AMENDMENT NO. 2 Dated as of June 11, 2009 to the CREDIT AGREEMENT Dated as of January 28, 2005
EXHIBIT
10.1
EXECUTION
COPY
AMENDMENT
NO. 2
Dated as
of June 11, 2009
to
the
Dated as
of January 28, 2005
This
AMENDMENT NO. 2 TO THE CREDIT AGREEMENT (this “Amendment”)
is made as of June 11, 2009 by and among SCHAWK, INC. (the “Borrower”),
the financial institutions listed on the signature pages hereof and JPMORGAN
CHASE BANK, NATIONAL ASSOCIATION, in its capacity as contractual representative
for itself and the other Lenders (in such capacity, the “Agent”)
under that certain Credit Agreement dated as of January 28, 2005 by and among
the Borrower, the Alternate Currency Borrowers from time to time party thereto,
the Lenders and the other “Lenders” from time to time party thereto, JPMorgan
Chase Bank, National Association, as Collateral Agent, and the Agent (as amended
prior to the date hereof, the “Credit
Agreement”). Defined terms used herein and not otherwise
defined herein shall have the meaning given to them in the Credit
Agreement.
WITNESSETH
WHEREAS,
the Borrower, the Lenders and the Agent have agreed to amend the Credit
Agreement on the terms and conditions set forth herein; and
NOW,
THEREFORE, in consideration of the premises set forth above, the terms and
conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
have agreed to the following amendment to the Credit Agreement:
1. Amendment
to the Credit Agreement. Effective as of the date hereof and
subject to the satisfaction of the conditions precedent set forth in Section
3 below, the Credit Agreement is hereby amended as follows:
1.1. The
Aggregate Revolving Loan Commitment is hereby reduced from $115,000,000 to
$82,500,000. The last sentence in the definition of “Aggregate
Revolving Loan Commitment” appearing in Article I of the Credit Agreement is
amended and restated in its entirety to read as follows:
The
Aggregate Revolving Loan Commitment as of the Amendment No. 2 Effective Date is
Eighty-Two Million Five Hundred Thousand and 00/100 Dollars
($82,500,000).
1.2. The
definition of “Collateral Documents” appearing in Article I of the Credit
Agreement is amended to add the phrase “, the Security Agreement” immediately
after the phrase “the Foreign Pledge Agreements” appearing therein.
1.3. The
definition of “Required Lenders” appearing in Article I of the Credit Agreement
is amended to delete each occurrence of the word “two” appearing therein and to
replace each such word with the word “three”.
1.4. The
definition of “Secured Obligations” appearing in Article I of the Credit
Agreement is amended to add the phrase “and Banking Services Obligations, in
each case” immediately after the reference to “Hedging Obligations” appearing
therein.
1.5. Article
I of the Credit Agreement is amended to add the following definitions thereto in
appropriate alphabetical order and, where applicable, replace the corresponding
previously existing definitions:
“Agreement
Accounting Principles” means, with respect to the calculation of
financial ratios and other financial tests required by this Agreement, generally
accepted accounting principles as in effect in the United States as of the date
of this Agreement, applied in a manner consistent with that used in preparing
the financial statements of the Borrower referred to in Section
6.4(B) hereof; provided,
further,
however,
all pro
forma
financial statements reflecting Acquisitions shall be prepared in accordance
with the requirements established by the Commission for acquisition accounting
for reporting acquisitions by public companies (whether or not such Acquisitions
are required to be publicly reported); provided,
further,
that no change in accounting principles shall be made from those used in
preparing the financial statements referred to in Section 6.4(B)
hereof, including, without limitation, with respect to the nature or
classification of accounts, closing proceedings, levels of reserves, or levels
of accruals other than as a result of objective changes in the underlying
business; provided,
further,
that for purposes of the preceding clauses, “changes in accounting principles”
or “changes in Agreement Accounting Principles” includes all changes in
accounting principles, policies, practices, procedures, or methodologies with
respect to financial statements, their classification, or their display, as well
as all changes in practices, methods, conventions, or assumptions used in making
accounting estimates.
“Alternate
Base Rate” means, for any day, a fluctuating rate of interest per annum
equal to the highest of (i) the Prime Rate for such day, (ii) the sum of (a) the
Federal Funds Effective Rate for such day and (b) one-half of one percent
(0.50%) per annum and (iii) the Eurocurrency Base Rate for a one month Interest
Period on such day (or if such day is not a Business Day, the immediately
preceding Business Day) plus 1%; provided that, for the avoidance of doubt, the
Eurocurrency Base Rate for any day shall be based on the applicable British
Bankers’ Association LIBOR rate for deposits in Dollars as reported by any
generally recognized financial information service as of 11:00 a.m. (London
time) on such day. Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Federal Funds Effective Rate or the Eurocurrency
Base Rate shall be effective from and including the effective date of such
change in the Prime Rate, the Federal Funds Effective Rate or the Eurocurrency
Base Rate, respectively.
“Amendment
No. 2 Effective Date” means June 11, 2009.
“Applicable
L/C Fee Percentage” means, as at any date of determination, the greater
of (i) 2.00% per annum and (ii) the rate per annum then applicable to the letter
of credit fee under Section
3.8(a) hereof in accordance with the provisions of Section
2.15(D)(ii) hereof.
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“Banking
Services” means each and any of the following bank services provided to
the Borrower or any Subsidiary by any Lender or any of its Affiliates: (a)
commercial credit cards, (b) stored value cards and (c) treasury management
services (including, without limitation, controlled disbursement, automated
clearinghouse transactions, return items, overdrafts and interstate depository
network services).
“Banking
Services Agreement” means any agreement entered into by the Borrower or
any Subsidiary in connection with Banking Services.
“Banking
Services Obligations” means any and all obligations of the Borrower or
any Subsidiary, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor) in connection with Banking
Services.
“Collateral”
means all pledged Capital Stock, and any and all owned or leased personal
property, in or upon which a security interest or Lien is from time to time
granted to the Collateral Agent, for the benefit of the Holders of Secured
Obligations, whether under the Foreign Pledge Agreements, under the Security
Agreement, under any of the other Collateral Documents or under any of the other
Loan Documents.
“Defaulting
Lender” means any Lender, as determined by the Agent, that has (a) failed
to fund any portion of its Loans or participations in Letters of Credit or Swing
Line Loans within three Business Days of the date required to be funded by it
hereunder, (b) notified the Borrower, the Agent, the Issuing Banks, the Swing
Line Bank or any Lender in writing that it does not intend to comply with any of
its funding obligations under this Agreement or has made a public statement to
the effect that it does not intend to comply with its funding obligations under
this Agreement or under other agreements in which it commits to extend credit,
(c) failed, within three Business Days after request by the Agent, to confirm
that it will comply with the terms of this Agreement relating to its obligations
to fund prospective Loans and participations in then outstanding Letters of
Credit and Swing Line Loans, (d) otherwise failed to pay over to the Agent or
any other Lender any other amount required to be paid by it hereunder within
three Business Days of the date when due, unless the subject of a good faith
dispute, or (e) (i) become or is insolvent or has a parent company that has
become or is insolvent or (ii) become the subject of a bankruptcy or insolvency
proceeding, or has had a receiver, conservator, trustee, administrator, assignee
for the benefit of creditors or similar Person charged with reorganization or
liquidation of its business or custodian, appointed for it, or has taken any
action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment or has a parent company that
has become the subject of a bankruptcy or insolvency proceeding, or has had a
receiver, conservator, trustee, administrator, assignee for the benefit of
creditors or similar Person charged with reorganization or liquidation of its
business or custodian appointed for it, or has taken any action in furtherance
of, or indicating its consent to, approval of or acquiescence in any such
proceeding or appointment.
“Domestic
Loan Parties” means
the Borrower and the Domestic Incorporated Subsidiaries.
“EBITDA”
means, for any period, on a consolidated basis for the Borrower and its
Subsidiaries, the sum of the amounts for such period, without duplication, of
(i) Net Income, plus
(ii) Interest Expense to the extent deducted in computing Net Income, plus
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(iii)
charges against income for foreign, federal, state and local taxes to the extent
deducted in computing Net Income, plus
(iv) depreciation expense to the extent deducted in computing Net Income, plus
(v) amortization expense, including, without limitation, amortization of
goodwill and other intangible assets to the extent deducted in computing Net
Income, plus
(vi) acquisition, integration and restructuring charges incurred in the
Borrower’s 2009 fiscal year and in an aggregate amount not to exceed $3,000,000,
all in accordance with Agreement Accounting Principles to the extent deducted in
computing Net Income, plus
(vii) other extraordinary non-cash charges to the extent deducted in computing
Net Income, minus
(viii) other extraordinary non-cash credits to the extent added in computing Net
Income, plus
(ix) non-cash expenses related to stock based compensation to the extent
deducted in computing Net Income, plus
(x) charges incurred as a result of impairment of fixed assets, intangible
assets and goodwill, all to the extent deducted in computing Net
Income. EBITDA shall be calculated on a pro
forma
basis giving effect to acquisitions and Asset Sales on a last twelve (12)
months’ basis. Notwithstanding the foregoing, EBITDA shall be deemed
to be (1) $13,900,000 for the Borrower’s fiscal quarter ended on or about June
30, 2008, (2) $13,800,000 for the Borrower’s fiscal quarter ended on or about
September 30, 2008 and (3) $2,243,000 for the Borrower’s fiscal quarter ended on
or about December 31, 2008.
“Eurocurrency
Rate” means, with respect to a Eurocurrency Rate Loan for the relevant
Interest Period, the sum of (i) the greater of (A) 2.00% per annum and (B) the
Eurocurrency Base Rate applicable to such Interest Period plus
(ii) the then Applicable Eurocurrency Margin.
“Facility
Reduction” means, with respect to any prepayment of the Revolving Credit
Obligations made at any time on or after the Amendment No. 2 Effective Date, an
amount equal to, if positive, (a) the Threshold Amount in effect immediately
prior to such prepayment minus (b) the Revolving Credit Obligations after giving
effect to such reduction.
“Normalization
Date” is defined in the Intercreditor Agreement.
“Note
Documents” means (i) (A) the Note Purchase Agreement dated as of December
23, 2003 between the Borrower and the purchasers named therein, as amended from
time to time and (B) the Senior Notes issued thereunder and (ii) (A) the Note
Purchase and Private Shelf Agreement dated as of the Closing Date between the
Borrower and the purchasers named therein, as amended from time to time and (B)
the Senior Notes and Shelf Notes issued thereunder.
“PIK
Notes” is defined in the Intercreditor Agreement.
“Report”
means reports prepared by either Agent or another Person showing the results of
appraisals, field examinations or audits pertaining to the assets of the
Borrower or any Subsidiary from information furnished by or on behalf of the
Borrower or any of its Subsidiaries, after such Agent has exercised its rights
of inspection pursuant to this Agreement, which Reports may be distributed to
the Lenders by either Agent.
“Required
Pro Rata Termination Time” means the time upon which (a) the sum of the
aggregate amount of all Facility Reductions and required pro rata repayment or
prepayment of the Note Obligations (excluding the PIK Notes) pursuant to the
terms of the Note Documents in accordance with the Current Pro Rata Shares (as
defined in the
4
Intercreditor
Agreement), in each case made at any time on or after the Amendment No. 2
Effective Date, equals (b) $20,000,000.
“Security
Agreement” means that certain Pledge and Security Agreement (including
any and all supplements thereto), dated as of the Amendment No. 2 Effective
Date, between the Domestic Loan Parties and the Collateral Agent, for the
benefit of the Collateral Agent and the other Holders of Secured
Obligations.
“Swing
Line Exposure” means, at any time, the aggregate principal amount of all
Swing Line Loans outstanding at such time. The Swing Line Exposure of
any Lender at any time shall be its Pro Rata Share of the total Swing Line
Exposure at such time.
“Threshold
Amount” means, at the time of any determination thereof, $75,283,750,
less the aggregate amount of all Facility Reductions (without duplication) prior
to such time.
“UCC”
means the Uniform Commercial Code as in effect from time to time in the State of
Illinois or any other state the laws of which are required to be applied in
connection with the issue of perfection of security interests.
“US
GAAP” means generally accepted accounting principles as in effect from
time to time in the United States of America.
1.6. Section
2.5(B)(iii) of the Credit Agreement is amended and restated in its entirety to
read as follows:
(iii) Upon
the consummation of any Asset Sale by the Borrower or any Subsidiary, within
five (5) Business Days after the Borrower’s or any of its Subsidiaries’ receipt
of any Net Cash Proceeds (or conversion to cash of non-cash proceeds (whether
principal or interest and including securities and release of escrow
arrangements)) received from any such Asset Sale (in any such case, such date is
hereinafter referred to as the “Prepayment Date”), the Borrower shall make a
mandatory prepayment of the Loans, subject to the provisions governing the
application of payments set forth in Section 2.5(B)(v),
in an amount equal to the product of (x) one hundred percent (100%) of such Net
Cash Proceeds and (y) a fraction, the numerator of which is the outstanding
principal amount of the Loans and L/C Obligations on the Prepayment Date and the
denominator of which is the outstanding principal amount of the sum of (A) the
outstanding principal amount of the Loans and L/C Obligations on the Prepayment
Date and (B) the Indebtedness (excluding in any event any make-whole premium or
payment in kind-related principal) under the Note Documents on the Prepayment
Date. Furthermore, at all times on or prior to the Required Pro Rata
Termination Time, if the outstanding principal amount of Indebtedness under the
Note Documents (other than PIK Notes) is paid or prepaid in whole or in part at
any time (but expressly excluding any prepayment of the Indebtedness under the
Note Documents pursuant to provisions of such Note Documents substantially
equivalent to this sentence) as in effect on the Amendment No. 2 Effective
Date), then on the date of each such payment or prepayment, the Borrower shall
make a mandatory prepayment of the Loans (subject to the provisions governing
the application of payments set forth in Section
2.5(B)(v)) in a pro rata amount calculated on the basis of the Current
Pro Rata Shares (as defined in the Intercreditor Agreement), together with
interest accrued thereon to the date of such prepayment (each such prepayment, a
“Required
Pro Rata Prepayment”). In addition, Borrower
shall
5
make a
mandatory prepayment of the Loans, subject to the provisions governing the
application of payments set forth in Section 2.5(B)(v),
in an amount equal to the amount of any offer to repurchase Indebtedness
outstanding under the Note Documents, which
offer was made as a result of such Asset Sale and which offer was rejected by
any holder of said Indebtedness. Any such prepayment shall be made
within five (5) Business Days after any such holder has rejected (or is deemed
to have rejected) such prepayment offer.
1.7. Section
2.5(B)(v) of the Credit Agreement is amended to amend and restate the final
sentence thereof in its entirety to read as follows:
The
parties hereto acknowledge and agree that such prepayments shall not reduce the
Aggregate Revolving Loan Commitment (provided that, notwithstanding the
foregoing, Required Pro Rata Prepayments (as defined in clause (iii) above)
shall permanently reduce the Aggregate Revolving Loan Commitment by the amount
of such prepayments).
1.8. Section
2.15(D)(ii) of the Credit Agreement is amended to (i) delete the ratio “2.5 to
1.0” appearing therein and to replace such ratio with the ratio “4.50 to 1.00”
and (ii) amend and restate the pricing grid appearing therein in its entirety to
read as follows:
|
Cash
Flow Leverage Ratio
|
Applicable
Floating
Rate
Margin
|
Applicable
Eurocurrency
Margin
|
Applicable
Commitment
Fee
Percentage
|
Applicable
l/c
Fee
Percentage
|
||||
|
Greater
than 4.50 to 1.00
|
3.50%
|
4.50%
|
0.50%
|
4.50%
|
||||
|
Greater
than 2.75 to 1.0 and less than or equal to 4.50 to 1.00
|
3.00%
|
4.00%
|
0.50%
|
4.00%
|
||||
|
Greater
than 2.50 to 1.00 and less than or equal to 2.75 to 1.00
|
2.50%
|
3.50%
|
0.50%
|
3.50%
|
||||
|
Less
than or equal to 2.50 to 1.00
|
2.00%
|
3.00%
|
0.375%
|
3.00%
|
1.9. Section
2.15(D)(iii) of the Credit Agreement is amended and restated in its entirety to
read as follows:
(iii) Notwithstanding
anything herein to the contrary, from the Amendment No. 2 Effective Date to but
not including the fifth (5th)
Business Day following receipt of the Borrower’s financial statements delivered
pursuant to Section
7.1(A)(i) for the fiscal quarter ending June 30, 2009, the Applicable
Floating Rate Margin, Applicable Eurocurrency Margin, Applicable L/C Fee
Percentage and Applicable Commitment Fee Percentage shall be determined based
upon a Cash Flow Leverage Ratio of 4.46 to 1.00.
1.10. Section
2.19 of the Credit Agreement is amended to (i) amend and restate clause (A)
thereof to read as “(A) all of the Obligations, Hedging Obligations and Banking
Services Obligations (other than (x) contingent indemnity obligations for which
no claim has been made and (y) Hedging Obligations
and Banking Services Obligations, in each case only to the extent the same are
not yet due
6
and
payable) shall have been fully and indefeasibly paid and satisfied,” and (ii)
amend and restate the parenthetical appearing in clause (B) thereof in its
entirety to read as follows:
(other
than under Hedging Agreements, Banking Services Agreements or other agreements
with respect to Hedging Obligations and Banking Services
Obligations)
1.11. Section
2.21(E) of the Credit Agreement is amended to delete the phrase “an Event of
Default” appearing therein and to replace such phrase with the phrase “a
Default”.
1.12. Article
VI of the Credit Agreement is amended to add the following as a new Section 6.22
thereto:
6.22. Security
Interest in Collateral. The provisions of this Agreement and
the other Loan Documents create legal and valid Liens on all the Collateral in
favor of the Collateral Agent, for the benefit of the Holders of Secured
Obligations, and such Liens constitute perfected and continuing Liens on the
Collateral, securing the Secured Obligations, enforceable against the applicable
Domestic Loan Party and all third parties, and having priority over all other
Liens on the Collateral except in the case of (a) Permitted Existing Liens, to
the extent any such Permitted Existing Liens would have priority over the Liens
in favor of the Collateral Agent pursuant to any applicable law and (b) Liens
perfected only by possession (including possession of any certificate of title)
to the extent the Collateral Agent has not obtained or does not maintain
possession of such Collateral.
1.13. Section
7.2(F) of the Credit Agreement is amended and restated in its entirety to read
as follows:
(F) Inspection
of Property; Books and Records; Discussions. The Borrower
shall permit and cause each of the Borrower’s Subsidiaries to permit, any
authorized representative(s) designated by either the Agent or any Lender to
visit and inspect any of the properties of the Borrower or any of its
Subsidiaries, to examine, audit, check and make copies of their respective
financial and accounting records, books, journals, orders, receipts and any
correspondence and other data relating to their respective businesses or the
transactions contemplated hereby (including, without limitation, in connection
with environmental compliance, hazard or liability), and to discuss their
affairs, finances and accounts with their officers, all upon reasonable notice
and at such reasonable times during normal business hours, as often as may be
reasonably requested. The Borrower shall keep and maintain, and cause
each of the Borrower’s Subsidiaries to keep and maintain, in all material
respects, proper books of record and account in which entries in conformity with
Agreement Accounting Principles shall be made of all dealings and transactions
in relation to their respective businesses and activities. If a
Default has occurred and is continuing, the Borrower, upon the Agent’s request,
shall provide copies of such records to the Agent or its
representatives. The Borrower acknowledges that either Agent, after
exercising its rights of inspection, may prepare and distribute to the Lenders
certain Reports pertaining to the Borrower and its Subsidiaries’ assets for
internal use by the Agents and the Lenders. At any time after the
occurrence and during the continuation of a Default, that the Agent requests,
the Borrower and the Subsidiaries will provide, at the sole expense of the
Borrower, such Agent with appraisals or updates thereof of their inventory and
other assets from an appraiser selected and engaged by such Agent, and prepared
on a basis satisfactory to such Agent, such appraisals and
7
updates
to include, without limitation, information required by applicable law and
regulations.
1.14. Section
7.2(H) of the Credit Agreement is amended and restated in its entirety to read
as follows:
(H) Maintenance
of Property. The Borrower shall (i) cause all property used or
useful in the conduct of its business or the business of any Subsidiary to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Borrower may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times
and (ii) with respect to such property, maintain, or cause to be maintained,
with financially sound and reputable insurance companies, insurance in such
amounts and against such risks as are customarily maintained by companies
engaged in the same or similar businesses operating in the same or similar
locations; provided,
however,
that nothing in this Section
7.2(H) shall prevent the Borrower from discontinuing the operation or
maintenance of any of such property if such discontinuance is, in the judgment
of the Borrower, desirable in the conduct of its business or the business of any
Subsidiary and not disadvantageous in any material respect to the Agent or the
Lenders. The Borrower will furnish to the Collateral Agent, upon
request of the Collateral Agent, information in reasonable detail as to the
insurance so maintained. The Borrower shall deliver to the Collateral
Agent endorsements (x) to all “All Risk” physical damage insurance policies on
all of the Domestic Loan Parties’ tangible personal property and assets and
business interruption insurance policies naming the Collateral Agent as lender
loss payee, and (y) to all general liability and other liability policies naming
the Collateral Agent an additional insured. In the event any Domestic
Loan Party at any time or times hereafter shall fail to obtain or maintain any
of the policies or insurance required herein or to pay any premium in whole or
in part relating thereto, then the Collateral Agent, without waiving or
releasing any obligations or resulting Default hereunder, may at any time or
times thereafter (but shall be under no obligation to do so) obtain and maintain
such policies of insurance and pay such premiums and take any other action with
respect thereto which the Collateral Agent deems advisable. All sums
so disbursed by the Collateral Agent shall constitute part of the Obligations,
payable as provided in this Agreement. The Borrower will furnish to
the Agents and the Lenders prompt written notice of any casualty or other
insured damage to any material portion of the Collateral or the commencement of
any action or proceeding for the taking of any material portion of the
Collateral or interest therein under power of eminent domain or by condemnation
or similar proceeding.
1.15. Section
7.2 of the Credit Agreement is amended to add the following as a new clause (M)
thereof:
(M) Security
Agreement; Additional Collateral; Further Assurances.
(i) The
Borrower will cause, and will cause each other Domestic Incorporated Subsidiary
to cause, all of its owned personal property (whether tangible, intangible, or
mixed) to be subject at all times to first priority, perfected Liens in favor of
the Collateral Agent for the benefit of the Holders of Secured Obligations to
secure the Secured Obligations in accordance with the terms and conditions of
the Collateral Documents, subject in any case to Liens permitted by Section
7.3(C). Without limiting
8
the
generality of the foregoing, the Borrower (i) will cause the issued and
outstanding Capital Stock of each Domestic Incorporated Subsidiary directly
owned by the Borrower or any other Domestic Incorporated Subsidiary to be
subject at all times to a first priority, perfected Lien in favor of the
Collateral Agent to secure the Secured Obligations in accordance with the terms
and conditions of the Collateral Documents.
(ii) Without
limiting the foregoing, the Borrower will, and will cause each Domestic
Incorporated Subsidiary to, execute and deliver, or cause to be executed and
delivered, to the Collateral Agent such documents, agreements and instruments,
and will take or cause to be taken such further actions, which may be required
by law or which the Collateral Agent may, from time to time, reasonably request
to carry out the terms and conditions of this Agreement and the other Loan
Documents and to ensure perfection and priority of the Liens created or intended
to be created by the Collateral Documents, all at the expense of the
Borrower.
(iii) If
any personal property is acquired by a Domestic Loan Party after the Amendment
No. 2 Effective Date (other than assets constituting Collateral under a
Collateral Document that automatically become subject to the Lien under such
Collateral Document upon acquisition thereof), the Borrower will notify the
Collateral Agent thereof, and, if requested by the Collateral Agent, the
Borrower will cause such personal property to be subjected to a Lien securing
the Secured Obligations and will take, and cause the other Domestic Loan Parties
to take, such actions as shall be necessary or reasonably requested by the
Collateral Agent to grant and perfect such Liens, including actions described in
paragraph (iii) of this Section, all at the expense of the
Borrower.
1.16. Section
7.3(C) of the Credit Agreement is amended to (i) amend and restate clause (i)
thereof in its entirety to read as follows “(i) Liens created by the Loan
Documents, or otherwise securing the Secured Obligations, in accordance with the
terms of the Intercreditor Agreement;” and (ii) add the following as a new
paragraph to the end thereof:
Notwithstanding
the foregoing, other than Liens created under the Collateral Documents, the
Borrower will not, and will not permit any Subsidiary to, create, incur, assume
or permit to exist any Lien on the real property of the Borrower and any
Subsidiary.
1.17. Section
7.3(F) of the Credit Agreement is amended and restated in its entirety to read
as follows:
(F) Restricted
Payments. The Borrower shall not, unless approved in writing
by each of the Lenders, declare or make any Restricted Payment, except
Restricted Payments constituting dividends in an amount not to exceed $300,000
in the aggregate during any fiscal quarter of the Borrower and except Restricted
Payments by a Subsidiary to the Borrower or another Subsidiary; provided,
however,
that in no event shall any Restricted Payments (other than Restricted Payments
to Borrower) be declared or made if either a Default or an Unmatured Default
shall have occurred and be continuing at the date of declaration or payment
thereof or would result therefrom.
1.18. Section
7.3(G) of the Credit Agreement is amended to (i) delete the phrase “or otherwise
approved by the Required Lenders” appearing therein, (ii) delete the phrase “(i)
the KAGT Acquisition and (ii)” appearing in the third sentence thereof, (iii)
delete the word “and” appearing after the semicolon at the end of clause (vi)
thereof, (iv) delete the period appearing at the end of clause
(vii)
9
thereof
and to replace such period with the phrase “; and” and (v) to add the following
as a new clause (viii) thereof:
(viii) such
Acquisition is approved in writing by each of the Lenders.
1.19. Section
7.4(A) of the Credit Agreement is amended and restated in its entirety to read
as follows:
(A) Minimum
Fixed Charge Coverage Ratio. The Borrower and its consolidated
Subsidiaries shall maintain a ratio (“Fixed
Charge Coverage Ratio”) of:
(i) the
sum of (a) EBITDA during such period minus
(b) Capital Expenditures during such period, to
(ii) the
sum of the amounts, without duplication, of (a) Interest Expense during such
period (net of interest income) plus
(b) scheduled principal payments of Indebtedness (excluding Required Pro Rata
Prepayments and substantially concurrent prepayments of Indebtedness under the
Note Documents) plus
(c) dividend payments on Borrower’s common and preferred stock plus
(or minus with respect to tax benefits) (d) Borrower’s income tax provision
calculated in accordance with US GAAP for such period plus
(e) Capitalized Lease Obligations during such period,
which
shall not be less than the applicable ratio set forth below for each
corresponding four (4) fiscal quarter period beginning with the four (4) fiscal
quarter period ending with the end of the applicable fiscal quarter of the
Borrower set forth below. In each case, the Fixed Charge Coverage
Ratio shall be determined as of the last day of each fiscal quarter for the four
(4) fiscal quarter period ending on such day (the “Last
Twelve-Month Period”), provided,
that the Fixed Charge Coverage Ratio shall be calculated, with respect to
Permitted Acquisitions, on a pro
forma
basis using historical audited and reviewed unaudited financial statements
obtained from the seller(s) in such Permitted Acquisition, broken down by fiscal
quarter as if such Permitted Acquisition (including the uses and applications of
proceeds in respect thereof and the Indebtedness incurred in conjunction
therewith) had occurred on the first day of the Last Twelve-Month Period (the
“Measurement
Period”) (excluding cost savings), provided such pro
forma
statements shall be substantiated by supporting information reasonably
acceptable to the Agent. Interest Expense shall be calculated for the
purpose of clause
(ii) by excluding the effect of amortization of deferred financing fees,
to the extent it is an Interest Expense.
|
Last Twelve-Month Period
Ending
|
Minimum Fixed Charge Coverage
Ratio
|
|
|
March
31, 2009
|
1.35
to 1.00
|
|
|
June
30, 2009
|
1.35
to 1.00
|
|
|
September
30, 2009
|
1.35
to 1.00
|
|
|
December
31, 2009 and each fiscal quarter thereafter
|
1.25
to 1.00
|
10
1.20. Section
7.4(B) of the Credit Agreement is amended and restated in its entirety to read
as follows:
(B) Maximum
Cash Flow Leverage Ratio. The Borrower and its consolidated
Subsidiaries shall not permit the ratio (the “Cash
Flow Leverage Ratio”) of (i) Total Funded Indebtedness (excluding the PIK
Notes) to (ii) EBITDA to be greater than the applicable ratio set forth below
for each corresponding four (4) fiscal quarter period ending with the end of the
applicable fiscal quarter of the Borrower set forth below. The Cash
Flow Leverage Ratio shall be calculated, in each case, determined as of the last
day of each fiscal quarter based upon (a) for Indebtedness, Indebtedness as of
the last day of each such fiscal quarter; and (b) for EBITDA, the actual amount
for Last Twelve-Month Period, provided,
that the Cash Flow Leverage Ratio shall be calculated, with respect to Permitted
Acquisitions, on a pro
forma
basis using historical audited and reviewed unaudited financial statements
obtained from the seller(s) in such Permitted Acquisition, broken down by fiscal
quarter in the Borrower’s reasonable judgment as if such Permitted Acquisition
(including the uses and applications of proceeds in respect thereof and the
Indebtedness incurred in conjunction therewith) had occurred on the first day of
the Measurement Period (excluding cost savings), provided such pro
forma
statements shall be substantiated by supporting information reasonably
acceptable to the Agent.
|
Last Twelve-Month Period
Ending
|
Maximum Cash Flow Leverage
Ratio
|
|
|
March
31, 2009
|
5.00
to 1.00
|
|
|
June
30, 2009
|
4.80
to 1.00
|
|
|
September
30, 2009
|
4.20
to 1.00
|
|
|
December
31, 2009 and each fiscal quarter thereafter
|
3.00
to 1.00
|
1.21. Section
7.4(C) of the Credit Agreement is amended and restated in its entirety to read
as follows:
(C) Minimum
Consolidated Net Worth. The Borrower shall not permit its Consolidated
Net Worth at any time to be less than the sum of (a) an amount equal to ninety
percent (90%) of Consolidated Net Worth as of March 31, 2009 (as reported in the
Borrower’s financial statements contained in its publicly filed Form 10-Q for
the period ending March 31, 2009) plus
(b) fifty percent (50%) of Net Income (if positive) calculated separately for
each fiscal quarter commencing with the fiscal quarter ending on June 30, 2009,
plus
(c) one hundred percent (100%) of the net cash proceeds resulting from the
issuance by the Borrower of any Capital Stock other than shares of Capital Stock
issued pursuant to employee stock option or ownership plans commencing with the
fiscal quarter ending on June 30, 2009.
1.22. Section
7.4(D) of the Credit Agreement is amended to delete the amount “$25,000,000”
appearing therein and to replace such amount with the amount
“$17,500,000”.
1.23. Section
7.4 of the Credit Agreement is amended to add the following as a new clause (E)
thereof:
11
(E) Amendments
to Note Documents. If the Borrower or any Subsidiary enters
into any amendment, restatement, supplement, waiver or modification to any Note
Document (or the documents related to any extension, refinancing, refunding or
renewal thereof) that amends, restates, supplements or modifies any of the
covenants, events of default or related definitions used in such Note Document
(or the documents related to any extension, refinancing, refunding or renewal
thereof) in a manner that causes such covenants, events of default or related
definitions which are more restrictive than, or in addition to (the “More
Restrictive Provisions”), the covenants, events of default or related
definitions contained in this Agreement, then (a) the Borrower will give the
Agent prior written notice thereof, (b) this Agreement shall be deemed to be
automatically amended to add the More Restrictive Provisions hereto and
otherwise afford the Lenders with the benefit thereof without any action by the
Borrower or any Lender and (c) the Borrower, upon the request of the Agent,
shall (i) enter into an amendment to this Agreement, in form and substance
satisfactory to the Agent, to evidence the addition of such More Restrictive
Provisions to this Agreement for the benefit of the Lenders and (ii) agree to
satisfy any conditions precedent to the effectiveness of such
amendment.
1.24. Section
8.1 of the Credit Agreement is amended to add the following as a new clause (Q)
thereof:
(Q) Collateral
Documents. Any Collateral Document shall for any reason fail
to create a valid and perfected first priority security interest in any portion
of the Collateral purported to be covered thereby, except as permitted by the
terms of any Loan Document.
1.25. Section
8.1 of the Credit Agreement is amended to add the following sentence at the end
of the final paragraph thereof:
Upon the
occurrence and during the continuance of a Default, the Collateral Agent may, in
accordance with the terms of the Intercreditor Agreement, exercise any rights
and remedies provided to the Collateral Agent under the Loan Documents or at law
or equity, including all remedies provided under the UCC.
1.26. Section
9.2 of the Credit Agreement is amended to (i) delete the word “and” appearing
after the semicolon at the end of clause (v) thereof, (ii) delete the period
appearing at the end of clause (vi) thereof and to replace such period with a
semicolon and (iii) add the following as new clauses (vii) and (viii) thereof,
respectively:
(vii) for
so long as such Lender is a Defaulting Lender, if any Swing Line Exposure or L/C
Obligation exists at the time a Lender is a Defaulting Lender, the
Borrower shall within one Business Day following notice by the Agent (i) prepay
such Swing Line Exposure or, if agreed by the Swing Line Lender, cash
collateralize the Swing Line Exposure of the Defaulting Lender on terms
satisfactory to the Swing Line Lender and (ii) cash collateralize such
Defaulting Lender’s L/C Obligation in accordance with the procedures set forth
in Section
2.5 for so long as such L/C Obligation is outstanding; and
(viii) for
so long as such Lender is a Defaulting Lender, the Swing Line Lender shall not
be required to fund any Swing Line Loan and the Issuing Bank shall not be
required to issue, amend or increase any Letter of Credit unless it is satisfied
that cash collateral will be provided by the Borrower in accordance with Section
9.20(vii).
12
1.27. Section
9.3 of the Credit Agreement is amended to delete the phrase “defaulting Lender”
appearing therein and to replace such phrase with the term “Defaulting
Lender”.
1.28. Section
10.7(A) of the Credit Agreement is amended to add the following to the end
thereof:
Expenses
being reimbursed by the Borrower under this Section include, without limiting
the generality of the foregoing, costs and expenses incurred in connection with
(x) appraisals (subject to the limitations contained in Section
7.2(F)) and insurance reviews and (y) field examinations and the
preparation of Reports based on the fees charged by a third party retained by
either Agent or the internally allocated fees for each Person employed by either
Agent with respect to each field examination; provided that so long as no
Default has occurred and is continuing, the Borrower shall not be required to
reimburse either Agent for the costs of more than one field exam and consequent
preparation of Reports per fiscal year.
1.29. Section
10.9 of the Credit Agreement is amended to add the following to the end
thereof:
Notwithstanding
the foregoing, for all purposes of this Agreement the outstanding principal
amount of any Indebtedness of the Borrower or any of its Subsidiaries (other
than, to the extent such obligations are included in the definition of
“Indebtedness”, Hedging Obligations) shall be equal to the actual outstanding
principal amount thereof irrespective of the amount that might otherwise be
accounted for under Agreement Accounting Principles as the amount of the
liability of the Borrower or any of its Subsidiaries with respect thereto, and
any determination of the net income (or net loss), equity or assets of the
Borrower or any of its Subsidiaries shall not take into account any effect of
marking any such outstanding Indebtedness of the Borrower or any of its
Subsidiaries to market value.
1.30. Article
X of the Credit Agreement is amended to add the following as a new Section 10.15
thereto:
10.15. Appointment
for Perfection. Each Lender hereby appoints each other Lender
as its agent for the purpose of perfecting Liens, for the benefit of the
Collateral Agent and the Holders of Secured Obligations, in assets which, in
accordance with Article 9 of the UCC or any other applicable law can be
perfected only by possession. Should any Lender (other than the
Collateral Agent) obtain possession of any such Collateral, such Lender shall
notify the Collateral Agent thereof, and, promptly upon the Collateral Agent’s
request therefor shall deliver such Collateral to the Collateral Agent or
otherwise deal with such Collateral in accordance with the Collateral Agent’s
instructions.
1.31. Section
11.12(i) of the Credit Agreement is amended and restated in its entirety to read
as follows:
(i) upon
termination of the Revolving Loan Commitments and satisfaction of the other
Termination Conditions (as defined in Section
2.19);
13
1.32. Section
12.3 of the Credit Agreement is amended to (i) add the phrase “, Hedging
Obligations and Banking Services Obligations” immediately after the word
“Obligations” appearing in the first sentence thereof and (ii) amend and restate
clause (H) thereof in its entirety to read as follows:
(H) eighth,
to the ratable payment or prepayment of principal outstanding on Loans (other
than Swing Line Loans), Reimbursement Obligations, Hedging Obligations under
Hedging Agreements and Banking Services Obligations;
1.33. The
Revolving Loan Commitments of the Lenders are reduced and restated as set forth
on Annex
I hereto. The Borrower hereby agrees to compensate each Lender
for any and all losses, costs and expenses incurred by such Lender in connection
with the prepayment of any Revolving Loans described in Section 3(a) below, in
each case on the terms and in the manner set forth in Section 4.4 of the Credit
Agreement.
2. Waivers. The
Agent and the Lenders agree to waive any Default resulting from (v) the failure
of the Borrower to make any mandatory prepayment of the Loans from the proceeds
of the Asset Sale of the Borrower’s real property commonly known as 000 X.
Xxxxxx, Xxxxxxx, Xxxxxxxx, which mandatory prepayment is hereby waived, (w) the
failure of the Borrower to comply with Sections 7.4(A), 7.4(B) and 7.4(C) of the
Credit Agreement as of its fiscal year ended December 31, 2008, (x) the failure
of the Borrower to deliver the quarterly reports required by Section 7.1(A) of
the Credit Agreement for the fiscal quarter ended March 31, 2009 within the time
required by said Section 7.1(A) (so long as such quarterly reports are delivered
by July 15, 2009, (y) the failure of the Borrower to deliver to the Agent the
annual reports and related financial statements required by Section 7.1(B) of
the Credit Agreement for the fiscal year ended December 31, 2008 within the time
required by said Section 7.1(B) (so long as such annual reports are so delivered
within two (2) Business Days after the Amendment No. 2 Effective Date) and (z)
the payment by the Borrower of a Restricted Payment in the form of a dividend on
its Capital Stock on or prior to April 15, 2009 in an amount not to exceed
$810,000.
3. Conditions
of Effectiveness. The effectiveness of this Amendment is
subject to the condition precedent that (a) the Borrower shall have prepaid (i)
the Revolving Loans and the principal obligations under the Note Documents by an
aggregate amount equal to $15,000,000 (of which the pro rata portion applied to
prepay the Revolving Loans shall be $7,889,123.91) and (ii) the Revolving Loans
and/or cash collateralized the LC Obligations such that after giving effect
thereto and to the reductions in the Revolving Loan Commitments pursuant hereto,
each Lender’s Pro Rata Share of the aggregate Revolving Credit Obligations is
equal to such Lender’s Pro Rata Share of the total Revolving Loan Commitments
(as reduced hereby), (b) the Agent shall have received (i) counterparts of this
Amendment duly executed by the Borrower, the Lenders and the Agent and the
Consent and Reaffirmation attached hereto duly executed by the Subsidiary
Guarantors, (ii) such instruments and documents as are reasonably requested by
the Agent and (iii) for the account of each Lender, an amendment fee in an
amount equal to 0.50% of such Lender’s Revolving Loan Commitment (after giving
effect to the reduction pursuant hereto), (c) the Borrower shall have paid all
fees and, to the extent invoiced, expenses of the Agent and its affiliates
(including attorneys’ fees and expenses) in connection with this Amendment and
(d) the Borrower and its Subsidiaries shall have delivered to the Agent and the
Collateral Agent all Collateral Documents and related instruments and documents
requested by the Agent and the Collateral Agent in connection with the
effectiveness of this Amendment.
4. Representations
and Warranties of the Borrower. The Borrower hereby represents
and warrants as follows:
14
(a) This
Amendment and the Credit Agreement as previously executed and as amended hereby,
constitute legal, valid and binding obligations of the Borrower and are
enforceable against the Borrower in accordance with their terms.
(b) Upon
the effectiveness of this Amendment and after giving effect hereto, (i) the
Borrower hereby reaffirms all covenants, representations and warranties made in
the Credit Agreement as amended hereby, and agrees that all such covenants,
representations and warranties shall be deemed to have been remade as of the
effective date of this Amendment (unless any such representation and warranty is
made as of a specific date, in which case, such representation and warranty
shall be remade as of such date) and (ii) no Default or Unmatured Default has
occurred and is continuing.
5. Reference
to the Effect on the Credit Agreement.
(a) Upon
the effectiveness of Section
1 hereof, on and after the date hereof, each reference in the Credit
Agreement or in any other Loan Document (including any reference therein to
“this Credit Agreement,” “hereunder,” “hereof,” “herein” or words of like import
referring thereto) shall mean and be a reference to the Credit Agreement as
amended hereby.
(b) Except
as specifically amended above, the Credit Agreement and all other documents,
instruments and agreements executed and/or delivered in connection therewith,
shall remain in full force and effect, and are hereby ratified and
confirmed.
(c) The
execution, delivery and effectiveness of this Amendment shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
the Agent or the Lenders, nor constitute a waiver of any provision of the Credit
Agreement or any other documents, instruments and agreements executed and/or
delivered in connection therewith.
6. GOVERNING
LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING 735 ILCS 105/5-1 ET SEQ., BUT
OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS) OF THE STATE OF
ILLINOIS.
7. Headings. Section
headings in this Amendment are included herein for convenience of reference only
and shall not constitute a part of this Amendment for any other
purpose.
8. Counterparts. This
Amendment may be executed by one or more of the parties to the Amendment on any
number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
[Signature
Page Follows]
15
IN
WITNESS WHEREOF, this Amendment has been duly executed as of the day and year
first above written.
|
SCHAWK,
INC., as the
Borrower
|
|||
|
|
By:
|
/s/Xxxxxxx X. Xxxxxxxxx | |
| Name: Xxxxxxx X. Xxxxxxxxx | |||
| Title: Chief Financial Officer | |||
Signature
Page to Amendment No. 2
Schawk,
Inc.
Credit
Agreement dated as of January 28, 2005
|
JPMORGAN CHASE
BANK, NATIONAL ASSOCIATION, as Agent and as a
Lender
|
|||
|
|
By:
|
/s/Xxxxxx X. Xxxxxxxxxxx | |
| Name: Xxxxxx X. Xxxxxxxxxxx | |||
| Title: Vice President | |||
Signature
Page to Amendment No. 2
Schawk,
Inc.
Credit
Agreement dated as of January 28, 2005
|
BANK OF
AMERICA, N.A., as a
Lender
|
|||
|
|
By:
|
/s/Xxxx X. Xxxxxxxxx | |
| Name: Xxxx X. Xxxxxxxxx | |||
| Title: Senior Vice President | |||
Signature
Page to Amendment No. 2
Schawk,
Inc.
Credit
Agreement dated as of January 28, 2005
|
THE NORTHERN
TRUST COMPANY, as a
Lender
|
|||
|
|
By:
|
/s/Xxxxxx Xxxxxxxxx | |
| Name: Xxxxxx Xxxxxxxxx | |||
| Title: Vice President | |||
Signature
Page to Amendment No. 2
Schawk,
Inc.
Credit
Agreement dated as of January 28, 2005
|
XXXXX FARGO
BANK, NATIONAL ASSOCIATION, as a
Lender
|
|||
|
|
By:
|
/s/Xxxxx X. Xxxxxxx | |
| Name: Xxxxx X. Xxxxxxx | |||
| Title: Senior Vice President | |||
Signature
Page to Amendment No. 2
Schawk,
Inc.
Credit
Agreement dated as of January 28, 2005
|
ASSOCIATED BANK, N.A.,
as a
Lender
|
|||
|
|
By:
|
/s/Xxxx Xxxxxxxxx | |
| Name: Xxxx Xxxxxxxxx | |||
| Title: Vice President | |||
Signature
Page to Amendment No. 2
Schawk,
Inc.
Credit
Agreement dated as of January 28,
2005
CONSENT
AND REAFFIRMATION
June 11,
2009
Each of
the undersigned hereby acknowledges receipt of a copy of the foregoing Amendment
No. 2 to the Credit Agreement dated as of January 28, 2005 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
“Credit
Agreement”) by and among Schawk, Inc. (the “Borrower”),
the Alternate Currency Borrowers from time to time party thereto, the financial
institutions from time to time party thereto (the “Lenders”)
and JPMorgan Chase Bank, N.A., as agent (in such capacity, the “Agent”)
and as collateral agent (in such capacity, the “Collateral
Agent”), which Amendment No. 2 is dated as of the date hereof (the “Amendment”). Capitalized
terms used in this Consent and Reaffirmation and not defined herein shall have
the meanings given to them in the Credit Agreement. Without in
any way establishing a course of dealing by the Agent, the Collateral Agent or
any Lender, each of the undersigned consents to the Amendment and reaffirms the
terms and conditions of the Subsidiary Guaranty and any other Loan Document
executed by it and acknowledges and agrees that such agreement and each and
every such Loan Document executed by the undersigned in connection with the
Credit Agreement remains in full force and effect and is hereby reaffirmed,
ratified and confirmed. All references to the Credit Agreement
contained in the above-referenced documents shall be a reference to the Credit
Agreement as so modified by the Amendment and as the same may from time to time
hereafter be amended, modified or restated.
[Signature
Page Follows]
|
SCHAWK
USA, INC.
By: /s/Xxxxxxx X.
Xxxxxxxxx
Name:
Xxxxxxx X. Xxxxxxxxx
Title:
Chief Financial Officer
|
SCHAWK
WORLDWIDE HOLDINGS INC.
By: /s/Xxxxxxx X.
Xxxxxxxxxx
Name:
Xxxxxxx X. Xxxxxxxxx
Title:
Chief Financial Officer
|
|
SCHAWK
LLC
By: /s/Xxxxxxx X.
Xxxxxxxxx
Name:
Xxxxxxx X. Xxxxxxxxx
Title:
Chief Financial Officer
|
SCHAWK
HOLDINGS INC.
By: /s/Xxxxxxx X.
Xxxxxxxxxx
Name:
Xxxxxxx X. Xxxxxxxxx
Title:
Chief Financial Officer
|
|
SEVEN
SEATTLE, INC.
By: /s/Xxxxxxx X.
Xxxxxxxxx
Name:
Xxxxxxx X. Xxxxxxxxx
Title:
Chief Financial Officer
|
SCHAWK
DIGITAL SOLUTIONS INC.
By: /s/Xxxxxxx X.
Xxxxxxxxxx
Name:
Xxxxxxx X. Xxxxxxxxx
Title:
Chief Financial Officer
|
|
MIRAMAR
EQUIPMENT, INC.
By: /s/Xxxxxxx X.
Xxxxxxxxx
Name:
Xxxxxxx X. Xxxxxxxxx
Title:
Chief Financial Officer
|
KEDZIE
AIRCRAFT LLC
By: /s/Xxxxxxx X.
Xxxxxxxxxx
Name:
Xxxxxxx X. Xxxxxxxxx
Title:
Chief Financial Officer
|
Consent
and Reaffirmation related to
Amendment
No. 2 to
Schawk,
Inc.
Credit
Agreement dated as of January 28, 2005
