Exhibit 10.4 (g)
SIXTH AMENDMENT TO CREDIT AGREEMENT
This Sixth Amendment to Credit Agreement ("Amendment") is made this 26th
day of December, 2001, by and among Phoenix Color Corp. ("Phoenix"), a Delaware
corporation, PCC Express, Inc. ("PCC"), a Delaware corporation, Phoenix (MD.)
Realty, LLC ("Realty"), a Maryland limited liability company, and TechniGraphix,
Inc. ("TechniGraphix"), a Maryland corporation (singly a "Borrower" and
collectively, "Borrowers"), the lending institutions listed from time to time on
Schedule A to the Credit Agreement (as defined below) (singly, a "Lender" and
collectively, "Lenders"), First Union National Bank, a national banking
association, as issuer of letters of credit (in such capacity, "Issuer"), and
First Union National Bank, as administrative agent for Issuer and Lenders (in
such capacity, "Agent").
BACKGROUND
A. Borrowers, Agent, Issuer and Lenders are parties to a Credit Agreement
dated September 15, 1998 (as amended or otherwise modified from time to time,
the "Credit Agreement"), pursuant to which certain financing arrangements were
established for the benefit of Borrowers. All capitalized terms not otherwise
defined herein shall have the respective meanings ascribed thereto in the Credit
Agreement.
B. Borrowers have requested that Agent, Issuer and Lenders modify, in
certain respects, the Credit Agreement and Agent, Issuer and Lenders have agreed
to make such modifications, all as more fully set forth herein and subject to
the terms and conditions hereof.
NOW, THEREFORE, with the foregoing Background incorporated by reference
herein and made part hereof, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Amendments to Credit Agreement.
a. The definitions of Borrowing Base and Equipment Availability set
forth in Section 1.1 of the Credit Agreement are hereby deleted in their
entirety and replaced with the following new definitions:
"Borrowing Base" - As of any date of determination, the sum of: (a)
eighty-five percent (85%) of Eligible Accounts, plus (b) the lesser of
(i) Three Million Dollars ($3,000,000) and (ii) (A) fifty-five percent
(55%) of that portion of Eligible Inventory comprised of paper raw
material, plus (B) fifty percent (50%) of that portion of Eligible
Inventory comprised of ink raw material (such portions of Eligible
Inventory to be separately reported by Borrowers on the Borrowing
Certificate), plus (C) thirty-five percent (35%) of that portion of
Eligible Inventory comprised of raw material other than paper raw
material and ink raw material, plus (c) the Equipment Availability,
plus (d) in the event the Tax Refund is not received by Borrowers
prior to March 31, 2002, then for the period from April 1, 2002, until
the earlier of (i) June 30, 2002, or (ii) Borrower's receipt of the
Tax Refund, an amount equal to the lesser of (x) the actual Tax Refund
expected to be paid, or (y) the sum of Six Hundred Forty Thousand
Dollars ($640,000), minus (e) reserves established by Agent from time
to time (including but not limited to semi-annual bond interest
payment reserve and customer rebate reserve). If Borrowers implement a
perpetual inventory system that is reasonably satisfactory to Agent
(as indicated in writing by Agent to Phoenix), then the percentage set
forth in clause (b)(ii)(A) shall increase from fifty-five percent
(55%) to sixty percent (60%).
"Equipment Availability" - Shall mean Six Million Dollars
($6,000,000). The aggregate amount of Equipment Availability shall
reduce by (x) One Hundred Thousand Dollars ($100,000) per month for
each month commencing July 1, 2002 for the first twelve (12) months,
and, commencing July 1, 2003, Two Hundred Thousand Dollars ($200,000)
per month for each month thereafter, and (y) if all or any portion of
a security deposit financed under clause (b)(ii) shall be returned to
Borrowers, an amount equal to the returned portion of such security
deposit.
b. The following new definitions shall be added (in alphabetical
order) to Section 1.1 of the Credit Agreement:
"Tax Refund " - The federal tax refund to which Borrowers are entitled
for the [year ended December 31, 2000] in an amount no less than Six
Hundred Forty Thousand Dollars ($640,000).
"Pearson Contract" - The Master Purchase Order effective as of January
1, 2002, between Pearson, inc. and Phoenix.
"Sixth Amendment" - That certain Sixth Amendment to Credit Agreement
dated as of December 26, 2001, by and among Borrowers, Agent, Lenders
and Issuer.
c. Section 2.6(e) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
"(e) Borrowers shall unconditionally pay to Agent an amendment fee, in
consideration of the accommodation granted under the Sixth Amendment
of One Hundred Fifty Thousand Dollars ($150,000), which is fully
earned upon execution of the Sixth Amendment, and which is payable in
the amount of Seventy Five Thousand Dollars ($75,000) on December 31,
2002, and Seventy Five Thousand Dollars ($75,000) on December 31,
2003; provided however, that the entire amendment fee (or the
remaining unpaid portion, if applicable) shall be payable on the
termination of the Revolving Credit, if such termination occurs prior
to either such payment date.
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d. Section 2.7 of the Credit Agreement is amended and restated in its
entirety as follows:
"2.7 Use of Proceeds: The extensions of credit under and
proceeds of the Revolving Credit shall be used (i) for general
corporate purposes, including but not limited to, working
capital, (ii) to fund (a) final payments due on Eligible Fixed
Assets upon Phoenix's certification to Agent that the
underlying capital equipment leases are not converted to
operating leases and (b) security deposits to be held by
lessors for Eligible Fixed Assets which Borrowers lease
pursuant to one or more operating leases (in either case,
subject to the limitations in Section 6.12 herein), (iii) to
fund payments (up to a maximum of Four Million Dollars
($4,000,000) owing by Phoenix, in connection with the closing
fees required, under the Pearson Contract, and (iv) for the
issuance of Letters of Credit.
2. Effectiveness Conditions. This Amendment shall become effective upon the
satisfactory completion, as determined by Agent in its discretion, of the
following conditions ("Effectiveness Conditions") (all documents to be in form
and substance satisfactory to Agent):
a. Execution and delivery by all parties of this Amendment;
b. Delivery of all consents and approvals of the boards of directors,
shareholders and other applicable third parties necessary in connection
with this transaction shall have been obtained;
c. Receipt of a true and correct copy of the Pearson Contract; and
d. Payment of expenses.
3. Representations and Warranties. Each Borrower warrants and represents to
Agent, Issuer and Lenders that:
a. Prior Representations. As of the date of this Amendment, all
warranties and representations set forth in the Credit Agreement and Loan
Documents are true and correct in all material respects, both before and
after giving effect to this Amendment.
b. No Default. No Default or Event of Default is outstanding or would
exist after giving effect to this Amendment.
4. Additional Covenant. Within thirty (30) days from the execution of this
Amendment, Borrowers shall execute and deliver to Agent, such instruments,
documents and agreement as Agent may require (including without limitation, Form
2848 of the Department of the Treasury, Internal Revenue Service, titled "Power
of Attorney and Declaration of Representative"), enabling Agent or Agent's
representatives to receive directly, whether by check, wire transfer or any
other means of payment, the Tax Refund.
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5. Incorporation into Existing Loan Documents. The parties acknowledge and
agree that this Amendment is incorporated into and made part of the Credit
Agreement and Loan Documents, the terms and provisions of which, unless
expressly modified herein, are hereby ratified and confirmed and continue
unchanged and in full force and effect. Any future reference to the Credit
Agreement or Loan Documents shall mean the Credit Agreement or Loan Documents as
amended hereby. To the extent that any term or provision of this Amendment is or
may be deemed expressly inconsistent with any term or provision in the Loan
Documents, the terms and provisions hereof shall control.
6. Miscellaneous.
a. Headings. The headings of any paragraph of this Amendment are for
convenience only and shall not be used to interpret any provision hereof.
b. Other Instruments. Each Borrower shall execute any other documents,
instruments and writings, in form and substance satisfactory to Agent, as
Agent may reasonably request, to carry out the intentions of the parties
hereunder.
c. Modifications. No modification hereof or any agreement referred to
herein shall be binding or enforceable unless in writing and signed on
behalf of the party against whom enforcement is sought.
d. Third Party Rights. No rights are intended to be created hereunder
for the benefit of any third party donee, creditor, or incidental
beneficiary.
e. Governing Law. The terms and conditions of this Amendment shall be
governed by and construed in accordance with the substantive laws of the
Commonwealth of Pennsylvania without regard to its otherwise applicable
principles of conflicts and laws.
f. Counterparts. This Amendment may be executed in counterpart all, of
which counterparts taken together shall constitute one completed fully
executed document. A photocopied or facsimile signature shall be deemed to
be the functional equivalent of a manually executed original for all
purposes.
g. WAIVER OF JURY TRIAL. BORROWERS, AGENT, ISSUER AND LENDERS, BY
THEIR EXECUTION OF THIS AMENDMENT, EACH REAFFIRM THEIR WAIVER OF THE RIGHT
TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING OR COUNTERCLAIM OF ANY
KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE
OBLIGATIONS OR THE COLLATERAL.
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IN WITNESS WHEREOF, the parties have executed this Amendment the day
and year first above written.
Phoenix Color Corp. Phoenix (MD.) Realty, LLC
By: /s/Xxxxxx Xxxxxxxxx By: /s/Xxxxxx Xxxxxxxxx
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Name: Xxxxxx Xxxxxxxxx Name: Xxxxxx Xxxxxxxxx
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Title: Chief Financial Officer Title: Chief Financial Officer
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PCC Express, Inc. TechniGraphix, Inc.
By: /s/Xxxxxx Xxxxxxxxx By: /s/Xxxxxx Xxxxxxxxx
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Name: Xxxxxx Xxxxxxxxx Name: Xxxxxx Xxxxxxxxx
-------------------------------- -----------------------------------
Title: Chief Financial Officer Title: Chief Financial Officer
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First Union National Bank
By: /s/Xxxxxxxx Xxxxx
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Name: Xxxxxxxx Xxxxx
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Title: Vice President
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