Document:

ex10-3.htm

EXHIBIT 10.3

 

CONSENT

 

THIS CONSENT dated as of March 14, 2014 (the or this “Consent”) is between SCHAWK, INC., a Delaware corporation (the “Company”), and each of the institutions which is a signatory to this Consent (collectively, the “Noteholders”).

 

RECITALS:

 

A.           The Company and each of the Noteholders have heretofore entered into the Amended and Restated Note Purchase and Private Shelf Agreement dated as of January 27, 2012 (as amended by that certain First Amendment to Amended and Restated Note Purchase and Private Shelf Agreement dated as of September 6, 2012 among the Company and the Noteholders, and the Consent thereto dated as of February 27, 2013, and as otherwise hereafter amended, modified and supplemented from time to time, the “Note Agreement”).  The Company has heretofore issued the $25,000,000 4.38% Series F Senior Notes Due January 27, 2019 dated January 27, 2012 (collectively, the “Notes”) pursuant to the Note Agreement.

 

B.           The Company has informed the Noteholders that (i) the Company is currently in negotiations with an entity previously disclosed to the Noteholders and code named Moonlight (“Moonlight”) pursuant to which the Company may be acquired by Moonlight pursuant to a merger of a wholly-owned subsidiary of Moonlight with and into the Company (the “Merger”) and (ii) in connection therewith, certain stockholders of the Company are considering entering into a stockholder agreement (in substantially the form attached hereto as Exhibit A, the “Stockholder Agreement”) with Moonlight pursuant to which such stockholders shall, subject to the terms and conditions set forth therein, (A) vote their equity interests in the Company in favor of the Merger and (B) grant an irrevocable proxy to Moonlight and its executive officers and other designees to vote their shares as contemplated by the foregoing clause (A) (the foregoing agreements by such shareholders being referred to herein as the “Specified Voting Arrangements”).  The Specified Voting Arrangements would constitute a “Change of Control” under the Note Agreement pursuant to clause (a) of such definition and therefore the Company has requested that, notwithstanding the foregoing, the Noteholders consent to and agree that the Specified Voting Arrangements shall not constitute a Change of Control.

 

C.           Capitalized terms used herein shall have the respective meanings ascribed thereto in the Note Agreement unless herein defined or the context shall otherwise require.

 

NOW, THEREFORE, upon the full and complete satisfaction of the conditions precedent to the effectiveness of this Consent set forth in Section 3 hereof, and in consideration of good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Company and the Noteholders do hereby agree as follows:

 

SECTION 1.  CONSENT.

 

The Noteholders and Prudential consent to and agree that the Specified Voting Arrangements shall not constitute a Change of Control under the Note Agreement, provided that, for the avoidance of doubt, it is expressly understood and agreed that this Consent does not

 

 

  

  

  

permit or otherwise approve or consent to the Merger and that the consummation of the Merger shall constitute a Change of Control.  This Consent shall terminate on the earliest of (i) the termination of the Stockholder Agreement, (ii) the termination of the merger agreement in respect of the Merger or the abandonment of the Merger and (iii) October 31, 2014.

 

SECTION 2.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

To induce the Noteholders to execute and deliver this Consent (which representations shall survive the execution and delivery of this Consent), the Company represents and warrants to the Noteholders that:

 

(a)         this Consent has been duly authorized, executed and delivered by it and this Consent constitutes the legal, valid and binding obligation, contract and agreement of the Company enforceable against the Company in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally;

 

(b)         the execution, delivery and performance by the Company of this Consent (i) has been duly authorized by all requisite corporate action and, if required, shareholder action, (ii) does not require the consent or approval of any governmental or regulatory body or agency, and (iii) will not (A) violate (1) any provision of law, statute, rule or regulation or its certificate of incorporation or bylaws, (2) any order of any court or any rule, regulation or order of any other agency or government binding upon it, or (3) any provision of any material indenture, agreement or other instrument to which it is a party or by which its properties or assets are or may be bound, or (B) result in a breach or constitute (alone or with due notice or lapse of time or both) a default under any indenture, agreement or other instrument referred to in clause (iii)(A)(3) of this Section 2(b);

 

(c)         as of the date hereof and after giving effect to this Consent, no Default or Event of Default has occurred which is continuing and no condition exists which has resulted in, or could reasonably be expected to have, a Material Adverse Effect;

 

(d)         all the representations and warranties contained in Section 5 of the Note Agreement and in Section 5 of the Subsidiary Guaranty are true and correct in all material respects with the same force and effect as if made by the Company and the Subsidiary Guarantors, respectively, on and as of the date hereof;

 

(e)         all Subsidiaries that are required to enter into the Subsidiary Guaranty or enter into a joinder agreement in respect of the Subsidiary Guaranty pursuant to Section 9.6 of the Note Agreement have so entered into the Subsidiary Guaranty or a joinder agreement in respect of the Subsidiary Guaranty and are listed on the signature pages to this Consent as Subsidiary Guarantors; and

 

(f)         neither the Company nor any of its Subsidiaries on or prior to the Consent Effective Date has paid or agreed to pay, nor will the Company or any of its Subsidiaries pay or agree to pay on or after to the Consent Effective Date, any fees or other compensation to the Administrative Agent, any Bank Lender or any holder of the

 

 

  

-2-

  

2003 Notes for or with respect to the Bank Credit Agreement Consent (as defined below) or the 2003 Note Agreement Consent (as defined below) (in each case other than for the reimbursement of out of pocket expenses in connection therewith).

 

SECTION 3.  CONDITIONS TO EFFECTIVENESS OF THIS CONSENT.

 

This Consent shall not become effective until, and shall become effective when, each and every one of the following conditions shall have been satisfied:

 

(a)         executed counterparts of this Consent, duly executed by the Company, each of the Subsidiary Guarantors and the Noteholders, shall have been delivered to the Noteholders;

 

(b)         the Company shall have delivered to the Noteholders executed copies of (i) the Consent Memorandum dated as of the date hereof among the Company, certain Subsidiaries of the Company named therein, JPMorgan Chase Bank, N.A., as agent, and the other financial institutions party thereto (the “Bank Credit Agreement Consent”), and (ii) the Consent dated as of the date hereof among the Company and the holders of the 2003 Notes (the “2003 Note Agreement Consent”), and all related agreements, documents and instruments, in each case, in connection therewith, all of which shall be in form and substance satisfactory to the Noteholders; and

 

(c)         the representations and warranties of the Company set forth in Section 2 hereof are true and correct on and with respect to the date hereof.

 

Upon receipt of all of the foregoing, this Consent shall become effective (the “Consent Effective Date”).

SECTION 4.  MISCELLANEOUS.

 

Section 4.1.  This Consent shall be construed in connection with and as part of the Note Agreement and, except as expressly provided in this Consent, all terms, conditions and covenants contained in the Note Agreement, the Subsidiary Guaranty and the Notes are hereby ratified and shall be and remain in full force and effect.

 

Section 4.2.  Except as expressly provided in this Consent, the execution, delivery and effectiveness of this Consent shall not (a) amend the Note Agreement, the Subsidiary Guaranty or any Note, (b) operate as a waiver of any right, power or remedy of any Noteholder, or (c) constitute a waiver of, or consent to any departure from, any provision of the Note Agreement, the Subsidiary Guaranty or any Note at any time.

 

Section 4.3.  Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this Consent may refer to the Note Agreement without making specific reference to this Consent but nevertheless all such references shall include this Consent unless the context otherwise requires.  At all times on and after the Consent Effective Date, each reference to the Note Agreement in any other document, instrument or agreement shall mean and be a reference to the Note Agreement as modified by this Consent.

 

 

 

  

-3-

  

Section 4.4.  The descriptive headings of the various Sections or parts of this Consent are for convenience only and shall not affect the meaning or construction of any of the provisions hereof.

 

Section 4.5.  This Consent shall be governed by and construed in accordance with the laws of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State.

 

Section 4.6.  The Company hereby confirms its obligations under the Note Agreement, whether or not the transactions hereby contemplated are consummated, to pay, promptly after request, the reasonable fees and expenses of Schiff Hardin LLP, special counsel to the Noteholders, in connection with the negotiation, preparation, approval, execution and delivery of this Consent.

 

 [Signatures on Following Page]

 

 

  

-4-

  

The execution hereof by you shall constitute a contract between us for the uses and purposes hereinabove set forth, and this Consent may be executed in any number of counterparts, each executed counterpart constituting an original, but all together only one agreement.

 

  

	

  

	 	 	

Very truly yours,

SCHAWK, INC.

  

  

	 
	 	
  

	 	 	By:	

/s/Timothy J. Cunningham

	 
	 	 	 	Name:  Timothy J. Cunningham
	 	 	 	Title:  EVP & CFO	 

	
  

  

    Each of the Subsidiary Guarantors hereby (i) consents to the foregoing Consent and ratifies the consents contained therein, (ii) ratifies and reaffirms all of its obligations and liabilities under each Subsidiary Guaranty (as defined in the Note Agreement referred to in the Consent) notwithstanding the Consent or otherwise, (iii) confirms that each Subsidiary Guaranty remains in full force and effect after giving effect to the Consent, (iv) represents and warrants that there is no defense, counterclaim or offset of any type or nature under any Subsidiary Guaranty, (v) agrees that nothing in any Subsidiary Guaranty, the Note Agreement, the Consent or any other agreement or instrument relating thereto requires the consent of any Subsidiary Guarantor or shall be deemed to require the consent of any Subsidiary Guarantor to any future amendment or other modification to the Note Agreement, and (vi) waives acceptance and notice of acceptance hereof.

 

  

  

  

	

  

	 	 	

SCHAWK USA, INC.

  

	 
	 	
  

	 	 	By:	

/s/Timothy J. Cunningham

	 
	 	 	 	Name:	Timothy J. Cunningham	 
	 	 	 	Title:	EVP & CFO	 

 

 

	

  

	 	 	

SCHAWK WORLDWIDE HOLDINGS INC.

  

	 
	 	
  

	 	 	By:	

/s/Timothy J. Cunningham

	 
	 	 	 	Name:	Timothy J. Cunningham	 
	 	 	 	Title:	EVP & CFO	 

  

  

	

  

	 	 	

SCHAWK LLC

  

	 
	 	
  

	 	 	By:	

/s/Timothy J. Cunningham

	 
	 	 	 	Name:	Timothy J. Cunningham	 
	 	 	 	Title:	EVP & CFO	 

 

  

  

  

 

 

  

  

  

  

 

	

  

	 	 	

SCHAWK HOLDINGS INC.

  

	 
	 	
  

	 	 	By:	

/s/Timothy J. Cunningham

	 
	 	 	 	Name:	Timothy J. Cunningham	 
	 	 	 	Title:	EVP & CFO	 

 

 

	

  

	 	 	

SEVEN SEATTLE, INC.

  

	 
	 	
  

	 	 	By:	

/s/Timothy J. Cunningham

	 
	 	 	 	Name:	Timothy J. Cunningham	 
	 	 	 	Title:	EVP & CFO	 

 

 

	

  

	 	 	

SCHAWK DIGITAL SOLUTIONS INC.

  

	 
	 	
  

	 	 	By:	

/s/Timothy J. Cunningham

	 
	 	 	 	Name:	Timothy J. Cunningham	 
	 	 	 	Title:	EVP & CFO	 

 

 

	

  

	 	 	

MIRAMAR EQUIPMENT, INC.

  

	 
	 	
  

	 	 	By:	

/s/Timothy J. Cunningham

	 
	 	 	 	Name:	Timothy J. Cunningham	 
	 	 	 	Title:	EVP & CFO	 

 

 

	

  

	 	 	

KEDZIE AIRCRAFT, LLC

  

	 
	 	
  

	 	 	By:	

/s/Timothy J. Cunningham

	 
	 	 	 	Name:	Timothy J. Cunningham	 
	 	 	 	Title:	EVP & CFO	 

 

 

	

  

	 	 	

SCHAWK LATIN AMERICA HOLDINGS LLC

  

	 
	 	
  

	 	 	By:	

/s/Timothy J. Cunningham

	 
	 	 	 	Name:	Timothy J. Cunningham	 
	 	 	 	Title:	EVP & CFO	 

  

  

  

 

Accepted as of the date first written above.

 

	

  

PRUDENTIAL INVESTMENT MANAGEMENT, INC.

 

 

	 	 	

 

  

	 
	By:	
/s/Anthony Colletta

	 	 	 	 	 

	 	
Vice President

	 	 	 	
  

	 

	
  

  

 

 

	

  

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

 

 

	 	 	

 

	 
	By:	

/s/Anthony Colletta

	 	 	 	 	 

	 	

Vice President

	 	 	 	
  

	 

	
  

  

 

 

	

  

PRUCO LIFE INSURANCE COMPANY

 

 

	 	 	

 

	 
	By:	

/s/Anthony Colletta

	 	 	 	 	 

	 	
Assistant Vice President

	 	 	 	
  

	 

	
  

  

  

  

 

  

	

  

PRUDENTIAL RETIREMENT INSURANCE

AND ANNUITY COMPANY

 

	 	 	 	 
	By:	
Prudential Investment Management, Inc., 

as investment manager

 

 

	 	 	 	 	 

  

	By:	

/s/Anthony Colletta

	 	 	 	
  

	 
	 	Vice President	 	 	 
	 	 	 	 	 

	
  

  

 

 

  

  

  

Exhibit A

 

Form of Stockholder Agreement

 

See Attachedex10-4.htm

EXHIBIT 10.4

 

 

Execution Copy

TERMINATION OF EMPLOYMENT AND DEFERRED COMPENSATION 

AGREEMENTS AND LIMITED RELEASE

 

This Termination of Employment and Deferred Compensation Agreements and Limited Release (“Agreement”) is made between Clarence W. Schawk (“Employee”) and Schawk, Inc. (“Schawk”).

 

WHEREAS, the terms and conditions of Employee’s employment with Schawk, Inc. (“Schawk”) are governed by the Clarence W. Schawk Amended and Restated Employment Agreement, dated October 1, 1994, as amended by that certain Addendum to Restated Employment Agreement of Clarence W. Schawk, dated March 9, 1998 (the “Employment Agreement”);

 

WHEREAS, Employee and Schawk are also parties to that certain Deferred Compensation Agreement dated June 1, 1983, as modified by that certain Addendum to Restated Employment Agreement of Clarence W. Schawk, dated March 9, 1998 (“Deferred Compensation Agreement”);

 

WHEREAS, Matthews International Corporation (“Matthews”) and Schawk are contemplating entering into that certain Agreement and Plan of Merger by and among Matthews, Moonlight Merger Sub Corporation, Moonlight Merger Sub LLC and Schawk dated as of March 16, 2014 (the “Merger Agreement”); and

 

WHEREAS, as a condition precedent to the execution of the Merger Agreement, Employee must terminate the Employment Agreement and the Deferred Compensation Agreement as provided herein.

 

NOW THEREFORE, intending to be legally bound and for good and valuable consideration, Schawk and Employee agree as follows:

 

1.           Recitals.  The foregoing recitals are true and correct and incorporated herein.

 

2.           Termination of Employment and Deferred Compensation Agreements (collectively, the “Employment Agreement”).

 

(a)           Except as provided in Section 3(c) herein, notwithstanding any provision of the Employment Agreement to the contrary, Employee hereby agrees that the Employment Agreement is terminated, effective immediately.

 

(b)           The termination of the Employment Agreement contained herein does not constitute a termination of Employee’s employment with the Company, and upon the execution hereof he will continue to hold the position and office he held in the Company immediately prior hereto, and he will continue to receive his base salary, eligibility for his annual bonus and long term incentive opportunities, health & welfare and fringe benefits following the execution hereof until changed by the Board of Directors of Schawk.

 

	  	
 

	  

 

  

1

  

Execution Copy

3.           No Further Obligations and Limited Release of Claims.

 

(a)           The Employee and Schawk acknowledge and agree that the termination of the Employment Agreement does not result in any obligations of either Executive or Schawk party under the Employment Agreement becoming due to either party (including any successor entities), including without limitation, the Employee’s obligation to remain subject to any restrictive covenants thereunder and the Company’s (or any successor entity’s) obligation to make any payments or benefits to the Employee, except as otherwise provided in Section 2(b) herein; provided, however, Employee shall remain entitled to the accrued deferred compensation of approximately $815,000.00 as specifically set forth on Schawk’s books and records and as disclosed in Schawk’s 2013 Proxy Statement (the “Deferred Compensation Exception”).

 

(b)           Employee further releases and forever discharges Schawk, Matthews, and each of their direct and indirect subsidiaries, divisions, parents, affiliates, companies under common control of any of the foregoing, predecessors, successors, and assigns, and its and their past, present and future shareholders, partners, principals, managers, directors, officers, employees, agents, attorneys, employee benefit plans, trustees and all others acting in concert with them, from any and all claims, actions, suits, proceedings, complaints, causes of action, debts, costs and expenses (including attorney’s fees), at law or in equity, known or unknown, that Employee has or may have through the date Employee signs this Agreement, arising out of, based on, or relating in any way to any payments or compensation that otherwise may have been due and/or owing Employee under the Employment Agreement, excluding the Deferred Compensation Exception, but including any other amounts that are or may be owed under any other deferred compensation plans or agreements.

 

(c)           Notwithstanding the foregoing, the limited release set forth in Section 3(b) does not and is not intended to release any claims not specifically referenced in Section 3(b) herein and/or that cannot be released by law, including but not limited to claims for (i) vested pension benefits, (ii) rights under current bonus plans, Long Term Incentive Plans and the like of the type and consistent with the disclosures contained in Schawk’s 2013 Proxy Statement; and (iii) amounts due under Clause 2(b).

 

4.           Consult With an Attorney.  Schawk hereby advise Employee to consult with an attorney of Employee’s choice (at Employee’s expense) before Employee signs this Agreement.  Schawk will rely on Employee’s signature on this Agreement as Employee’s representation that Employee read this Agreement carefully before signing it, and that Employee has a full and complete understanding of its terms.

 

5.           Applicable Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois, without giving effect to its principles of conflicts of law.

 

6.           Entire Agreement.  This Agreement reflects the complete understanding between the parties concerning its subject matter, and supersedes any and all prior agreements, promises, representations or inducements concerning that subject matter.

 

	  	
 

	  

 

  

2

  

Execution Copy

7.           No Admissions.  Neither the execution of this Agreement nor the performance of its terms and conditions shall be construed or considered by any party or by any other person as an admission of liability or wrongdoing by either party.

 

8.           Counterparts.  This Agreement may be executed in one or more counterparts, each of which will be considered an original instrument and all of which together will be considered one and the same agreement and will become effective when all executed counterparts have been delivered to the respective parties.  Delivery of executed pages by facsimiles transmission or e-mail will constitute effective and binding execution and delivery of this Agreement.

 

9.           Assignment.  This Agreement shall be binding upon and shall inure to the benefit of Schawk and its respective successors and assigns.

 

[The rest of this page is intentionally left blank.]

 

	  	
 

	  

  

3

  

Execution Copy

     10.           Acknowledgements.  Employee hereby acknowledges that Employee (a) has read this Agreement and understands all of its provisions; and (b) voluntarily enters into this Agreement, which is contractual in nature and contains a general release of claims related to the Employment Agreement and the Deferred Compensation Agreement.

 

 

	

Witness:

	 	 	
SCHAWK, INC.

 

	 
	 	 	 	By:	

/s/Timothy J. Cunningham

	 
	 	
  

	 	 	Title:	EVP & CFO	 
	 	
  

	 	 	Date:	
March 16, 2014

	 

	

 

 

Witness:

 

	 	 	
  

	 
	 	 	 	By:	
/s/Clarence W. Schawk

	 
	 	
  

	 	 	 	
Clarence W. Schawk

 

	 
	 	
  

	 	 	Date:	
  

	 

 

	  	
 

	  

  

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00228-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00228-of-00352.parquet"}]]