SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended April 1, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from ___________ to
___________
Commission File Number 0-6187
BANTA CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 39-0148550
- ------------------------------- -------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) I.D. Number)
225 Main Street, Menasha, Wisconsin 54952
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (920) 751-7777
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
The registrant had outstanding on April 1, 2000, 25,205,503 shares of
$.10 par value common stock.
<PAGE>
BANTA CORPORATION AND SUBSIDIARIES
Quarterly Report on Form 10-Q
For the Quarter Ended April 1, 2000
INDEX
Page
Number
------
PART I FINANCIAL INFORMATION:
Item 1 - Financial Statements
Unaudited Consolidated Condensed Balance Sheets
April 1, 2000 and January 1, 2000 ....................................3
Unaudited Consolidated Condensed Statements of Earnings for
the Three Months Ended April 1, 2000 and April 3, 1999 ................4
Unaudited Consolidated Condensed Statements of Cash Flows
for the Three Months Ended April 1, 2000 and April 3, 1999.............5
Notes to Unaudited Consolidated Condensed
Financial Statements ................................................6-8
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations ...................................9-10
Item 3 - Quantitative and Qualitative Disclosures about Market Risk........11
PART II OTHER INFORMATION AND SIGNATURES:
Item 6 - Exhibits and Reports on Form 8-K..................................11
Exhibit Index ................................................................12
<PAGE>
PART I Item 1. Financial Statements
BANTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
April 1, January 1,
2000 2000
-------- ----------
ASSETS
Current Assets
Cash and cash equivalents $ 24,261 $ 27,651
Receivables, net 216,280 218,047
Inventories 93,424 86,094
Other current assets 24,089 24,069
--------- ---------
Total Current Assets 358,054 355,861
--------- ---------
Plant and Equipment 835,325 811,800
Less accumulated depreciation (499,670) (484,450)
--------- ---------
Plant and Equipment, net 335,655 327,350
Other Assets 35,440 31,111
Cost in Excess of Net Assets of
Subsidiaries Acquired 58,086 59,022
-------- ---------
$ 787,235 $ 773,344
========= =========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities
Short-term debt $ 81,656 $ 88,499
Accounts payable 103,467 96,456
Accrued salaries and wages 29,343 31,848
Other accrued liabilities 30,659 21,435
Current maturities of long-term debt 5,931 7,115
--------- ---------
Total Current Liabilities 251,056 245,353
--------- ---------
Long-term Debt 133,475 113,520
Deferred Income Taxes 16,771 20,382
Other Non-Current Liabilities 39,549 40,314
--------- ---------
Total Liabilities 440,851 419,569
--------- ---------
Shareholders' Investment
Preferred stock-$10 par value;
authorized 300,000 shares; none issued 0 0
Common stock-$.10 par value;
Authorized 75,000,000 shares;
25,205,503 and 25,825,803 shares issued
and outstanding, respectively 2,521 2,583
Accumulated other comprehensive loss (7,855) (6,389)
Treasury stock (54,689) (42,790)
Retained earnings 406,407 400,371
--------- ---------
Total Shareholders' Investment 346,384 353,775
--------- ---------
$ 787,235 $ 773,344
========= =========
See accompanying notes to consolidated financial statements
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BANTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
(Dollars in thousands,
except per share amounts)
Three Months Ended
April 1, April 3,
2000 1999
-------- --------
Net sales $ 328,784 $ 309,286
Cost of goods sold 262,277 247,591
--------- ---------
Gross earnings 66,507 61,695
Selling and administrative expenses 45,870 42,304
--------- ---------
Earnings from operations 20,637 19,391
Interest expense
3,890 2,947
Other expense, net
353 432
--------- ---------
Earnings before income taxes 16,394 16,012
Provision for income taxes 6,500 6,300
--------- ---------
Net earnings $ 9,894 $ 9,712
========= =========
Basic earnings per share of common stock $ .39 $ .35
========= =========
Diluted earnings per share of common stock $ .39 $ .35
========= =========
Cash dividends per common share $ .15 $ .14
========= =========
See accompanying notes to consolidated financial statements
<PAGE>
BANTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three Months Ended
April 1, April 3,
2000 1999
-------- --------
Cash Flows From Operating Activities
Net earnings $ 9,894 $ 9,712
Depreciation and amortization 18,107 17,172
Deferred income taxes (2,505) (597)
Cash paid for restructuring (1,862) -
Change in assets and liabilities:
Decrease in receivables 1,767 34,334
(Increase) decrease in inventories (7,330) 1,803
Increase in other current assets (1,126) (1,741)
Increase (decrease) in accounts payable
and accrued liabilities 14,827 (18,048)
(Increase) decrease in other non-current assets (634) 263
Other, net (1,181) (1,327)
-------- --------
Cash provided from operating activities 29,957 41,571
-------- --------
Cash Flows From Investing Activities
Capital expenditures, net (25,761) (17,051)
Additions to long-term investments (3,695) (1,125)
-------- --------
Cash used for investing activities (29,456) (18,176)
-------- --------
Cash Flows From Financing Activities
Repayment of short-term debt, net (6,843) (2,275)
Proceeds from issuance of long-term debt 20,000 -
Repayment of long-term debt (1,229) (137)
Dividends paid (3,858) (3,950)
Proceeds from exercise of stock options - 55
Repurchase of common stock (11,961) (15,554)
-------- --------
Cash used for financing activities (3,891) (21,861)
-------- --------
Net (decrease) increase in cash (3,390) 1,534
Cash and cash equivalents at beginning of period 27,651 26,584
-------- --------
Cash and cash equivalents at end of period $ 24,261 $ 28,118
======== ========
Cash payments for:
Interest, net of amount capitalized $ 2,007 $ 2,035
Income taxes 3,341 1,373
See accompanying notes to consolidated statements
<PAGE>
BANTA CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1) Basis of Presentation
The condensed financial statements included herein have been prepared by
the Corporation, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Corporation believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these condensed
financial statements be read in conjunction with the financial statements
and the notes thereto included in the Corporation's latest Annual Report on
Form 10-K.
In the opinion of management, the aforementioned statements reflect all
adjustments (consisting only of normal recurring adjustments) necessary for
a fair presentation of the results for the interim periods. Results for the
three months ended April 1, 2000, are not necessarily indicative of results
that may be expected for the year ending December 30, 2000.
2) Inventories
The Corporation's inventories are stated at the lower of cost or market
using the first-in, first-out (FIFO) method. Inventories include material,
labor and manufacturing overhead.
Inventory amounts at April 1, 2000 and January 1, 2000 were as follows:
(Dollars in thousands)
April 1, January 1,
2000 2000
-------- ----------
Raw Materials and Supplies $ 57,100 $ 51,425
Work-In-Process and Finished Goods 36,324 34,669
-------- --------
FIFO value (current cost of all inventories) $ 93,424 $ 86,094
======== ========
3) Earnings Per Share of Common Stock
Basic earnings per share of common stock is computed by dividing net
earnings by the weighted average number of common shares outstanding during
the period. Diluted earnings per share of common stock is computed by
dividing net earnings by the weighted average number of common shares and
common equivalent shares outstanding. The common equivalent shares relate
entirely to the assumed exercise of stock options.
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The weighted average shares used in the computation of earnings per share
were as follows (in millions of shares):
April 1, 2000 April 3, 1999
------------- -------------
Basic 25.5 27.9
Diluted 25.5 27.9
4) Comprehensive Income
Total comprehensive income, comprised of net income and other comprehensive
income (loss), was $8,428,000 and $7,321,000 for the first quarter of 2000
and 1999, respectively. Other comprehensive income (loss) was comprised
solely of foreign currency translation adjustments. The Corporation does
not provide U.S. income taxes on foreign currency translation adjustments
because it does not provide for such taxes on undistributed earnings of
foreign subsidiaries.
5) Segment Information
The Corporation operates in two primary business segments, print and
turnkey services, with other business operations in healthcare products.
Summarized segment data for the three months ended April 1, 2000 and April
3, 1999 are as follows:
Turnkey
Dollars in thousands Printing Services Healthcare Total
---------------------------------------------------------------------------
2000
Net sales $245,016 $60,009 $23,759 $328,784
Intersegment sales 877 - - 877
Earnings from operations 20,732 1,223 2,615 24,570
1999
Net sales $236,420 $47,069 $25,797 $309,286
Intersegment sales 1,301 4 - 1,305
Earnings from operations 19,321 265 3,908 23,494
The following table presents a reconciliation of segment earnings from
operations to the totals contained in the condensed financial statements:
Dollars in thousands 2000 1999
Reportable segment earnings $24,570 $23,494
Unallocated corporate expenses (3,933) (4,103)
Interest expense (3,890) (2,947)
Other income (expense) (353) (432)
------- -------
Earnings before income taxes $16,394 $16,012
======= =======
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6) Restructuring Charge
In the second quarter of 1999, the Corporation recorded a restructuring
charge of $55 million ($38.5 million or $1.40 diluted share, after tax).
The restructuring primarily involved the Corporation's print segment and
resulted in three facility closings and the elimination of certain
underperforming business assets. The restructuring also resulted in
workforce reductions of approximately 650 employees (350 employees at the
three facilities closed) and the writedown of certain long-lived assets,
including goodwill. It is expected that the restructuring actions will be
substantially completed in 2000. Details of the remaining restructuring
activity are as follows (in thousands):
January 1, Used in April 1,
2000 2000 2000
---------- -------- --------
Lease termination payments $8,736 $(740) $7,996
Employee severance
and termination benefit 1,712 (455) 1,257
Other facility exit costs 1,501 (667) 834
------- ------- -------
$11,949 $(1,862) $10,087
======= ======= =======
7) Treasury Stock
At April 1, 2000, the Corporation held 2,503,600 shares of its common stock
in treasury. These shares were acquired during 1999 and the first quarter
of 2000 through the common stock repurchase program and may be reissued
pursuant to the Corporation's stock option plans or for other purposes.
8) Debt Covenants
The long-term debt agreements contain various operating and financial
covenants. The more restrictive of these covenants require that working
capital be maintained at a minimum of $40,000,000, current assets be 150%
of current liabilities and consolidated tangible net worth be not less than
$125,000,000. Funded debt of up to 50% of the sum of consolidated tangible
net worth and consolidated funded debt may be incurred without prior
consent of the noteholders. The Corporation may incur short-term debt of up
to 25% of consolidated tangible net worth at any time and is required to be
free of all such obligations in excess of 12.5% of consolidated net
tangible worth for 60 consecutive days each year.
As of April 1, 2000, the Corporation was in compliance with all of its debt
covenants except that current assets were 139% of current liabilities and
short-term debt exceeded 25% of consolidated tangible net worth. These
violations primarily were a result of the common stock repurchase program,
which has increased short-term debt and correspondingly lowered
shareholders' investment. The Corporation is currently in negotiations with
its creditors to cure these violations and as such continues to classify
the debt as long-term.
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net Sales
Net sales for the first quarter of 2000 increased to $328.8 million, 6.3%
higher than the $309.3 million in the prior year quarter.
First quarter sales for the print segment reached $245.0 million, a 3.6%
increase from the prior year's $236.4 million. Increased sales within the
book and publications markets more than offset sales of approximately $10
million generated in the prior year quarter from facilities closed in
conjunction with the 1999 second quarter restructuring. Strong demand for
educational and trade books resulted in the book market sales increase
while higher magazine advertising page counts contributed to the
publications market sales increase. Also contributing to the increase in
print segment sales was an increase of approximately 6% in paper prices
compared to the prior year first quarter.
Supply-chain management sales of $60.0 million for the current quarter were
27.4% higher than the prior period's $47.1 million. This increase was
primarily due to sales from the late 1999-facility start-up in Houston to
service Compaq Computer in North America.
Healthcare sales of $23.8 million for the current year first quarter were
7.9% lower than the prior period sales of $25.8 million. Higher-than-normal
purchasing by customers during the fourth quarter of 1999 reduced demand in
the first quarter.
Earnings from Operations
First quarter earnings from operations rose to $20.6 million, 6.4% higher
than the prior year's $19.4 million.
Print segment earnings from operations increased 7.3% from the prior year
primarily due to additional sales volume within the book and publications
markets. Operating margins improved within the print segment due to the
closure of underperforming facilities in conjunction with last year's
restructuring. The three facilities closed last year had a combined
operating loss percentage of approximately 14%.
Earnings from operations for the supply-chain management segment increased
approximately $1.0 million from the prior year period due to improved
utilization at the European operations. These improvements more than offset
the amortization of start-up costs associated with the Houston facility.
Healthcare segment earnings from operations were approximately $1.3 million
lower than the prior year period primarily due to lower sales volume.
Operating margins were negatively impacted by raw material price increases,
which could not be passed onto customers due to competitive pricing
pressures.
<PAGE>
Interest Expense
Interest expense for the first quarter of 2000 was $943,000 higher than the
prior period primarily due to increased debt levels to support the common
stock repurchase program, capital expenditures and additions to long-term
investments.
Income Taxes
The Corporation's effective first quarter income tax rate for 2000 of 39.6%
was comparable to the 1999 first quarter rate of 39.3%.
FINANCIAL CONDITION
Liquidity and Capital Resources
The Corporation's net working capital decreased by approximately $5.9
million during the first quarter of 2000 due to an increase in payables and
accrued liabilities. The increase in payables compared to the balance at
January 1, 2000 was primarily due to higher sales volume. Also during the
first quarter of 2000, the Corporation repurchased approximately 620,000
shares of common stock at an aggregate purchase price of approximately
$12.0 million pursuant to its common stock repurchase program. Short-term
borrowings funded these repurchases. Future stock repurchases will be
funded by a combination of cash provided from operations and short-term
borrowings, as necessary.
Capital expenditures were $25.8 million during the first quarter of 2000,
an increase of $8.7 million from the amount expended during the prior year
first quarter. Significant expenditures included additional equipment to
support the Compaq Computer contract and continued investment in new
printing and digital imaging technologies. Capital requirements for the
full year are expected to be approximately $110 million and will be funded
by a combination of cash provided from operations and borrowings.
Long-term debt as a percentage of total capitalization increased to 27.8%
compared with 24.3% at January 1, 2000. This increase was a result of the
Corporation converting $20 million of its short-term floating debt into
long-term debt in March 2000. At April 1, 2000, the Corporation was in
default of certain financial covenants under its long-term debt agreements.
The Corporation is currently in negotiations with its creditors to cure
these violations and as such continues to classify the debt as long-term.
Cautionary Statements for Forward-Looking Information
This document includes forward-looking statements. Statements that describe
future expectations, plans or strategies are considered forward-looking.
Such statements are subject to certain risks and uncertainties, which could
cause actual results to differ materially from those currently anticipated.
Factors that could affect actual results include, among others, changes in
customer order patterns or demand for the Corporation's products, the
timing and magnitude of orders placed by Compaq, changes in raw material
costs and availability, success with operational start-ups, and general
changes in economic conditions. These factors should be considered in
evaluating the forward-looking statements, and undue reliance should not be
placed on such statements. The forward-looking statements included herein
are made as of the date hereof, and the Corporation undertakes no
obligation to update publicly such statements to reflect subsequent events
or circumstances.
<PAGE>
Item 3. Qualitative and Quantitative disclosure about Market Risk
The Corporation is exposed to market risk from changes in interest rates
and foreign exchange rates. At April 1, 2000, the Corporation had notes
payable outstanding aggregating $81.7 million against lines of credit with
banks. These notes consist entirely of commercial paper and bear interest
at floating rates. Each 1% fluctuation in the interest rate will increase
or decrease interest expense for the Corporation by approximately $817,000
annually. Since essentially all long-term debt is at fixed interest rates,
exposure to interest rate fluctuations is minimal. Exposure to adverse
changes in foreign exchange rates is considered immaterial.
<PAGE>
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - 4(a) - Credit Agreement dated March 10, 2000 27 -
Financial Data Schedule (EDGAR version only)
(b) No reports on Form 8-K were filed during the quarter for which
this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BANTA CORPORATION
/S/GERALD A. HENSELER
-------------------------------
Gerald A. Henseler
Executive Vice President,
Chief Financial Officer and Treasurer
Date: May 16, 2000
<PAGE>
BANTA CORPORATION
EXHIBIT INDEX TO FORM 10-Q
For The Quarter Ended April 1, 2000
Exhibit Number
4(a) Credit Agreement dated March 10, 2000
27 Financial Data Schedule (EDGAR version only)
CREDIT AGREEMENT
Dated as of March 10, 2000
by and between
BANTA CORPORATION
as the Company
and
FIRSTAR BANK, NATIONAL ASSOCIATION
as the Bank
<PAGE>
LIST OF EXHIBITS
Exhibit A: $20,000,000 Term Note
Exhibit B: Compliance Certificate
LIST OF SCHEDULES
Schedule 3.1: Parent, Affiliates, Subsidiaries and Joint Ventures
Schedule 3.3: Required Consents
Schedule 3.5: Disputed Taxes
Schedule 3.6: Pending Litigation
Schedule 3.14: Existing Defaults
Schedule 3.15: Environmental Disclosures
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT ("Agreement") is made and entered into
as of this 10th day of March, 2000, by and between BANTA CORPORATION, a
Wisconsin corporation (the "Company"), and FIRSTAR BANK, NATIONAL ASSOCIATION, a
national banking association (the "Bank").
RECITALS
The Company has requested that the Bank extend to it credit in the
aggregate principal amount not to exceed $20,000,000 in the form of a Term Loan
subject to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements contained herein, the receipt and sufficiency of all such
consideration being hereby acknowledged, the parties agree as follows:
AGREEMENT
SECTION 1 DEFINITIONS AND TERMS
1.1 Definitions. As used in this Agreement, the following terms have
the following meanings:
"$100,000,000 Credit Agreement" shall mean that certain $65,000,000
Credit Agreement by and among Company, Bank, M& I Marshall & Ilsley Bank, and
NBD Bank dated as of September 29, 1995, as amended by the First Amendment to
Credit Agreement dated as of September 27, 1996, as further amended by the
Second Amendment to Credit Agreement dated as of September 24, 1997, as further
amended by the Third Amendment to Credit Agreement dated as of September 23,
1998, and as further amended by the Fourth Amendment to the Credit Agreement
dated as of September 22, 1999.
"Affiliate" shall mean any (a) director, officer or employee of the
Person, or (b) Person directly or indirectly controlling or controlled by, or
under direct or indirect common control with, another Person. A Person shall be
deemed to control another Person if the controlling Person directly or
indirectly, either individually or together with (in the case of an individual)
his spouse, lineal descendants and ascendants and brothers or sisters by blood
or adoption or spouses of such descendants, ascendants, brothers and sisters,
owns five percent or more of any class of voting securities of the controlled
Person or possesses, directly or indirectly, the power to direct, or cause the
direction of, the management or policies of the controlled Person, whether
through the ownership of voting securities, through common directors, trustees
or officers, by contract or otherwise.
"Agreement" shall mean this Credit Agreement, as amended,
supplemented, modified or extended from time to time.
3
<PAGE>
"Business Day" shall mean any day other than a Saturday, Sunday,
public holiday or other day when commercial banks in Wisconsin, are authorized
or required by law to close; provided, however, that for purposes of LIBOR
Loans, the term "Business Day" shall mean only those days on which dealings in
U.S. dollar deposits are carried out by U.S. financial institutions in the
London Interbank Eurodollar Market.
"Capitalized Lease" shall mean any lease, the obligations under which
have been, or in accordance with GAAP are required to be, recorded as a capital
lease liability on the consolidated balance sheet of the Company and its
Consolidated Subsidiaries.
"Closing Date" shall mean March 10, 2000 (or such other date as Bank
and the Company may agree in writing).
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
any successor statute, together with the regulations and published
interpretations thereunder, in each case as in effect from time to time.
"Consolidated Funded Debt" shall mean, as of any time of determination
thereof, the Funded Debt of the Company and Subsidiaries determined on a
consolidated basis.
"Consolidated Subsidiaries" shall mean Subsidiaries whose financial
statements are consolidated with those of the Company in accordance with GAAP.
"Consolidated Tangible Net Worth" shall mean, as of any time of any
determination thereof, the excess of (i) the sum of (a) the par value (of value
stated on the books of the Company) of the outstanding capital stock of all
classes of the Company, plus (or minus in the case of a surplus deficit) (b) the
amount of the consolidated surplus, whether capital or earned, of the Company
and its Subsidiaries, over (ii) the sum of treasury stock, minority interests,
any other contra-equity accounts, unamortized debt discount and expense,
goodwill, trademarks, trade names, patents, deferred charges and other
intangible assets and any write-up of the value of any assets after January 1,
1994.
"Current Debt" shall mean, with respect to any Person, all
Indebtedness of such Person for borrowed money which by its terms or by the
terms of any instrument or agreement relating thereto matures on demand or
within one year from the date of the creation thereof and is not directly or
indirectly renewable or extendible at the option of the Person to a date more
than one year from the date of the creation thereof, provided that Indebtedness
for borrowed money outstanding under a revolving credit or similar agreement
which obligates the lender or lenders to extend credit over a period of more
than one year shall constitute Funded Debt and not Current Debt, even though
such Indebtedness by its terms matures on demand or within one year from the
date of the creation thereof.
"Current Ratio" shall mean the relationship, expressed as a numerical
ratio, between: (a) the amount of all assets which, under GAAP, would appear as
current assets on the consolidated balance sheet of the Company, and (b) the
amount of all liabilities which, under GAAP, would appear as current liabilities
on such balance sheet of the Company and its Consolidated Subsidiaries.
4
<PAGE>
"Debt" shall mean Current Debt plus Funded Debt.
"Default" shall mean an Event of Default or an event which with the
giving of notice or the passage of time or both would constitute an Event of
Default.
"Employee Plan" shall mean any savings, profit sharing, or retirement
plan or any deferred compensation contract or other plan maintained for
employees of the Company and covered by Title IV of ERISA, including, without
limitation, any "multiemployer plan" as defined in ERISA.
"Environmental Law" shall mean any local, state or federal law or
other statute, law, ordinance, rule, code, regulation, decree or order,
presently in effect or hereafter enacted, promulgated or implemented, governing,
regulating or imposing liability for standards of conduct concerning the use,
treatment, generation, storage, disposal, discharge or other handling or release
of any Hazardous Substance.
"Environmental Liability" shall mean all liability arising under,
resulting from or imposed by any Environmental Law and all liability imposed
under common law with respect to the use, treatment, generation, storage,
disposal, discharge or other handling or release of any Hazardous Substance.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and any successor statute, together with the regulations and
published interpretations thereunder, in each case as in effect from time to
time.
"Event of Default" shall have the meaning assigned in Section 7.1.
"Financial Statements" shall mean the financial statements referred to
in Section 5.3.
"Fiscal Quarter" shall mean any of the thirteen week accounting
periods of the Company, ending on the Saturday closest to the last day of March,
June, September and December of each calendar year.
"Fiscal Year" shall mean the annual accounting period of the Company
ending on the Saturday closest to December 31st of each calendar year.
"Floating Rate" shall mean the Prime Index Rate as announced by Bank
from time to time.
"Funded Debt" shall mean (i) with respect to any Person, all
Indebtedness of such Person which by its terms or by the terms of any instrument
or agreement relating thereto matures, or which is otherwise payable or unpaid,
more than one year from, or is directly or indirectly renewable or extendible at
the option of the debtor to a date more than one year (including an option of
the debtor under a revolving credit or similar agreement obligating the lender
or lenders to extend credit over a period of more than one year) from, the date
of the creation thereof, plus (ii) Current Debt of the Company and Subsidiaries,
if during the most recently completed period of four consecutive fiscal quarters
the aggregate principal balance of
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<PAGE>
all such Current Debt has not been reduced to zero for a period of sixty
consecutive days selected by the Company as a clean down period, in an amount
equal to the maximum amount thereof outstanding at any time during such clean
down period.
"GAAP" shall mean those generally accepted accounting principles and
practices which are recognized as such by the American Institute of Certified
Public Accountants acting through appropriate boards or committees thereof and
which are consistently applied for all periods so as to properly reflect the
financial condition, results of operations and cash flows of the Company.
"Government Authority" shall mean any nation or government, any state
or other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled through
stock or capital ownership or otherwise, by any of the foregoing.
"Hazardous Substance" shall mean any pollutant, contaminant, waste or
toxic or hazardous chemicals, wastes or substances, including, without
limitation, asbestos, urea formaldehyde insulation, petroleum, PCB's, air
pollutants, water pollutants, and other substances defined as hazardous or toxic
in the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. ss. 9061 et seq., Hazardous Materials Transportation
Act, 49 U.S.C. ss. 1801, et seq., the Resource Conservation and Recovery Act, 42
U.S.C. ss. 6901 et seq., the Toxic Substance Control Act of 1976, as amended, 15
U.S.C. ss. 2601 et seq., the Solid Waste Disposal Act, 42 U.S.C. ss. 3251 et
seq., the Clean Air Act, 42 U.S.C. ss. 1857 et seq., the Clean Water Act, 33
U.S.C. ss. 1251 et seq., Emergency Planning and Community Right to Know Act, 42
U.S.C. ss. 11001, et seq., Chapter 144 of the Wisconsin Statutes, or any other
statute, rule, regulation or order of any Government Authority having
jurisdiction over the control of such wastes or substances.
"Indebtedness" shall mean all (a) all items which, in accordance with
GAAP, would be classified as liabilities on the consolidated balance sheet of
the Company and its Consolidated Subsidiaries, including all Capitalized Leases,
and (b) indebtedness secured by any mortgage, lien, pledge or security interest
on property of the Company or Consolidated Subsidiary even though it has not
assumed or otherwise become liable for the payment thereof.
"Interest Differential" shall have the meaning set forth in the Term
Note.
"Interest Period" shall mean the one, two, three or six month periods
offered by Bank for LIBOR Loans.
"LIBOR Index Rate" shall mean with respect to a LIBOR Loan, the rate
of interest per annum determined by the Bank to be the average offered rate for
deposits in U.S. dollars (rounded up to the next whole multiple of 1/100 of 1%)
for one, two, three and six months Interest Periods on the electronic
communications terminals in the Bank's money center as of 10:00 a.m. (London
time) for the day two Business date of the proposed funding of the LIBOR Loan.
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"LIBOR Loan" shall mean the Term Loan to the extent a LIBOR Rate is
the applicable rate of interest for such Loan under Section 2 of this Agreement.
"LIBOR Rate" shall mean the LIBOR Rate set forth in the Term Note.
"Lien" or "Liens" shall mean any mortgage, pledge, hypothecation,
assignment, collateral deposit arrangement, encumbrance, lien (statutory or
other), deed of trust, charge, preference, priority, security interest or other
security agreement or preferential arrangement of any kind or nature whatsoever
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction.
"Loan" or "Loans" shall mean the Term Loan.
"Loan Account" shall mean an account on the books of the Bank in which
the Bank will record, pursuant to Section 2.3, Obligations of the Company to the
Bank, payments made upon such Obligations and other advances, debits and credits
pertaining to the Obligations.
"Material Adverse Effect" shall mean (a) an Event of Default, (b) a
material adverse change in the business, Property, operations or condition
(financial or otherwise) of the Company, (c) the termination of any material
agreement to which the Company is a party which has a material adverse effect on
the operations or condition of the Company, (d) any material impairment of the
right to carry on the business as now or proposed to be conducted by the
Company, or (e) any material impairment of the ability of the Company, to
perform the Obligations under this Agreement or the Related Documents. A
Material Adverse Effect shall be deemed to have occurred if the cumulative
effect of an individual event and all other then existing events would result in
a Material Adverse Effect. "Material Subsidiary" shall mean, as of any time of
determination thereof, any subsidiary (i) whose assets or liabilities constitute
five percent or more of the consolidated assets or consolidated liabilities,
respectively, of the Company and Subsidiaries, or (ii) whose net earnings
constituted five percent or more of consolidated net earnings for the then most
recently completed fiscal year of the Company.
"Note" shall mean the Term Note, and any note(s) or obligation(s)
issued in substitution, replacement or renewal thereof.
"Obligations" shall mean the Company's obligations under the Term Loan
and the Company's other liabilities and obligations to Bank under this Agreement
or the Related Documents, including, without limitation, all liabilities under
interest rate swap agreements, interest rate cap agreements and interest rate
collar agreements, and all other agreements designed to protect against
fluctuations in interest rates or currency exchange rates applicable to the Term
Loan.
"Permitted Liens" shall have the meaning set forth in Section 6.3
below.
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"Person" shall mean an individual, partnership, corporation, limited
liability company or partnership, firm, enterprise, business trust, joint stock
company, trust, unincorporated association, joint venture, Government Authority
or other entity of whatever nature.
"Prime Index Rate" shall mean, prior to Default, for Loans which are
not LIBOR Loans, the interest rate publicly announced by the Bank from time to
time in Milwaukee, Wisconsin as its "prime rate" for interest rate
determinations, which is solely a reference rate and may be at, above or below
the rate or rates at which the Bank lends to other Persons. Any change in the
Prime Index Rate shall become effective as of the opening of business on the day
on which such change is publicly announced by the Bank.
"Priority Debt" shall mean, as of any time of determination thereof,
(i) Debt of any Subsidiary, other than Debt owed to the Company or another
subsidiary and (ii) Debt of the Company secured by any Lien.
"Property" shall mean any interest of the Company and its Subsidiaries
of any kind in property or assets, whether real, personal, mixed, tangible or
intangible, wherever located, and whether now owned or subsequently acquired or
arising and in the products, proceeds, additions and accessions thereof or
thereto.
"Regulatory Change" shall mean the adoption or amendment, after the
date of this Agreement, of any national, federal or state law, regulation,
interpretation, direction, policy, guideline or court decision applicable to any
Bank or the London Interbank Eurodollar Market which makes it unlawful for any
Bank to make, maintain or fund the Obligations based on the LIBOR Rate,
increases the cost to any Bank of making or maintaining the Obligations or
reduces the rate of return to such Bank (by reduction of principal, interest or
otherwise) on the Obligations by subjecting such Bank to any tax, duty or other
imposition or charge with respect to the Obligations, imposing any reserve
requirement (except any reserve requirement reflected in the LIBOR Rate),
affecting the treatment of any Obligation for purposes of calculating the
appropriate amount of capital to be maintained by such Bank or any Person
controlling such Bank, or otherwise imposing on such Bank any other condition
affecting the Obligations.
"Related Documents" shall mean the Term Note, and all other
instruments, agreements, certificates, and other documents executed by or on
behalf of the Company, or in connection with the transactions contemplated under
this Agreement, all as amended, supplemented, modified or extended from time to
time.
"Related Party" shall mean (i) any Person owning 10% or more of the
Company's or (with the exception of the Company) any Subsidiary's Voting Stock,
(ii) any Affiliate of the Company, and (iii) all persons to whom Persons
described in clause (i) or (ii) are related by affinity or consanguinity within
the third degree as determined by the common law, or individual in a step or
adoptive relationship within such third degree.
"Requirements of Law" shall mean as to any matter or Person, the
Certificate or Articles of Incorporation, Bylaws or other organizational or
governing documents of such Person, and any law (including, without limitation,
any Environmental Law and any law
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relating to agriculture, food, health or safety), ordinance, treaty, rule,
regulation, order, decree, determination or other requirement having the force
of law relating to such matter or Person and, where applicable, any
interpretation thereof by any Government Authority.
"Subsidiary" or "Subsidiaries" shall mean as to any Person, a
corporation of which shares of stock having voting power (other than stock
having such power only by reason of the happening of a contingency that has not
occurred) sufficient to elect a majority of the board of directors or other
managers of such corporation are at the time owned, or the management of which
is otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person.
"Tangible Capitalization" shall mean, as of any time of determination
thereof, the sum of Consolidated Tangible Net Worth and Consolidated Funded
Debt.
"Term Loan" shall mean the term loan to be made by Bank to the Company
pursuant to Section 2.1 evidenced by the Term Note in the initial aggregate
principal amount of up to $20,000,000.
"Term Note" shall mean the promissory note of the Company to the Bank
in the form of Exhibit A evidencing the Term Loan as amended, supplemented,
modified or extended from time to time.
"Termination Date" shall mean March 10, 2003 or such earlier date on
which the Obligations shall terminate as provided in Section 7.2 of this
Agreement.
"Transfer" shall mean, with respect to any item, the sale, exchange,
conveyance, lease, transfer or other disposition of such item.
1.2 Accounting and Consolidated Financial Determinations. Except as
otherwise expressly provided herein, where the character or amount of any asset,
liability, item of income or expense or financial covenant is required to be
determined, or any accounting computation is required to be made, for the
purpose of this Agreement, such determination or calculation shall be made on a
consolidated basis so as to include the Company and its Subsidiaries, if any, in
each such calculation and, to the extent applicable and except as otherwise
specified in this Agreement, shall be made in accordance with GAAP; provided,
however, that if any change in GAAP from those applied in the preparation of the
financial statements referred to in Section 5.3 is occasioned by the
promulgation of rules, regulations, pronouncements and opinions by or required
by the American Institute of Certified Public Accountants (or its boards or
committees or successors thereto or agencies with similar functions), the
initial announcement of which change is made after the date hereof, results in a
change in the method of calculation of financial covenants, standards or terms
found in Section 6, the parties hereto agree to enter into good faith
negotiations in order to amend such provisions so as to reflect such changes
with the desired result that the criteria for evaluating the Company's financial
condition shall be the same after such changes as if such changes had not been
made. When used herein, the term "financial statement" shall include balance
sheets, statements of earnings, statements of stockholders' equity, statements
of cash flows and the notes and schedules thereto, and each reference herein to
a balance sheet or other financial statement of the
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Company shall be to a statement prepared on a consolidated and consolidating
basis, unless otherwise specified.
1.3 Interpretation. The words "hereof," "herein" and "hereunder" and
words of a similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Section, Schedule and Exhibit references contained in this Agreement are
references to sections, schedules and exhibits in or to this Agreement unless
otherwise specified. Any reference in any Section or definition to any clause
is, unless otherwise specified, to such clause of such Section or definition.
1.4 Other Terms. Except as otherwise specifically provided, each
accounting term used herein shall have the meaning given to it under GAAP. Terms
defined in other Sections of this Agreement shall have the meanings set forth
therein.
SECTION 2 AMOUNTS AND TERMS OF OBLIGATIONS
2.1 Term Loan; Interest Rate; Repayment of Principal and Interest.
(a) On the date hereof, the Bank agrees to advance to the
Company, the Term Loan in an initial principal amount of $20,000,000
and such Term Loan shall be subject to all of the terms and conditions
set forth in this Agreement and the Term Note. The Term Loan made by
the Bank pursuant hereto shall be evidenced by the Term Note.
(b) Prior to an Event of Default, and except as otherwise
provided herein, the Term Loan shall bear interest on the unpaid
principal balance before maturity (whether upon demand, acceleration
or otherwise) at the one, two, three or six month LIBOR Index Rate
selected in writing by Company from time to time plus 85 basis points
(each such selected rate a "LIBOR Rate") for the corresponding
Interest Period so long as LIBOR Loans are available for the Term Loan
herein. Interest shall be computed based on the actual number of days
elapsed and a year of 360 days. Subject to the provisions of this
Agreement with respect to acceleration and prepayment, the entire
principal balance of the Term Loan, together with accrued interest and
all other accrued costs, charges and fees, shall be due and payable in
full on March 10, 2003. Amounts paid or prepaid on the Term Loan may
not be reborrowed. The Company may, from time to time and without
premium or penalty, prepay the unpaid principal balance of the Term
Loan.
(c) Prior to an Event of Default, and except as otherwise
provided herein, interest on the unpaid principal balance of any LIBOR
Loan shall be paid at the end of each Interest Period; provided that,
if any LIBOR Loan is based on a six month Interest Period, accrued
interest shall be due at the end of the third month of such Interest
Period, and at the end of such Interest Period. During any time that
interest on the Term Loan shall be calculated with reference to the
Floating Rate, accrued interest on the Term Loan shall be due and
payable monthly commencing on the first day of the subsequent month
and on the first day of each month thereafter.
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(d) In the event the Company does not select in writing a
LIBOR Rate at least two Business Days prior to expiration of the then
existing Interest Period, the Floating Rate shall apply until the
Company selects in writing a LIBOR Rate upon such two (2) Business
Days prior written notice to Bank. The Bank's internal records of
applicable interest rates shall be determinative in the absence of
manifest error. Each LIBOR Rate option selected shall apply to the
entire outstanding principal amount of the Term Loan. For determining
time and payment dates for LIBOR Loans, the London business day shall
be standard convention.
2.2 Interest After Default. After an Event of Default and after
fifteen (15) days prior written notice to the Company by Bank, all of the
Obligations shall bear interest at the Prime Index Rate ("Default Rate").
However, in no event shall the interest rate under the Term Note exceed the
highest rate permitted by law.
2.3 Loan Account. The Bank will enter as a debit to the Loan Account
the principal amount of each Loan as disbursed or issued from time to time by
the Bank and credit same to the Company's general depository account at Bank.
The Bank shall also debit and/or credit the Loan Account, in accordance with the
Bank's customary accounting practices for the following: accrued interest and
all other charges, expenses and other obligations properly chargeable to the
Company hereunder or under the Related Documents; all payments made by the
Company with respect to the Obligations, if any; and all other appropriate
debits and credits. The debit balance of the Loan Account shall reflect the
amount of the Obligations and other charges hereunder or under the Related
Documents. Not more frequently than once each month, the Bank shall render a
statement of account of the Loan Account to the Company including a statement of
the outstanding principal balance, and applicable LIBOR Rate or Floating Rate
for the Term Loan, which statement shall be considered correct and accepted by
the Company and conclusively binding upon the Company unless it notifies the
Bank to the contrary in writing within 30 days of the mailing of such statement
by the Bank to the Company; provided, however, that the failure of the Bank to
record any of the foregoing items in the Loan Account shall not limit or
otherwise affect the Company's obligation to repay the Obligations or pay any
charges, fees or other items to Bank.
2.4 Payments. Whenever any payment to be made hereunder shall be
stated to be due on a day which is not a Business Day, such payment may be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest on the Note. The Bank
may debit to the depository accounts maintained by the Company with the Bank all
payments on the Obligations when due without further notice to or consent of the
Company.
2.5 Loan Prepayments. Subject to Section 2.8 regarding prepayment of
LIBOR Loans, the Company may at its option, at any time upon prior written
notice to the Bank, prepay the Term Note in whole or in part. Any prepayment
shall permanently reduce the amount of the Term Loan. In the case of prepayment
of less than all of the outstanding principal amount of the Term Loan, all
prepayments shall be applied to the principal installments in the reverse order
of their maturities or, if no principal installments are provided for in the
Term Note, then to the unpaid principal balance of the Term Loan.
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2.6 Effect of Regulatory Change. In the event that any Regulatory
Change makes it unlawful for Bank to make, maintain or fund the Term Loan based
on the LIBOR Rate, then: (a) Bank shall promptly notify the Company; (b) the
obligation of Bank to make or continue the Term Loan based on the LIBOR Rate
shall be suspended for the duration of such unlawfulness; and (c) Term Loan
shall bear interest at the Floating Rate with the interest rate to change on
each day that the Prime Index Rate changes.
2.7 LIBOR Index Rate Unascertainable/Increased Funding Costs.
(a) If the Bank determines (which determination shall be
binding and conclusive on all parties) that (i) by reason of
circumstances affecting the London Interbank Eurodollar Market,
adequate and reasonable means do not exist for ascertaining the
applicable LIBOR Index Rate; or (ii) the LIBOR Rate will not
adequately and fairly reflect the cost to the Bank of maintaining or
funding loans based on the LIBOR Rate, or that the maintenance or
funding of such LIBOR Loans has become impracticable as a result of an
event occurring after the date of this Agreement which in the opinion
of the Bank materially affects the Bank's initially projected after
tax yield on such LIBOR Loans; then so long as such circumstances
shall continue, the Bank shall not be under any obligation to make or
continue the Term Loan based on the LIBOR Rate, and on the first
Business Day of the next calendar month, such Term Loan shall bear
interest at the Floating Rate.
(b) In the event after the date of initial funding any
Regulatory Change subjects Bank to any new or additional charge, fee,
withholding or tax of any kind with respect to any LIBOR Loans or
changes the method of taxation of such LIBOR Loans, or changes the
reserve or deposit requirements applicable to such LIBOR Loans, the
Borrower shall pay to the Bank such additional amounts as will
compensate the Bank for such costs or lost income resulting therefrom
as reasonably determined by the Bank.
2.8 LIBOR Loan Prepayment; Indemnity. If a LIBOR Loan is prepaid prior
to the end of any Interest Period, by the Borrower, (whether as a result of
acceleration upon default or otherwise), the Borrower agrees to pay all of the
Bank's costs, expenses and Interest Differential (as reasonably determined by
the Bank) incurred as a result of such prepayment. The term "Interest
Differential" shall mean the sum equal to the greater of $0 or the financial
loss incurred by the Bank resulting from prepayment, calculated as the
difference between the amount of interest the Bank would have earned had
prepayment not occurred and the interest the Bank will actually earn as a result
of the redeployment of funds from the prepayment. Due to of the short-term
nature of each Interest Period, the Borrower agrees that the Interest
Differential shall not be discounted to its present value.
2.9 Application of Payments. All payments hereunder and under the Term
Note shall be made to the Bank in immediately available funds and the Bank shall
apply any payments received from the Company in the following order: (a) First,
to any unpaid fees, charges or expenses owed to Bank related to the Obligations;
(b) Second, to any unpaid accrued interest due on the Term Loan; and (c) Lastly,
to any unpaid principal of the Term Loan.
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2.10 Arrangement Fee/Closing Costs. On the Closing Date, the Company
shall pay the Bank: (a) the Bank's costs and expenses in undertaking this
transaction including the reasonable attorneys fees of Bank's counsel; and (b) a
$20,000 arrangement fee.
SECTION 3 REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement and make and
incur the Obligations as herein provided, Company hereby represents and warrants
to Bank as follows:
3.1 Organization, Qualification and Subsidiaries. Company is a
corporation duly organized and validly existing under the laws of the State of
Wisconsin, and each Subsidiary is duly organized and existing in good standing
under the laws of the jurisdiction in which it is incorporated. The Company and
each Subsidiary has the power and authority and all necessary licenses, permits
and franchises to borrow hereunder and to own its assets and conduct its
business as presently conducted. The Company and each Subsidiary are duly
licensed or qualified to do business and are in good standing in all
jurisdictions where they are required to be qualified, except where the failure
to be so qualified would not result in a Material Adverse Effect. Except as set
forth on Schedule 3.1, the Company does not own, directly or indirectly, more
than 1% of the total outstanding shares of any class of capital stock of any
other Person, and the Company is not affiliated with nor has any investment in
any other company, person, joint venture or other entity.
3.2 Financial Statements/Fiscal Year. The pro forma and actual
financial statements of the Company delivered to the Bank prior to the Closing
Date are accurate and complete in all material respects. The Company's Fiscal
Year is as provided in Section 1 of the Agreement.
3.3 Authorization/Consents. The making, execution, delivery and
performance of this Agreement and the Related Documents by the Company has been
duly authorized by all necessary consents. The valid execution, delivery and
performance of this Agreement, the Related Documents and the transactions
contemplated hereby and thereby, are not and will not be subject to any
approval, consent or authorization of any Government Authority or third party
except as is set forth in Schedule 3.3. This Agreement and the Related Documents
are the valid and binding obligations of the Company enforceable against the
Company in accordance with its respective terms.
3.4 Absence of Conflicting Obligations. The making, execution,
delivery and performance of this Agreement and the Related Documents and
compliance with their respective terms do not violate or constitute a default,
breach or violation under any Requirements of Law or any covenant, indenture,
deed, lease, contract, agreement, mortgage, deed of trust, note or instrument to
which the Company is a party or by which it is bound.
3.5 Taxes. The Company has filed all federal, state, foreign and local
tax returns which were required to be filed, except those returns for which the
due date has been validly extended, except where the failure to file such
returns would not have a Material Adverse Effect on the Company. The Company has
paid or made provisions for the payment of all taxes,
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assessments, fees and other governmental charges owed, and no tax deficiencies
have been threatened or assessed against the Company except as set forth in
Schedule 3.5.
3.6 Absence of Litigation. There are no pending or, to the knowledge
of the Company, threatened litigation or administrative proceedings at law or in
equity which would, if adversely determined, result in a Material Adverse
Effect, and, to the best of the Company's knowledge after diligent inquiry,
there are no presently existing facts or circumstances likely to give rise to
any such litigation or administrative proceedings except as is described in
Schedule 3.6 hereto.
3.7 Accuracy of Information. All information, certificates or
statements given or made by the Company to the Bank under this Agreement and the
Related Documents were accurate, true and complete in all material respects when
given, continue to be accurate, true and complete as of the date hereof, and do
not contain any untrue statement or omission of a material fact necessary to
make the statements herein or therein not misleading. There is no fact known to
the Company which is not set forth in this Agreement, the Related Documents or
other documents, certificates or statements furnished to the Bank by or on
behalf of the Company in connection with the transactions contemplated hereby
and which will, or which in the future may (so far as the Company can reasonably
foresee), cause a Material Adverse Effect.
3.8 Ownership of Property. The Company has good and marketable title
to all of its Property, except only for Property which is leased or licensed by
the Company, with respect to which the Company has a valid and enforceable
leasehold title or licensee title, as applicable. There are no Liens of any
nature on any of the Property except Permitted Liens. All Property that is
useful or necessary in the Company's business, whether leased or owned, is in
good condition, repair (ordinary wear and tear excepted) and working order and,
to the best of the Company's knowledge after diligent inquiry, conforms to all
applicable Requirements of Law, except where such noncompliance would not have a
Material Adverse Effect on the Company. The Company owns (or is licensed to use)
and possesses all such patents, trademarks, trade names, service marks,
copyrights and rights with respect to the foregoing as are reasonably necessary
for the conduct of the business of the Company as now conducted and proposed to
be conducted without, individually or in the aggregate, any infringement upon
rights of other Persons.
3.9 Federal Reserve Regulations. The Company will not, directly or
indirectly use any proceeds of the Obligations to: (a) purchase or carry any
"margin stock" within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System (12 C.F.R. 221, as amended); (b) extend credit to
other Persons for any such purpose or refund indebtedness originally incurred
for any such purpose; or (c) otherwise take or permit any action which would
involve a violation of Section 7 of the Securities Exchange Act of 1934, as
amended, or any regulation of the Board of Governors of the Federal Reserve
System.
3.10 ERISA. The Company and anyone under common control with the
Company under Section 4001(b) of ERISA are in compliance in all material
respects with the applicable provisions of ERISA and: (a) no "prohibited
transaction" as defined in Section 406 of ERISA or Section 4975 of the Code has
occurred; (b) no "reportable event" as defined in Section 4043 of ERISA has
occurred; (c) no "accumulated funding deficiency" as defined in Section 302
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of ERISA (whether or not waived) has occurred; (d) there are no unfunded vested
liabilities of any Employee Plan administered by the Company; and (e) the
Company or the plan sponsor has timely filed all returns and reports required to
be filed for each Employee Plan.
3.11 Place of Business. The principal place of business and chief
executive office of the Company is located at the address specified in Section
8.6 for the Company, and the books and records of the Company and all records of
account are located and hereafter shall continue to be located at such principal
places of business and chief executive offices.
3.12 Other Names. [Intentionally Omitted].
3.13 Not an Investment Company. The Company is not (a) an "investment
company" or a company "controlled by an investment Company" within the meaning
of the Investment Company Act of 1940, as amended, or (b) a "holding company" or
a "subsidiary" of a "holding company" or an "affiliate of a "holding company" or
a "subsidiary" of a "holding company" within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
3.14 No Defaults. Except as set forth in Schedule 3.14 hereof, the
Company is not in default under or in violation of (a) any Requirements of Law,
(b) any covenant, indenture, deed, lease, agreement, mortgage, deed of trust,
note or other instrument to which the Company is a party or by which the Company
is bound, or to which any Property is subject, and (c) any Indebtedness; or if
any default or violation under Sections 3.14(a), (b) or (c) exists, the failure
to cure such default or violation would not result in a Material Adverse Effect.
3.15 Environmental Compliance. Except as set forth in Schedule 3.15
hereof, the Company and its Subsidiaries, and all of their respective properties
and facilities, have complied at all times and in all respects with all federal,
state, local and regional statutes, laws, ordinances and judicial or
administrative orders, judgments, rulings and regulations relating to protection
of the environment except, in any such case, where such noncompliance would not
have a Material Adverse Effect on the Company and its Subsidiaries taken as a
whole.
3.1 Labor Matters. There are no labor disputes between the Company and
any of its employees which individually or in the aggregate, if resolved in a
manner adverse to the Company, would result in a Material Adverse Effect.
3.17 Restricted Payments. [Intentionally Omitted].
3.18 Solvency. The Company is not "insolvent," nor will the Company's
incurrence of the Obligations render the Company "insolvent." For purposes of
this Section 3.18, a company is "insolvent" if (i) the "present fair salable
value" (as defined below) of its assets is less than the amount that will be
required to pay its probable liability on its existing debts and other
liabilities (including contingent liabilities) as they become absolute and
matured; (ii) its property constitutes unreasonably small capital for it to
carry out its business as now conducted and as proposed to be conducted
including its capital needs; (iii) it intends to, or believes that it will,
incur debts beyond its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be received by it and amounts to be
payable on or in respect of debt of it), or the cash available to it after
taking into account all of its other anticipated uses of the cash is anticipated
to be insufficient to pay all such amounts on or in
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respect of its debt when such amounts are required to be paid; or (iv) it
believes that final judgments against it in actions for money damages will be
rendered at a time when, or in an amount such that, it will be unable to satisfy
any such judgments promptly in accordance with their terms (taking into account
the maximum reasonable amount of such judgments in any such actions and the
earliest reasonable time at which such judgments might be rendered), or the cash
available to it after taking into account all other anticipated uses of its
cash, is anticipated to be insufficient to pay all such judgments promptly in
accordance with their terms. For purposes of this Section 3.18, the following
terms have the following meanings: (x) the term "debts" includes any legal
liability, whether matured or unmatured, liquidated, absolute, fixed or
contingent, (y) the term "present fair salable value" of assets means the amount
which may be realized, within a reasonable time, either through collection or
sale of such assets at their regular market value and (z) the term "regular
market value" means the amount which a capable and diligent businessman could
obtain for the property in question within a reasonable time from an interested
buyer who is willing to purchase under ordinary conditions.
SECTION 4 CLOSING AND FUNDING CONDITIONS
4.1 Initial Closing/Funding Conditions. In addition to the terms and
conditions otherwise contained herein and in the Related Documents the
obligation of the Bank to make any Loans hereunder is conditioned on the Bank
receiving, prior to or on the date of the Bank's first extension of credit, each
of the following items in form, detail and content satisfactory to the Bank:
(a) the executed Term Note;
(b) a legal opinion from in-house or outside counsel to the
Company as to the due authorization, execution and performance of this
Agreement by the Company and such other matters pertaining to the
Company or this Agreement as may be required by Bank or its counsel,
and
(c) such additional documents and materials as the Bank or
its counsel may require.
SECTION 5 AFFIRMATIVE COVENANTS
The Company covenants and agrees that, from and after the date of this
Agreement until the entire amount of all Obligations to the Bank are paid in
full, it shall:
5.1 Existence; Compliance With Laws; Maintenance of Business; Taxes.
(a) Maintain its corporate existence, (b) maintain all licenses, permits, rights
and franchises except where the failure by the Company to maintain such license,
permit, right or franchise would not have a Material Adverse Effect on the
Company; (c) comply in all material respects with all Requirements of Law except
where the failure by the Company to do so would not have a Material Adverse
Effect on the Company; (d) conduct its business substantially as now conducted
and proposed to be conducted except where the failure by the Company to do so
would not have a Material Adverse Effect on the Company; and (e) pay before the
same become delinquent and before penalties accrue thereon, all taxes,
assessments and other government charges against it and its Property, and all
other liabilities except to the extent and so long as the
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same are being contested in good faith by appropriate proceedings, with adequate
reserves having been provided except where the failure by the Company to do so
would not have a Material Adverse Effect on the Company.
5.2 Maintenance of Property; Insurance.
(a) Keep and cause each Subsidiary to keep its properties
(whether owned or leased) in good operating condition, repair and
working order, except where noncompliance with this section would not
have a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole.
(b) Maintain with good, reputable and financially sound
insurance underwriters insurance of such nature and in such amounts as
is customarily maintained by Company engaged in the same or similar
business of comparable size to the Company and its Subsidiaries and
such other insurance as may be required by law or as may be reasonably
required in writing by the Bank. Upon request of Bank, the Company
shall furnish copies of all such insurance policies or a certificate
evidencing that the Company and its Subsidiaries has complied with the
requirements of this paragraph on the date hereof and on each renewal
date of such policies.
5.3 Financial Statements. Provide a copy of this Agreement to the
Company's auditors, maintain a standard and modern system of accounting in
accordance with sound accounting practice, and furnish to the Bank such
information respecting the business, assets and financial condition of the
Company and its Subsidiaries as Bank may reasonably request and, without
request, furnish to Bank:
(a) as soon as available, and in any event within 45 days
after the end of each Fiscal Quarter of the Company's Fiscal Year,
consolidated financial statements including the balance sheets for the
Company as of the end of each such Fiscal Quarter and statements of
income of the Company for such Fiscal Quarter setting forth in each
case, in comparative form, figures for the corresponding periods in
the preceding Fiscal Year, all in reasonable detail and certified as
true, correct and complete, (subject to review and normal year-end
adjustments), by the chief financial officer or chief executive
officer of the Company;
(b) a Compliance Certificate from the Company as set forth
in Exhibit B hereto for each Fiscal Quarter presenting the Company's
calculation of the financial covenants set forth therein, and the
other information, representations and warranties required by such
Compliance Certificate, within 45 days of the end of such Fiscal
Quarter;
(c) as soon as available, and in any event within 90 days
after the close of each Fiscal Year, a copy of the consolidated annual
audited financial statements of the Company for such year, containing
and for the previous Fiscal Year in comparative form, as audited by
independent certified public accountants of recognized standing
selected by the Company and satisfactory to the Bank, which report
shall be accompanied by (i) the unqualified opinion of such
accountants to the effect that the Financial Statements present
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fairly, in all material respects, the financial position of the
Company and its Subsidiaries as of the end of such year and the
results of their operations and its cash flows for the year then ended
in conformity with GAAP; (ii) a certificate of such accountants
showing calculation of the financial covenants contained herein and
stating that audit disclosed no Default or that their audit disclosed
a Default and specifying the same and the action taken or proposed to
be taken with respect thereto; and (iii) any supplementary comments
and reports submitted by such accountants to the Company including the
management letter, if any.
All financial statements referred to herein shall be complete and correct in all
material respects and shall be prepared in reasonable detail and on a
consolidated and consolidating basis in accordance with GAAP, applied
consistently throughout all accounting periods.
5.4 Inspection of Property and Records/Bank Audits. At any reasonable
time following reasonable notice (and as often as may be reasonably desired),
permit representatives of Bank to visit the Property of the Company and its
Subsidiaries, examine their books and records and discuss its affairs, finances
and accounts with its officers and independent certified public accountants (who
shall be instructed by the Company and its Subsidiaries to make available to
Bank or its Bank the work papers of such accountants) and the Company and its
Subsidiaries shall facilitate such inspections and examinations.
5.5 Use of Proceeds. Use the entire proceeds of the Term Loan to
refinance $20,000,000 of the Company's existing unrated commercial paper
outstanding on the date hereof.
5.6 Bank Accounts. [Intentionally Omitted].
5.7 Comply With, Pay and Discharge All Notes, Mortgages, Deeds of
Trust and Leases. Comply with, pay and discharge all existing notes, mortgages,
deeds of trust, leases, indentures and any other contractual arrangements to
which the Company or any of its Subsidiaries is a party (including, without
limitation, all Indebtedness) in accordance with the respective terms of such
instruments so as to prevent any default thereunder except where the failure to
do so would not have a Material Adverse Effect on the Company.
5.8 Environmental Compliance.
The Company will, and will cause each of its Subsidiaries to, comply
in a timely fashion with, or operate pursuant to valid waivers of the provisions
of, all Environmental Laws, except where the noncompliance with such
Environmental Laws would not have a Material Adverse Effect on the Company and
its Subsidiaries taken as a whole. Notwithstanding the foregoing, nothing
contained in this Agreement, or in the enforcement of this Agreement or the
Notes, shall constitute or be construed as granting or providing the right,
power or capacity to the Agent or any of the Banks to exercise (a) decision
making control of the Company's or any Subsidiary's compliance with any
Environmental Law, or (b) day to day decision making of the Company or any
Subsidiary with respect to (i) compliance with Environmental Laws or (ii) all or
substantially all of the operational aspects of the Company or any Subsidiary.
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5.9 Fees and Costs.
(a) Pay all fees due Bank hereunder or under the Related
Documents computed based on the actual number of days elapsed and a
year of 360 days. The Bank may debit the Company's primary depositary
account with the Bank for all fees and reimbursements when due without
further notice to or consent of the Company.
(b) Pay the Bank all customary charges for other financial
services provided to the Company or its Subsidiaries by Bank
including, without limitation, wire transfer or other charges
pertaining to the transfer of funds.
(c) Pay promptly, upon receipt of an invoice, the reasonable
fees and expenses incurred by the Bank after a Default hereunder in
connection with any inspection or audit pursuant to Section 5.4,
including, without limitation, travel and administration expenses
incurred by representatives of the Bank.
(d) Pay promptly, upon receipt of an invoice, all reasonable
fees and expenses incurred by the Bank with respect to preparation and
negotiation of this Agreement, the Related Documents, and any
amendments thereof and supplements thereto, including, without
limitation, the reasonable fees of in-house and outside counsel of
Bank in connection with the preparation and negotiation of this
Agreement, the Related Documents and all amendments thereto and any
waivers of the terms and provisions thereof and the consummation of
the transactions contemplated herein.
(e) Pay promptly, upon receipt of an invoice, all reasonable
fees and expenses (including reasonable attorneys fees) incurred by
the Bank as a consequence of a Default by the Company hereunder, and
all reasonable fees and expenses incurred by the Bank in connection
with any bankruptcy or other debtor relief proceeding involving the
Company on any of its Subsidiaries.
5.10 Indemnity. Indemnify the Bank and its respective employees,
officers, directors, shareholders, attorneys, successors and assigns against any
and all losses, claims, damages, liabilities, obligations, penalties, actions,
judgments, suits, costs and expenses of any kind or nature whatsoever,
including, without limitation, reasonable attorneys' fees and expenses, incurred
by them arising out of, in any way connected with, or as a result of (a) this
Agreement or the Related Documents or the transactions contemplated hereby or
protection or enforcement of the Bank's rights under this Agreement or the
Related Documents, (b) the execution and delivery of this Agreement by the
Company and the performance of the Obligations, (c) any violation of
Environmental Laws or any other Requirements of Law by the Company or any of its
Subsidiaries or any of their Property as well as any cost or expense incurred in
remedying such violation, and (d) any claim, litigation, investigation or
proceedings relating to any of the foregoing or the transactions contemplated by
this Agreement, whether or not any Bank is a party thereto; provided, however,
that such indemnity shall not apply to any such losses, claims, damages,
liabilities or related expenses to the extent caused by the willful misconduct
and/or gross negligence of the Bank.
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5.11 Covenant to Secure Note Equally. If Company or any Subsidiary
shall create or assume any Lien upon any of its property or assets, whether now
owned or hereafter acquired, other than Liens permitted by the provisions of
Section 6.3 hereof, Company will make or cause to be made effective provision
whereby the Note will be secured by such Lien equally and ratably with any and
all other Debt thereby secured so long as any such other Debt shall be so
secured.
SECTION 6 NEGATIVE COVENANTS
The Company for itself (and as to each of its Subsidiaries) covenants
that, without the prior written consent of the Bank, it will not, and will not
permit any Subsidiary to, until the Obligations have been paid in full:
6.1 Current Ratio. Permit the Current Ratio to be less than 1.5 to 1.0
at any time.
6.2 Consolidated Funded Debt. Permit the Consolidated Funded Debt to
exceed fifty percent (50%) of Tangible Capitalization at any time.
6.3 Liens. Create, assume or suffer to exist any Lien upon any of its
property or assets, whether now owned or hereafter acquired except the following
liens ("Permitted Liens"):
(i) Liens for taxes not yet due or which are being
actively contested in good faith by appropriate proceedings,
(ii) other Liens incidental to the conduct of its business
or the ownership of its property and assets which were not incurred in
connection with the borrowing of money or the obtaining of advances or
credit, and which do not in the aggregate materially detract from the
value of its property or assets or materially impair the use thereof
in the operation of its business,
(iii) Liens on property or assets of a Subsidiary to secure
obligations of such Subsidiary to the Company or another Subsidiary,
(iv) Liens securing Debt existing on any property of any
corporation at the time it becomes a Subsidiary, or existing prior to
the time of acquisition upon any property acquired by the Company or
any Subsidiary through purchase, merger or consolidation or otherwise,
whether or not expressly assumed by the Company or such Subsidiary,
provided that (a) such Lien shall not have been created, incurred or
assumed in contemplation of such purchase, merger, consolidation or
other event, (b) even such Lien shall be confined solely to the
item(s) of property so acquired, (c) the Debt secured by such Lien
shall not be renewed, extended or refunded and (d) the aggregate
amount of Debt secured by all such Liens at no time exceeds 25% of
Consolidated Tangible Net Worth, and
(v) other Liens securing Debt, provided that the aggregate
amount of Debt secured by all such Liens shall at no time exceed 10%
of Consolidated Tangible Net Worth,
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provided that Priority Debt shall at no time exceed the lesser of (a)
25% of Consolidated Tangible Net Worth and (b) 10% of Consolidated
Tangible Net Worth plus Debt described in clause (iv), above;
6.4 Debt. Create, incur, assume or suffer to exist any Debt, except
(i) Debt represented by the Term Note and outstanding
under that certain $100,000,000 Credit Agreement,
(ii) Debt of any Subsidiary to the Company or another
Subsidiary, and
(iii) additional Debt of the Company (other than to a
Subsidiary) and of its Subsidiaries, provided that (a) Consolidated
Funded Debt shall at no time exceed an amount equal to 50% of Tangible
Capitalization and (b) Priority Debt shall at no time exceed the
lesser of (1) 25% of Consolidated Tangible Net Worth or (2) 10% of
Consolidated Tangible Net Worth plus Debt described in clause (iv) of
Section 6.3 hereof;
6.5 Loans, Advances and Investments. Make or permit to remain
outstanding any loan or advance to, or own, purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, any Person, except:
(i) make or permit to remain outstanding loans or advances
to any Subsidiary,
(ii) own, purchase or acquire stock obligations or
securities of a Subsidiary or of a Person which immediately after such
purchase or acquisition will be a Subsidiary,
(iii) acquire and own stock, obligations or securities
received in settlement of debts (created in the ordinary course of
business) owing to the Company or any Subsidiary,
(iv) own, purchase or acquire (a) direct obligations of, or
obligations guaranteed by, the United States of America, (b) banker's
acceptances, certificates of deposit and repurchase agreements with
respect to same, in each case due within one year from the date of
purchase issued by a commercial bank located and incorporated in the
United States or Canada with capital and surplus of at least $100
million (U.S.) and (c) commercial paper rated P-1 by Moody's Investors
Service, Inc. or A-1 by Standard & Poor's Corporation and maturing not
more than one year from the date of purchase thereof,
(v) own, purchase or acquire other obligations maturing
not more than 90 days from the date of purchase thereof rated "AAA" by
Standard and Poor's Corporation or "Aaa" by Moody's Investors Service,
Inc.,
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(vi) make or permit to remain outstanding travel and other
like advances to officers and employees of the Company or a Subsidiary
in the ordinary course of business, and
(vii) make other loans, advances and investments not to
exceed 5% of Consolidated Tangible Net Worth at any time;
6.6 Sale of Stock and Debt of Subsidiaries. Sell or otherwise dispose
of, or part with control of, any shares of stock or Debt of any Subsidiary,
except (a) to the Company or another Subsidiary, or (b) shares of stock and Debt
of any Subsidiary at the time owned by or owed to the Company if sold as an
entirety for a consideration which represents the fair value (as determined in
good faith by the Board of Directors of the Company) at the time of sale of the
shares of stock and Debt so sold; provided that such sale or other disposition
is treated as a transfer of assets of such Subsidiary and is permitted by
Section 6.8 hereof at the time of such sale or disposition.
6.7 Merger and Consolidation. Merge or consolidate with or into any
other Person, except that:
(i) any Subsidiary may merge or consolidate with or into
the Company, provided that the Company is the continuing or surviving
corporation,
(ii) any Subsidiary may merge or consolidate with or into
another Subsidiary provided that no Default or Event of Default exists
or would exist immediately after giving effect thereto, and
(iii) the Company may merge or consolidate with any other
corporation, provided that (a) the Company shall be the continuing or
surviving corporation, and (b) no Default or Event of Default exists
or would exist immediately after giving effect thereto;
6.8 Transfer of Assets. Transfer any of its assets except that:
(i) any Subsidiary may transfer assets to the Company,
(ii) the Company or any Subsidiary may sell inventory in
the ordinary course of business, and
(iii) the Company or any Subsidiary may otherwise transfer
assets, provided that such transfers of assets shall not exceed, on
the basis of the book value thereof, $15,000,000 in any fiscal year of
the Company.
6.9 Sale or Discount of Receivables. Sell with recourse, pledge, or
discount or otherwise sell for less than the face value thereof, any of its
notes or accounts receivable;
6.10 Related Party Transactions. Directly or indirectly, purchase,
acquire or lease any Property from, or sell, transfer or lease any Property to,
or otherwise deal with, in the
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ordinary course of business or otherwise any Related Party; provided that the
foregoing shall not prohibit any transaction in the ordinary course of business
with a Related Party on terms no less favorable to the Company or a Subsidiary
than if no such Related Party relationship existed;
6.11 Margin Securities. Permit the aggregate market value of all
"margin stock", as defined under Regulation U of the Board of Governors of the
Federal Reserve Board, owned by the Company and its Subsidiaries at any time to
be greater than 25% of the value of the consolidated assets of the Company and
its Subsidiaries, as determined by any reasonable method; or
SECTION 7 DEFAULT AND REMEDIES
7.1 Events of Default Defined. Any one or more of the following shall
constitute an "Event of Default":
(a) the Company shall fail to pay any Obligation hereunder
(including, without limitation, any payments due on the Term Loan and
the payments required Section 5.9) when and as the same shall become
due, which default shall remain uncured for a period of ten (10) Days;
(b) the Company shall fail to observe or perform any of the
covenants, agreements or conditions contained in Sections 5.2(b), 5.4,
5.7, 5.9 or any provision of Section 6, which Default shall remain
uncured for a period of ten (10) Days;
(c) the Company shall fail to observe or perform any of the
other covenants, agreements or conditions contained in this Agreement
or the Related Documents and such failure shall continue for thirty
(30) days after the earlier of the Company's knowledge thereof or
written notice thereof is given by the Bank to the Company's, or such
longer period, if any, which the Bank may specify in such notice in
its sole discretion;
(d) the Company or any Subsidiary shall default (as
principal or otherwise) in the payment of any other Indebtedness
aggregating $5,000,000 or more, or default in any of the provisions of
any agreement(s) evidencing such Indebtedness, and such default shall
continue beyond any period of grace, if any, specified in such
agreement;
(e) any representation or warranty made by the Company
herein or in any of the Related Documents or in any certificate,
document or financial statement delivered by the Company or any
Subsidiary to any Bank shall prove to have been incorrect in any
material respect as of the time when made or given;
(f) a final judgment (or judgments) for the payment of
amounts aggregating in excess of $1,000,000 shall be entered against
the Company or any Subsidiary and such judgment (or judgments) shall
remain outstanding and unsatisfied, unbonded or unstayed after thirty
days from the date of entry thereof or not subject to insurance
coverage;
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(g) the Company or any Material Subsidiary (as defined
above) shall (i) become insolvent or take or fail to take any action
which constitutes an admission of inability to pay its debts as they
mature; (ii) make an assignment for the benefit of creditors; (iii)
petition or apply to any tribunal for the appointment of a custodian,
receiver or any trustee for the Company or any Material Subsidiary or
a substantial part of its respective assets; (iv) suffer any such
custodianship, receivership or trusteeship to continue undischarged
for a period of 60 days or more; (v) commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, whether
now or hereafter in effect; (vi) by any act or omission indicate its
consent to, approval of or acquiescence in any such petition,
application or proceeding or order for relief or the appointment of a
custodian, receiver or any trustee for its or any substantial part of
any of its properties; or adopts a plan of liquidation of its assets;
(h) the Company shall be declared in default under the
$100,000,000 Credit Agreement; or
(i) this Agreement or any of the Related Documents shall at
any time cease to be in full force and effect, or the Company shall
contest or deny any liability or obligation under, or attempt to
revoke or terminate, any provision of this Agreement or any Related
Document.
7.2 Remedies Upon Event of Default. Upon the occurrence and during a
continuance of an Event of Default:
(a) As specified in clause (g) of Section 7.1, then, without
presentment, notice, demand or action of any kind by the Bank, all of
which are hereby waived; the entire amount of the Obligations shall be
automatically accelerated and immediately due and payable.
(b) As specified in clauses (a), (b), (c), (d), (e), (f),
(h) or (i) of Section 7.1, the Bank may, upon written notice to the
Company declare the entire amount of the Obligations immediately
accelerated, due and payable.
(c) the Bank may at any time, without prior notice or
demand, set off against any credit balance or other money now or
hereafter owed to the Company the Company's Obligations hereunder.
(d) the Bank may exercise all of the others rights and
remedies provided to the Bank by this Agreement and the other Related
Documents, and all rights and remedies provided by law and in equity,
by statute or otherwise, and no remedy herein conferred upon the Bank
or the Bank is intended to be exclusive of any other right and remedy
and each right and remedy shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at
law, in equity, by statute or otherwise. In addition to and not in
lieu of any other right or remedy the Bank might have, the Bank at any
time may (but shall not be required to) do or perform or cause to be
done or performed anything which the Company is required to do,
perform or
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comply hereunder, and the Company shall reimburse the Bank upon demand
for any cost or expense which the Bank may incur in such respect,
together with interest thereon at the Default Rate. No failure or
delay on the part of the Bank in exercising any right or remedy
hereunder shall operate as a waiver thereof nor shall any single or
partial exercise of any right hereunder preclude any further exercise
thereof or the exercise of any other right or remedy. The Company
hereby grants to the Bank a security interest in and Lien on any such
credit balance or other money.
SECTION 8 MISCELLANEOUS
8.1 Assignability; Successors. The provisions of this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of the parties hereto. The Company's rights and liabilities under this Agreement
and the Related Documents are not assignable in whole or in part without the
prior written consent of the Bank.
8.2 Survival. All indemnity and reimbursement obligations made herein
and in the Related Documents shall survive the termination of this Agreement and
the Related Documents and the satisfaction of the Obligations.
8.3 Governing Law. This Agreement and the Related Documents shall be
governed by the internal laws of the State of Wisconsin. The parties hereto
acknowledge that this Agreement and the Related Documents were all negotiated
with the assistance of counsel and, accordingly, such laws shall be applied
without reference to any rules of construction regarding the draftsman hereof.
8.4 Counterparts; Headings; Construction. This Agreement may be
executed in several counterparts, each of which shall be deemed an original, but
such counterparts shall together constitute but one and the same agreement.
8.5 Entire Agreement. This Agreement, the Exhibits and Schedules
attached hereto, and the Related Documents contain the entire understanding of
the parties with respect to the subject matter hereof, and supersede all other
understandings, oral or written, with respect to the subject matter hereof. No
provision of this Agreement or the Related Documents may be waived, modified or
supplemented in any manner without the prior written consent of the parties.
8.6 Notices. All communications or notices required or permitted by
this Agreement shall be in writing and shall be deemed to have been given or
made when delivered in hand, deposited in the mail, or sent by facsimile or
express mail service. Communications or notices shall be delivered personally or
by certified or registered mail, postage prepaid, or by facsimile and addressed
as follows, (unless and until either of such parties notifies the other in
accordance with this section of a change of address):
if to the Company: Banta Corporation
225 Main Street
Box 8003
Menasha, Wisconsin 54952
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Attn: Gerald A. Henseler
FAX: (920) 751-7790
with a copy to: Banta Corporation
225 Main Street
Box 8003
Menasha, Wisconsin 54952
Attn: Ronald Kneezel, General Counsel
FAX: (920) 751-7792
if to the Bank: Firstar Bank, N.A.
777 East Wisconsin Avenue
Milwaukee, WI 53202
Attn: Jeffrey Janza
FAX (414) 765-4632
with copy to: Michael Best & Friedrich LLP
100 East Wisconsin, Suite 3300
Milwaukee, WI 53202-4108
Attn: Gilbert L. Southwell, III
FAX (414) 277-0656
8.7 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
8.8 Further Assurances. The Company agrees (and agrees to cause its
Subsidiaries) to do such further acts and things, and to execute and deliver
such additional conveyances, assignments, agreements and instruments, as Bank
may at any time reasonably request in connection with the administration or
enforcement of this Agreement or the Related Documents.
8.9 Conflicts and Ambiguities. In the event of any ambiguity or
conflict as between the terms of this Agreement, the Related Documents or any
other document executed and delivered pursuant to this Agreement, such conflicts
shall be interpreted in a manner so as to provide the Bank with the greatest
rights and remedies vis-a-vis the Company.
8.10 Submission to Jurisdiction. The Bank may enforce any claim
arising out of this Agreement or the Related Documents in any state or federal
court having subject matter jurisdiction and located in Milwaukee, Wisconsin.
For the purpose of any action or proceeding instituted with respect to any such
claim, the Company hereby irrevocably submits to the personal jurisdiction of
such courts. Nothing herein contained shall affect the right of the Bank to
serve process in any other manner permitted by law or preclude the Bank from
bringing an action or proceeding in respect hereof in any other country, state
or place having jurisdiction over such action. The Company hereby irrevocably
waives, to the fullest extent permitted by law, any
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objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding brought in any court located in Milwaukee,
Wisconsin and any claim that any such suit, action or proceeding brought in such
a court has been brought in an inconvenient forum.
8.11 Waiver of Jury Trial. Each party hereto knowingly, voluntarily
and without coercion, waives all rights to a trial by jury of all disputes
arising out of or in relation to (a) this Agreement or any Related Document to
which it is a party, or under any amendment, instrument, document or agreement
delivered or which may in the future be delivered in connection therewith, (b)
arising from any relationship existing in connection with this Agreement or and
any Related Document, or (c) any past or future act, conduct or omission in
connection with this Agreement, the Related Documents or any relationship
created thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
COMPANY:
BANTA CORPORATION
By: /s/ Gerald A. Henseler
----------------------------------
Gerald A. Henseler,
Executive Vice President and
Chief Financial Officer
BANK:
FIRSTAR BANK, N.A.
By: /s/ Jeffrey Janza
----------------------------------
Jeffrey Janza, Vice President
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TERM NOTE
$20,000,000 Milwaukee, Wisconsin
March 10, 2000
FOR VALUE RECEIVED, BANTA CORPORATION, a Wisconsin corporation, (the
"Company"), promises to pay to the order of FIRSTAR BANK, NATIONAL ASSOCIATION
(the "Bank") at the main office of Bank in Milwaukee, Wisconsin or at such other
place as the Bank may from time to time in writing designate, in good funds, the
principal sum of Twenty Million Dollars ($20,000,000) together with interest as
provided herein and all other costs, charges and fees due under the Credit
Agreement of even date herewith (the "Credit Agreement") between Bank and the
Company. Capitalized terms not defined in this Term Note shall have the meanings
ascribed thereto in the Credit Agreement.
This Term Note ("Note") evidences indebtedness incurred under, and is
entitled to the benefits of, and is subject to the Credit Agreement (as
amended), including Section 2.1 of the Credit Agreement and those sections
governing payment and acceleration of this Note. In the event of any conflict
between the terms of this Note and the Credit Agreement, the Credit Agreement
shall control.
Prior to an Event of Default, and except as otherwise provided in the
Credit Agreement or herein, this Note shall bear interest on the unpaid
principal balance before maturity (whether upon demand, acceleration or
otherwise) at the one, two, three or six month LIBOR Index Rate selected in
writing by Company from time to time plus 85 basis points (each such selected
rate a "LIBOR Rate") for the corresponding Interest Period so long as LIBOR
Loans are available for this Note under the Credit Agreement or herein. Interest
shall be computed based on the actual number of days elapsed and a year of 360
days. Subject to the provisions of the Credit Agreement with respect to
acceleration and prepayment, the entire principal balance of this Note, together
with accrued interest and all other accrued costs, charges and fees, shall be
due and payable in full on March 10, 2003. Amounts paid or prepaid on this Note
may not be reborrowed. Subject to the provisions of the Credit Agreement
regarding LIBOR Loans, the Company may, from time to time and without premium or
penalty, prepay the unpaid principal balance of this Note.
Prior to an Event of Default, and except as otherwise provided in the
Credit Agreement or herein, interest on the unpaid principal of any LIBOR Loan
shall be paid at the end of each Interest Period provided that, if any LIBOR
Loan is based on a six month Interest Period, accrued interest shall be due at
the end of the third month of such Interest Period, and at the end of such
Interest Period. During any time that interest on the Term Loan shall be
calculated with reference to the Floating Rate, accrued interest on the Term
Loan shall be due and payable monthly commencing on the first day of the
subsequent month and on the first day of each month thereafter.
In the event the Company does not select in writing a LIBOR Rate at
least two Business Days prior to expiration of the then existing Interest
Period, the Floating Rate shall apply until the Company selects in writing a
LIBOR Rate upon such two (2) Business Days prior written
28
<PAGE>
notice to Bank. The Bank's internal records of applicable interest rates shall
be determinative in the absence of manifest error. Each LIBOR Rate option
selected shall apply to the entire outstanding principal amount of the Term
Loan. For determining time and payment dates for LIBOR Loans, the London
business day shall be standard convention.
If a LIBOR Loan is prepaid prior to the end of any Interest Period by
the Company, (whether as a result of acceleration upon default or otherwise),
the Company agrees to pay all of the Bank's costs, expenses and Interest
Differential (as reasonably determined by the Bank) incurred as a result of such
prepayment. The term "Interest Differential" shall mean the sum equal to the
greater of $0 or the financial loss incurred by the Bank resulting from
prepayment, calculated as the difference between the amount of interest the Bank
would have earned had prepayment not occurred and the interest the Bank will
actually earn as a result of the redeployment of funds from the prepayment. Due
to of the short-term nature of each Interest Period, the Company agrees that the
Interest Differential shall not be discounted to its present value.
The Company hereby agrees to pay all costs and expenses incurred by
the Bank, including reasonable attorneys' fees and legal expenses, in enforcing
its rights under this Note as are specified in the Credit Agreement.
This Note is issued in and shall be governed by the laws of the State
of Wisconsin.
No delay or omission on the part of the Bank in exercising any right
hereunder shall operate as a waiver of such right or of any other remedy under
this Note. A waiver on any one occasion shall not be construed as a waiver of
any such right or remedy on a future occasion.
BANTA CORPORATION
By: /s/ Gerald A. Henseler
---------------------------------------
Gerald A. Henseler, Executive Vice
President and Chief Financial Officer
29
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF BANTA CORPORATION AS OF AND FOR THE
THREE MONTHS ENDED APRIL 1, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-2000
<PERIOD-START> JAN-02-2000
<PERIOD-END> APR-01-2000
<CASH> 0
<SECURITIES> 24,261
<RECEIVABLES> 221,163
<ALLOWANCES> 4,883
<INVENTORY> 93,424
<CURRENT-ASSETS> 358,054
<PP&E> 835,325
<DEPRECIATION> 499,670
<TOTAL-ASSETS> 787,235
<CURRENT-LIABILITIES> 251,056
<BONDS> 133,475
0
0
<COMMON> 2,521
<OTHER-SE> 343,863
<TOTAL-LIABILITY-AND-EQUITY> 787,235
<SALES> 328,784
<TOTAL-REVENUES> 328,784
<CGS> 262,277
<TOTAL-COSTS> 262,277
<OTHER-EXPENSES> 45,870
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,890
<INCOME-PRETAX> 16,394
<INCOME-TAX> 6,500
<INCOME-CONTINUING> 9,894
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,894
<EPS-BASIC> 0.39 <F1>
<EPS-DILUTED> 0.39
<FN>
<F1> THE EPS UNDER THE "EPS - PRIMARY" TAG REPRESENTS BASIC EARNINGS PER SHARE
</FN>
</TABLE>
