Exhibit 10.18
REVOLVING LOAN
AGREEMENT
THIS REVOLVING LOAN
AGREEMENT (hereinafter
called “Loan Agreement”) between ALCOA SECURITIES
CORPORATION (“Lender”), a Delaware corporation
having its principal place of business at 101 Cherry Street, Suite
400, Burlington, VT 05401, and MOZAIC GROUP, LTD.
(“Borrower”), a Missouri corporation having its
principal place of business at 5257 Shaw Avenue, St. Louis, MO,
63110, takes effect June 30, 2004.
WITNESSETH THAT:
WHEREAS, Borrower has requested that
Lender provide a revolving credit facility to the Borrower for its
general corporate purposes, including its working capital
requirements.
WHEREAS, Lender has agreed to make
the requested credit facility available to the Borrower on the
terms and conditions set forth in this Loan Agreement.
NOW, THEREFORE, the parties hereto,
in consideration of their mutual covenants hereinafter set forth,
and intending to be legally bound hereby, agree as
follows:
Section 1
. Certain
Definitions
As used herein, the following words
and terms shall have the following meanings,
respectively:
“BBA -LIBOR” means the
rate for deposits in U.S. dollars for a three-month period that is
released by the British Bankers Association as of 11:00 am., London
time, on the day that is two Business Days preceding the date for
which the rate is to be determined.
“Business Day” means any
day on which commercial banks and foreign exchange markets settle
payments and are open for general business in New York, New York
and London, England.
“Event of Default” shall
mean any of the Events of Default described in Section 15 of
this Loan Agreement.
“Loan Documents” shall
mean this Loan Agreement, the Security Agreement between Lender and
Borrower effective this date.
“Maturity Date” means
June 30, 2006 or such later date to which the term of this
Agreement is extended with Lender’s consent; provided,
however, that if the Minority Shareholders exercise the Purchase
Option under the Shareholders’ Agreement, then the
“Maturity Date” is the date on which the Minority
Shareholders purchase the capital stock of Borrower held by SGS (or
its affiliates).
“Minority Shareholders”
means the holders of the capital stock of Borrower other than SGS
or its affiliates.
“SGS” means Southern Graphic
Systems, Inc., a Kentucky corporation and an indirect subsidiary of
Lender.
“Shareholders’
Agreement” means the Mozaic Group Ltd. Amended and Restated
Shareholders’ Agreement dated June 30, 2004 by and among
Mozaic Group Ltd., SGS and the other persons who are or become
parties to that agreement.
Section 2
. Loans .
Subject to the terms and conditions
set forth herein, Lender agrees to make advances to Borrower, from
time to time during the period from and including the date hereof
to but not including the Maturity Date (each a “Loan”
and collectively the “Loans”) for the purposes
hereinafter set forth; provided , however , that the
aggregate amount of outstanding Loans shall not at any time exceed
$3,100,000, as that amount is reduced under Section 2.1 (the
“Loan Commitment”). Subject to the terms of this Loan
Agreement, Borrower may borrow, repay and re-borrow the amount of
the Loan Commitment. All sums outstanding under the Loan Commitment
shall be due and payable in full on the Maturity Date. At
Lender’s request, Borrower will execute and deliver to Lender
a Note evidencing all Loans substantially in the form of Schedule A
hereto. Lender’s records with respect to any and all sums
borrowed, repaid, re-borrowed and prepaid, and other amounts due or
to become due hereunder shall be binding upon the parties, absent
manifest error. Lender may at any time refinance this Loan
Agreement and all amounts owed hereunder with a third party lender
under comparable terms; provided, however, that (a) the
Minority Shareholders will not, without their consent, be required
to personally guaranty such refinancing, (b) absent approval
by Borrower’s board of directors and shareholders, Borrower
will not be required to grant a security interest in its assets
(other than its accounts receivable) to secure such refinancing and
(c) such third party lender will not have the right to convert
the debt to equity of the Borrower.
Section 2.1
Reduction of Commitments
.
The parties hereby agree that the
Loan Commitment shall be permanently reduced in incremental partial
reductions in the amounts and in accordance with the Loan
Commitment Reduction Schedule and the other terms and conditions
set forth in Schedule 2.1 hereto.
Section 3
. Absolute Obligation
.
Borrower hereby unconditionally and
irrevocably promises to pay to Lender all principal, interest and
other amounts owing under this Loan Agreement when such amounts are
due and payable hereunder, without counterclaim, deduction, setoff
or other reduction for any reason.
Section 4
. Loan Availability
.
Borrower may borrow sums hereunder
from time to time without advance notice to Lender if, after giving
effect to such Loan, the then unpaid principal amount of the Loans
shall not exceed the Loan Commitment (as reduced under
Section 2.1) and Borrower is otherwise in compliance with the
terms of this Loan Agreement.
Section 5
. Interest .
Each Loan will bear interest at a
rate equal to BBA - LEBOR plus 350 basis points, and that rate will
change quarterly on the first day of each quarter beginning
October 1, 2004. From the effective date of this agreement
through September 30, 2004, the applicable interest rate is
5.37% per annum. Accrued interest is due and payable quarterly
in arrears on
September 30, December 31, March 31 and
June 30 of each year, beginning September 30, 2004 (each
such date, an “Interest Payment Date”) and on the
Maturity Date. All interest is computed on the basis of actual days
elapsed and a. 360- day year of twelve 30-day months. Without
prejudice to Lender’s rights and remedies under
Section 15, if Borrower fails to pay when due any principal of
or interest on the Loan or other amount due hereunder, Borrower
must pay to Lender, upon demand, a late payment charge on the
amount remaining unpaid at the rate of BBA - LIBOR plus 400 basis
points per annum. This late payment charge will accrue daily in
lieu of interest on such amount during the period such amount
remains unpaid (whether before or after judgment) and including the
due date but excluding the date on which payment is
made.
Section 6
. Principal .
The principal of each Loan is due
and payable on the Maturity Date unless accelerated sooner in
accordance with Section 15 of this agreement.
Section 7
. Prepayment .
Borrower may at its option prepay
all or any part of the outstanding principal balance of the Loans
(in minimum amounts of $100,000 or a larger integral multiple of
$100,000) on any Business Day upon two Business Days’ prior
written notice to Lender. All prepayments are without premium or
penalty. All partial prepayments will be applied to principal. If
the Loans are prepaid in full, Borrower must pay all accrued
interest to the date of such prepayment.
Section 8
. Payment in Full at Maturity
.
On the Maturity Date, the entire
outstanding principal balance of all Loans, together with all other
sums owing under this Loan Agreement, are due and payable in full,
unless accelerated sooner in accordance with Section 15 of
this agreement or unless payable sooner under Section 6.3;
7.2(c); 9.2(b) of the Shareholders’ Agreement. Repayment must
be made by transfer to such account of Lender as Lender may
designate to Borrower. If any payment of interest or principal is
due on a day that is not a Business Day, then such payment must be
made on the next Business Day thereafter.
Section 9
. Term .
This Loan Agreement is effective for
the period commencing on this date and terminating on the Maturity
Date, unless Lender terminates this Loan Agreement earlier in
accordance with its terms and conditions or unless it has been
repaid in full under Section 6.3; 7.2(c); 9.2(b); or 10.1(b)
of the Shareholders’ Agreement. Borrower immediately must pay
all sums due and payable under this Agreement if Lender terminates
this Loan Agreement or if payment is required under
Section 6.3; 7.2(c); 9.2(b); or 10.1(b) of the
Shareholders’ Agreement, provided, that if there has been no
default and if payment has not been required under
Section 6.3; 7.2(c); 9.2(b); or 10.1(b) of the
Shareholders’ Agreement and the Purchase Option, as set forth
and described in the Shareholders’ Agreement, has not been
exercised, Lender will (i) extend the Maturity Date
for
such period of time as Lender and Borrower may
mutually agree or (ii) refinance the Loan Commitment with a
third party on substantially similar terms.
Section 10
. Utilization of Loan by
Borrower .
Borrower agrees that it will use all
proceeds of each Loan for its general corporate purposes, including
its working capital requirements.
Section 11
. Representations and
Warranties .
Borrower hereby represents and
warrants (and each representation and warranty is deemed repeated
at the date of each Loan) that:
(a) Borrower is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Missouri and is duly qualified to do business and is
in good standing in such jurisdictions where such qualification is
necessary.
(b) There is no action or proceeding
pending or, to the knowledge of Borrower, threatened, against
Borrower, before any court or administrative agency which is likely
to result in any material adverse change in the business or
financial condition of Borrower.
(c) Neither the execution or
delivery of this Loan Agreement, the consummation of any Loan, nor
compliance with the terms and provisions hereof will conflict with
or result in a breach of any of the terms, conditions or provisions
of the charter or by-laws of Borrower or of any law or of any
regulation, order, writ, injunction or decree of any court or
governmental instrumentality, or of any material agreement or
instrument to which Borrower is a party or by which it is bound or
to which it is subject, or constitute a default under any such
agreement or instrument or result in the creation or imposition of
any lien, charge, or encumbrance of any nature whatsoever upon any
of the property of Borrower pursuant to the terms of any such
agreement or instrument.
(d) Borrower is in compliance with
all of the terms of this Loan Agreement and the Loan
Documents.
(e) Neither Borrower nor any of its
subsidiaries has any indebtedness other than this Loan Agreement
and the indebtedness listed on Schedule 11.1 hereto.
Section 12
. Conditions of Lending
.
The obligation of Lender to make
Loans hereunder is subject to the accuracy, as of the date hereof
and as of the date of each Loan, of the representations and
warranties contained herein, the performance by Borrower of its
obligations to be performed hereunder on or before each such date,
Lender’s (or an affiliate’s) continuing ownership of a
majority of the outstanding voting capital stock of Borrower and
Borrower’s and the Minority Shareholders compliance with the
terms and conditions of the Shareholders’
Agreement.
Section 13
. Affirmative Covenant
.
Borrower covenants that, so long as
the Loan Agreement is in effect and thereafter until payment in
full of the Loans, it will forward to Lender a copy of the
financial statements submitted to SGS, at the time such financial
statements are submitted to SGS.
Section 14
. Negative Covenant
.
Borrower covenants that, so long as
the Loan Agreement is in effect and thereafter until payment in
full of the Loans, it will not, other than in accordance with the
Shareholders’ Agreement, register any change in the ownership
of Borrower’s voting capital stock from the ownership
existing on the effective date of this Loan Agreement.
Section 15
. Events of Default
.
If one or more of the following
described Events of Default shall occur, that is to say:
(a) Borrower defaults in any payment
of interest or principal when due (other than at maturity or by
acceleration) and Borrower fails to cure such default within thirty
days; provided, however, that after three such defaults Borrower
must cure any further such default within five Business
Days;
(b) any representation or warranty
made or deemed made by Borrower hereunder is false or misleading in
any material respect as of the time made or deemed made or
furnished;
(c) Borrower defaults in the
performance of any other covenant, condition or provision hereof
and such default is not be remedied for a period of 30 days after
written (including electronic or facsimile) notice
thereof;
(d) Borrower or any of the Minority
Shareholders default under any of the Loan Documents or breach the
Shareholders’ Agreement such default is not cured within
thirty days after notice of default is given;
(e) any case, proceeding or other
action against Borrower is commenced seeking an order for relief
against it as debtor or to adjudicate it a bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law
relating to bankruptcy, insolvency, reorganization or relief of
debtors, or seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part
of its property, and such case, proceeding or other action
(i) results in the entry of an order for relief against it
that is not fully stayed within seven Business Days after the entry
thereof or (ii) remains in effect for a period of 60 days;
or
(f) Borrower generally fails to pay
its debts as they become due or admits in writing its inability to
pay its debts, or makes a general assignment for the benefit of
creditors; or Borrower commences any case, proceeding or other
action seeking an order for relief on its behalf as debtor or
adjudicating it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of
it or its debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors or seeking appointment of
a
receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its property;
or Borrower takes any corporate action to authorize or in
contemplation of any of the actions set forth above in this
subsection.
Then, and in any such event, Lender
shall in addition to all other rights and remedies available to it
be entitled by written (including electronic or facsimile) notice
to Borrower to terminate this Loan Agreement and to declare any
principal and all interest accrued thereon to be forthwith due and
payable, and the same will thereupon become immediately due and
payable without presentment, demand, protest or further notice of
any kind, all of which are hereby expressly waived.
Notwithstanding anything contained
herein to the contrary, in the case of a default under clause
(a) of this Section 15 and a failure by Borrower to cure
such default within the prescribed time period, Lender will, before
exercising any of the rights or remedies available to it, provide
the Minority Shareholders with an opportunity to tender an offer to
purchase all of the capital stock of Borrower held by SGS. The
Minority Shareholders mu
