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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): SEPTEMBER 19, 2005
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COLOR IMAGING, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 1-16450 13-3453420
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
4350 PEACHTREE INDUSTRIAL BOULEVARD, SUITE 100, NORCROSS, GA 30071
(Address of principal executive office) (zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (770) 840-1090
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(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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SECTION 1 REGISTRANT'S BUSINESS AND OPERATIONS.
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE CONTRACT.
Assignment and Assumption Agreement
On September 19, 2005, Color Imaging, Inc. (the "Company" or "Color Imaging")
entered into an Assignment and Assumption Agreement ("Assumption Agreement")
with Kings Brothers LLC ("Kings Brothers"). As described more fully in the
Company's Annual Report on Form 10-K for the year ended December 31, 2004, since
June 1999 Kings Brothers and Color Imaging have been co-debtors on industrial
revenue bonds. Jui-Hung Wang, Jui-Kung Wang, Sueling Wang and Jui-Chi Wang are
directors of the Company and own Kings Brothers. In connection with those bonds,
Kings Brothers and Color Imaging entered into a Joint Debtor Agreement, agreeing
to be responsible for their respective shares of the liability under the bonds.
As described in the Company's Current Report on Form 8-K filed on March 16,
2005, on March 8, 2005, Color Imaging entered into a Second Amendment to Joint
Debtors Agreement ("Second Amendment") with Kings Brothers. Prior to the entry
into the Second Amendment, Kings Brothers paid principal on, redeemed or
provided for the redemption of an aggregate amount of the outstanding bonds
representing Kings Brothers' agreed upon portion of the liability under the
Joint Debtor Agreement. Under the bond documents, Kings Brothers remained an
obligor on the bonds. Under the Second Amendment, the parties agreed that Color
Imaging has sole responsibility for paying the remaining principal and interest
under the bonds. In September 2005, the financial institution responsible for
administering the bond agreed to release Kings Brothers and Kings Brothers'
security from the bond obligations. The Company has agreed to assume the
remaining obligations under the bonds. The Assignment and Assumption Agreement
serves to document the Company's agreement to assume the remaining obligations
under the bond, including Kings Brothers' obligations. A copy of the Assignment
and Assumption Agreement is attached as Exhibit 10.1 to this report and is
incorporated herein by reference.
Renewal of Bank Borrowing Arrangements
On September 19, 2005, Color Imaging renewed its credit facility with Wachovia
Bank, National Association, as successor by merger to SouthTrust Bank (the
"Bank"). The Company has a $1.5 million revolving line of credit, as amended,
bearing interest at the one-month Libor interest rate in effect two business
days before the first day of the month plus 2.50%. This revolving line of credit
expired on June 30, 2005, and the Company has, on September 19, 2005, renewed
the line of credit in the increased amount of $3 million to expire June 30,
2007, at a reduced interest rate of Libor plus 1.85%. Under the renewed line of
credit, the Company is permitted to borrow up to 75% of eligible accounts
receivable and 50% of eligible inventories (up to a maximum $1.5 million and not
to exceed 50% of the total outstanding). The line of credit includes a $500,000
sublimit for import letters of credit. The Company has a $1.5 million standby
letter of credit facility, which expired on June 30, 2005. The bank has extended
this facility in the reduced amount of $1.0 million to June 30, 2007, as another
sublimit under the $3 million revolving line of credit. The Company requested
and the Bank has provided the Company with a $1.0 million guidance line,
$500,000 for each of the next two years, for 80% of the cost of the acquisition
of eligible capital equipment, excluding soft costs and installation, or the
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refinancing of principal amounts due in 2006 and 2007 on the industrial
development bond. Under the guidance line approved by the Bank, amounts advanced
would be payable interest only during the fiscal year in which advanced at the
one-month Libor rate plus 1.85% and then be converted to a term loan with level
principal payments over five years. The Company has granted the Bank a security
interest in all of the Company's assets as security for the repayment of the
obligations to the Bank.
The credit agreement provides for the following credit facilities:
(1) A $3.0 million Revolving Credit Line to support working capital with
sublimits of $500,000 and $1,000,000 for import and standby letters of
credit to facilitate the purchase of inventory from foreign vendors
(2) A $500,000 Capital Asset Financing Facility to be available through
June 30, 2006, with the outstanding principal balance on this facility
converting to a term loan on June 30, 2006, to be fully amortized over
5 years.
(3) A $500,000 Capital Asset Financing Facility to be available from July
1, 2006 through June 30, 2007, with the outstanding principal balance
on this facility converting to a term loan on June 30, 2007, to be
fully amortized over 5 years.
The credit facility includes customary loan covenants, including requirements to
maintain at all times that this Agreement is in effect the following:
(a) Fixed Charge Coverage Ratio with respect to the twelve-month period
ending on the last day of any fiscal quarter of not less than
1.25:1:00;
(b) Traditional Leverage of not more than 2.0 to 1; and
(c) Tangible Net Worth of not less than $9,000,000.
If the Company either abandons the going private transaction or fails to
consummate the going private transaction by December 31, 2005, then the
foregoing covenants, effective upon the earlier of abandonment or December 31,
2005, shall be modified to provide that the Company shall at all times
thereafter maintain the following:
(a) Fixed Charge Coverage Ratio with respect to the twelve-month period
ending on the last day of any fiscal quarter of not less than
1.25:1:00;
(b) Traditional Leverage of not more than 1.5 to 1; and
(c) Tangible Net Worth of not less than $ 10,000,000.
A copy of the Second Amended and Restated Loan and Security Agreement is
attached as Exhibit 10.2 to this report. The revolving note and two term notes
are attached as Exhibits 10.3, 10.4 and 10.5 to this report. These documents are
incorporated herein by reference.
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SECTION 2 FINANCIAL INFORMATION.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION
UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
The discussion at Item 1.01 above is incorporated herein by reference.
SECTION 9 FINANCIAL STATEMENTS AND EXHIBITS.
ITEM 9.01(C) EXHIBITS.
Exhibit Number Description
10.1 Assignment and Assumption Agreement (Relating to
Development Authority of Gwinnett County
Industrial Development Revenue Bonds (Color Image,
Inc. Project), Series 1999) as of September 19,
2005, by and among Kings Brothers, LLC and Color
Imaging, Inc.
10.2 Second Amended and Restated Loan and Security
Agreement as of September 19, 2005, by and between
Color Imaging, Inc. and Wachovia Bank, National
Association, Successor by Merger to SouthTrust
Bank.
10.3 Second Amended And Restated $3,000,000 Revolving
Note as of September 19, 2005, by and between
Color Imaging, Inc. and Wachovia Bank, National
Association, Successor by Merger to SouthTrust
Bank.
10.4 First $500,000 Term Note as of September 19, 2005,
by and between Color Imaging, Inc. and Wachovia
Bank, National Association, Successor by Merger to
SouthTrust Bank.
10.5 Second $500,000 Term Note as of September 19,
2005, by and Between Color Imaging, Inc. and
Wachovia Bank, National Association, Successor by
Merger to SouthTrust Bank.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Color
Imaging, Inc. has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COLOR IMAGING, INC.
Date: September 19, 2005 By: /S/ MORRIS E. VAN ASPEREN
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Name: Morris E. Van Asperen
Title: Executive Vice President, Chief
Financial Officer and Secretary
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EXHIBIT INDEX
Exhibit Number Description
Exhibit Number Description
10.1 Assignment and Assumption Agreement (Relating to
Development Authority of Gwinnett County
Industrial Development Revenue Bonds (Color Image,
Inc. Project), Series 1999) as of September 19,
2005, by and among Kings Brothers, LLC and Color
Imaging, Inc.
10.2 Second Amended and Restated Loan and Security
Agreement as of September 19, 2005, by and between
Color Imaging, Inc. and Wachovia Bank, National
Association, Successor by Merger to SouthTrust
Bank.
10.3 Second Amended And Restated $3,000,000 Revolving
Note as of September 19, 2005, by and between
Color Imaging, Inc. and Wachovia Bank, National
Association, Successor by Merger to SouthTrust
Bank.
10.4 First $500,000 Term Note as of September 19, 2005,
by and between Color Imaging, Inc. and Wachovia
Bank, National Association, Successor by Merger to
SouthTrust Bank.
10.5 Second $500,000 Term Note as of September 19,
2005, by and Between Color Imaging, Inc. and
Wachovia Bank, National Association, Successor by
Merger to SouthTrust Bank.
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