
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash $ 267 $ 114
Restricted bank deposits 229 --
Accounts receivable (Net of allowance for
doubtful accounts of $212 and $162, respectively) 7,150 7,820
Inventories 11,661 10,667
Income taxes receivable 196 --
Deferred income taxes 892 892
Prepaid and other current assets 632 483
-------- --------
Total current assets 21,027 19,976
PROPERTY, PLANT AND EQUIPMENT - Net 24,610 25,362
EXCESS OF PURCHASE PRICE OVER NET
ASSETS ACQUIRED (Net of accumulated
amortization of $3,574 and $3,368, respectively) 13,571 13,775
OTHER ASSETS (Net of accumulated amortization
of $76 and $1,199, respectively) 955 258
-------- --------
TOTAL $ 60,163 $ 59,371
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Checks not yet presented $ 1,022 $ 1,119
Current portion of long-term debt 2,341 2,034
Accounts payable 7,896 9,310
Accrued expenses 2,092 2,344
Income taxes payable -- 200
-------- --------
Total current liabilities 13,351 15,007
LONG-TERM DEBT - Net of current portion 30,842 27,872
DEFERRED INCOME TAXES 1,659 1,659
OTHER LONG-TERM LIABILITIES 707 815
-------- --------
Total liabilities 46,559 45,353
-------- --------
STOCKHOLDERS' EQUITY:
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 deficit (14,608) (14,194)
Total stockholders' equity 13,604 14,018
-------- --------
TOTAL $ 60,163 $ 59,371
======== ========
</TABLE>
See notes to unaudited consolidated financial statements
1
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GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands except share and per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
------------ ------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $ 18,980 $ 18,619 $ 39,165 $ 37,947
COST OF GOODS SOLD 16,022 16,395 32,986 32,176
----------- ----------- ----------- -----------
GROSS PROFIT 2,958 2,224 6,179 5,771
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Selling 856 1,154 1,743 2,231
General and administrative 1,284 2,981 2,833 4,523
Amortization of excess of purchase price
over net assets acquired 104 147 206 293
Restructuring charges 235 170 235 170
----------- ----------- ----------- -----------
Total operating expenses 2,479 4,452 5,017 7,217
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS 479 (2,228) 1,162 (1,446)
OTHER EXPENSE (INCOME):
Interest expense 799 806 1,705 1,513
Other income (5) (3) (7) (49)
----------- ----------- ----------- -----------
Other expense - net 794 803 1,698 1,464
----------- ----------- ----------- -----------
LOSS BEFORE INCOME TAXES (315) (3,031) (536) (2,910)
INCOME TAX BENEFIT (78) (1,154) (122) (1,047)
----------- ----------- ----------- -----------
NET LOSS $ (237) $ (1,877) $ (414) $ (1,863)
=========== =========== =========== ===========
BASIC AND DILUTED PER COMMON SHARE AMOUNTS:
Net Loss $ (0.05) $ (0.37) $ (0.08) $ (0.37)
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING:
(basic and diluted) 5,041,544 5,041,544 5,041,544 5,041,544
=========== =========== =========== ===========
</TABLE>
See notes to unaudited consolidated financial statements.
2
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GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
------------
1998 1997
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (414) $(1,863)
Adjustments to reconcile net loss to
net cash (used in) provided by operating activities:
Depreciation and amortization 1,493 2,047
Gain on sale of property, plant and equipment (1) (49)
Write-down of long-lived assets 61 --
Changes in operating assets and liabilities:
Accounts receivable - net 670 1,128
Inventories (994) (308)
Income taxes (396) (1,248)
Prepaid expenses and other assets (85) (264)
Accounts payable (1,511) 1,868
Accrued expenses and other liabilities (360) (111)
-------- --------
Net Cash (Used In) Provided by Operating Activities (1,537) 1,200
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment 4 84
Changes in restricted (229) --
Purchases of property, plant and equipment (532) (1,071)
-------- --------
Net Cash Used in Investing Activities (757) (987)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving credit facility 3,513 1,650
Net principal repayments of long-term debt (31,085) (1,898)
Proceeds from refinancing 30,830 --
Refinancing costs (830) --
Net activity under capital leases 19 (75)
-------- --------
Net Cash Provided by (Used In) Financing Activities 2,447 (323)
-------- --------
NET INCREASE (DECREASE) IN CASH 153 (110)
CASH AT BEGINNING OF PERIOD 114 110
-------- --------
CASH AT END OF PERIOD $ 267 $ --
======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
3
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GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
A. GENERAL
The accompanying unaudited consolidated financial statements of Gibraltar
Packaging Group, Inc. ("Gibraltar" or the "Company") have been prepared in
accordance with Rule 10-01 of Regulation S-X for interim financial
statements required to be filed with the Securities and Exchange
Commission and do not include all information and footnotes required by
generally accepted accounting principles for complete financial
statements. However, in the opinion of management, the accompanying
unaudited consolidated financial statements contain all adjustments,
consisting only of normal recurring adjustments, necessary to present
fairly the financial position of Gibraltar as of December 31, 1998, and
the results of its operations and cash flows for the periods presented
herein. Results for the six months ended December 31, 1998 are not
necessarily indicative of the results to be expected for the full fiscal
year. The financial statements should be read in conjunction with the
financial statements for the year ended June 27, 1998 and the notes
thereto contained in Gibraltar's Annual Report on Form 10-K.
B. INVENTORIES
Inventories consisted of the following (In thousands):
December 31, June 27,
1998 1998
---- ----
Finished goods $ 7,138 $ 6,506
Work in process 1,582 1,396
Raw materials 2,444 2,319
Manufacturing supplies 497 446
--------- ---------
$ 11,661 $ 10,667
========= =========
C. RESTRICTED BANK DEPOSITS
Restricted bank deposits are held at Harris Bank in support of outstanding
letters of credit and bank fees in relation to those letters. The letters
of credit relate to workman's compensation insurance policies.
D. NET INCOME (LOSS) PER COMMON SHARE
Basic income per common share is based on the weighted average outstanding
common shares during the respective period. Diluted income per share is
based on the weighted average outstanding common shares and the effect of
all dilutive potential common shares, such as stock options. Presently,
there is no difference for the Company between basic and diluted income
per share.
4
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GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
E. ADOPTION OF SFAS 130
During the first quarter of fiscal 1999, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income," which requires disclosure of
comprehensive income to be included in the financial statements for fiscal
years beginning after December 15, 1997. Comprehensive income is defined
as the change in equity of a business enterprise during a period from
transactions and other events and circumstances from non-owner sources.
Presently, there are no components of comprehensive income for the
Company.
F. RESTRUCTURING CHARGES
As previously announced, the Company approved a plan to reduce costs by
closing the Company's corporate office and moving the Company's corporate
functions to its Hastings, Nebraska facility. The move was completed on
November 2, 1998. Included in the three months ended December 31, 1998, is
a restructuring charge of $0.2 million consisting of severance costs for
corporate personnel, the write-off of leasehold improvements and moving
costs associated with relocating the corporate functions to its Hastings,
Nebraska facility.
G. STOCK APPRECIATION RIGHTS
On November 30, 1998, the Company established the 1998 Stock Appreciation
Rights Plan (the "Plan") to be administered by the Compensation Committee
of the Company's Board of Directors. The Plan provides for the
discretionary granting of Stock Appreciation Rights ("SAR") to key
employees of the Company. SARs held by grantees under the Plan entitle the
holder to cash payments only.
Effective January 15, 1999, 150,000 SARs valued at $2.25 each and 150,000
SARs valued at $3.00 each were granted to officers of the Company. The
SARs vest at 20% per year through the maturity date of June 30, 2003.
H. RECLASSIFICATION
Certain amounts in the fiscal 1998 financial statements have been
reclassified to conform with the fiscal 1999 presentation.
5
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GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Recent Events:
As previously announced, the Company has been pursuing the sale of
Niemand Industries, Inc. ("Niemand"), and anticipates completing this
divestiture before the end of fiscal 1999.
Effective January 5, 1999, Merrell A. Ketchum was appointed Division
President of Niemand. Mr. Ketchum replaced John F. Justice, who left the
Company to pursue other opportunities.
Results of Operations:
Three Months Ended December 31, 1998 Compared to
Three Months Ended December 31, 1997
In the second quarter of fiscal 1999, the Company had net sales of $19.0
million compared with $18.6 million in the second quarter of fiscal 1998,
an increase of $0.4 million or 1.9%. Sales of folding cartons continued to
remain strong, as sales to major customers in the second fiscal quarter
increased over the corresponding period in the previous year. Sales of
pressure sensitive labels decreased compared with prior year levels.
Cost of goods sold decreased $0.4 million or 2.3% to $16.0 million in the
second quarter of fiscal 1999 compared to $16.4 million in the second
quarter of fiscal 1998. Expressed as a percentage of net sales, cost of
goods sold decreased in the second quarter of fiscal 1999 to 84.4%
compared to 88.1% in the corresponding period of fiscal 1998. Several
factors contributed to the decrease. Product mix for Great Plains
Packaging Co., ("Gibraltar" dba "Great Plains") improved, allowing it to
schedule and run jobs more efficiently and cost effectively. Raw material
costs continued to decline as Standard Packaging & Printing Corp.
("Standard Packaging") renegotiated prices with suppliers and internalized
the die making and ink mixing processes. As a result of writing down the
carrying amount of goodwill and fixed assets for Niemand to estimated fair
market value less cost to sell at the end of fiscal 1998, depreciation
expense has been significantly reduced in fiscal 1999. However, the
decrease in cost of goods sold has been partially offset by higher labor
costs incurred at Standard Packaging associated with servicing customer
demands over the corresponding period in the previous year.
Selling expenses decreased $0.3 million or 25.8% in the second quarter of
fiscal 1999, to $0.9 million from $1.2 million in the second quarter of
fiscal 1998, primarily as a result of an overall decrease in the size of
Gibraltar's sales force and its marketing programs. These reductions are a
direct result of cost savings following the Company's organizational and
facility consolidations implemented in the second quarter of fiscal 1998.
General and administrative expenses expressed as a percentage of net sales
decreased to 6.8% in the second quarter of fiscal 1999, compared with
16.0% in the corresponding fiscal 1998 period. The Company continues to
realize the cost savings benefits of the second quarter fiscal 1998
restructuring program. In addition, general and administrative expenses
were lower as a result of
6
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GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
the relocation of the Company's corporate functions from Westport,
Connecticut to its Hastings, Nebraska facility in the second quarter of
fiscal 1999. Included in general and administrative expenses in the second
quarter of fiscal 1998 is an increase in receivable and other reserves of
$0.6 million, and a charge for severance and relocation costs of
approximately $0.5 million.
Included in the three months ended December 31, 1998, is a restructuring
charge of $0.2 million consisting of severance costs for corporate
personnel, the write-off of leasehold improvements and moving costs
associated with relocating the corporate functions to its Hastings,
Nebraska facility.
Total interest expense for the second quarter of fiscal 1999 remained
constant with the second quarter of fiscal 1998 at $0.8 million. In the
second quarter of fiscal 1998, the Company incurred fees in amending the
Company's revolving credit facility. The lower fees in the second quarter
of fiscal 1999 were offset by increased interest expense as a result of
higher borrowings of approximately $2.8 million, coupled with higher
interest rates.
The income tax benefit as a percentage of pre-tax loss for the three
months ended December 31, 1998 is 25%, which differs from the statutory
rate primarily as a result of non-deductible amortization of excess of
purchase price over net assets acquired. The equivalent tax rate was 38%
for the corresponding period in the prior year.
Six Months Ended December 31, 1998 Compared to
Six Months Ended December 31, 1997
Net sales increased $1.2 million, or 3.2%, to $39.2 million during the
first six months of fiscal 1999 from $37.9 million during the first six
months of fiscal 1998. Sales of folding cartons in the first six months of
fiscal 1999 increased over the corresponding period in fiscal 1998, most
notably at Great Plains. Sales of pressure sensitive labels decreased
compared with prior year levels.
Cost of goods sold increased $0.8 million, or 2.5% for the six months
ended December 31, 1998 compared with the corresponding period in fiscal
1998. Expressed as a percentage of net sales, cost of goods sold decreased
in the first six months of fiscal 1999 to 84.2% compared to 84.8% in the
corresponding period of fiscal 1998. Product mix for Great Plains
improved, allowing it to schedule and run jobs more efficiently and cost
effectively. Raw material costs continued to decline as Standard Packaging
renegotiated prices with suppliers and internalized the die making and ink
mixing processes. As a result of writing down the carrying amount of
goodwill and fixed assets for Niemand to estimated fair market value less
cost to sell at the end of fiscal 1998, depreciation expense has been
significantly reduced in fiscal 1999. However, the decrease in cost of
goods sold has been partially offset by higher labor costs incurred at
Standard Packaging, associated with servicing customer demands over the
corresponding period in the previous year.
Selling expenses expressed as a percentage of net sales decreased to 4.5%
in the first six months of fiscal 1999, compared with 5.9% in the first
six months of fiscal 1998, primarily as a result of an overall decrease in
the size of Gibraltar's sales force and its marketing programs. These
reductions are a direct result of cost savings following the Company's
organizational and facility consolidations implemented in the second
quarter of fiscal 1998.
7
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GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
General and administrative expenses decreased $1.7 million, or 37.4%. The
Company continues to realize the cost savings benefits of the second
quarter fiscal 1998 restructuring program. In addition, general and
administrative expenses were lower as a result of the relocation of the
Company's corporate functions from Westport, Connecticut to its Hastings,
Nebraska facility in the second quarter of fiscal 1999. Included in
general and administrative expenses in the second quarter of fiscal 1998
is an increase in receivable and other reserves of $0.6 million and a
charge for severance and relocation costs of approximately $0.5 million.
Included in the three months ended December 31, 1998, is a restructuring
charge of $0.2 million consisting of severance costs for corporate
personnel, the write-off of leasehold improvements and moving costs
associated with relocating the corporate functions to its Hastings,
Nebraska facility.
Total interest expense for the first six months of fiscal 1999 increased
$0.2 million, or 12.7%, to $1.7 million from $1.5 million in the first six
months of fiscal 1998. In the second quarter of fiscal 1998, the Company
incurred fees in amending the Company's revolving credit facility. The
lower fees in the second quarter of fiscal 1999 were offset by increased
interest expense as a result of higher borrowings of approximately $2.8
million, coupled with higher interest rates.
The income tax benefit as a percentage of pre-tax loss for the six months
ended December 31, 1998 is 23%, which differs from the statutory rate
primarily as a result of non-deductible amortization of excess of purchase
price over net assets acquired. The equivalent tax rate was 36% for the
corresponding period in the prior year.
Financial Condition:
On July 31,1998, the Company refinanced all of its outstanding debt. The
new facility with First Source Financial LLP (First Source) provides for a
five year $25 million term loan and a five year $15 million working
capital revolving line of credit (Revolver). The term loan requires
quarterly principal payments of $562,500 in the first year of the loan,
beginning October 15, 1998. The balance of the term loan is due in
quarterly installments of $625,000 in fiscal year 2000, $687,500 per
quarter through April 2003 and the balance of $12,687,500 is due on July
31, 2003.
The proceeds from the new credit facility were used to refinance the
Harris Bank credit facility, to repay the note payable related to the
Alabama facility, to pay the related transactions costs, and to fund the
working capital and capital expenditure needs of the Company. The new
credit facility is secured by a first priority perfected security interest
in and lien on all assets (real and personal, tangible and intangible) of
the Company excluding the Burlington, North Carolina property.
The Revolver provides for a revolving line of credit under a borrowing
base commitment subject to certain loan availability requirements. Loan
availability under the Revolver may not exceed the lesser of (1) the
Revolver Commitment or (2) the sum of (a) up to 85% of Gibraltar's
eligible accounts receivable plus (b) up to 60% of Gibraltar's eligible
inventory.
As part of the refinancing, all outstanding letters of credit were
collateralized with Harris Bank from
8
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GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
the proceeds of the refinancing and are classified as part of restricted
bank deposits on the Consolidated Balance Sheets. Outstanding letters of
credit at December 31, 1998 amounted to $222,000 and relate to workman's
compensation insurance claims.
The new credit facility contains certain restrictive covenants including
financial covenants related to Net Worth, Minimum Interest Coverage Ratio,
Capital Expenditures, the Debt Ratio and Fixed Charge Coverage. As of
December 31, 1998, the Company was not in compliance with certain
financial covenants. First Source has amended the credit agreement with
the Company to waive covenants relating to the Minimum Interest Coverage
Ratio and the Debt Ratio as of December 31, 1998. In addition, First
Source has amended the credit agreement to make the Minimum Interest
Coverage Ratio and the Debt Ratio less restrictive for the remainder of
the fiscal year.
The Revolver bears interest at First Source's prime rate plus 0.75% or the
London Interbank Offered Rate (LIBOR) plus 2.75%. The term loan bears
interest at First Source's prime rate plus 1.25% or LIBOR plus 3.25%. The
Company also pays a commitment fee of 0.5% on the difference between the
average daily loan balance and the amount of the Revolver. The interest
rates at December 31, 1998 were a combination of prime and LIBOR. First
Source's prime and LIBOR rates were 7.75% and 5.575%, respectively, at
December 31, 1998. However, under the terms of the amended credit
agreement, the LIBOR option was suspended, effective January 25, 1999
until the Company achieves the covenant levels required by the amended
credit agreement.
At December 31, 1998, the Company had working capital of $7.7 million, as
compared to $5.0 million at June 27,1998. Historically, the Company's
liquidity requirements have been met by a combination of funds provided by
operations and its revolving credit agreements. The increase in working
capital was made possible by increased borrowing capacity as a result of
the debt refinancing described above. The Company had available to it
unused borrowing capacity of $1.8 million as of December 31, 1998.
During the first six months ended December 31, 1998, capital expenditures
totaled $0.5 million compared with $1.1 million in the corresponding
period in fiscal 1998, and consisted primarily of building expansion and
additions to machinery and equipment. Gibraltar makes capital improvements
to improve efficiency and product quality and periodically upgrades its
equipment by purchasing or leasing new or previously used equipment.
Management believes that future funds generated by operations and
borrowings available under its new credit facility with First Source will
be sufficient to meet working capital and capital expenditure requirements
in fiscal 1999.
Year 2000 Compliance
The Year 2000 issue is the result of computer systems that use two digits
rather than four to define the applicable year, which may prevent such
systems from accurately processing dates ending in the Year 2000 and
after. This could result in system failures or in miscalculations causing
disruption of operations, including, but not limited to, an inability to
process transactions, to send and receive electronic data, or to engage in
routine business activities and operations.
9
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GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
The Company has completed its initial assessment of all currently used
computer systems and has developed a plan to correct those areas that will
be affected by the Year 2000 issue. The folding carton divisions of the
Company (Great Plains, RidgePak Corp. dba Flashfold Carton and Standard
Packaging) have recently installed AmTech's Imaginera software for their
manufacturing and accounting IS systems. These information systems are
certified by the vendor to be Year 2000 Compliant. Niemand has done an
extensive review of all its current computer programs and files and has
completed its evaluation of vendors to upgrade all IS systems for Year
2000 compliance. The budget for these upgrades is $80,000, and Niemand
anticipates completion of these upgrades by June 1999.
The Company began in fiscal 1998 evaluating environmental and
manufacturing equipment, telephones, personal computer hardware and
software outside of the Company's IS systems. The Company's goal is to
complete any upgrade requirements by the end of fiscal 1999, but does not
expect that the cost for subsequent upgrades will be material to the
Company's consolidated financial statements.
In addition to reviewing its internal systems, the Company is currently
compiling a list of its significant vendors to initiate communications
concerning Year 2000 compliance. There can be no assurance that the
systems of other companies that interact with the Company will be
sufficiently Year 2000 compliant so as to avoid an adverse impact on the
Company's operations, financial condition and results of operations.
The Company presently anticipates that it will complete its Year 2000
assessment and remediation by the end of fiscal 1999. However, there can
be no assurance that the Company will be successful in implementing its
Year 2000 remediation plan according to the anticipated schedule. If the
Company does not complete implementation of its remediation plan prior to
January 1, 2000, the Company's operations and financial condition will be
negatively impacted, perhaps significantly, by the failure of its
information and or manufacturing systems. In addition, the Company may be
adversely affected by the inability of other companies whose systems
interact with the Company to become Year 2000 compliant and by potential
interruptions of utility, communications or transportation systems as
result of Year 2000 issues.
Although the Company expects its internal systems to be Year 2000
compliant as described above, the Company intends to prepare a contingency
plan that will specify what it plans to do if it or important external
companies are not Year 2000 compliant in a timely manner. The Company
expects to prepare its contingency plan during calendar year 1999.
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) the Company's ability to execute its business
plan to leverage the success of the Company's Great Plains division; (2)
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 and the increasing
trends of customers to increase their buying power by consolidating the
number of vendors they maintain; (3)
10
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GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
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; (4)
whether the Company will be able to maintain its listing on the Nasdaq
National Market; (5) the Company's ability to continue to comply with the
restrictive covenants in its credit facility or to obtain waivers if it is
not in compliance in the future; (6) whether the Company will be able to
pass on to its customers price increases for paper and paperboard products
in fiscal 1999; (7) whether the Company will be able to sell Niemand
Industries on terms that are satisfactory to the Company; (8) continued
stability in other raw material prices, including oil-based resin and
plastic film; (9) 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; (10) pressure on prices
from competition or purchasers of the Company's products; (11) the
introduction of competing products by other firms, (12) the Company's
ability to comply with restrictive financial covenants contained in its
loan documents in the future and to obtain waivers of any default if it is
not able to do so, and (13) whether the Company will be able to
successfully complete its Year 2000 remediation prior to January 1, 2000,
and the risk that not all of the Company's vendors and suppliers will be
Year 2000 compliant. 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-Q and other documents that the
Company files from time to time with the Securities and Exchange
Commission, including its annual report on Form 10-K and any current
reports on Form 8-K must be considered by any investor or potential
investor in the Company.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
The Company's primary market risk is fluctuation in interest rates. All of
the Company's debt at December 31, 1998 is at variable interest rates, and
the company has in the past utilized interest rate caps to reduce the
impact of changes in interest rates. A hypothetical 10% change in interest
rates would have had a $0.2 million impact on interest expense for the six
months ended December 31, 1998.
11
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GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. 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, results of
operations or net cash flows of the Company.
In May 1998, two lawsuits, captioned Monroe B. Moorefield et al v. Bernard
H. Oakley, Sr., et al, File Number 98 CVS 990; and Harold L. Fogleman et
al v. Bernard H. Oakley, Sr., et al, File Number 98 CVS 989, were filed in
Alamance County, State of North Carolina, alleging property damage and
personal injury arising from the groundwater contamination at GB Labels,
Inc. ("GB Labels"). Gibraltar and GB Labels, among others, were also named
as defendants in the lawsuits. The plaintiffs are all property owners, or
their family members, residing near the GB Labels facility.
In October 1998 the Fogleman plaintiffs dismissed without prejudice their
personal injury claims against the Company. The Foglemans' property damage
claims remain pending and the Company is pursuing discovery on these
claims. The Company and GB Labels have in their responses to the
complaints denied liability and intend to vigorously defend themselves.
Although at this time, the Company cannot predict the outcome of this
lawsuit, the Company does not believe that this lawsuit will have a
material adverse effect on the business or financial condition of the
Company.
In November 1998 the Moorefield plaintiffs dismissed their entire
complaint against the Company without prejudice. No Moorefield claims are
pending against the Company.
Although as described above, at this time certain claims have been
dismissed, there can be no assurance that the Fogelman and/or Moorefield
plaintiffs will not re-file their claims at a later date.
The Company has been notified by the Nasdaq Stock Market (Nasdaq) that the
Company's Common Stock, par value $0.01 per share (the Common Stock), will
be delisted from the Nasdaq National Market (National Market). Nasdaq has
taken this action because the Company does not currently meet Nasdaq's
requirement that listed companies maintain net tangible assets of at least
$4.0 million. The Company also is not presently in compliance with the
National Market's requirement that the market value of the public float,
which excludes shares held by affiliates of the Company, be at least $5.0
million. The Company has appealed the delisting determination by Nasdaq.
The delisting will be delayed until Nasdaq's decision on the appeal
becomes final.
There is no assurance that the Company will be successful in maintaining
its National Market listing. If the Company's Common Stock were delisted,
there would likely be a negative impact on the trading market, liquidity
and price of the Common Stock.
12
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
Item 4. Submission of Matters to a Vote of Security Holders.
At the Company's Annual Meeting of Stockholders' on November 18, 1998, a
total of 4,094,965 shares, or 81.22%, of outstanding shares were
represented and entitled to vote.
(a) The following members were elected to the Board of Directors:
FOR WITHHOLD
David G. Chandler 3,832,841 262,124
John W. Lloyd 3,818,542 276,423
Walter E. Rose 3,717,451 377,514
Robert G. Shaw 3,826,342 268,623
John D. Strautnieks 3,725,751 369,214
(b) The following proposal was approved:
Ratification of Deloitte & Touche LLP as the independent auditors
for the Company for the 1999 fiscal year.
Affirmative Votes: 3,820,038
Negative Votes: 271,524
Abstentions: 3,403
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
10.33 Gibraltar Packaging Group, Inc. 1998 Stock Appreciation Rights Plan, dated
November 30, 1998.
10.34 Employment Agreement, dated January 15, 1999, between Gibraltar Packaging
Group, Inc. and John W. Lloyd.
10.35 Employment Agreement, dated January 15, 1999, between Gibraltar Packaging
Group, Inc. and Richard D. Hinrichs.
10.36 Stock Appreciation Rights Agreement, dated January 15, 1999, between
Gibraltar Packaging Group, Inc. and John W. Lloyd.
10.37 Stock Appreciation Rights Agreement, dated January 15, 1999, between
Gibraltar Packaging Group, Inc. and Richard D. Hinrichs.
13
<PAGE>
GIBRALTAR PACKAGING GROUP, INC. AND SUBSIDIARIES
10.38 First Amendment to Secured Credit Agreement, dated September 1, 1998,
among Gibraltar Packaging Group, Inc., various financial institutions and
First Source Financial LLP, Individually and as agent.
10.39 Second Amendment to Secured Credit Agreement, dated November 15, 1998,
among Gibraltar Packaging Group, Inc., various financial institutions and
First Source Financial LLP, Individually and as agent.
10.40 Third Amendment to Secured Credit Agreement, dated February 11, 1999,
among Gibraltar Packaging Group, inc., various financial institutions and
First Source Financial LLP, Individually and as agent.
27.1 Financial Data Schedule.
27.2 Restated Financial Data Schedule for period ending June 27, 1998.
(b) Reports on Form 8-K:
Gibraltar did not file any reports on Form 8-K during the quarter ended
December 31, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GIBRALTAR PACKAGING GROUP, INC.
Date: February 11, 1999 By: /s/ John W. Lloyd
-------------------------- ---------------------------------------
John W. Lloyd, Chief Financial Officer
Signing on behalf of the registrant and
as principal financial officer
14
Exhibit 10.33
GIBRALTAR PACKAGING GROUP, INC.
1998 STOCK APPRECIATION RIGHTS PLAN
1. Name. The name of this plan is the Gibraltar Packaging Group, Inc. 1998
Stock Appreciation Rights Plan (the "Plan"). The purpose of the Plan is to
afford an incentive to key employees of Gibraltar Packaging Group, Inc. (the
"Company") and its affiliated corporations and to enable the Company and its
affiliated corporations to retain and attract personnel of the highest caliber
who by their position, ability and diligence are able to make important
contributions to the Company's success.
2. Definitions.
a. "Cause" means, solely for purposes of this Plan, the
termination of a grantee's employment with the Company because
of (i) final conviction of grantee 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 grantee at the expense of the Company, (ii)
participation by grantee as an employee, officer or holder of
more than five percent of the equity in any business engaged
in activities in direct competition with the Company without
the prior written consent of the Company, or (iii) willful
misconduct.
b. "Committee" means the Compensation Committee of the Board of
Directors of the Company.
c. "Common Stock" means the common stock of the Company.
d. "Share Unit" means the equivalent of one share of Common
Stock.
e. "Initial Value" means the value of a share of Common Stock on
the date an award of Share Units is made as determined by the
Committee in the exercise of its sole discretion.
f. "Maturity Date" means the date the Committee specifies as the
date on which an account or accounts shall be valued.
g. "Maturity Value" means for the purposes of this 1998 Stock
Appreciation Rights Plan the value of each share of the Common
Stock determined as the closing price per share of the Common
Stock on the NASDAQ national market system, or such other
<PAGE>
national securities exchange or association on which the Stock
is then listed (the "Exchange"), as provided in accordance
with the terms of the award or awards of Share Units.
h. "Dividend Unit" means the equivalent number of shares of
Common Stock paid or made by the Company with respect to a
share of its Common Stock.
i. "Units" means Share Units and Dividend Units collectively.
j. "Unit Value" is defined in Section 6 below.
k. "Change in Control" means the occurrence of any of the
following events:
i. 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;
ii. 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 approved merger,
consolidation, reorganization, liquidation or
dissolution is subsequently abandoned); or
iii. 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).
3. Administration of Plan. This Plan shall be administered by the
Committee, or by such other committee composed of members of the Board of
Directors as may be designated by the Board. The Committee is authorized to
interpret the terms and provisions of the Plan and to adopt such rules and
regulations for the administration of the Plan as it may deem advisable. Members
of the Committee are not eligible to participate in this Plan.
<PAGE>
4. Eligibility. Share Units shall be granted only to persons who at the
time of the grant are key employees of the Company or its affiliates (including
officers, but excluding directors who are not regular employees). No member of
the Committee, while serving as such, shall be eligible to receive Share Units
under this Plan. While all such employees are eligible to be considered for the
receipt of Share Units, it is contemplated that only those employees who perform
services of special importance to the Company and its affiliated corporations in
the management, operation, and development of the business will be selected to
receive Share Units. Subject to the terms, provisions and conditions of this
Plan, the Committee is hereby authorized to: (a) select the employees to be
granted Share Units (it being understood that more than one award may be granted
to the same person); (b) determine the number of Share Units covered by each
grant; (c) determine the time or times when Share Units will be granted; (d)
determine the time or times when, and the conditions under which, amounts may
become payable with respect to Share Units within the limits stated in this
Plan; and (e) prescribe the form, which shall be consistent with this Plan, of
the instruments evidencing any Share Units granted under this Plan.
5. Share Unit Accounts. The Company shall record in an account with
respect to each grantee the number of Share Units awarded to such grantee and
the Initial Value thereof. A separate account shall be maintained with respect
to each award of Share Units to each grantee. Whenever the Company shall pay any
dividend in Common Stock upon issued and outstanding Common Stock there shall be
credited to the account or accounts of each grantee such number of Dividend
Units as would be allocable to the Units then credited to such account or
accounts if the grantee had actually owned the number of shares of Common Stock
represented by the Units. No adjustment will be made to the account or accounts
of grantees on distributions on its Common Stock except as provided for herein.
6. Valuation of Units. The amount to be paid to the grantee with respect
to any account established in his or her name under this Plan shall be
determined on the Maturity Date with respect to such account, shall be
calculated only with respect to Units included in such account that have vested
in accordance with the terms of the award or awards of Share Units, and shall
consist of the sum of (a) the excess, if any, of the Maturity Value over the
Initial Value of all Share Units included in such account and (b) the Maturity
Value of all Dividend Units included in such account, less any amount which the
Company is required to withhold with respect to such payment under the then
applicable provisions of the Internal Revenue Code or state or local income tax
laws (the "Unit Value"). Payment shall be made wholly in cash in accordance with
the terms of the award or awards of Share Units.
7. Payment of Unit Value. Payment of the Unit Value shall be made in
accordance with the terms of the award or awards of Share Units.
8. Termination of Employment. If a grantee's employment with the Company
is terminated by (i) the retirement of grantee, (ii) the death of grantee, (iii)
the mental or physical disability of grantee as determined by a medical doctor
satisfactory to
<PAGE>
the Committee, (iv) choice of the grantee, or (v) by the Company for other than
Cause, then the Maturity Date shall be the date of termination. If a grantee's
employment with the Company is terminated by the Company for Cause, then the
award of Share Units to the grantee shall become void on the date of
termination.
9. Right of Company to Terminate Employment. Nothing contained in the Plan
or in any grant pursuant to the Plan shall interfere in any way with the right
of the Company or a subsidiary to terminate the employment of the grantee at any
time for any reason or for no reason.
10. Nontransferability. No amounts payable under this Plan shall be
transferable by the grantee other than by will or by the laws of descent and
distribution.
11. Changes in Stock and Conversion Rights. In the event that (a) the
number of outstanding shares of Common Stock shall be changed by reason of
split-ups, combinations of shares, recapitalizations, stock dividends or
otherwise, or (b) the Common Stock is converted into or exchanged for other
shares as a result of any merger or consolidation (including a sale of assets)
or other recapitalization, the number of Units then credited to the account or
accounts of any grantee and the Initial Value of all Share Units included
therein shall be appropriately adjusted so as to reflect such change. Persons
participating in the Plan shall be vested in all Units in their account and to
be paid the full Maturity Value of such Units upon occurrence
12. Amendments to Plan. The Board of Directors may at any time terminate
or from time to time amend, modify, or suspend this Plan, provided that no such
action shall adversely affect any right or obligation with respect to any award
previously granted.
13. Governing Law. This Plan shall be governed and construed in accordance
with the laws of the State of Ohio.
14. Effective Date. This Plan shall be effective as of November 30, 1998.
Exhibit 10.34
AGREEMENT CONCERNING EMPLOYMENT
THIS AGREEMENT CONCERNING EMPLOYMENT (the "Agreement") is made and entered
into this 15th day of January, 1999, at Hastings, Nebraska, by and between
GIBRALTAR PACKAGING GROUP, INC., a Delaware corporation (hereinafter referred to
as "Gibraltar"), and JOHN W. LLOYD, an individual residing at 270 Warner Hill
Rd., Southport, CT 06490 (hereinafter referred to as "Lloyd").
RECITALS:
A. Gibraltar has engaged Lloyd to serve as an employee of Gibraltar, and
has been elected by Gibraltar to the offices of Executive Vice President and
Chief Financial Officer, and Lloyd has been serving in such capacities.
B. The parties now desire to formalize and modify their understandings
related to certain terms and conditions of Lloyd's employment, as set forth
below.
Accordingly, the parties hereto agree as follows:
1. COMPENSATION. During the period of Lloyd's employment (the
"Employment Period"), Lloyd shall receive the following compensation:
(a) A salary which shall be at an annual rate of not less than Two
Hundred Thousand Seven Hundred Thirty Nine Dollars ($200,739), payable not less
frequently than semi-monthly.
<PAGE>
(b) The right to participate in a stock appreciation rights plan,
pursuant to the terms thereof, a copy of which is attached hereto, and the
related agreement between Gibraltar and Lloyd;
(c) An opportunity to earn a bonus in an amount not to exceed forty
percent (40%) of the salary paid to Lloyd during Gibraltar's fiscal year, with
respect to fiscal years ending during the Employment Period, the precise amount
of which shall be determined by the Board of Directors, based upon the
recommendation of the Compensation Committee; provided, however, that a bonus of
thirty percent (30%) will be paid if the base budget is met; and
(d) The right to participate in all corporate employee benefit
programs offered to employees by Gibraltar.
2. DUTIES. During the Employment Period, Lloyd's job assignments, duties
and responsibilities shall be consistent with those of executive vice presidents
and chief financial officers of companies of a size comparable to Gibraltar;
provided, however, that it is expressly understood and agreed that Lloyd will
also devote a portion of his business efforts to Rostra Technologies, Inc.
("Rostra") and that, as a result, Lloyd will not be required to devote all of
his business efforts to Gibraltar.
3. EMPLOYMENT AT WILL. It is understood and agreed that (i) nothing
contained in this Agreement is intended to provide a definite duration for
Lloyd's employment at Gibraltar, (ii) that the employment relationship remains
one of "employment at will" (i.e., terminable by either party), except to the
extent that (iii) a termination under the specific circumstances described in
this Agreement may entitle Lloyd to receive the severance compensation described
below.
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<PAGE>
4. SEVERANCE COMPENSATION.
(a) If the employment of Lloyd by Gibraltar should terminate after a
"Change of Control" (as defined in subparagraph (b) below) has occurred or has
been deemed to have occurred, Gibraltar shall pay severance compensation to
Lloyd, whether such termination is instituted by Lloyd or by Gibraltar. The
severance compensation shall be the continuing payment to Lloyd of the salary
described in paragraph 1(a) above, at the rate in effect immediately prior to
such Change of Control but in no event at a rate lower than the rate set forth
in paragraph 1(a) above, for a period of one (1) year following the date of
termination.
(b) No severance compensation shall be payable under this Agreement
unless and until either (i) a "Change of Control" has occurred or has been
deemed to have occurred, while Lloyd is still an active employee of Gibraltar
and Lloyd's employment with Gibraltar has ended in connection therewith or
within six (6) months thereafter, or (ii) Lloyd's employment with Gibraltar has
been terminated in accordance with paragraph 5.
(c) For purposes of this Agreement, a "Change in Control" shall
occur or shall be deemed to have occurred (i) 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
Gibraltar immediately before such transaction cease to own at least 51% of the
voting stock of Gibraltar or of any entity that results from the participation
of Gibraltar in a reorganization, consolidation, merger, liquidation or any
other form of corporate transaction, (ii) if the stockholders of Gibraltar
approve a plan of merger, consolidation, reorganization, liquidation or
dissolution in which Gibraltar does not survive (unless the approved merger,
consolidation, reorganization, liquidation or dissolution is subsequently
abandoned), or (iii) if the
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<PAGE>
stockholders of Gibraltar approve a plan for the sale, lease, exchange,
transfer, assignment or other disposition of all or substantially all the
property and assets of Gibraltar (unless such plan is subsequently abandoned).
(d) Lloyd shall not be required to mitigate damages by seeking other
employment or otherwise in order to receive severance compensation hereunder,
nor shall the amount of any payment provided for under this Agreement be reduced
by any compensation earned by Lloyd as the result of employment by another
employer after the termination of his employment pursuant hereto.
5. TERMINATION IN THE ABSENCE OF A CHANGE OF CONTROL.
(a) In the absence of a Change of Control, Lloyd shall also be
entitled to the compensation provided in paragraph 4 upon the termination of
Lloyd's employment, unless such termination is as a result of (i) Lloyd's death,
(ii) Lloyd's "Disability" (as defined in paragraph 5(b) below), (iii) Lloyd's
"Retirement" (as defined in paragraph 5(c) below), or (iv) Lloyd's termination
by Gibraltar for "Cause" (as defined in paragraph 5(d) below).
(b) Disability. If, as result of Lloyd's incapacity due to physical
or mental illness, Lloyd shall have been absent from his duties with Gibraltar
on a full-time basis for six months and within thirty (30) days after written
notice of termination is thereafter given by Gibraltar Lloyd shall not have
returned to the full-time performance of Lloyd's duties, Gibraltar may terminate
this Agreement for "Disability".
(c) Retirement. The term "Retirement" as used in this Agreement
shall mean termination by Gibraltar or by Lloyd of Lloyd's employment after
Lloyd has reached age 65, or
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<PAGE>
such other age as shall have been fixed in any arrangement established with
Lloyd's consent with respect to Lloyd.
(d) Cause. "Cause" shall mean (i) final conviction of Lloyd 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
Lloyd at the expense of Gibraltar, (ii) participation by Lloyd as an employee,
officer or holder of more than five percent of the equity in any business
engaged in activities in direct competition with Gibraltar without the prior
written consent of Gibraltar, or (iii) Lloyd's failure to perform his duties as
an employee at substantially the same level as he had performed those duties
immediately prior to the date of this Agreement; provided, however, that
notwithstanding the foregoing, Lloyd shall not be deemed to have been terminated
for "Cause" pursuant to subparagraph (d)(iii) unless and until there shall have
been delivered to Lloyd a written notice setting forth his deficiencies, an
opportunity for Lloyd to present argument to the contrary to Gibraltar's Board
of Directors at a meeting of the Board at which this subject is an agenda item
(and of which Lloyd had reasonable notice and at which Lloyd had an opportunity
to be heard), and the adoption by the Board of a resolution, approved by the
affirmative vote of not less than three-quarters of the members of the Board
present at such meeting, finding that in the good faith opinion of the Board
Lloyd had failed to perform his duties as an employee at substantially the same
level as he had performed those duties immediately prior to the date of this
Agreement.
(e) Notice of Termination. Any termination by Gibraltar pursuant to
paragraph 5(b), 5(c) or 5(d) shall be communicated by a Notice of Termination.
For purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which identifies the
-5-
<PAGE>
specific termination provisions in this Agreement relied upon and which sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Lloyd's employment under the provision so identified.
For purposes of this Agreement, no such purported termination by Gibraltar shall
be effective without such Notice of Termination.
(f) Date of Termination. "Date of Termination" shall mean (i) if
this Agreement is terminated by Gibraltar for Disability, thirty (30) days after
Notice of Termination is given to Lloyd (provided that Lloyd shall not have
returned to the performance of Lloyd's duties on a full-time basis during such
30-day period), or (ii) if Lloyd's employment is terminated by Gibraltar for any
other reason, the date on which a Notice of Termination is given.
6. NO EFFECT ON OTHER CONTRACTUAL RIGHTS. The provisions of this
Agreement, and any payment provided for hereunder, are not intended to reduce
any amounts otherwise payable, or in any way diminish Lloyd's existing rights,
or rights which would accrue solely as a result of the passage of time, under
any benefit plan, incentive plan, stock option plan, employment agreement or
other contract, plan or arrangement which may presently be in effect, except to
the extent that any such contract, plan or arrangement is directly contrary to
any provision hereof, in which case the terms set forth in this Agreement shall
prevail.
7. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto, their heirs, representatives and successors.
8. SEVERABILITY. In case any one or more of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect
-6-
<PAGE>
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal, or unenforceable provision had never been contained
herein.
9. EFFECT OF CAPTIONS. The captions in this Agreement are included for
convenience only and shall not in any way effect the interpretation or
construction of any provision hereof.
10. REMEDIES CUMULATIVE; NO WAIVER. All remedies specified herein or
otherwise available shall be cumulative and in addition to any and every other
remedy provided hereunder or now or hereafter available. No waiver or failure
(intentional or unintentional) to act with respect to any breach or default
hereunder shall be deemed to be a waiver with respect to any subsequent breach
or default, whether of a similar or different nature.
11. NOTICES. All notices, requests, demands or other communications
hereunder shall be sent by registered or certified mail to:
To Employer: Gibraltar Packaging Group, Inc.
2000 Summit Avenue
Hastings, NE 68902-2148
Copy to: Alan M. Rauss, Esquire
Kohrman Jackson & Krantz P.L.L.
1375 East Ninth Street
20th Floor, One Cleveland Center
Cleveland, Ohio 44114
To Lloyd: John W. Lloyd
270 Warner Hill Rd.
Southport, CT 06490
12. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and
construed in accordance with the substantive law of the State of Delaware. The
parties
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<PAGE>
intend to and hereby do confer jurisdiction upon the courts of any jurisdiction
within the State of Delaware to determine any dispute arising out of or related
to this Agreement, including the enforcement and the breach hereof.
13. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between Employer and Lloyd and supersedes all prior agreements and
understandings relating to the subject matter hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands on the
date first hereinabove mentioned.
GIBRALTAR PACKAGING GROUP, INC.
("Gibraltar")
By: /s/ Walter E. Rose
--------------------------------------
Its: Chairman
--------------------------------------
/s/ John W. Lloyd
--------------------------------------------
JOHN W. LLOYD ("Lloyd")
-8-
Exhibit 10.35
AGREEMENT CONCERNING EMPLOYMENT
THIS AGREEMENT CONCERNING EMPLOYMENT (the "Agreement") is made and entered
into this 15th day of January, 1999, at Hastings, Nebraska, by and between
GIBRALTAR PACKAGING GROUP, INC., a Delaware corporation (hereinafter referred to
as "Gibraltar"), and RICHARD D. HINRICHS, an individual residing at 1300 Country
Club Drive, Hastings, Nebraska 68901 (hereinafter referred to as "Hinrichs").
RECITALS:
A. Gibraltar has engaged Hinrichs to serve as an employee of Gibraltar,
and has been elected by Gibraltar to the office of President and Hinrichs has
been serving in such capacity.
B. The parties now desire to formalize and modify their understandings
related to certain terms and conditions of Hinrichs's employment, as set forth
below.
Accordingly, the parties hereto agree as follows:
1. COMPENSATION. During the period of Hinrichs's employment (the
"Employment Period"), Hinrichs shall receive the following compensation:
(a) A salary which shall be at an annual rate of not less than Two
Hundred One Thousand Dollars ($201,000), payable not less frequently than
semi-monthly.
(b) The right to participate in a stock appreciation rights plan,
pursuant to the terms thereof, a copy of which is attached hereto, and the
related agreement between Gibraltar and Hinrichs;
<PAGE>
(c) An opportunity to earn a bonus in an amount not to exceed forty
percent (40%) of the salary paid to Hinrichs during Gibraltar's fiscal year,
with respect to fiscal years ending during the Employment Period, the precise
amount of which shall be determined by the Board of Directors, based upon the
recommendation of the Compensation Committee; provided, however, that a bonus of
thirty percent (30%) will be paid if the base budget is met; and
(d) The right to participate in all corporate employee benefit
programs offered to employees by Gibraltar.
2. DUTIES. During the Employment Period, Hinrichs's job assignments,
duties and responsibilities shall be consistent with those of presidents of
companies of a size comparable to Gibraltar. Hinrichs will be required to devote
all of his business efforts to Gibraltar.
3. EMPLOYMENT AT WILL. It is understood and agreed that (i) nothing
contained in this Agreement is intended to provide a definite duration for
Hinrichs's employment at Gibraltar, (ii) that the employment relationship
remains one of "employment at will" (i.e., terminable by either party), except
to the extent that (iii) a termination under the specific circumstances
described in this Agreement may entitle Hinrichs to receive the severance
compensation described below.
4. SEVERANCE COMPENSATION.
(a) If the employment of Hinrichs by Gibraltar should terminate
after a "Change of Control" (as defined in subparagraph (b) below) has occurred
or has been deemed to have occurred, Gibraltar shall pay severance compensation
to Hinrichs, whether such termination is instituted by Hinrichs or by Gibraltar.
The severance compensation shall be the continuing payment to Hinrichs of the
salary described in paragraph 1(a) above, at the rate in effect
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<PAGE>
immediately prior to such Change of Control but in no event at a rate lower than
the rate set forth in paragraph 1(a) above, for a period of one (1) year
following the date of termination.
(b) No severance compensation shall be payable under this Agreement
unless and until either (i) a "Change of Control" has occurred or has been
deemed to have occurred, while Hinrichs is still an active employee of Gibraltar
and Hinrichs's employment with Gibraltar has ended in connection therewith or
within six (6) months thereafter, or (ii) Hinrichs's employment with Gibraltar
has been terminated in accordance with paragraph 5.
(c) For purposes of this Agreement, a "Change in Control" shall
occur or shall be deemed to have occurred (i) 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
Gibraltar immediately before such transaction cease to own at least 51% of the
voting stock of Gibraltar or of any entity that results from the participation
of Gibraltar in a reorganization, consolidation, merger, liquidation or any
other form of corporate transaction, (ii) if the stockholders of Gibraltar
approve a plan of merger, consolidation, reorganization, liquidation or
dissolution in which Gibraltar does not survive (unless the approved merger,
consolidation, reorganization, liquidation or dissolution is subsequently
abandoned), or (iii) if the stockholders of Gibraltar approve a plan for the
sale, lease, exchange, transfer, assignment or other disposition of all or
substantially all the property and assets of Gibraltar (unless such plan is
subsequently abandoned).
(d) Hinrichs shall not be required to mitigate damages by seeking
other employment or otherwise in order to receive severance compensation
hereunder, nor shall the amount of any payment provided for under this Agreement
be reduced by any compensation
-3-
<PAGE>
earned by Hinrichs as the result of employment by another employer after the
termination of his employment pursuant hereto.
5. TERMINATION IN THE ABSENCE OF A CHANGE OF CONTROL.
(a) In the absence of a Change of Control, Hinrichs shall also be
entitled to the compensation provided in paragraph 4 upon the termination of
Hinrichs's employment, unless such termination is as a result of (i) Hinrichs's
death, (ii) Hinrichs's "Disability" (as defined in paragraph 5(b) below), (iii)
Hinrichs's "Retirement" (as defined in paragraph 5(c) below), or (iv) Hinrichs's
termination by Gibraltar for "Cause" (as defined in paragraph 5(d) below).
(b) Disability. If, as result of Hinrichs's incapacity due to
physical or mental illness, Hinrichs shall have been absent from his duties with
Gibraltar on a full-time basis for six months and within thirty (30) days after
written notice of termination is thereafter given by Gibraltar Hinrichs shall
not have returned to the full-time performance of Hinrichs's duties, Gibraltar
may terminate this Agreement for "Disability".
(c) Retirement. The term "Retirement" as used in this Agreement
shall mean termination by Gibraltar or by Hinrichs of Hinrichs's employment
after Hinrichs has reached age 65, or such other age as shall have been fixed in
any arrangement established with Hinrichs's consent with respect to Hinrichs.
(d) Cause. "Cause" shall mean (i) final conviction of Hinrichs 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
Hinrichs at the expense of Gibraltar, (ii) participation by Hinrichs as an
employee, officer or holder of more than five percent of the equity in any
business engaged in activities in direct competition with Gibraltar without the
prior
-4-
<PAGE>
written consent of Gibraltar, or (iii) Hinrichs's failure to perform his
duties as an employee at substantially the same level as he had performed those
duties immediately prior to the date of this Agreement; provided, however, that
notwithstanding the foregoing, Hinrichs shall not be deemed to have been
terminated for "Cause" pursuant to subparagraph (d)(iii) unless and until there
shall have been delivered to Hinrichs a written notice setting forth his
deficiencies, an opportunity for Hinrichs to present argument to the contrary to
Gibraltar's Board of Directors at a meeting of the Board at which this subject
is an agenda item (and of which Hinrichs had reasonable notice and at which
Hinrichs had an opportunity to be heard), and the adoption by the Board of a
resolution, approved by the affirmative vote of not less than three-quarters of
the members of the Board present at such meeting, finding that in the good faith
opinion of the Board Hinrichs had failed to perform his duties as an employee at
substantially the same level as he had performed those duties immediately prior
to the date of this Agreement.
(e) Notice of Termination. Any termination by Gibraltar pursuant to
paragraph 5(b), 5(c) or 5(d) shall be communicated by a Notice of Termination.
For purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which identifies the specific termination provisions in this Agreement
relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Hinrichs's
employment under the provision so identified. For purposes of this Agreement, no
such purported termination by Gibraltar shall be effective without such Notice
of Termination.
(f) Date of Termination. "Date of Termination" shall mean (i) if
this Agreement is terminated by Gibraltar for Disability, thirty (30) days after
Notice of Termination is given to Hinrichs (provided that Hinrichs shall not
have returned to the performance of
-5-
<PAGE>
Hinrichs's duties on a full-time basis during such 30-day period), or (ii) if
Hinrichs's employment is terminated by Gibraltar for any other reason, the date
on which a Notice of Termination is given.
6. NO EFFECT ON OTHER CONTRACTUAL RIGHTS. The provisions of this
Agreement, and any payment provided for hereunder, are not intended to reduce
any amounts otherwise payable, or in any way diminish Hinrichs's existing
rights, or rights which would accrue solely as a result of the passage of time,
under any benefit plan, incentive plan, stock option plan, employment agreement
or other contract, plan or arrangement which may presently be in effect, except
to the extent that any such contract, plan or arrangement is directly contrary
to any provision hereof, in which case the terms set forth in this Agreement
shall prevail.
7. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto, their heirs, representatives and successors.
8. SEVERABILITY. In case any one or more of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, but this Agreement shall be construed as if such invalid,
illegal, or unenforceable provision had never been contained herein.
9. EFFECT OF CAPTIONS. The captions in this Agreement are included for
convenience only and shall not in any way effect the interpretation or
construction of any provision hereof.
-6-
<PAGE>
10. REMEDIES CUMULATIVE; NO WAIVER. All remedies specified herein or
otherwise available shall be cumulative and in addition to any and every other
remedy provided hereunder or now or hereafter available. No waiver or failure
(intentional or unintentional) to act with respect to any breach or default
hereunder shall be deemed to be a waiver with respect to any subsequent breach
or default, whether of a similar or different nature.
11. NOTICES. All notices, requests, demands or other communications
hereunder shall be sent by registered or certified mail to:
To Employer: Gibraltar Packaging Group, Inc.
2000 Summit Avenue
Hastings, NE 68902-2148
Copy to: Alan M. Rauss, Esquire
Kohrman Jackson & Krantz P.L.L.
1375 East Ninth Street
20th Floor, One Cleveland Center
Cleveland, Ohio 44114
To Hinrichs: Richard D. Hinrichs
1300 Country Club Drive
Hastings, Nebraska 68901
12. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and
construed in accordance with the substantive law of the State of Delaware. The
parties intend to and hereby do confer jurisdiction upon the courts of any
jurisdiction within the State of Delaware to determine any dispute arising out
of or related to this Agreement, including the enforcement and the breach
hereof.
-7-
<PAGE>
13. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between Employer and Hinrichs and supersedes all prior agreements
and understandings relating to the subject matter hereof.
-8-
<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their hands on the
date first hereinabove mentioned.
GIBRALTAR PACKAGING GROUP, INC.
("Gibraltar")
By: /s/ Walter E. Rose
--------------------------------------
Its: Chairman
--------------------------------------
/s/ Richard D. Hinrichs
--------------------------------------
RICHARD D. HINRICHS ("Hinrichs")
-9-
Exhibit 10.36
GIBRALTAR PACKAGING GROUP, INC.
STOCK APPRECIATION RIGHTS AGREEMENT
This Stock Appreciation Rights Agreement (this "Agreement") is entered
into as of the 15th day of January, 1999, by and between Gibraltar Packaging
Group, Inc., a Delaware corporation (the "Company"), and John W. Lloyd
("Grantee").
RECITALS:
WHEREAS, the Company has adopted the 1998 Stock Appreciation Rights Plan
(the "Plan"), which is administered by the Compensation Committee of the
Company's Board of Directors;
WHEREAS, this Agreement is governed by the Plan and all capitalized terms
used in this Agreement and not otherwise defined have the meanings assigned to
them in the Plan;
WHEREAS, Grantee is an officer or key employee of the Company or one of
its subsidiaries;
WHEREAS, the Company believes that it would advance the interests of the
Company to grant Share Units to Grantee pursuant to the Plan; and
WHEREAS, Grantee desires to obtain the Share Units;
NOW, THEREFORE, the parties agree as follows:
1. Grant of Share Units. The Company hereby grants One Hundred Fifty
Thousand (150,000) Share Units to Grantee subject to all of the terms and
conditions contained in this Agreement and the Plan.
2. Vesting and Maturity Date.
a. Except as provided in ss.2(b) below, the Share Units shall vest as
follows:
i. 20% upon execution of this Agreement;
ii. 20% on the last Saturday to occur in June of each of 1999,
2000, 2001, and 2002; provided, that Grantee is an active
employee of the Company or one of its subsidiaries on each
such anniversary; and
<PAGE>
iii. Prior to the last Saturday to occur in June 2002, upon the
termination of Grantee's employment with the Company for any
reason other then Cause, Grantee shall vest in a pro-rata
number of shares that would have vested on the next
anniversary, which shall be based on the ratio of the number
of days Grantee is employed by the Company in the fiscal year
divided by 360, notwithstanding the forgoing, if there is a
Change in Control within one (1) year following the
termination of Grantee's employment with the Company by the
Company, the Grantee shall be vested in all Share Units.
b. The Share Units shall become immediately fully vested upon the
occurrence of a Change in Control.
c. The Maturity Date of the Units shall be as follows:
i. If there shall be a Change in Control, the Maturity Date shall
be the date upon which such Change in Control occurs;
ii. Grantee's employment with the Company is terminated for any
reason other then Cause prior to the last Saturday to occur in
June 2002, the Maturity Date shall be one year after the date
of such If termination; and
iii. In all other cases the Maturity Date shall be June 30, 2003.
3. Initial Value. The Initial Value of the Share Units shall be as follows:
a. Seventy-Five Thousand Share Units shall be valued at $2.25 each; and
b. Seventy-Five Thousand Share Units shall be valued at $3.00 each.
4. Payment of Unit Value. The Company shall pay to Grantee the Unit Value as
follows:
a. If a Change in Control has occurred while Grantee is employed by the
Company or within one year following the termination of Grantee's
employment to other then Cause, the Unit Value shall be paid in full
upon the date upon which such Change in Control occurs;
b. In all other cases the Unit Value shall be paid in three equal
annual payments, starting upon the Maturity Date, and upon the first
and second yearly anniversary of such Maturity Date, with interest
to be paid at the prime rate and such other terms as the Committee
deems appropriate in its sole discretion.
<PAGE>
5. Maturity Value. The Maturity Value of the Units shall be based upon the
closing price per share of the Common Stock on the NASDAQ national market
system, or such other national securities exchange or association on which
the Stock is then listed (the "Exchange"), as follows:
a. If there shall be a Change in Control, the average closing price for
the 30 day period immediately prior to the date of such Change in
Control;
b. If Grantee's employment with the Company is terminated by the
Company for any reason other then Cause, the average closing price
for the 30 day period immediately prior to the date of the later of
either (i) June 30, 2000, or (ii) the one year anniversary of the
date of such termination;
c. If Grantee's employment with the Company is terminated by the
Grantee, the average closing price for the 30 day period immediately
prior to the date the date of such termination; or
d. In all other cases, the average of the closing price for the three
month period from and including April 1, 2003 to and including June
30, 2003.
6. Representations and Warranties of Grantee. Grantee represents and warrants
that:
a. Grantee is aware that no federal or state agency has made any
finding or determination as to the fairness for public or private
investment in, nor any recommendation or endorsement of, the Units;
and
b. Grantee is aware that the Units are not registered under the
securities or "blue sky" laws of any state or jurisdiction (the
"Blue Sky Laws") as of the date of this Agreement, and the Company
is under no obligation to cause the Units to be registered under the
Securities Act of 1933, as amended (the "Act"), or the Blue Sky
Laws;
7. Transferability. The Units may not be transferred by Grantee other than by
will or the laws of descent and distribution and during the Grantee's
lifetime may be exercised only by Grantee.
8. Miscellaneous.
a. The headings and other captions in this Agreement are for
convenience of reference only and shall not be used in interpreting,
construing or enforcing any of the provisions of this Agreement.
b. No change or modification of this Agreement shall be valid unless
the same is in writing and signed by the Company and Grantee.
<PAGE>
c. No waiver of any provision of this Agreement shall be valid unless
in writing and signed by the person against whom it is sought to be
enforced. The failure of any party at any time to insist upon strict
performance of any condition, promise, agreement or understanding
set forth herein shall not be construed as a waiver or
relinquishment of the right to insist upon strict performance of the
same or other condition, promise, agreement or understanding at a
future time.
d. The provisions of this Agreement relate solely to granting of the
Share Units to Grantee pursuant to the Plan as of the date hereof
and do not address or relate to any conditions of Grantee's
employment with the Company. Nothing in this Agreement or the Plan
shall confer upon Grantee any right or entitlement with respect to
continuation of employment by the Company nor interfere in any way
with the right or power of the Company to terminate Grantee's
employment at any time, with or without cause.
e. This Agreement and the Plan set forth all of the agreements,
warranties and/or representations between the parties hereto with
respect to the Units, and there are no other promises, agreements,
conditions, understandings, warranties or representations, oral or
written, express or implied, between them with respect to the Units
other than as set forth herein and therein. Any and all prior
agreements with respect to the Units are hereby revoked.
f. This Agreement shall be construed and enforced in accordance with
the laws of the State of Ohio.
g. This Agreement may be executed in any number of counterparts, each
of which, when executed, shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer and Grantee has signed this Agreement, all as of
the date first written above.
GIBRALTAR PACKAGING GROUP, INC.
By: /s/ Walter E. Rose
-------------------------------
Its: Chairman
-------------------------------
<PAGE>
GRANTEE
/s/ John W. Lloyd
------------------------------------------
JOHN W. LLOYD
- --------------------------------------------------------------------------------
Exhibit 10.37
GIBRALTAR PACKAGING GROUP, INC.
STOCK APPRECIATION RIGHTS AGREEMENT
This Stock Appreciation Rights Agreement (this "Agreement") is entered
into as of the 15th day of January, 1999, by and between Gibraltar Packaging
Group, Inc., a Delaware corporation (the "Company"), and Richard D. Hinrichs
("Grantee").
RECITALS:
WHEREAS, the Company has adopted the 1998 Stock Appreciation Rights Plan
(the "Plan"), which is administered by the Compensation Committee of the
Company's Board of Directors;
WHEREAS, this Agreement is governed by the Plan and all capitalized terms
used in this Agreement and not otherwise defined have the meanings assigned to
them in the Plan;
WHEREAS, Grantee is an officer or key employee of the Company or one of
its subsidiaries;
WHEREAS, the Company believes that it would advance the interests of the
Company to grant Share Units to Grantee pursuant to the Plan; and
WHEREAS, Grantee desires to obtain the Share Units;
NOW, THEREFORE, the parties agree as follows:
1. Grant of Share Units. The Company hereby grants One Hundred Fifty
Thousand (150,000) Share Units to Grantee subject to all of the terms and
conditions contained in this Agreement and the Plan.
2. Vesting and Maturity Date.
a. Except as provided in ss.2(b) below, the Share Units shall vest as
follows:
i. 20% upon execution of this Agreement;
ii. 20% on the last Saturday to occur in June of each of 1999,
2000, 2001, and 2002; provided, that Grantee is an active
employee of the Company or one of its subsidiaries on each
such anniversary; and
<PAGE>
iii. Prior to the last Saturday to occur in June 2002, upon the
termination of Grantee's employment with the Company for any
reason other then Cause, Grantee shall vest in a pro-rata
number of shares that would have vested on the next
anniversary, which shall be based on the ratio of the number
of days Grantee is employed by the Company in the fiscal year
divided by 360, notwithstanding the forgoing, if there is a
Change in Control within one (1) year following the
termination of Grantee's employment with the Company by the
Company, the Grantee shall be vested in all Share Units.
b. The Share Units shall become immediately fully vested upon the
occurrence of a Change in Control.
c. The Maturity Date of the Units shall be as follows:
i. If there shall be a Change in Control, the Maturity Date shall
be the date upon which such Change in Control occurs;
ii. Grantee's employment with the Company is terminated for any
reason other then Cause prior to the last Saturday to occur in
June 2002, the Maturity Date shall be one year after the date
of such If termination; and
iii. In all other cases the Maturity Date shall be June 30, 2003.
3. Initial Value. The Initial Value of the Share Units shall be as follows:
a. Seventy-Five Thousand Share Units shall be valued at $2.25 each; and
b. Seventy-Five Thousand Share Units shall be valued at $3.00 each.
4. Payment of Unit Value. The Company shall pay to Grantee the Unit Value as
follows:
a. If a Change in Control has occurred while Grantee is employed by the
Company or within one year following the termination of Grantee's
employment to other then Cause, the Unit Value shall be paid in full
upon the date upon which such Change in Control occurs;
b. In all other cases the Unit Value shall be paid in three equal
annual payments, starting upon the Maturity Date, and upon the first
and second yearly anniversary of such Maturity Date, with interest
to be paid at the prime rate and such other terms as the Committee
deems appropriate in its sole discretion.
<PAGE>
5. Maturity Value. The Maturity Value of the Units shall be based upon the
closing price per share of the Common Stock on the NASDAQ national market
system, or such other national securities exchange or association on which
the Stock is then listed (the "Exchange"), as follows:
a. If there shall be a Change in Control, the average closing price for
the 30 day period immediately prior to the date of such Change in
Control;
b. If Grantee's employment with the Company is terminated by the
Company for any reason other then Cause, the average closing price
for the 30 day period immediately prior to the date of the later of
either (i) June 30, 2000, or (ii) the one year anniversary of the
date of such termination;
c. If Grantee's employment with the Company is terminated by the
Grantee, the average closing price for the 30 day period immediately
prior to the date the date of such termination; or
d. In all other cases, the average of the closing price for the three
month period from and including April 1, 2003 to and including June
30, 2003.
6. Representations and Warranties of Grantee. Grantee represents and warrants
that:
a. Grantee is aware that no federal or state agency has made any
finding or determination as to the fairness for public or private
investment in, nor any recommendation or endorsement of, the Units;
and
b. Grantee is aware that the Units are not registered under the
securities or "blue sky" laws of any state or jurisdiction (the
"Blue Sky Laws") as of the date of this Agreement, and the Company
is under no obligation to cause the Units to be registered under the
Securities Act of 1933, as amended (the "Act"), or the Blue Sky
Laws;
7. Transferability. The Units may not be transferred by Grantee other than by
will or the laws of descent and distribution and during the Grantee's
lifetime may be exercised only by Grantee.
8. Miscellaneous.
a. The headings and other captions in this Agreement are for
convenience of reference only and shall not be used in interpreting,
construing or enforcing any of the provisions of this Agreement.
b. No change or modification of this Agreement shall be valid unless
the same is in writing and signed by the Company and Grantee.
<PAGE>
c. No waiver of any provision of this Agreement shall be valid unless
in writing and signed by the person against whom it is sought to be
enforced. The failure of any party at any time to insist upon strict
performance of any condition, promise, agreement or understanding
set forth herein shall not be construed as a waiver or
relinquishment of the right to insist upon strict performance of the
same or other condition, promise, agreement or understanding at a
future time.
d. The provisions of this Agreement relate solely to granting of the
Share Units to Grantee pursuant to the Plan as of the date hereof
and do not address or relate to any conditions of Grantee's
employment with the Company. Nothing in this Agreement or the Plan
shall confer upon Grantee any right or entitlement with respect to
continuation of employment by the Company nor interfere in any way
with the right or power of the Company to terminate Grantee's
employment at any time, with or without cause.
e. This Agreement and the Plan set forth all of the agreements,
warranties and/or representations between the parties hereto with
respect to the Units, and there are no other promises, agreements,
conditions, understandings, warranties or representations, oral or
written, express or implied, between them with respect to the Units
other than as set forth herein and therein. Any and all prior
agreements with respect to the Units are hereby revoked.
f. This Agreement shall be construed and enforced in accordance with
the laws of the State of Ohio.
g. This Agreement may be executed in any number of counterparts, each
of which, when executed, shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer and Grantee has signed this Agreement, all as of
the date first written above.
GIBRALTAR PACKAGING GROUP, INC.
By: /s/ Walter E. Rose
-------------------------------
Its: Chairman
-------------------------------
<PAGE>
GRANTEE
/s/ Richard D. Hinrichs
------------------------------------------
RICHARD D. HINRICHS
- --------------------------------------------------------------------------------
EXHIBIT 10.38
FIRST AMENDMENT TO SECURED CREDIT AGREEMENT
--------------------------------------------
This FIRST AMENDMENT (this "AMENDMENT") TO THE SECURED CREDIT
AGREEMENT, dated as of July 31, 1998 (the "CREDIT AGREEMENT") is made as of
September 1, 1998 by and between GIBRALTAR PACKAGING GROUP, INC., a Delaware
corporation (the "COMPANY") and FIRST SOURCE FINANCIAL LLP, as Agent and a
Lender ("FSFP").
R E C I T A L S:
----------------
WHEREAS, the Company wishes, and FSFP is willing, to amend the
Credit Agreement, subject to the terms and conditions of this Amendment;
WHEREAS, FSFP is the only Lender which is a party to the Credit
Agreement as of the date hereof; and
WHEREAS, this Amendment shall constitute a Related Document and
these Recitals shall be construed as part of this Amendment.
NOW, THEREFORE, in consideration of the foregoing and the
agreements, promises and covenants set forth below, and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Amendment. (a) Section 1.1 of the Credit Agreement is hereby
amended as follows:
(i) by deleting the definition of "Borrowing Base" and
replacing such definition with the following:
"BORROWING BASE" shall mean an amount equal to: (i)
eighty-five percent (85%) of the face amount (less maximum
discounts, credits and allowances which may have been taken by or
granted to Account Debtors in connection therewith) then outstanding
of existing Eligible Accounts, plus (ii) sixty percent (60%) of the
book value of then existing Eligible Inventory (the book value of
Eligible Inventory to be determined at the lower of cost (determined
on a first-in-first-out ("FIFO") basis) or market).
(ii) by deleting the definition of "Required Lenders" and
replacing such definition with the following:
<PAGE>
"REQUIRED LENDERS" shall mean (i) Lenders having sixty-six and
two-thirds percent (66_%) or more of the total Commitments then in
effect or (ii) if the Revolving Commitment has been terminated,
Lenders having in the aggregate sixty-six and two-thirds percent
(66_%) or more of the aggregate outstanding amount of the Loans;
provided, however, the required percentage shall be 100% so long as
(x) there are not more than two Lenders and (y) each such Lender has
(A) twenty percent (20%) or more of the total Commitments then in
effect or (B) if the Revolving Commitment has been terminated,
twenty percent (20%) or more of the aggregate outstanding amount of
the Loans).
(b) Section 9.1 of the Credit Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
SECTION 9.1 ELIGIBLE ACCOUNTS. "ELIGIBLE ACCOUNTS" shall mean
all Accounts of Borrower and each Guarantor other than the following: (i)
Accounts which remain unpaid as of the earlier to occur of ninety (90)
days after the due date specified in the original invoice with respect
thereto or one hundred twenty (120) days after the date of the original
invoice with respect thereto; (ii) all Accounts owing by a single Account
Debtor, including a currently scheduled Account, if twenty-five percent
(25%) or more of the balance owing by such Account Debtor is ineligible by
reason of the criterion set forth in clause (i) of this Section 9.1; (iii)
Accounts with respect to which the Account Debtor is an Affiliate of
either Borrower or a Guarantor or a director, officer or employee of
Borrower, any Guarantor or its Affiliates; (iv) Accounts with respect to
which the Account Debtor is a Governmental Authority or prime contractor
thereof unless Borrower or any Guarantor has complied in a manner
satisfactory to Agent with the Federal Assignment of Claims Act of 1940,
as amended, or similar law or statute of the relevant state, province,
municipality or other jurisdiction and any amendments thereto, relative to
the assignment of such Accounts; (v) Accounts with respect to which the
Account Debtor is not a resident of the United States or Canada (other
than the provinces of Prince Edward Island, Newfoundland and Nova Scotia
and the Northwest Territories) unless such Account is payable in United
States Dollars and the Account Debtor has supplied Borrower or any
Guarantor with an irrevocable letter of credit, issued by a financial
institution satisfactory to the Required Lenders, in an amount sufficient
to cover such Account and in form and substance satisfactory to the
Required Lenders and without right of setoff; (vi) Accounts arising with
respect to goods which have not been shipped and delivered to and accepted
as satisfactory by the Account Debtor or arising with respect to services
which have not been fully performed and accepted as satisfactory by the
Account Debtor; (vii) Accounts for which the prospect of payment in full
or performance in a timely manner by the Account Debtor is or is likely to
become impaired as determined by Agent in the exercise of its discretion;
(viii) Accounts which are not invoiced (and dated as of the date of such
invoice) and sent to the Account Debtor within five (5) days after
delivery of the underlying goods to or performance of the underlying
services for the Account Debtor; (ix) Accounts with respect to which
Agent, on behalf of the Lenders, does not have a first and valid fully
perfected Lien free and clear of any other Lien;
2
<PAGE>
(x) Accounts with respect to which the Account Debtor is the subject of
bankruptcy or a similar insolvency proceeding or has made an assignment
for the benefit of creditors or whose assets have been conveyed to a
receiver or trustee; (xi) Accounts with respect to which the Account
Debtor's obligation to pay the Account is conditional upon the Account
Debtor's approval or is otherwise subject to any repurchase obligation or
return right, as with sales made on a guaranteed sale, bill-and-hold,
sale-or-return, demonstration, sale on approval or other terms by reason
of which the payment by the Account Debtor is or may be conditional
(except with respect to Accounts in connection with which Account Debtors
are entitled to return Inventory solely on the basis of the quality of
such Inventory) or consignment basis; (xii) Accounts to the extent that
the Account Debtor's indebtedness to Borrower or any Guarantor exceeds a
credit limit determined by Agent in Agent's discretion following prior
written notice of such credit limit from Agent to Borrower or such
Guarantor; (xiii) Accounts with respect to which any disclosure is
required in accordance with Section 9.2; (xiv) contra Accounts to the
extent of the amount of the accounts payable owed by Borrower or any
Guarantor to the Account Debtor; (xv) Accounts with respect to which the
Account Debtor is located in Minnesota or any other state denying
creditors access to its courts in the absence of a Notice of Business
Activities Report or other similar filing unless Borrower or any Guarantor
has either qualified as a foreign corporation authorized to transact
business in such state or has filed a Notice of Business Activities Report
or similar filing with the applicable Governmental Authority in such state
for the then current year; (xvi) Accounts evidenced by Chattel Paper or
any Instrument of any kind, to the extent possession of such Chattel Paper
or Instrument is not granted to Agent, for the benefit of the Lenders;
(xvii) Accounts which Agent determines in good faith to be unacceptable
and (xviii) the Accounts do not arise from the sale of Inventory produced
in violation of the Fair Labor Standards Act so as to be subject to the
so-called "hot goods" provision contained in Title 19 U.S.C., Section
215(a)(1). In the event that an Eligible Account previously scheduled in a
Borrowing Base Certificate ceases to be an Eligible Account, Borrower
shall notify, or shall cause the applicable Guarantor to notify, Agent
thereof immediately.
(c) Section 14.1 of the Credit Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
SECTION 14.1 WAIVER; AMENDMENTS. No delay on the part of any Lender
or Agent or any holder of a Note or other Liability 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 a Note or any
Related Document shall in any event be effective unless the same shall be
in writing and signed and delivered by the Required Lenders, 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;
provided that no amendment, waiver or consent shall, unless in writing and
signed by each affected Lender, do any of the following: (i) increase the
Commitment of a Lender or subject a Lender
3
<PAGE>
to any additional obligations, (ii) except as otherwise expressly provided
in this Agreement, reduce the principal of, or interest on, the Notes, any
Reimbursement Obligations or any fees hereunder, (iii) postpone any date
fixed for any payment in respect of principal of, or interest on, the
Notes, any Reimbursement Obligations or any fees hereunder, (iv) change
the percentage of the Commitment, or any minimum requirement, necessary
for the Lenders or the Required Lenders to take any action hereunder, (v)
amend or waive this Section 14.1, or change the definition of Required
Lenders, (vi) increase the percentage of Eligible Accounts or Eligible
Inventory used in determining the Borrowing Base, or (vii) except as
otherwise expressly provided in this Agreement (including without
limitation as provided in Section 11.30 hereof), and other than in
connection with the financing, refinancing, sale or other disposition of
any asset of any Borrower or Subsidiary permitted under this Agreement,
release any Liens in favor of Agent on all or any substantial portion of
the Collateral; provided, further, that no amendment, waiver or consent
affecting the rights or duties of Agent under any Related Documents shall
in any event be effective, unless in writing and signed by Agent, in
addition to the Lenders required hereinabove to take such action.
Notwithstanding any of the foregoing to the contrary, the consent of
Borrower or any Guarantor shall not be required for any amendment,
modification or waiver of the provisions of Section 15.2 (other than the
provisions of Section 15.2.9). In addition, Borrower and the Lenders
hereby authorize Agent to modify this Agreement by unilaterally amending
or supplementing Schedule 1 from time to time in the manner requested by
Borrower, Agent or any Lender in order to reflect any assignments or
transfers of the Loans, as provided for hereunder; provided, however, that
Agent shall promptly deliver a copy of any such modification to Borrower
and each Lender. All Events of Default shall continue until the same are
waived in accordance with this Subsection 14.1.
(d) Section 14.23 of the Credit Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
SECTION 14.23 CONFIDENTIALITY. Borrower agrees that FSFP may
disclose information relating to Borrower to each of the Master Lenders
and the Master Agents which have agreed to use procedures substantially
comparable to those used by them in respect of non-public information as
supplied to them by or on behalf of FSFP to the extent that such
information is not and does not become publicly available and which FSFP
indicates at the time is to be treated confidentially; provided, however,
that each of the Master Lenders, and the Master Agents, as the case may
be, is hereby authorized to deliver a copy of each or any financial
statement of Borrower or any other information relating to the Loans, or
the Collateral, which may be furnished to it hereunder or otherwise to (a)
its legal counsel and auditors and other professional advisors, (b)
governmental or regulatory authorities having jurisdiction over it, (c)
independent financial rating agencies (including, without limitation the
Rating Agencies), (d) any person providing general liquidity or credit
enhancement to the Master Lenders , and (e) (subject to obtaining a
confidentiality agreement containing the foregoing confidentiality
restrictions) any Person to whom a Master Lender proposes to assign all or
any part of its interest or grant a participation in its interest. As used
herein:
4
<PAGE>
"MASTER AGENTS" shall mean Citicorp North America, Inc. ("CNAI"),
Bank of New York and any successor thereto or assignee thereof; "MASTER
LENDER" shall mean any person becoming a party "Lender" to that certain
Second Amended and Restated Credit Agreement dated as of May 24, 1996 (as
amended from time to time, the "MASTER CREDIT AGREEMENT") among First
Source Financial, Inc., FSFP, Master Agents and such Lenders; and "RATING
AGENCIES" shall mean Standard and Poor's and Moody's Ratings Group, a
division of McGraw-Hill, Inc., and Moody's Investors Services, Inc.
Borrower further agrees that Agent and any Lender may disclose information
relating to Borrower (a) to any regulatory authority having jurisdiction
over Agent or such Lender, (b) to any other Person in connection with a
Lender's proposed or actual assignment of, or sale of any participation
in, the Liabilities and (c) to any other Person in connection with the
exercise of Agent's or any Lender's rights hereunder or under any of the
other Related Documents, so long as each such party has agreed to use
procedures substantially comparable to those used by such Person in
respect of non-public information as supplied to such Person by or on
behalf of Agent or such Lender, as the case may be, to the extent that
such information is not and does not become publicly available and which
Agent or such Lender, as the case may be, indicates at the time is to be
treated confidentially.
(e) Section 15.4 of the Credit Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
SECTION 15.4 AGENT'S DISCRETION. In the event Borrower is unable to
comply with (i) the Borrowing Base limitations applicable to it set forth
in Section 2 or (ii) the conditions precedent to the making of a Revolving
Loan, the Lenders authorize Agent, in its sole discretion, to make
Revolving Loans (and Lenders shall fund their Pro Rata Share of such
Revolving Loans upon the request of Agent) (such Revolving Loans are
collectively referred to as "INTERIM REVOLVING LOANS") for a period
commencing on the date Agent first receives a request for an Interim
Revolving Loan until the earlier of (i) the 30th day after such date, or
(ii) the date Borrower is again able to comply with the Borrowing Base
limitations applicable to it and the conditions precedent to the making of
Revolving Loans set forth in Sections 2 and 12 hereof, or obtains an
amendment or waiver with respect thereto (such period, in each case, is
referred to as the "INTERIM REVOLVING LOAN PERIOD"). Agent shall not, in
any event, make any Interim Revolving Loan if at such time the amount of
such Interim Revolving Loan when added to the then aggregate outstanding
principal amount of other Interim Revolving Loans made to all Borrowers
would exceed the lesser of (a) 10% of the amount of the Revolving
Commitment or (b) 10% of the Borrowing Base; provided, that nothing in
this Section 15.4 shall limit Agent's right to make Agent's Advances;
provided, further, that, after giving effect to any Interim Revolving
Loans, the aggregate outstanding principal amount of the Total Revolving
and LC Exposure shall not exceed the aggregate Commitments. All Interim
Revolving Loans shall be Prime Rate Loans. An Interim Revolving Loan shall
cease to be an Interim Revolving Loan (and shall be deemed to be an
Advance consisting of Revolving Loans) if the unsatisfied conditions
5
<PAGE>
giving rise to such Interim Revolving Loan shall thereafter be satisfied
or the events which cause such Loan to be an Interim Revolving Loan shall
thereafter cease to exist. The provisions of this Section 15.4 are solely
for the benefit of Agent and the Lenders, and Borrower shall not have any
rights of a third-party beneficiary of any of the provisions hereof.
(f) Schedule 10.5 to the Credit Agreement is hereby deleted in its
entirety and Schedule 10.5 to this Amendment is substituted therefor.
2. Representations and Warranties of the Company. In order to induce
FSFP to enter into this Amendment, the Company hereby represents and warrants to
FSFP that:
(a) No Default. After giving effect to this Amendment, no Default
or Event of Default shall have occurred or be continuing;
(b) Representations and Warranties. As of the date hereof and after
giving effect to this Amendment, the representations and warranties of the
Company contained in the Credit Agreement and each of the Related Documents are
true, accurate and complete in all respects on and as of the date hereof to the
same extent as though made on and as of such date except to the extent such
representations and warranties specifically relate to an earlier date; and
(c) Corporate Authority; Enforceability. (i) The execution, delivery
and performance by the Company of this Amendment are within the Company's
corporate powers and have been duly authorized by all necessary corporate action
on the part of the Company, (ii) this Amendment is the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms and (iii) neither the execution, delivery or performance by the
Company of this Amendment (1) violates any law or regulation, or any order or
decree of any court or Governmental Authority, (2) conflicts with or results in
the breach or termination of, constitutes a default under or accelerates any
performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which the Company is a party or by which the
Company or any of its property is bound or (3) results in the creation or
imposition of any Lien (other than Liens created by the Collateral Documents and
Permitted Liens) upon any of the assets or property of the Company.
3. Conditions to Effectiveness. The effectiveness of this Amendment
shall be conditioned upon the satisfaction of the conditions set forth in this
Section 3 and the delivery of the following documents to FSFP, in each case in
form and substance satisfactory to FSFP.
(a) Documentation. The Company shall have delivered to FSFP a
counterpart of this Amendment duly executed by the Company.
(b) No Default. No Default or Event of Default under the Credit
Agreement, as amended hereby, shall have occurred and be continuing.
6
<PAGE>
(c) Warranties and Representations. After giving effect to this
Amendment, the respective warranties and representations of the Company
contained in the Related Documents shall be true and correct as of the effective
date hereof, with the same effect as though made on such date, except to the
extent that such warranties and representations expressly relate to an earlier
date, and all of such representations and warranties (except those relating to
an earlier date) are hereby remade by the Company as of the date hereof.
4. Miscellaneous.
(a) Headings. Section headings in this Amendment are included solely
for convenience of reference and are not intended to affect the interpretation
of any provision of this Amendment.
(b) Severability. Whenever possible each provision of this Amendment
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Amendment 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 Amendment.
(c) Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties 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 instrument. Delivery of an
executed counterpart of a signature page to this Amendment by telecopy shall be
effective as delivery of a manually executed counterpart of this Amendment.
(d) Successors and Assigns. This Amendment shall be binding upon,
and shall inure to the sole benefit of, parties hereto and their respective
successors and assigns.
(e) References. Any reference to the Credit Agreement contained in
any notice, request, certificate, or other document executed concurrently with
or after the execution and delivery of this Amendment shall be deemed to include
this Amendment unless the context shall otherwise require.
(f) Continued Effectiveness. This Amendment shall be part of the
Credit Agreement, the terms of which are incorporated herein. Except as
specifically amended above, the Credit Agreement and the other Related Documents
shall remain in full force and effect and are each hereby ratified and
confirmed.
(g) Costs, Expenses and Indemnity. The Company affirms and
acknowledges that Section 14.4 of the Credit Agreement applies to this Amendment
and the agreements and documents contemplated hereunder.
7
<PAGE>
(h) Incorporation of Credit Agreement. The provisions contained in
Sections 14.6, 14.7 and 14.11 of the Credit Agreement are incorporated herein by
reference to the same extent as if reproduced herein in their entirety.
(i) Capitalized Terms. Capitalized terms used but not otherwise
defined in this Amendment shall have the meanings ascribed to them in the Credit
Agreement.
(j) Entire Agreement. This Amendment constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all other understandings, oral or written, with respect to the
subject matter hereof.
* * * * *
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
GIBRALTAR PACKAGING GROUP, INC.
By: /s/ John W. Lloyd
Name Printed: John W. Lloyd
---------------------------
Title: Executive Vice President, Secretary &
Treasurer
FIRST SOURCE FINANCIAL LLP,
as Agent and a Lender
By: First Source Financial, Inc.
Its: Manager
By: /s/ John P. Thacker
Name Printed: John P. Thacker
---------------------------
Title: Senior Vice President
<PAGE>
SCHEDULE 10.5
--------------
LIENS
Agent has elected not to take a mortgage on the real property owned by GB
Labels, Inc. in Burlington, North Carolina.
EXHIBIT 10.39
SECOND AMENDMENT TO SECURED CREDIT AGREEMENT
--------------------------------------------
This Second Amendment to Secured Credit Agreement (this "Agreement")
is dated as of November 15, 1998 by and among Gibraltar Packaging Group, Inc.,
a Delaware corporation (the "BORROWER"), the financial institutions parties to
the Credit Agreement (as defined herein) (collectively, the "LENDERS" and
individually, a "LENDER") and First Source Financial LLP, as Agent for the Banks
(the "AGENT").
RECITALS
--------
WHEREAS, the Borrower, the Agent and the Lenders are parties to that
certain Secured Credit Agreement, dated as of July 31, 1998 (the "ORIGINAL
CREDIT AGREEMENT"), as amended by that certain First Amendment to Secured Credit
Agreement, dated as of September 1, 1998 (the "FIRST AMENDMENT"; the Original
Credit Agreement, as amended by the First Amendment, is collectively referred to
herein as the "SECURED CREDIT AGREEMENT"), among the Borrower, the Agent and the
Lenders;
WHEREAS, the Borrower wishes, and the Agent and the Lenders are
willing, to amend certain provisions of the Secured Credit Agreement and to
waive certain provisions of the Secured Credit Agreement, all on the terms and
conditions set forth in this Agreement.
WHEREAS, First Source Financial LLP and LaSalle Business Credit,
Inc. are the only Lenders which are parties to the Secured Credit Agreement as
of the date hereof; and
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties hereto agree as follows:
AGREEMENT
---------
1. Definitions. Capitalized terms used but not otherwise defined
herein shall have the meanings as set forth in the Secured Credit Agreement.
2. Waiver. The Lenders hereby waive any Unmatured Event of Default
or Event of Default caused by the Borrower's failure to comply with the Net
Worth, Debt to EBITDA Ratio or Interest Coverage Ratio covenants set forth in
Sections 11.32(a), (b) and (c) of the Secured Credit Agreement through September
30, 1998.
<PAGE>
3. Amendment to Secured Credit Agreement. Section 11.32(a) of the
Credit Agreement is hereby amended by deleting it in its entirety and replacing
it with the following:
(a) Net Worth. Maintain a Net Worth at all times during each
period listed below of at least the amounts set forth opposite such
period:
PERIODS (ALL DATES MINIMUM
ARE INCLUSIVE) NET WORTH
Fiscal Quarter ending December 31, 1998 $ 13,400,000
Fiscal Quarter ending March 31, 1999 $ 13,400,000
Fiscal Quarter ending July 3, 1999 $ 13,400,000
July 4, 1999 through July 2, 2000 $ 13,900,000
July 3, 2000 through June 30, 2001 $ 14,900,000
July 1, 2001 through June 29, 2002 $ 15,900,000
June 30, 2002 and thereafter $ 17,900,000
4. Representations and Warranties. To induce the Agent and the Lenders to
enter into this Agreement and to make all future Loans under the Secured Credit
Agreement, the Borrower represents and warrants to the Agent and the Lenders
that:
(a) Due Authorization, etc. The execution, delivery and performance by the
Borrower of this Agreement executed as of the date hereof are within its
corporate powers, have been duly authorized by all necessary corporate action
(including without limitation, shareholder approval), have received all
necessary governmental approval (if any shall be required), and do not and will
not contravene or conflict with any Requirement of Law or Contractual Obligation
binding upon such entity. This Agreement is the legal, valid, and binding
obligation of the Borrower enforceable against the Borrower in accordance with
its respective terms.
(b) Certain Agreements. To the best of the Borrower's knowledge, on the
date hereof all warranties of the Borrower thereto set forth in the Secured
Credit Agreement are true and correct in all material respects, without any
waiver or modification thereof and no default of any party exists under the
Secured Credit Agreement or any Related Document.
(c) Financial Information. All balance sheets, all statement of
operations, of shareholders' equity and of changes in financial position, and
other financial data which have been or shall hereafter be furnished to the
Agent for the purposes of or in connection with this Agreement have been and
will be prepared in accordance with GAAP consistently applied throughout the
periods
2
<PAGE>
involved and do and will, present fairly the financial condition of the entities
involved as of the dates thereof and the results of their operations for the
periods covered thereby.
(d) Litigation. No material litigation (including, without limitation,
derivative actions), arbitrations, governmental investigation or proceeding or
inquiry shall, on the date hereof, be pending which was not previously disclosed
in writing to the Agent and no material adverse development shall have occurred
in any litigation (including, without limitation, derivative actions),
arbitration, government investigations, or proceeding or inquiry previously
disclosed to the Agent in writing.
5. Conditions to Effectiveness. This Agreement shall be effective as of
September 30, 1998 upon the satisfaction of the conditions set forth in this
Section 5 and delivery of the following documents to the Agent on or prior to
the date hereof (unless another date is specified), in form and substance
satisfactory to the Agent and the Lenders:
(a) Agreement. The Borrower shall have delivered to the Agent executed
originals of this Agreement.
(b) Consents and Acknowledgments. The Borrower shall have obtained all
consents, approvals and acknowledgments which may be required with respect to
the execution, delivery and performance of this Agreement.
(c) No Default. As of the date hereof after giving effect to this
Agreement and the waiver set forth in Section 2 hereof, no Unmatured Event of
Default or Event of Default under any Related Document shall have occurred and
be continuing.
(d) Amendment Fee. The Borrower shall have delivered to the Agent for the
benefit of the Lenders, on or before November 15, 1998, an amendment fee of
$20,000.
6. Affirmation of Guaranties.
-------------------------
Each Guarantor (i) consents to and approves the execution and delivery of
this Agreement by the Borrower, the Agent and the Lenders, (ii) agrees that this
Agreement does not and shall not limit or diminish in any manner its obligations
under its Guaranty or under any of the other Related Documents to which it is a
party, (iii) agrees that this Agreement shall not be construed as requiring the
consent of any Guarantor in any other circumstance, (iv) reaffirms its
obligations under its Guaranty and all of the other Related Documents to which
it is a party, and (v) agrees that its Guaranty and such other Related Documents
remain in full force and effect and are each hereby ratified and confirmed.
7. Miscellaneous.
-------------
(a) Captions. Section captions used in this Agreement are for convenience
only, and shall not affect the construction of this Agreement.
3
<PAGE>
(b) Governing Law. This Agreement shall be a contract made under and
governed by the laws of the State of Illinois, without regard to conflict of
laws principles. Wherever possible each provision of this Agreement shall be
interpreted in such manner 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 provisions or the
remaining provision of this Agreement.
(c) Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties 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. Delivery of an executed
counterpart of a signature page to this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.
(d) Successors and Assignees. This Agreement shall be binding upon the
Borrower, the Agent, the Lenders and their respective successors and assignees,
and shall inure to the sole benefit of the Borrower, the Agent, the Lenders and
their successors and assignees.
(e) References. Any reference to the Secured Credit Agreement contained in
any notice, request, certificate, or other document executed concurrently with
or after the execution and delivery of this Agreement shall be deemed to include
this Agreement unless the context shall otherwise require.
(f) Continued Effectiveness. Notwithstanding anything contained herein,
the terms of this Agreement are not intended to and do not serve to effect a
novation as to the Secured Credit Agreement, any Note or any of the Collateral
Documents provided to furnish security therefor. The parties hereto expressly do
not intend to extinguish the Secured Credit Agreement, any Note or the
Collateral Documents. Instead, it is the express intention of the parties hereto
to reaffirm the existence of the indebtedness created under the Secured Credit
Agreement which is evidenced by Notes and secured by the various Collateral
Documents. The Secured Credit Agreement and each of the Related Documents as
amended hereby remain in full force and effect. The execution, delivery and
effectiveness of this Agreement shall not operate as a waiver of any right,
power or remedy of the Lenders or the Agent under the Secured Credit Agreement
or any Related Document to which the Lenders and the Agent are a party nor,
except as set forth in Section 2 hereof, constitute a waiver of any provision in
or Event of Default or Unmatured Event of Default (now or hereafter existing)
under the terms of the Secured Credit Agreement or any Related Document.
(g) Fees and Expenses. In accordance with Section 14.4 of the Secured
Credit Agreement, the Borrower agrees to pay on demand all fees, costs and
expenses incurred by the Agent and the Lenders in connection with the
preparation, execution and delivery of this Agreement.
* * * * *
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
GIBRALTAR PACKAGING GROUP, INC., as Borrower
By: /s/ John W. Lloyd
Name Printed: John W. Lloyd
-------------------------------
Title: Executive Vice President, Secretary &
Treasurer
FIRST SOURCE FINANCIAL LLP,
as Agent and a Lender
By: First Source Financial, Inc.
Its: Manager
By: /s/ John P. Thacker
Name Printed: John P. Thacker
--------------------------------
Title: Senior Vice President
LASALLE BUSINESS CREDIT, INC.,
as a Lender
By: /s/ Ellen T. Cook
Name Printed: Ellen T. Cook
---------------------------------
Title: Vice President
RIDGEPAK CORPORATION, as a Guarantor
By: /s/ John W. Lloyd
Name Printed: John W. LLoyd
---------------------------------
Title: Secretary
<PAGE>
NIEMAND HOLDINGS, INC., as a Guarantor
By: /s/ John W. Lloyd
Name Printed: John W. Lloyd
---------------------------
Title: Secretary
NIEMAND INDUSTRIES, INC., as a Guarantor
By: /s/ John W. Lloyd
Name Printed: John W. Lloyd
---------------------------
Title: Secretary
GB LABELS, INC., as a Guarantor
By: /s/ John W. Lloyd
Name Printed: John W. Lloyd
---------------------------
Title: Secretary
STANDARD PACKAGING AND PRINTING CORP., as a
Guarantor
By: /s/ John W. Lloyd
Name Printed: John W. Lloyd
---------------------------
Title: Secretary
EXHIBIT 10.40
THIRD AMENDMENT TO SECURED CREDIT AGREEMENT
-------------------------------------------
This Third Amendment to Secured Credit Agreement (this "AGREEMENT")
is dated as of February 11, 1999 by and among Gibraltar Packaging Group, Inc., a
Delaware corporation (the "BORROWER"), the financial institutions parties to the
Credit Agreement (as defined herein) (collectively, the "LENDERS" and
individually, a "LENDER") and First Source Financial LLP, as Agent for the
Lenders (the "AGENT").
RECITALS
WHEREAS, the Borrower, the Agent and the Lenders are parties to that
certain Secured Credit Agreement, dated as of July 31, 1998 (the "ORIGINAL
CREDIT AGREEMENT"), as amended by that certain First Amendment to Secured Credit
Agreement, dated as of September 1, 1998 (the "FIRST AMENDMENT") and that
certain Second Amendment to Secured Credit Agreement, dated as of November 13,
1998 (the "SECOND AMENDMENT"; the Original Credit Agreement, as amended by the
First Amendment and the Second Amendment, is collectively referred to herein as
the "SECURED CREDIT AGREEMENT"), among the Borrower, the Agent and the Lenders;
WHEREAS, the Borrower wishes, and the Agent and the Lenders are
willing, to amend certain provisions of the Secured Credit Agreement and to
waive compliance with certain provisions of the Secured Credit Agreement, all on
the terms and conditions set forth in this Agreement.
WHEREAS, First Source Financial LLP and LaSalle Business Credit,
Inc. are the only Lenders which are parties to the Secured Credit Agreement as
of the date hereof; and
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties hereto agree as follows:
AGREEMENT
1. Definitions. Capitalized terms used but not otherwise defined herein
shall have the meanings as set forth in the Secured Credit Agreement.
2. Waiver. The Lenders hereby waive any Unmatured Event of Default or
Event of Default caused by the Borrower's failure to comply with the Debt to
EBITDA Ratio or Interest Coverage Ratio covenants set forth in Sections 11.32(b)
and (c) of the Secured Credit Agreement through December 31, 1998; provided,
however, that the Borrower may not incur or continue any
<PAGE>
LIBOR Rate Loans (or convert any Prime Rate Loans into LIBOR Rate Loans) from
the date hereof until the date on which the Borrower demonstrates to the Agent
and the Lenders, by the delivery of a Compliance Certificate and the financial
statements required under Section 11.1(b), its compliance with the financial
covenants set forth in Sections 11.32(b) and (c), as amended hereby.
3. Amendments to Secured Credit Agreement.
(a) Section 11.32(b) of the Credit Agreement is hereby amended by deleting
it in its entirety and replacing it with the following:
(b) Debt to EBITDA Ratio. Not permit the Debt to
EBITDA Ratio for any period set forth below to be more than the ratio
listed below opposite such period:
MAXIMUM
RATIO
PERIOD(S) (ALL DATES ARE INCLUSIVE) (TO 1.0)
Fiscal Quarter ending March 31, 1999 5.60:1.0
Fiscal Quarter ending July 3, 1999 5.30:1.0
Each Fiscal Quarter of Fiscal Year 2000 3.50:1.0
Each Fiscal Quarter of Fiscal Year 2001 3.00:1.0
Each Fiscal Quarter of Fiscal Year 2002 2.50:1.0
Fiscal Quarter ending on June 30, 2002 2.50:1.0
and each Fiscal Quarter thereafter
(b) Section 11.32(c) of the Credit Agreement is hereby amended by deleting
it in its entirety and replacing it with the following:
(c) Interest Coverage Ratio. Not permit the Interest Coverage
Ratio measured on the last day of any month for any twelve (12) month
period (or, in the case of months ending before July 3, 1999, for the
period from and including June 27, 1998, to and including the last day of
such month) ending on the last day of such month to be less than the ratio
listed below opposite the period including such month:
MINIMUM
RATIO
PERIOD(S) (ALL DATES ARE INCLUSIVE) (TO 1.0)
2
<PAGE>
Fiscal Quarter ending March 31, 1999 1.79:1.0
Fiscal Quarter ending July 3, 1999 1.79:1.0
July 4, 1999 through July 2, 2000 2.25:1.0
July 3, 2000 through June 30, 2001 2.50:1.0
July 1, 2001 through June 29, 2002 2.50:1.0
June 30, 2002 and thereafter 2.50:1.0
(c) Section 11.32(d) of the Credit Agreement is hereby amended by deleting
it in its entirety and replacing it with the following:
(d) Fixed Charge Coverage Ratio. Not permit the Fixed Charge
Coverage Ratio measured on the last day of any month for any twelve (12) month
period (or, in the case of months ending before July 3, 1999, for the period
from and including June 27, 1998, to and including the last day of each month)
ending on the last day of such month to be less than the ratio listed below
opposite the period including such month:
MINIMUM
RATIO
PERIOD(S) (ALL DATES ARE INCLUSIVE) (TO 1.0)
Fiscal Quarter ending March 31, 1999 1.00:1.0
Fiscal Quarter ending July 3, 1999 1.00:1.0
July 4, 1999 through July 2, 2000 1.05:1.0
July 3, 2000 through June 30, 2001 1.10:1.0
July 1, 2001 through June 29, 2002 1.10:1.0
June 30, 2002 and thereafter 1.10:1.0
(d) Item IV of Exhibit 11.1(e) of the Credit Agreement is hereby amended
by deleting it in its entirety and replacing it with the following:
IV. Section 11.32(d) - Minimum Fixed Charge Coverage Ratio
Period Covered (Computation Period):
As of ___________, _____
A. EBITDA for such period:
3
<PAGE>
B. Net Capital Expenditures for such period: $___________
C. A. minus B.: $___________
D. Total Fixed Charges for such period: $___________
E. Ratio of C. to D.:
Minimum Fixed Charge Coverage Ratio
shown for relevant period in column
captioned "RATIO" in SECTION
11.32(D): ___________
4. Representations and Warranties. To induce the Agent and the Lenders to
enter into this Agreement and to make all future Loans under the Secured Credit
Agreement, the Borrower represents and warrants to the Agent and the Lenders
that:
(a) Due Authorization, etc. The execution, delivery and performance by the
Borrower of this Agreement executed as of the date hereof are within its
corporate powers, have been duly authorized by all necessary corporate action
(including without limitation, shareholder approval, if any shall be required),
have received all necessary governmental approval (if any shall be required),
and do not and will not contravene or conflict with any Requirement of Law or
Contractual Obligation binding upon such entity. This Agreement is the legal,
valid, and binding obligation of the Borrower enforceable against the Borrower
in accordance with its respective terms.
(b) Certain Agreements. To the best of the Borrower's knowledge, on the
date hereof all warranties of the Borrower thereto set forth in the Secured
Credit Agreement are true and correct in all material respects, without any
waiver or modification thereof and no default of any party exists under the
Secured Credit Agreement or any Related Document.
(c) Financial Information. All balance sheets, all statement of
operations, of shareholders' equity and of changes in financial position, and
other financial data which have been or shall hereafter be furnished to the
Agent for the purposes of or in connection with this Agreement have been and
will be prepared in accordance with GAAP consistently applied throughout the
periods involved and do and will, present fairly the financial condition of the
entities involved as of the dates thereof and the results of their operations
for the periods covered thereby.
(d) Litigation. No material litigation (including, without limitation,
derivative actions), arbitrations, governmental investigation or proceeding or
inquiry shall, on the date hereof, be pending which was not previously disclosed
in writing to the Agent and no material adverse development shall have occurred
in any litigation (including, without limitation, derivative actions),
arbitration, government investigations, or proceeding or inquiry previously
disclosed to the Agent in writing.
4
<PAGE>
5. Conditions to Effectiveness. This Agreement shall be effective as of
December 31, 1998 upon the satisfaction of the conditions set forth in this
Section 5 and delivery of the following documents to the Agent on or prior to
the date hereof (unless another date is specified), in form and substance
satisfactory to the Agent and the Lenders:
(a) Agreement. The Borrower shall have delivered to the Agent executed
originals of this Agreement.
(b) Consents and Acknowledgments. The Borrower shall have obtained all
consents, approvals and acknowledgments which may be required with respect to
the execution, delivery and performance of this Agreement.
(c) No Default. As of the date hereof after giving effect to this
Agreement and the waiver set forth in Section 2 hereof, no Unmatured Event of
Default or Event of Default under any Related Document shall have occurred and
be continuing.
(d) Amendment Fee. The Borrower shall have delivered to the Agent for the
benefit of the Lenders, on or before February ___, 1999, an amendment fee of
$20,000.
6. Affirmation of Guaranties.
Each Guarantor (i) consents to and approves the execution and delivery of
this Agreement by the Borrower, the Agent and the Lenders, (ii) agrees that this
Agreement does not and shall not limit or diminish in any manner its obligations
under its Guaranty or under any of the other Related Documents to which it is a
party, (iii) agrees that this Agreement shall not be construed as requiring the
consent of any Guarantor in any other circumstance, (iv) reaffirms its
obligations under its Guaranty and all of the other Related Documents to which
it is a party, and (v) agrees that its Guaranty and such other Related Documents
remain in full force and effect and are each hereby ratified and confirmed.
7. Miscellaneous.
(a) Captions. Section captions used in this Agreement are for convenience
only, and shall not affect the construction of this Agreement.
(b) Governing Law. This Agreement shall be a contract made under and
governed by the laws of the State of Illinois, without regard to conflict of
laws principles. Wherever possible each provision of this Agreement shall be
interpreted in such manner 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 provisions or the
remaining provision of this Agreement.
5
<PAGE>
(c) Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties 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. Delivery of an executed
counterpart of a signature page to this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.
(d) Successors and Assignees. This Agreement shall be binding upon the
Borrower, the Agent, the Lenders and their respective successors and assignees,
and shall inure to the sole benefit of the Borrower, the Agent, the Lenders and
their successors and assignees.
(e) References. Any reference to the Secured Credit Agreement contained in
any notice, request, certificate, or other document executed concurrently with
or after the execution and delivery of this Agreement shall be deemed to include
this Agreement unless the context shall otherwise require.
(f) Continued Effectiveness. Notwithstanding anything contained herein,
the terms of this Agreement are not intended to and do not serve to effect a
novation as to the Secured Credit Agreement, any Note or any of the Collateral
Documents provided to furnish security therefor. The parties hereto expressly do
not intend to extinguish the Secured Credit Agreement, any Note or the
Collateral Documents. Instead, it is the express intention of the parties hereto
to reaffirm the existence of the indebtedness created under the Secured Credit
Agreement which is evidenced by Notes and secured by the various Collateral
Documents. The Secured Credit Agreement and each of the Related Documents as
amended hereby remain in full force and effect. The execution, delivery and
effectiveness of this Agreement shall not operate as a waiver of any right,
power or remedy of the Lenders or the Agent under the Secured Credit Agreement
or any Related Document to which the Lenders and the Agent are a party nor,
except as set forth in Section 2 hereof, constitute a waiver of any provision in
or Event of Default or Unmatured Event of Default (now or hereafter existing)
under the terms of the Secured Credit Agreement or any Related Document.
(g) Fees and Expenses. In accordance with Section 14.4 of the Secured
Credit Agreement, the Borrower agrees to pay on demand all fees, costs and
expenses incurred by the Agent and the Lenders in connection with the
preparation, execution and delivery of this Agreement.
* * * * *
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
GIBRALTAR PACKAGING GROUP, INC., as
Borrower
By: /s/ John W. Lloyd
Name Printed: John W. Lloyd
Title: Executive VP, Secretary and Treasurer
FIRST SOURCE FINANCIAL LLP,
as Agent and a Lender
By: First Source Financial, Inc.
Its: Manager
By: /s/ John P. Thacker
Name Printed: John P. Thacker
Title: Senior Vice President
LASALLE BUSINESS CREDIT, INC.,
as a Lender
By: /s/ Ellen T. Cook
Name Printed: Ellen T. Cook
Title: Vice President
RIDGEPAK CORPORATION, as a Guarantor
By: /s/ John W. Lloyd
Name Printed: John W. Lloyd
Title: Secretary
S-1
[TO THIRD AMENDMENT TO SECURED CREDIT AGREEMENT]
<PAGE>
NIEMAND HOLDINGS, INC., as a Guarantor
By: /s/ John W. Lloyd
Name Printed: John W. Lloyd
Title: Secretary
NIEMAND INDUSTRIES, INC., as a Guarantor
By: /s/ John W. Lloyd
Name Printed: John W. Lloyd
Title: Secretary
GB LABELS, INC., as a Guarantor
By: /s/ John W. Lloyd
Name Printed: John W. Lloyd
Title: Secretary
STANDARD PACKAGING AND PRINTING
CORP., as a Guarantor
By: /s/ John W. Lloyd
Name Printed: John W. Lloyd
Title: Secretary
S-2
[TO THIRD AMENDMENT TO SECURED CREDIT AGREEMENT]
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-03-1999
<PERIOD-START> JUN-28-1998
<PERIOD-END> DEC-31-1998
<CASH> 496
<SECURITIES> 0
<RECEIVABLES> 7,362
<ALLOWANCES> 212
<INVENTORY> 11,661
<CURRENT-ASSETS> 21,027
<PP&E> 43,583
<DEPRECIATION> 18,973
<TOTAL-ASSETS> 60,163
<CURRENT-LIABILITIES> 13,351
<BONDS> 0
0
0
<COMMON> 50
<OTHER-SE> 13,554
<TOTAL-LIABILITY-AND-EQUITY> 60,163
<SALES> 39,165
<TOTAL-REVENUES> 39,165
<CGS> 32,986
<TOTAL-COSTS> 32,986
<OTHER-EXPENSES> 5,010
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,705
<INCOME-PRETAX> (536)
<INCOME-TAX> (122)
<INCOME-CONTINUING> (414)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (414)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-27-1998
<PERIOD-START> JUN-29-1997
<PERIOD-END> JUN-27-1998
<CASH> 114
<SECURITIES> 0
<RECEIVABLES> 7,982
<ALLOWANCES> 162
<INVENTORY> 10,667
<CURRENT-ASSETS> 19,976
<PP&E> 43,279
<DEPRECIATION> 17,917
<TOTAL-ASSETS> 59,371
<CURRENT-LIABILITIES> 15,007
<BONDS> 0
0
0
<COMMON> 50
<OTHER-SE> 13,968
<TOTAL-LIABILITY-AND-EQUITY> 59,371
<SALES> 75,890
<TOTAL-REVENUES> 75,890
<CGS> 64,138
<TOTAL-COSTS> 64,138
<OTHER-EXPENSES> 26,384
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,016
<INCOME-PRETAX> (18,648)
<INCOME-TAX> (1,435)
<INCOME-CONTINUING> (17,213)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,213)
<EPS-PRIMARY> (3.41)
<EPS-DILUTED> (3.41)
</TABLE>
