UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 24, 2016 (June 20, 2016)
Ennis, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Texas | 1-5807 | 75-0256410 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
2441 Presidential Pkwy. Midlothian, Texas | 76065 | |||
(Address of Principal Executive Offices) | (Zip Code) |
Registrants Telephone Number, Including Area Code: (972) 775-9801
N/A
(Former Name or Former Address, if Changed Since Last Report)
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:
¨ | 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) |
Item 1.01 | Entry into a Material Definitive Agreement |
Amendments to Credit Agreement
Ennis, Inc. (the Company) entered into a Fifth Amendment to Second Amended and Restated Credit Agreement, dated June 20, 2016, among the Company, the lenders party thereto and Bank of America, National Association, as Administrative Agent (the Fifth Amendment), which amended the Companys existing revolving credit facility (the Credit Facility) in connection with the payment of a previously announced special dividend declared by the Company as a result of the closing of the previously announced sale of Alstyle Apparel, LLC and its subsidiaries (collectively, the Apparel Division). In addition, in connection with the closing of the sale of the Apparel Division, the Company entered into a Fourth Amendment to Second Amended and Restated Credit Agreement, dated as of May 25, 2016, among the Company, the lenders party thereto and Bank of America, National Association, as Administrative Agent (the Fourth Amendment and together with the Fifth Amendment, the Credit Facility Amendments).
The Credit Facility Amendments (i) released the Apparel Division from all liabilities and obligations under the Credit Facility, (ii) reduced the aggregate commitments under the Credit Facility to a $100 million revolving credit line, (iii) removed Comerica Bank and Branch Banking and Trust Company as a lender thereunder, (iv) permitted the payment by the Company of a special dividend to the Companys shareholders, and (v) amended the definition of fixed charge coverage ratio and reduce the minimum consolidated tangible net worth threshold in connection with reduction of the aggregate commitments under the Credit Facility.
The foregoing summary of the Credit Agreement Amendments does not purport to be complete and is subject to, and qualified in its entirety by, the full text of such amendments, copies of which are filed as Exhibit 10.1 and Exhibit 10.2.
Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement or a Registrant. |
The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference in this Item 2.03.
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits |
Exhibit No. |
Description | |
10.1 | Fourth Amendment and Consent to Second Amended and Restated Credit Agreement, effective as of May 25, 2016, by and among Ennis, Inc., each of the co-borrowers party thereto, each of the lenders party thereto, and Bank of America, N.A., in its capacity as administrative agent for the Lenders. | |
10.2 | Fifth Amendment to Second Amended and Restated Credit Agreement, dated June 20, 2016, by and among Ennis, Inc., each of the co-borrowers party thereto, each of the lenders party thereto, and Bank of America, N.A., in its capacity as administrative agent for the Lenders. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Ennis, Inc. | ||
By: | /s/ Richard L. Travis Jr. | |
Richard L. Travis, Jr. | ||
Chief Financial Officer |
Date: June 24, 2016
EXHIBIT INDEX
Exhibit No. |
Description | |
10.1 | Fourth Amendment and Consent to Second Amended and Restated Credit Agreement, effective as of May 25, 2016, by and among Ennis, Inc., each of the co-borrowers party thereto, each of the lenders party thereto, and Bank of America, N.A., in its capacity as administrative agent for the Lenders. | |
10.2 | Fifth Amendment to Second Amended and Restated Credit Agreement, dated June 20, 2016, by and among Ennis, Inc., each of the co-borrowers party thereto, each of the lenders party thereto, and Bank of America, N.A., in its capacity as administrative agent for the Lenders. |
Exhibit 10.1
Amendment
FOURTH AMENDMENT AND CONSENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS FOURTH AMENDMENT AND CONSENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this Fourth Amendment), dated as of May 18, 2016 (but effective as provided in Section 5 hereof), is entered into among ENNIS, INC., a Texas corporation (the Parent), each of the other parties listed under the heading Co-Borrowers on the signature pages hereto (individually with the Parent referred to herein as a Co-Borrower and collectively with the Parent, called the Co-Borrowers), Bank of America, N.A. and Regions Bank (collectively, the Continuing Lenders), and BANK OF AMERICA, N.A., in its capacity as administrative agent for the Lenders (the Administrative Agent).
BACKGROUND
A. The Co-Borrowers, the Lenders, and the Administrative Agent are parties to that certain Second Amended and Restated Credit Agreement, dated as of August 18, 2009, as amended by that certain First Amendment to Second Amended and Restated Credit Agreement, dated as of August 16, 2011, that certain Second Amendment to Second Amended and Restated Credit Agreement, dated as of February 23, 2012, and that certain Third Amendment and Consent to Second Amended and Restated Credit Agreement, dated as of September 19, 2013 (as amended, the Credit Agreement; the terms defined in the Credit Agreement and not otherwise defined herein shall be used herein as defined in the Credit Agreement).
B. The Parent has informed the Lenders that it has entered into a Unit Purchase Agreement, dated as of May 4, 2016, with Gildan Activewear Inc., a Canadian corporation, (the Unit Purchase Agreement) to sell (i) 100 units, constituting all of the limited liability company interests, of Alstyle Apparel, LLC, a Delaware limited liability company (Alstyle), presently a wholly-owned Subsidiary of the Parent, and (ii) the Acquired Assets (as defined in the Unit Purchase Agreement), for an aggregate base purchase price of $110,000,000 (Base Amount), subject to adjustment as provided in the Unit Purchase Agreement (the sale of such units and Acquired Assets, together with all related transactions and the payment of all fees and expenses in connection therewith, the Alstyle Sale).
C. The Co-Borrowers have requested that the Continuing Lenders (i) consent to the Alstyle Sale, (ii) release Alstyle, Alstyle Ensenada LLC, an Illinois limited liability company (AE), Alstyle Hermosilla LLC, an Illinois limited liability company (AH), Diaco USA, LLC, a California limited liability company (DU), and A and G, Inc., an Illinois corporation (AG) (Alstyle, AE, AH, DU and AG are hereinafter sometimes referred to collectively as the Alstyle Companies) from all liabilities and obligations under the Credit Agreement and the other Loan Documents, (iii) remove Comerica Bank and Branch Banking and Trust Company, as Lenders under the Credit Agreement (collectively, the Exiting Lenders), and (iv) reduce the Aggregate Commitments to $100,000,000.
D. Subject to the terms and conditions of this Fourth Amendment, the Continuing Lenders and the Administrative Agent have agreed to (i) consent to the Alstyle Sale, (ii) release the Alstyle Companies, and (iii) reduce the Aggregate Commitments to $100,000,000.
NOW, THEREFORE, in consideration of the covenants, conditions and agreements hereafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are all hereby acknowledged, the parties hereto covenant and agree as follows:
1. AMENDMENTS.
(a) Section 1.01 of the Credit Agreement is hereby amended by adding the following new definitions:
FATCA means Sections 1471 through 1474 of the Code, as of the date of the effective date of the Fourth Amendment (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretation thereof, any agreement entered into pursuant to Section 1471(b)(1) of the Code, any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code, and any fiscal or regulatory legislation, rules or practices adopted pursuant to such intergovernmental agreement.
Fourth Amendment means that certain Fourth Amendment to Second Amended and Restated Credit Agreement, dated as of May 18, 2016, among the Co-Borrowers, the Lenders and the Administrative Agent.
(b) The definition of Excluded Taxes in Section 1.01 of the Credit Agreement is hereby amended by deleting the word and before clause (d) and adding a new clause (e) as follows:
and (e) any U.S. federal withholding Taxes imposed under FATCA.
(c) The definition of Required Lenders set forth in Section 1.01 of the Credit Agreement is hereby amended to read as follows:
Required Lenders means, as of any date of determination, Lenders having more than 50% of the Aggregate Commitments or, if the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02, Lenders holding in the aggregate more than 50% of the Total Outstandings (with the aggregate amount of each Lenders risk participation and funded participation in L/C Obligations and Swing Line Loans being deemed held by such Lender for purposes of this definition); provided that (a) the Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders, and (b) at any time there are less than three Lenders hereunder, Required Lenders shall mean each Lender.
(d) Section 3.01 of the Credit Agreement is hereby amended by adding a new subsection (g) thereto to read as follows:
(g) FATCA. For purposes of determining withholding Taxes under FATCA, from and after the effective date of the Fourth Amendment, the Co-Borrowers and the Administrative Agent shall treat (and the Lenders hereby authorize the Administrative Agent to treat) this Agreement as not qualifying as a grandfathered obligation within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i).
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(e) Schedule 2.01 to the Credit Agreement is hereby amended to be in the form of Schedule 2.01, and the Commitments and the Applicable Percentages of the Continuing Lenders are hereby amended, as the case may be, to be in the amounts and percentages set forth thereon.
2. CONSENT. Subject to the satisfaction of the conditions of effectiveness set forth in Section 5 hereof and the immediately following proviso, the Continuing Lenders hereby consent to Alstyle Sale; provided that the Base Amount is not less than $110,000,000. This Consent is limited and does not affect any other covenant or provision of the Credit Agreement or any other Loan Document.
3. RELEASE. Subject to the satisfaction of the conditions of effectiveness set forth in Section 5 hereof, the Continuing Lenders and the Administrative Agent agree that (a) all obligations and liabilities of the Alstyle Companies under the Credit Agreement and the other Loan Documents shall be discharged and automatically terminated and the Alstyle Companies shall no longer be Co-Borrowers thereunder, (b) all Liens granted under the Loan Documents in any assets or property of the Alstyle Companies or the Capital Securities of any of the Alstyle Companies, Cactex de Mexico S.A. de C.V., Alstyle Internacional de Mexico S.A. de C.V., Alvest S.A. de C.V. and Diaco Internacional S.A. de C.V. (collectively, the Alstyle Liens) shall be released and automatically terminated and (c) the Parent has satisfied the requirements to deliver prior written notice of the releases set forth herein and a written request for such releases, in each case in accordance with Section 7.14 of the Security Agreement. At the expense of the Parent, the Administrative Agent shall (a) execute and deliver to the Parent or the Alstyle Companies (or any designee of the Parent or the Alstyle Companies) as directed such releases and terminations of the Alstyle Liens as are reasonably necessary or reasonably requested by the Parent or the Alstyle Companies (or any designee of the Parent or the Alstyle Companies) to release the Alstyle Liens and (b) deliver to the Parent or the Alstyle Companies (or any designee of the Parent or the Alstyle Companies) as directed all equity certificates and any other similar collateral related to the Alstyle Companies previously delivered in physical form to the Administrative Agent under the Loan Documents.
4. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its execution and delivery hereof, each of the Co-Borrowers represents and warrants that, as of the date hereof and after giving effect to the consent set forth in the foregoing Section 2:
(a) the representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct on and as of the date hereof as made on and as of such date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date;
(b) no event has occurred and is continuing which constitutes a Default or an Event of Default;
(c) each of the Co-Borrowers has full power and authority to execute and deliver this Fourth Amendment; and
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(d) no authorization, approval, consent, or other action by, notice to, or filing with, any Governmental Authority or other Person, is required for the execution or delivery by each of the Co-Borrowers of this Fourth Amendment, except for authorizations, approvals, consents, filings and notices that have been obtained or made and are in full force and effect.
5. CONDITIONS OF EFFECTIVENESS. This Fourth Amendment shall be effective upon satisfaction of the following conditions:
(a) the representations and warranties set forth in Section 4 of this Fourth Amendment shall be true and correct;
(b) the Administrative Agent shall have received counterparts of this Fourth Amendment executed by the Continuing Lenders and acknowledged by the Exiting Lenders for the purpose of Section 7 hereof only;
(c) the Administrative Agent shall have received counterparts of this Fourth Amendment executed by each of the Co-Borrowers;
(d) the Exiting Lenders shall have received payment in full in immediately available funds for all amounts due them under the Credit Agreement and the other Loan Documents;
(e) the simultaneous closing of Alstyle Sale according to its terms; and
(f) the Administrative Agent shall have received in form and substance satisfactory to the Administrative Agent, such other documents, certificates and instruments as the Administrative Agent shall require.
6. PURCHASE/SALE BY CONTINUING LENDERS. Simultaneously with the satisfaction of the conditions to effectiveness set forth in Section 5 hereof, each Continuing Lender shall purchase or sell (as the case may be), without recourse, an amount of the Revolving Loans outstanding such that, after giving effect to this Fourth Amendment, the amount of each Continuing Lenders Commitment utilized and the amount of Revolving Loans owed to each Continuing Lender will be equal to its Applicable Percentage thereof after giving effect to this Fourth Amendment. The Co-Borrowers shall pay each Continuing Lender compensation for any losses pursuant to Section 3.05 of the Credit Agreement as a result of any purchases or sales. Each Continuing Lender hereby waives the requirement in Section 2.13 that all payments on the Obligations be made pro rata solely for purposes of payment of all Obligations due and owing to the Exiting Lenders.
7. EXITING LENDERS. By acknowledging and agreeing as provided on the signature pages hereof, each Exiting Lender, upon satisfaction of the conditions of effectiveness set forth in Section 5 hereof, shall not (a) be a Lender under the Credit Agreement and (b) have any rights or obligations with respect to being a Lender (including any right to consent to the Alstyle Sale or the release of the Alstyle Liens hereunder), except (i) for those that expressly survive termination of the Credit Agreement or termination of any Commitment thereunder and (ii) the right, pursuant to Section 10.05 of the Credit Agreement, to have any payment or any part thereof made to such Exiting Lender reinstated and revived if such payment or any part thereof is subsequently invalidated, declared to be fraudulent or preferential; set aside or required to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise.
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8. CO-BORROWERS AGREEMENT. Each Co-Borrower (i) acknowledges and agrees that its liabilities and obligations under the Loan Documents are not released, diminished, waived, modified, impaired or affected in any manner by this Agreement the release of the Alstyle Companies and the Alstyle Liens provided herein, (ii) ratifies and confirms its obligations and liabilities under the Loan Documents, and (iii) acknowledges and agrees that it has no claim or offsets against, or defenses or counterclaims to, its obligations and liabilities under the Loan Documents.
9. REFERENCE TO THE CREDIT AGREEMENT.
(a) Upon the effectiveness of this Fourth Amendment, each reference in the Credit Agreement to this Agreement, hereunder, or words of like import shall mean and be a reference to the Credit Agreement, as affected and amended by this Fourth Amendment.
(b) Except as expressly set forth herein, this Fourth Amendment shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights or remedies of the Administrative Agent or the Lenders under the Credit Agreement or any of the other Loan Documents, and shall not alter, modify, amend, or in any way affect the terms, conditions, obligations, covenants, or agreements contained in the Credit Agreement or the other Loan Documents, all of which are hereby ratified and affirmed in all respects and shall continue in full force and effect.
10. COSTS AND EXPENSES. The Co-Borrowers shall be obligated to pay the reasonable and documented costs and expenses of the Administrative Agent in connection with the preparation, reproduction, execution and delivery of this Fourth Amendment and the other instruments and documents to be delivered hereunder (including the reasonable and documented fees and out-of-pocket expenses of counsel for the Administrative Agent with respect thereto).
11. EXECUTION IN COUNTERPARTS. This Fourth Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument. For purposes of this Fourth Amendment, a counterpart hereof (or signature page thereto) signed and transmitted by any Person party hereto to the Administrative Agent (or its counsel) by facsimile machine, telecopier or electronic mail is to be treated as an original. The signature of such Person thereon, for purposes hereof, is to be considered as an original signature, and the counterpart (or signature page thereto) so transmitted is to be considered to have the same binding effect as an original signature on an original document.
12. GOVERNING LAW; BINDING EFFECT. This Fourth Amendment shall be governed by and construed in accordance with the laws of the State of Texas applicable to agreements made and to be performed entirely within such state, provided that each party retains all rights arising under federal law. This Fourth Amendment shall be binding upon the parties hereto and their respective successors and assigns.
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13. HEADINGS. Section headings in this Fourth Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment and Fourth Amendment for any other purpose.
14. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS FOURTH AMENDMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AS TO THE SUBJECT MATTER THEREIN AND HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto have executed this Fourth Amendment as of the date first above written.
CO-BORROWERS: | ||
ENNIS, INC. | ||
By: | /s/ Richard L. Travis Jr. | |
Richard L. Travis, Jr. Vice-President and Chief Financial Officer | ||
Ennis Business Forms of Kansas, Inc. Connolly Tool and Machine Company Admore, Inc. PFC Products, Inc. Ennis Acquisitions, Inc. Northstar Computer Forms, Inc. General Financial Supply, Inc. Calibrated Forms Co. Inc. Crabar/GBF, Inc. Royal Business Forms Inc. Alstyle Apparel LLC A and G, Inc. Alstyle Ensenada LLC Alstyle Hermosilla LLC Diaco USA, LLC Tennessee Business Forms Company TBF Realty, LLC Block Graphics, Inc. Specialized Printed Forms, Inc. B&D Litho of Arizona, Inc. Skyline Business Forms, Inc. Skyline Business Properties LLC SPF Realty, LLC Printgraphics, LLC | ||
By: | /s/ Richard L. Travis Jr. | |
Richard L. Travis, Jr. Vice President of each |
Fourth Amendment and Consent to Second Amended and Restated Credit Agreement Signature Page
American Forms I, L.P. Adams McClure I, L.P. Texas EBF, L.P. Ennis Sales, L.P. Ennis Management, L.P. | ||
By: | Ennis, Inc., the sole general partner of each | |
By: | /s/ Richard L. Travis Jr. | |
Richard L. Travis, Jr. Vice President and Chief Financial Officer |
Fourth Amendment and Consent to Second Amended and Restated Credit Agreement Signature Page
BANK OF AMERICA, N.A., as Administrative Agent | ||
By: | /s/ Linda Lov | |
Title: | Linda Lov Assistant Vice President |
Fourth Amendment and Consent to Second Amended and Restated Credit Agreement Signature Page
BANK OF AMERICA, N.A., as a Lender, as L/C Issuer and as Swing Line Lender | ||
By: | /s/ Jennifer Yan | |
Jennifer Yan | ||
Title: | Senior Vice President |
Fourth Amendment and Consent to Second Amended and Restated Credit Agreement Signature Page
REGIONS BANK, as a Lender | ||
By: | /s/ Rick Prewitt | |
Rick Prewitt | ||
Title: | Director |
Fourth Amendment and Consent to Second Amended and Restated Credit Agreement Signature Page
SCHEDULE 2.01
COMMITMENTS
AND APPLICABLE PERCENTAGES
Lender |
Commitment | Applicable Percentage |
||||||
Bank of America, N.A. |
$ | 60,000,000 | 60.000000000 | % | ||||
Regions Bank |
$ | 40,000,000 | 40.000000000 | % | ||||
Total |
$ | 100,000,000 | 100.000000000 | % |
Schedule 2.01
Exhibit 10.2
Amendment
FIFTH AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this Fifth Amendment), dated as of June 20, 2016 (but effective as provided in Section 5 hereof), is entered into among ENNIS, INC., a Texas corporation (the Parent), each of the other parties listed under the heading Co-Borrowers on the signature pages hereto (individually with the Parent referred to herein as a Co-Borrower and collectively with the Parent, called the Co-Borrowers), Bank of America, N.A. and Regions Bank (collectively, the Continuing Lenders), and BANK OF AMERICA, N.A., in its capacity as administrative agent for the Lenders (the Administrative Agent).
BACKGROUND
A. The Co-Borrowers, the Lenders, and the Administrative Agent are parties to that certain Second Amended and Restated Credit Agreement, dated as of August 18, 2009, as amended by that certain First Amendment to Second Amended and Restated Credit Agreement, dated as of August 16, 2011, that certain Second Amendment to Second Amended and Restated Credit Agreement, dated as of February 23, 2012, that certain Third Amendment and Consent to Second Amended and Restated Credit Agreement, dated as of September 19, 2013, and that certain Fourth Amendment and Consent to Second Amended and Restated Credit Agreement, dated as of May 18, 2016 (as amended, the Credit Agreement; the terms defined in the Credit Agreement and not otherwise defined herein shall be used herein as defined in the Credit Agreement).
B. The Parent has requested certain amendments to the Credit Agreement.
C. Subject to the terms and conditions of this Fifth Amendment, the Lenders and the Administrative Agent have agreed to such amendments.
NOW, THEREFORE, in consideration of the covenants, conditions and agreements hereafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are all hereby acknowledged, the parties hereto covenant and agree as follows:
1. AMENDMENTS.
(a) Section 1.01 of the Credit Agreement is hereby amended by adding the following new definition:
Special Dividend means that certain dividend to be paid by the Parent on or about August 8, 2016 in an aggregate amount not to exceed $40,000,000.
(b) The definition of Fixed Charge Coverage Ratio set forth in Section 1.01 of the Credit Agreement is hereby amended to read as follows:
Fixed Charge Coverage Ratio means, for any Computation Period, the ratio of (a) the total for such period of EBITDA minus the sum of income taxes paid in cash by the Parent and its Subsidiaries and all unfinanced Capital Expenditures to (b) the sum for such period of (i) cash Interest Expense plus (ii) required payments of principal of
Funded Debt (excluding the Revolving Loans, Hedging Obligations and contingent obligations in respect of letters of credit) plus (iii) an amount equal to the advances, dividends and distributions (other than (x) the Special Dividend, (y) non-cash distributions of equity securities of the Parent and (z) distributions on equity securities of the Parent to the extent already included in the calculation of Consolidated Net Income), and redemptions and repurchases of equity securities of the Parent (to the extent otherwise permitted herein) made by the Parent to holders of its Capital Securities.
(c) Section 7.13(c) of the Credit Agreement is hereby amended to read as follows:
(c) Minimum Consolidated Tangible Net Worth. Permit the Consolidated Tangible Net Worth of the Parent and its Subsidiaries to be less than $75,000,000 plus 25% of Consolidated Net Income commencing with the Parents Fiscal Quarter ending May 31, 2016. As used herein Consolidated Tangible Net Worth means for the Parent and its Subsidiaries, on a consolidated basis, as at the end of any Fiscal Quarter, (i) the total amount of all consolidated assets that, in accordance with GAAP, are properly shown as such on the consolidated balance sheet of the Parent and its Subsidiaries as at the end of such Fiscal Quarter, prepared in accordance with GAAP (with Inventory being valued at the lower of cost or market value), after deducting all proper reserves (including reserves for depreciation and amortization), minus (ii) the total amount of all consolidated liabilities of the Parent and its Subsidiaries that, in accordance with GAAP, are properly shown as such on such balance sheet, minus (iii) the total amount of all assets of the Parent and its Subsidiaries that are considered to be intangible assets (including goodwill) in accordance with GAAP.
(d) Exhibit D, the Compliance Certificate, is hereby amended to be in the form of Exhibit D attached to this Fifth Amendment.
2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its execution and delivery hereof, each of the Co-Borrowers represents and warrants that, as of the date hereof:
(a) the representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct on and as of the date hereof as made on and as of such date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date;
(b) no event has occurred and is continuing which constitutes a Default or an Event of Default;
(c) each of the Co-Borrowers has full power and authority to execute and deliver this Fifth Amendment; and
(d) no authorization, approval, consent, or other action by, notice to, or filing with, any Governmental Authority or other Person, is required for the execution or delivery by each of the Co-Borrowers of this Fifth Amendment, except for authorizations, approvals, consents, filings and notices that have been obtained or made and are in full force and effect.
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3. CONDITIONS OF EFFECTIVENESS. This Fifth Amendment shall be effective upon satisfaction of the following conditions:
(a) the representations and warranties set forth in Section 2 of this Fifth Amendment shall be true and correct;
(b) the Administrative Agent shall have received counterparts of this Fifth Amendment executed by each of the Lenders; and
(c) the Administrative Agent shall have received in form and substance satisfactory to the Administrative Agent, such other documents, certificates and instruments as the Administrative Agent shall require.
4. REFERENCE TO THE CREDIT AGREEMENT.
(a) Upon the effectiveness of this Fifth Amendment, each reference in the Credit Agreement to this Agreement, hereunder, or words of like import shall mean and be a reference to the Credit Agreement, as affected and amended by this Fifth Amendment.
(b) Except as expressly set forth herein, this Fifth Amendment shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights or remedies of the Administrative Agent or the Lenders under the Credit Agreement or any of the other Loan Documents, and shall not alter, modify, amend, or in any way affect the terms, conditions, obligations, covenants, or agreements contained in the Credit Agreement or the other Loan Documents, all of which are hereby ratified and affirmed in all respects and shall continue in full force and effect.
5. COSTS AND EXPENSES. The Co-Borrowers shall be obligated to pay the reasonable and documented costs and expenses of the Administrative Agent in connection with the preparation, reproduction, execution and delivery of this Fifth Amendment and the other instruments and documents to be delivered hereunder (including the reasonable and documented fees and out-of-pocket expenses of counsel for the Administrative Agent with respect thereto).
6. EXECUTION IN COUNTERPARTS. This Fifth Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument. For purposes of this Fifth Amendment, a counterpart hereof (or signature page thereto) signed and transmitted by any Person party hereto to the Administrative Agent (or its counsel) by facsimile machine, telecopier or electronic mail is to be treated as an original. The signature of such Person thereon, for purposes hereof, is to be considered as an original signature, and the counterpart (or signature page thereto) so transmitted is to be considered to have the same binding effect as an original signature on an original document.
7. GOVERNING LAW; BINDING EFFECT. This Fifth Amendment shall be governed by and construed in accordance with the laws of the State of Texas applicable to agreements made and to be performed entirely within such state, provided that each party retains all rights arising under federal law. This Fifth Amendment shall be binding upon the parties hereto and their respective successors and assigns.
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8. HEADINGS. Section headings in this Fifth Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment and Fifth Amendment for any other purpose.
9. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS FIFTH AMENDMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AS TO THE SUBJECT MATTER THEREIN AND HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto have executed this Fifth Amendment as of the date first above written.
CO-BORROWERS:
ENNIS, INC. | ||
By: | /s/ Richard L. Travis Jr. | |
Richard L. Travis, Jr. Vice President and Chief Financial Officer | ||
Ennis Business Forms of Kansas, Inc. Connolly Tool and Machine Company Admore, Inc. PFC Products, Inc. Ennis Acquisitions, Inc. Northstar Computer Forms, Inc. General Financial Supply, Inc. Calibrated Forms Co. Inc. Crabar/GBF, Inc. Royal Business Forms Inc. Tennessee Business Forms Company TBF Realty, LLC Block Graphics, Inc. Specialized Printed Forms, Inc. B&D Litho of Arizona, Inc. Skyline Business Forms, Inc. Skyline Business Properties LLC SPF Realty, LLC Printgraphics, LLC | ||
By: | /s/ Richard L. Travis Jr. | |
Richard L. Travis, Jr. Vice President of each |
Fifth Amendment to Second Amended and Restated Credit Agreement Signature Page
American Forms I, L.P. Adams McClure I, L.P. Texas EBF, L.P. Ennis Sales, L.P. Ennis Management, L.P. | ||
By: | Ennis, Inc., the sole general partner of each | |
By: | /s/ Richard L. Travis Jr. | |
Richard L. Travis, Jr. Vice President and Chief Financial Officer |
Fifth Amendment to Second Amended and Restated Credit Agreement Signature Page
BANK OF AMERICA, N.A., as Administrative Agent | ||
By: | /s/ Linda Lov | |
Linda Lov | ||
Title: | Assistant Vice President |
Fifth Amendment to Second Amended and Restated Credit Agreement Signature Page
BANK OF AMERICA, N.A., as a Lender, as L/C Issuer and as Swing Line Lender | ||
By: | /s/ Jennifer Yan | |
Jennifer Yan | ||
Title: | Senior Vice President |
Fifth Amendment to Second Amended and Restated Credit Agreement Signature Page
REGIONS BANK, as a Lender | ||
By: | /s/ Richard M. Prewitt | |
Richard M. Prewitt | ||
Title: | SVP |
Fifth Amendment to Second Amended and Restated Credit Agreement Signature Page
EXHIBIT D
FORM OF COMPLIANCE CERTIFICATE
Financial Statement Date: ,
To: Bank of America, N.A., as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Second Amended and Restated Credit Agreement, dated as of August 18, 2009 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the Agreement; the terms defined therein being used herein as therein defined), among Ennis, Inc., a Texas corporation (the Parent), the other Co-Borrowers, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender.
The undersigned Responsible Officer hereby certifies as of the date hereof that he/she is the of the Parent, and that, as such, he/she is authorized to execute and deliver this Certificate to the Administrative Agent on the behalf of the Parent and each other Co-Borrower, and that:
[Use following paragraph 1 for fiscal year-end financial statements]
1. The Co-Borrowers have delivered the year-end audited financial statements required by Section 6.01(a) of the Agreement for the fiscal year of the Parent ended as of the above date, together with the report and opinion of an independent certified public accountant required by such section.
[Use following paragraph 1 for fiscal quarter-end financial statements]
1. The Company has delivered the financial statements required by Section 6.01(b) of the Agreement for the Fiscal Quarter of the Parent ended as of the above date. Such financial statements fairly present the financial condition, results of operations and cash flows of the Parent and its Subsidiaries in accordance with GAAP as at such date and for such period, subject only to normal year-end audit adjustments and the absence of footnotes.
2. The undersigned has reviewed and is familiar with the terms of the Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and condition (financial or otherwise) of the Parent and its Subsidiaries during the accounting period covered by such financial statements.
3. A review of the activities of the Parent and its Subsidiaries during such fiscal period has been made under the supervision of the undersigned with a view to determining whether during such fiscal period the Co-Borrowers performed and observed all their Obligations under the Loan Documents, and
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[SELECT ONE:]
[to the best knowledge of the undersigned, during such fiscal period the Co-Borrowers performed and observed each covenant and condition of the Loan Documents applicable to it, and no Default has occurred and is continuing.]
OR
[to the best knowledge of the undersigned, during such fiscal period the following covenants or conditions have not been performed or observed and the following is a list of each such Default and its nature and status:]
4. The representations and warranties of the Co-Borrowers contained in Article V of the Agreement, and any representations and warranties of any Co-Borrower or Subsidiary that are contained in any document furnished at any time under or in connection with the Loan Documents, are true and correct in all material respects (except that any representation or warranty that is qualified as to materiality or Material Adverse Effect shall be true and correct in all respects) on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects (except that any representation or warranty that is qualified as to materiality or Material Adverse Effect shall be true and correct in all respects) as of such earlier date, and except that for purposes of this Compliance Certificate, the representations and warranties contained in subsections (a) and (b) of Section 5.04 of the Agreement shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 of the Agreement, including the statements in connection with which this Compliance Certificate is delivered.
5. The financial covenant analyses and information set forth on Schedule 1 attached hereto are true and accurate on and as of the date of this Certificate.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of , .
ENNIS, INC. | ||
By: | ||
Name: | ||
Title: |
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Form of Compliance Certificate
SCHEDULE 1
to the Compliance Certificate
($ in 000s)
For the Quarter/Year ended (Statement Date)
I. | Section 7.01(b) Indebtedness. | |||
A. Debt secured by Liens permitted by Sections 7.02(d), 7.02(h) and 7.02(j): |
$ | |||
B. Maximum aggregate amount at any time outstanding: |
$25,000,000 | |||
II. | Section 7.01(g) Indebtedness. | |||
A. Amount of secured obligations outstanding under and pursuant to one or more Factoring Facilities |
$ | |||
B. Maximum aggregate amount at any one time outstanding: |
$30,000,000 | |||
III. | Section 7.01(h) Indebtedness. | |||
A. Debt assumed in connection with Acquisitions permitted under Section 7.05: |
$ | |||
B. Maximum amount at any time outstanding: |
$15,000,000 | |||
IV. | Section 7.01(i) Indebtedness. | $ | ||
A. Debt consisting of seller financing incurred in connection with Acquisitions permitted under Section 7.05 |
||||
B. Maximum amount at any time outstanding: |
$15,000,000 | |||
V. | Section 7.01(l) Indebtedness. | $ | ||
A. Unsecured Debt, other than Debt otherwise permitted under Section 7.01: |
||||
B. Maximum amount at any date outstanding: |
$25,000,000 | |||
VI. | Section 7.10(j) Investments. | $ | ||
A. Aggregate amount of Investments made by a Co-Borrower or a Subsidiary not otherwise permitted pursuant to clauses (a) through (i) of Section 7.10: |
||||
B. Maximum aggregate amount at any one time outstanding: |
$3,500,000 | |||
VII. | Section 7.13(a) Fixed Charge Coverage Ratio. | |||
A. EBITDA for the period of four consecutive Fiscal Quarters ending on the Statement Date:
1. Consolidated Net Income: |
$ |
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2. | Without duplication and to the extent deducted in calculating such Consolidated Net Income: | |||||||
a. Interest Expense |
$ | |||||||
b. income tax expense |
$ | |||||||
c. depreciation and amortization |
$ | |||||||
d. non-cash charges related to the impairment of goodwill and other intangibles |
$ | |||||||
e. transaction expenses incurred in such period in connection with the transactions contemplated by the Credit Agreement and the other Loan Documents (not to exceed $1,000,000 in aggregate amount for all periods) |
$ | |||||||
f. any non-cash items of income |
$ | |||||||
3. | Total EBITDA (Lines VII.A.1. + 2.a. + 2.b. + 2.c. + 2.d. + 2.e. 2.f.) | $ | ||||||
4. | Income taxes paid in cash by the Parent and its Subsidiaries | $ | ||||||
5. | Unfinanced Capital Expenditures | $ | ||||||
6. | Total (Line 3 [Line 4 + 5]) | $ | ||||||
B. | Cash Interest Expense | $ | ||||||
C. | Required payments of principal of Funded Debt (excluding the Revolving Loans, Hedging Obligations and contingent obligations in respect of letters of credit) | $ | ||||||
D. | Amount equal to the advances, dividends and distributions (other than the Special Dividend, non-cash distributions of equity securities of the Parent and distributions on equity securities of the Parent to the extent included in the calculation of Consolidated Net Income), and redemptions and repurchases of equity securities of the Parent (to the extent otherwise permitted herein) made by the Parent to holders of its Capital Securities | $ | ||||||
E. | Fixed Charge Coverage Ratio (Line 6 ÷ [Line B + C + D]) | to 1.00 | ||||||
F. | Maximum Fixed Charge Ratio: | 1.25 to 1.00 |
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VIII. | Section7.13(b) Total Leverage Ratio. | |||||||
A. | Total Funded Debt as of the Statement Date: | |||||||
1. | All Debt of the Parent and its Subsidiaries, determined on a consolidated basis, excluding: | $ | ||||||
a. Contingent obligations in respect of Contingent Liabilities (except to the extent constituting Contingent Liabilities in respect of Debt of a Person other than any Co-Borrower or any Subsidiary): |
$ | |||||||
b. Hedging Obligations: |
$ | |||||||
c. Debt of a Co-Borrower to Subsidiaries and Debt of Subsidiaries to a Co-Borrower or to other Subsidiaries: |
$ | |||||||
2. | Total Funded Debt (Lines VIII.A.1. 1.a. 1.b. l.c.): | $ | ||||||
B. | EBITDA for the period of four consecutive Fiscal Quarters ending on such date (Line VII.A.3.): | |||||||
C. | Leverage Ratio (Line VIII.A.2 ÷ Line VIII.B.): | to 1.00 | ||||||
D. | Maximum Leverage Ratio: | 3.00 to 1.00 | ||||||
IX. | Section 7.13(c) Consolidated Tangible Net Worth. | |||||||
A. | Actual Consolidated Tangible Net Worth at the Statement Date: | |||||||
1. | Total amount of all consolidated assets that, in accordance with GAAP, are properly shown as such on the consolidated balance sheet of the Parent and Subsidiaries as at the end of such Fiscal Quarter, prepared in accordance with GAAP (with Inventory being valued at the lower of cost or market value), after deducting all proper reserves (including reserves for depreciation and amortization): | $ | ||||||
2. | Total amount of all consolidated liabilities of the Parent and its Subsidiaries that, in accordance with GAAP, are properly shown as such on such balance sheet: | $ | ||||||
3. | Total amount of all assets of the Parent and its Subsidiaries that are considered to be intangible assets (including goodwill) in accordance with GAAP: | $ | ||||||
4. |
ConsolidatedTangible Net Worth (Lines IX.A.1. - IX.A.2 - IX.A.3): |
$ |
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B. | 25% of Consolidated Net Income for each Fiscal Quarter commencing with the Fiscal Quarter ending May 31, 2016: | $ | ||||
C. | Minimum Required (Line IX.B. + $75,000,000) | $ | ||||
X. | Section 7.13(d) Consolidated Assets Owned by Foreign Subsidiaries. | |||||
A. | Amount of consolidated assets that, in accordance with GAAP, are properly shown as such on the consolidated balance sheet of the Parent and its Subsidiaries, as owned by Foreign Subsidiaries: | $ | ||||
B. | Total amount of consolidated assets of the Parent and its Subsidiaries: | $ | ||||
C. | Line XA. ÷ Line X.B: | % | ||||
D. | Maximum: | 30% |
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