EXHIBIT 10.1
 
EXECUTION COPY
 
AMENDMENT NO. 2
 
Dated as of June 11, 2009
 
to the
 
CREDIT AGREEMENT
 
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.
 
 

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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
 
 
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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
 
 
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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
 
 
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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
 
 
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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
 
 
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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)
 
 
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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

 
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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:
 
 
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(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).
 
 
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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);
 
 
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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 114 S. Racine, Chicago, Illinois, 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:
 
 
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(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]
 
 
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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/Timothy J. Cunnigham       Name:  Timothy J. Cunnigham        Title:  Chief
Financial Officer            

 
 
 
 
 
 
 
 
 
 
 
 
 
Signature Page to Amendment No. 2
Schawk, Inc.
Credit Agreement dated as of January 28, 2005

 
 

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JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as Agent and as a Lender
         
 
By:
 /s/Robert E. Whitecotton       Name:  Robert E. Whitecotton        Title:  
Vice President          

 
 
 
 
 
 
 
 
 
 
 
 
 
Signature Page to Amendment No. 2
Schawk, Inc.
Credit Agreement dated as of January 28, 2005
 

 

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BANK OF AMERICA, N.A., as a Lender
         
 
By:
 /s/Adam M. Goettsche       Name:  Adam M. Goettsche        Title:  Senior Vice
President           

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Signature Page to Amendment No. 2
Schawk, Inc.
Credit Agreement dated as of January 28, 2005

 

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THE NORTHERN TRUST COMPANY, as a Lender
         
 
By:
 /s/Thomas Hasenauer       Name:  Thomas Hasenauer        Title:  Vice President
         

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Signature Page to Amendment No. 2
Schawk, Inc.
Credit Agreement dated as of January 28, 2005

 

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WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender
         
 
By:
 /s/James K. Edwards       Name:  James K. Edwards        Title:  Senior Vice
President          

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Signature Page to Amendment No. 2
Schawk, Inc.
Credit Agreement dated as of January 28, 2005
 
 

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ASSOCIATED BANK, N.A., as a Lender
         
 
By:
 /s/Jake Goldstein       Name:  Jake Goldstein        Title:  Vice President   
       

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Signature Page to Amendment No. 2
Schawk, Inc.
Credit Agreement dated as of January 28, 2005
 
 

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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]
 
 

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SCHAWK USA, INC.
 
By:  /s/Timothy J. Cunnigham             
Name:  Timothy J. Cunnigham 
Title:  Chief Financial Officer
 
SCHAWK WORLDWIDE HOLDINGS INC.
 
By:  /s/Timothy J. Cunningham             
Name:  Timothy J. Cunnigham 
Title:  Chief Financial Officer
SCHAWK LLC
 
By:  /s/Timothy J. Cunnigham             
Name:  Timothy J. Cunnigham 
Title:  Chief Financial Officer
 
SCHAWK HOLDINGS INC.
 
By:  /s/Timothy J. Cunningham             
Name:  Timothy J. Cunnigham 
Title:  Chief Financial Officer
SEVEN SEATTLE, INC.
 
By:  /s/Timothy J. Cunnigham             
Name:  Timothy J. Cunnigham 
Title:  Chief Financial Officer
SCHAWK DIGITAL SOLUTIONS INC.
 
By:  /s/Timothy J. Cunningham             
Name:  Timothy J. Cunnigham 
Title:  Chief Financial Officer
 
MIRAMAR EQUIPMENT, INC.
 
By:  /s/Timothy J. Cunnigham             
Name:  Timothy J. Cunnigham 
Title:  Chief Financial Officer
KEDZIE AIRCRAFT LLC
 
By:  /s/Timothy J. Cunningham             
Name:  Timothy J. Cunnigham 
Title:  Chief Financial Officer

 
 
 
 
 
 
 
 
 
 
Consent and Reaffirmation related to
Amendment No. 2 to
Schawk, Inc.
Credit Agreement dated as of January 28, 2005