AMENDMENT NO. 3 TO CREDIT AGREEMENT
Exhibit 99.1
Execution Version
AMENDMENT NO. 3 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 3 TO CREDIT AGREEMENT (this "Amendment No. 3") is made this 17th day of October, 2017 by and among CSS INDUSTRIES, INC., a Delaware corporation (together with its successors and/or assigns, "Borrower"), the banks and other financial institutions signatory hereto (together with their successors and/or assigns, collectively, the "Lenders"; and each individually, a "Lender"), and XXXXX FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as administrative agent for the Lenders hereunder (in such capacity, together with its successors and/or assigns in such capacity, the "Administrative Agent").
BACKGROUND
The Borrower, Guarantors, Administrative Agent and Lenders are parties to that certain Credit Agreement dated March 17, 2011, as amended by that certain Amendment No. 1 to Credit Agreement ("Amendment No. 1") dated as of December 17, 2013 and by that certain Amendment No. 2 to Credit Agreement ("Amendment No. 2") dated as of March 24, 2015 (as amended hereby and as may be further amended or otherwise modified from time to time, the "Credit Agreement").
The Borrower has requested, and the Administrative Agent and Lenders have agreed, subject to the terms and conditions hereof, to amend the Credit Agreement in certain respects as set forth herein.
In consideration of the foregoing premises and the agreements hereinafter set forth, and intending to be legally bound hereby, the parties hereto agree as follows:
A.Definitions. Except as expressly set forth herein, all capitalized terms used and not otherwise defined herein have the respective meanings ascribed thereto in the Credit Agreement (including defined terms added or modified hereby).
B.Amendments to Credit Agreement.
1.New Defined Terms. The following terms are hereby added to the Credit Agreement in alphabetical order in Section 1.1 (and used with such meanings in this Amendment No. 3):
"Amendment No. 3" means that certain Amendment No. 3 to Credit Agreement among Borrower, Lenders and Administrative Agent dated as of October 17, 2017.
"Amendment No. 3 Effective Date" shall have the meaning set forth in Amendment No. 3.
"Foreign Subsidiary Reorganization" means the transaction or series of transactions pursuant to which all of the issued and outstanding Capital Stock of the Hong Kong Subsidiaries will be
transferred to X.X. Xxxxxx Pacific Rim Limited, a Hong Kong limited liability company, from other Credit Parties.
"Hong Kong Subsidiaries" means CSS Pacific Rim Limited, a Hong Kong limited liability company, Paper Magic Group (Hong Kong) Limited, a Hong Kong limited liability company and Berwick Offray Hong Kong Limited, a Hong Kong limited liability company.
2.Amended and Restated Defined Terms. The following definitions set forth in Section 1.1 of the Credit Agreement are hereby amended and restated in their entireties to read as follows:
"Consolidated EBIT" means, for any period, the amount of (all as determined in accordance with GAAP):
(a) Consolidated Net Income for such period, plus
(b) an amount that, in the determination of Consolidated Net Income for such period, has been deducted for (without duplication) (and in the case of clauses (iii), (iv), (vi), (vii) and (viii), only to the extent such non-cash charges or losses are not reserved for future cash charges or losses and are otherwise not reasonably expected to become cash charges or losses in a later period):
(i) Consolidated Interest Expense;
(ii) total federal, state and local income, business privilege and similar tax expense;
(iii) any non-cash impairment charges relating to intangible assets;
(iv) any non-cash impairment charges relating to tangible fixed assets;
(v) Consolidated Stock Compensation Expense;
(vi) any non-cash restructuring charges;
(vii) the non-cash component of the cost of goods sold resulting from any inventory fair value adjustment made in connection with the consummation of any Permitted Acquisition; and
(viii) any other non-cash loss; minus
(c) an amount that, in the determination of Consolidated Net Income for such period, has been included for (without duplication):
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(i) federal, state and local income and similar tax benefits;
(ii) any aggregate net gain arising from the sale, exchange or other disposition of capital assets (including any fixed assets, whether tangible or intangible, all inventory sold in conjunction with the disposition of fixed assets and all securities) by the Borrower and its Subsidiaries; and
(iii) any other non-cash gain.
"Excluded Subsidiaries" means, individually and collectively, (a) any Foreign Subsidiary of a Foreign Subsidiary, and (b) any nominally capitalized and inactive Subsidiary until such time as such Subsidiary becomes a Guarantor or a Pledged Foreign Subsidiary in accordance with Section 5.10.
“Pledged Foreign Subsidiary” means a Foreign Subsidiary whose Capital Stock is pledged pursuant to the Pledge Agreement.
3.Amended Defined Terms. The following definitions set forth in Section 1.1 of the Credit Agreement are amended as follows:
(a)Clause (d) of the defined term “Permitted Disposition” is amended to read as follows:
(d) the sale, lease or transfer of property or assets between any Credit Parties, or, for not more than fair value, between any other Subsidiary, other than an Excluded Subsidiary, and any Credit Party;
(b)Clause (e) of the defined term "Permitted Investments" is amended to read as follows:
(e) Investments in any Subsidiary of the Borrower as existing on the Closing Date and Investments in any Foreign Subsidiary by a Foreign Subsidiary on or after the Amendment No. 3 Effective Date as a result of the Foreign Subsidiary Reorganization;
(c)Clause (a) of the defined term “Permitted Restricted Payments” is amended to read as follows:
(a) dividends payable to the Borrower or any Subsidiary of the Borrower;
4.Amended and Restated Section 6.13. Section 6.13 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
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Section 6.13 Limitation on Restricted Actions.
The Credit Parties shall not permit any Excluded Subsidiary, other than any Excluded Subsidiary that is a Foreign Subsidiary, to engage in any business or activity other than activities related to dissolution or merger out of existence of such Excluded Subsidiary in accordance with clause (e) or clause (f) of the “Permitted Disposition” definition unless the Excluded Subsidiary becomes a Credit Party by complying with the requirements of Section 5.10 upon the commencement of such business or activity.
C.Representations and Warranties. The Borrower hereby represents and warrants to the Lenders, as to themselves and their Subsidiaries, as follows:
1.Representations. As of the Amendment No. 3 Effective Date (defined below) and after giving effect thereto, the Borrower represents and warrants as follows: (i) the representations and warranties set forth in Article III of the Credit Agreement are true and correct in all material respects, except for any representation or warranty made as of an earlier date, which representation and warranty shall remain true and correct as of such earlier date; (ii) there is no Event of Default or Default under the Credit Agreement, as amended hereby, which has not been cured or waived; and (iii) no Material Adverse Effect has occurred or is continuing.
2.Power and Authority. The Borrower has the power and authority under the laws of its jurisdiction of formation and under its formation documents to enter into and perform this Amendment No. 3 and the other documents and agreements required hereunder (collectively, the "Amendment Documents"); all necessary actions (corporate or otherwise) for the execution and performance by the Borrower of the Amendment Documents have been taken; and each of the Amendment Documents and the Credit Agreement, as amended, constitute the valid and binding obligations of the Borrower, enforceable in accordance with its respective terms.
3.No Violations of Law or Agreements. The execution and performance of the Amendment Documents by the Borrower and the Guarantors party thereto will not: (i) violate any provisions of any law or regulation, federal, state, local, or foreign, or any formation document of the Borrower or (ii) result in any breach or violation of, or constitute a default or require the obtaining of any consent under, any material agreement or instrument by which the Borrower or its property may be bound.
D.Conditions to the Effectiveness of Amendment No. 3. This Amendment No. 3 shall be effective upon the date of the Administrative Agent's receipt of the following in form and substance reasonably satisfactory to the Administrative Agent (the "Amendment No. 3 Effective Date"):
1.Amendment No. 3. This Amendment No. 3 duly executed and delivered by each of the Borrower, the Lenders, and the Administrative Agent.
2.Acknowledgement of Guarantors. The Consent and Reaffirmation, duly executed and delivered by each of the Guarantors, in the form attached hereto as Exhibit A.
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3.Payment of the Administrative Agent's Legal and Other Fees. Payment by Borrower of all reasonable fees and expenses (including without limitation reasonable fees and expenses of counsel) incurred by the Administrative Agent in connection with the preparation, execution and delivery of this Amendment No. 3.
4.Amended Pledge Agreement Schedules. Revised Schedules I, II and III to the Pledge Agreement, giving effect to the Foreign Subsidiary Reorganization and the release set forth in Section E of this Amendment No. 3.
5.Other Documents. Such additional documents as the Administrative Agent may reasonably request.
E.Release. The Administrative Agent on behalf of the Lenders, as of the Amendment No. 3 Effective Date, hereby releases the security interests created under the Pledge Agreement in the Capital Stock of the Hong Kong Subsidiaries and proceeds thereof, and, to the extent of such released security interests, releases the Pledgors identified therein from the Pledge Agreement. Lenders acknowledge that as of the Amendment Xx. 0 Xxxxxxxxx Xxxx, xxx Xxxx Xxxx Subsidiaries are not Pledged Foreign Subsidiaries. The Pledge Agreement is deemed amended by the revised Schedules I, II and III delivered pursuant to Section D.4. hereof, and the Administrative Agent shall promptly return to Borrower any certificates no longer constituting Pledged Certificates.
F.Miscellaneous.
1.The Borrower hereby (i) affirms all the provisions of the Credit Agreement, as amended by this Amendment No. 3; and (ii) agrees that the terms and conditions of the Credit Agreement shall continue in full force and effect, as amended hereby.
2.The Borrower agrees to pay the Administrative Agent for all reasonable fees and expenses (including without limitation reasonable fees and expenses of counsel) incurred by the Administrative Agent and its counsel in connection with the due diligence review, the preparation, execution and delivery of this Amendment No. 3, and the future administration by the Administrative Agent of this Amendment No. 3 and the transactions contemplated hereby.
3.This Amendment No. 3 shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to conflicts of law or choice of law principles.
4.This Amendment No. 3 may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and shall be binding upon all parties, their successors and assigns, and all of which taken together shall constitute one and the same agreement.
5.This Amendment No. 3, together with the Amendment No. 1 and Amendment No. 2, the Credit Agreement, and the other Loan Documents, represents the entire agreement of the parties hereto and thereto, and supersedes all prior agreements and understandings, oral and written, if any, including any commitment letters or correspondence
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relating to the Amendment No. 3, the other Loan Documents or the transactions contemplated herein or therein.
6.The execution, delivery and performance of this Amendment No. 3 shall not operate as a waiver of any right, power or remedy of the Administrative Agent, any Issuing Lender, or Lenders under the Credit Agreement and the agreements and documents executed in connection therewith or constitute a waiver of any provision thereof.
(Signature Pages to Follow)
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IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 3 the day and year first written above.
BORROWER:
CSS INDUSTRIES, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President - Finance and Chief Financial Officer
LENDERS:
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
as Lender
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
CITIZENS BANK OF PENNSYLVANIA,
as Lender
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
ADMINISTRATIVE AGENT:
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
EXHIBIT A
CONSENT AND REAFFIRMATION
Each of the undersigned hereby (i) acknowledges receipt of a copy of the foregoing Amendment No. 3 to Credit Agreement (the "Amendment"); (ii) consents to the Borrower's execution and delivery of the Amendment; (iii) agrees to be bound by the Amendment; (iv) affirms that nothing contained in the Amendment shall modify in any respect whatsoever any Loan Document to which it is a party except as expressly set forth in the Amendment; and (v) reaffirms that such Loan Documents shall continue to remain in full force and effect. Although each of the undersigned has been informed of the matters set forth herein and has acknowledged and agreed to same, each of the undersigned understands that Administrative Agent and the Lenders have no obligation to inform such undersigned of such matters in the future or to seek the undersigned's acknowledgement or agreement to future amendments, waivers or consents, and nothing herein shall create such a duty. Capitalized terms have the meanings assigned to them in the Amendment.
IN WITNESS WHEREOF, each of the undersigned has duly executed this Consent and Reaffirmation on and as of the date of the Amendment.
GUARANTORS:
PAPER MAGIC GROUP, INC.
a Pennsylvania corporation
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President - Finance
BERWICK OFFRAY LLC,
a Pennsylvania limited liability company
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President - Finance
XXXX INC,
a Tennessee corporation
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President - Finance
PHILADELPHIA INDUSTRIES, INC.,
a Delaware corporation
By: /s/ Xxxxx X. XxXxxx
Name: Xxxxx X. XxXxxx
Title: Vice President - Finance
LION RIBBON COMPANY, LLC
a Delaware limited liability company
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President - Finance
Signature Page to Consent and Reaffirmation
X.X. XXXXXX, LLC,
a Delaware limited liability company
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President - Finance
W.J.S. FURNITURE, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President - Finance
PAPER MAGIC DISTRIBUTION, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President - Finance
CRG DISTRIBUTION, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President - Finance
LR TEXAS CORP.,
a Texas corporation
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President - Finance
Signature Page to Consent and Reaffirmation
BOC DISTRIBUTION, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President - Finance
BERWICK MANAGEMENT LLC,
a Pennsylvania limited liability company
By: Berwick Offray LLC,
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President - Finance
THE XXXXXX PATTERN COMPANY, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President - Finance
XXXXXX DISTRIBUTION, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President - Finance
Signature Page to Consent and Reaffirmation
