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): March 31, 2022
ARMSTRONG FLOORING, INC.
(Exact name of registrant as specified in its charter)
Delaware | 001-37589 | 47-4303305 | ||
(State or other jurisdiction of incorporation ) |
(Commission File No.) |
(IRS Employer Identification No.) |
1770 Hempstead Road Lancaster, PA |
17605 | |
(Address of principal executive offices) | (Zip code) |
Registrant’s telephone number, including area code: (717) 672-9611
Not Applicable
(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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Common Stock, $0.0001 par value | AFI | New York Stock Exchange |
Item 1.01 Entry into a Material Definitive Agreement
On March 31, 2022, Armstrong Flooring, Inc. (the “Company”) entered into an ABL Amendment (as defined below) and a Term Loan Amendment (as defined below) for the purpose of amending certain milestone covenants in the Company’s Amended ABL Credit Facility (as defined below) and Amended Term Loan Facility (as defined below). Specifically, the ABL Amendment and the Term Loan Amendment amend the milestone covenant contained in each of the Amended ABL Credit Facility and the Amended Term Loan Facility that requires the Company to enter into a definitive binding purchase agreement, merger agreement or other similar agreement by no later than March 31, 2022 (the “Definitive Agreement Milestone”) which provides for an aggregate purchase price in an amount sufficient to repay in full the outstanding loans under the Amended ABL Credit Facility and the Amended Term Loan Facility and is otherwise in form and substance reasonably satisfactory to the ABL Agent (as defined below) and the Term Loan Agent (as defined below). The ABL Amendment and the Term Loan Amendment also amend the milestone covenant contained in each of the Amended ABL Credit Facility and the Amended Term Loan Facility that requires the Company to consummate the transaction contemplated by such definitive purchase agreement, merger agreement or other similar agreement no later than May 15, 2022 (the “Closing Milestone”). As amended, the Definitive Agreement Milestone now requires that the Company enter into a definitive binding purchase agreement, merger agreement or other similar agreement by no later than May 2, 2022, and the Closing Milestone now requires that the transaction be consummated on or before June 15, 2022.
As previously announced, the Company retained Houlihan Lokey Capital, Inc. (“Houlihan”) to assist with a process for the sale of the Company and with the consideration of other strategic alternatives (the “Sale Process”). The Company received confidential, non-binding expressions of interest from several parties in connection with the Sale Process. After careful review and consideration, the Board of Directors of the Company (the “Board”) has instructed the Company’s management and advisors to pursue implementation of those expressions of interest which the Board believes are most likely to maximize the value to be realized by the Company’s stakeholders, subject to further negotiation and documentation.
The Company sought the extension of the Definitive Agreement Milestone and the Closing Milestone in order to allow additional time to evaluate the implementation of the expressions of interest received by the Company and pursue execution of definitive documentation, and to permit sufficient time to consummate the potential transaction if definitive documentation can be reached.
Please see below for a discussion of certain risks and uncertainties facing the Company in connection with the Sale Process, the terms of the Amended ABL Facility and Amended Term Loan Facility, the Company’s operational performance, and related matters. The Company undertakes no obligation to provide further disclosure, unless and until a definitive agreement is executed or another material event occurs for which disclosure is required, regarding the status of the Sale Process or the Company’s efforts to pursue implementation of a potential transaction, and does not presently intend to make such disclosure.
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Amended ABL Credit Facility
The Sixth Amendment to Credit Agreement, dated as of March 31, 2022 (the “ABL Amendment”), by and among the Company, as borrower, the guarantors named therein, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent (in such capacities, the “ABL Agent”), as Australian security trustee and as letter of credit issuer and as swingline lender, amends that certain Credit Agreement, dated as of December 31, 2018, by and among the Company, the guarantors named therein, the lenders party thereto, the letter of credit issuer, the swingline lender and the ABL Agent (as amended, restated, supplemented or otherwise modified from time to time, including by the ABL Amendment, the “Amended ABL Credit Facility”).
Amended Term Loan Facility
The Third Amendment to Term Loan Agreement, dated as of March 31, 2022 (the “Term Loan Amendment”), by and among the Company and Armstrong Flooring Pty Ltd, as borrowers, Borrower, the guarantors named therein, the lenders party thereto and Pathlight Capital LP, as administrative agent, collateral agent and Australian security trustee (in such capacities, the “Term Loan Agent”), amends that certain Term Loan Agreement, dated as of June 23, 2020, by and among the Company, the guarantors named therein, the lenders party thereto and the Term Loan Agent (as amended, restated, supplemented or otherwise modified from time to time, including by the Term Loan Amendment, the “Amended Term Loan Facility”).
* * * * *
The foregoing summaries of the ABL Amendment and the Term Loan Amendment do not purport to be complete and are subject to, and qualified in their entirety by reference to, the ABL Amendment and the Term Loan Amendment, copies of which are filed as Exhibits 10.1 and 10.2 hereto and are incorporated herein by reference.
There can be no assurance that the Company will reach agreement on any such potential transaction. Also, even if such an agreement is reached, it is possible that any such transaction would need to be completed through a court-supervised insolvency process. Moreover, the Company continues to face certain risks and uncertainties that have been affecting its business and operations. The Amended ABL Facility and the Amended Term Loan Facility contain provisions that require the Company and its subsidiaries to adhere to various covenants, including meeting the Definitive Agreement Milestone and the Closing Milestone, as described above, and there can be no assurance that the Company will be able to comply with these covenants. The failure to comply with any of these covenants would constitute a default under the terms of the Amended ABL Credit Facility and/or the Amended Term Loan Facility, as applicable, which could have an adverse effect on the Company, including affecting its access to liquidity. In such circumstance, absent additional accommodations from the Company’s lenders, the lenders under the Amended ABL Credit Facility and/or the Amended Term Loan Facility could exercise remedies and/or the Company could determine to seek protection through a court-supervised insolvency process. In addition, the cash dominion arrangement provided for in the
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Amended ABL Credit Facility creates certain operational risks for the Company given the constraints it places on the Company’s cash management system and could impede the Company’s access to liquidity if for any reason the Company were unable to borrow under the Amended ABL Credit Facility. In the event the lenders under the Amended ABL Credit Facility and/or the Amended Term Loan Facility exercise remedies and/or the Company seeks court protection as described above, holders of our equity securities would likely be entitled to little or no recovery on their investment.
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Item 9.01 Financial Statements and Exhibits
(d) Exhibits
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SIGNATURE
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.
ARMSTRONG FLOORING, INC. | ||
By: | /s/ Christopher S. Parisi | |
Christopher S. Parisi | ||
Senior Vice President, General Counsel & Secretary |
Date: March 31, 2022
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Exhibit 10.1
SIXTH AMENDMENT TO CREDIT AGREEMENT
This SIXTH AMENDMENT TO CREDIT AGREEMENT, dated as of March 31, 2022 (this Amendment), is by and among BANK OF AMERICA, N.A., in its capacity as administrative agent (in such capacity, together with its successors and permitted assigns in such capacity, the Administrative Agent), as Swingline Lender, as L/C Issuer, and as collateral agent and Australian security trustee (in such capacity together with its successors and permitted assigns in such capacity, the Collateral Agent), the Lenders under and as defined in the Existing Credit Agreement defined below party hereto (collectively, the Consenting Lenders), ARMSTRONG FLOORING, INC., a Delaware corporation (the Borrower), and the guarantors party hereto (collectively with the Borrower, the Loan Parties).
W I T N E S E T H :
WHEREAS, the Administrative Agent, Swingline Lender, L/C Issuer, certain financial institutions from time to time party thereto as lenders (collectively, the Lenders) and the Loan Parties are parties to that certain Credit Agreement, dated December 31, 2018 (as otherwise heretofore amended, supplemented or modified, the Existing Credit Agreement; the Existing Credit Agreement as amended hereby and as otherwise amended, restated, supplemented or modified from time to time in accordance with its terms, including by this Amendment, the Credit Agreement; capitalized terms used but not defined herein shall have the meanings set forth in the Existing Credit Agreement).
WHEREAS, the Borrower has conducted a comprehensive sale process as contemplated in the Existing Credit Agreement, in response to which the Borrower received expressions of interest from several parties regarding potential transactions involving the Borrower; following receipt and review of such expressions of interest, the Borrowers board of directors has instructed the Borrowers management and the Borrowers advisors to pursue implementation of those expressions of interest which the Borrowers board of directors believes are most likely to maximize the value to be realized by the Borrowers stockholders and other stakeholders, subject to further negotiation and documentation.
WHEREAS, the Borrower has requested that the Administrative Agent, the Collateral Agent, Swingline Lender, L/C Issuer and the Lenders consent to certain amendments to the Existing Credit Agreement to, inter alia, extend certain of the deadlines related to the sale process set forth in the Existing Credit Agreement, as more specifically set forth herein.
WHEREAS, the Administrative Agent, the Collateral Agent Swingline Lender, L/C Issuer and the Consenting Lenders have agreed to such requests, subject to the terms and conditions of this Amendment.
WHEREAS, by this Amendment, the Administrative Agent, the Collateral Agent and the Consenting Lenders (which Consenting Lenders constitute the Required Lenders), and the Borrower desire and intend to evidence the amendments set forth herein.
NOW THEREFORE, in consideration of the foregoing and the mutual agreements and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Amendments to Credit Agreement. Effective as of the Sixth Amendment Effective Date (as defined below), the Existing Credit Agreement is hereby amended as follows:
(a) The definition of Sale Deadline in Section 1.01 of the Existing Credit Agreement is amended by restating such definition as follows:
Sale Deadline means June 15, 2022.
(b) Section 2.09(b)(v) of the Existing Credit Agreement is deleted in its entirety and replaced with the following new Section 2.09(b)(v):
(v) The Borrower shall pay to the Administrative Agent, for the ratable benefit of the Consenting Lenders as defined in the Fifth Amendment, a Sales Process fee equal to (i) $1,000,000 if a sale or other investment resulting in the occurrence of the Facility Termination Date (a Company Sale) is consummated on or before June 15, 2022, or (ii) $1,250,000 if such Company Sale is consummated on or after June 16, 2022, with such fee being due and payable immediately upon the consummation of such Company Sale.
(c) Section 6.26 of the Existing Credit Agreement is amended by deleting clause (d) thereof and inserting the following new clause (d) in lieu thereof:
(d) No later than May 2, 2022, the Loan Parties shall cause Investment Bank to deliver to the Administrative Agent a fully-executed, binding purchase agreement, merger agreement or other similar agreement with a buyer or investor (the PSA), which fully-executed PSA shall (i) provide for a cash purchase price in an amount sufficient to cause the occurrence of the Facility Termination Date and payment in full of all obligations under the Term Loan Agreement in accordance therewith and otherwise be in form and substance reasonably satisfactory to Administrative Agent, (ii) be subject to limited conditionality relative to the obligations of the purchaser customary for public company transactions of the type contemplated by the applicable expression of interest, limited to the following (and in no event to include any financing contingency) (A) receipt by the parties of necessary regulatory approvals, (B) truth and accuracy of representations and warranties as of the date of closing such transaction within a customary material adverse effect standard, (C) the applicable Loan Parties compliance in all material respects of their covenants and agreements under the applicable purchase agreement through the date of closing, (D) the absence of any applicable law or order of any Governmental Authority prohibiting or limiting the transaction and (E) requisite Company shareholder approval, and (iii) otherwise in form and substance reasonably satisfactory to Administrative Agent;
(d) Section 6.26 of the Existing Credit Agreement is amended by deleting clause (f) thereof and inserting the following new clause (f) in lieu thereof:
(f) At least once every calendar week, or more frequently as requested by the Administrative Agent, the Borrower shall conduct or cause to be conducted update conference calls with the Investment Bank, the Consultant, the Administrative Agent and the Lenders (and the Borrower and the Administrative Agents respective counsel) regarding the Sale Process and, reasonably in advance of each such call, shall deliver to the Administrative Agent (for circulation to the Lenders) the then-current draft of the PSA and any work plan and/or closing checklist with respect to the transactions contemplated by the PSA and provide updates to the Administrative Agent regarding the planned disposition or liquidation of any assets of the Borrower in connection with the transactions contemplated by the PSA, if any, and any proposed changes to the Borrowers business or operations in connection with such transactions. The Borrower shall cause the Consultant to deliver to it any deliverables required under the Consultant Engagement Letter and, as soon as practicable (but in no event later than three days after receipt) after receiving any deliverables required under the Consultant Engagement Letter, the Borrower shall deliver or cause to be delivered copies of such deliverables to the Administrative Agent for distribution to the Lenders. Substantially simultaneous with distribution to shareholders, the Borrower shall deliver to the Administrative Agent and the Lenders copies of any proxy statement or other solicitation materials relating to the intended sale(s) of the assets or equity interests of the Borrower.
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2. Conditions Precedent. The amendments, consents and other agreements contained herein shall only be effective upon the satisfaction or waiver by the Administrative Agent and Consenting Lenders of each of the following conditions precedent (the date of such satisfaction or waiver, the Sixth Amendment Effective Date):
(a) the Administrative Agent shall have received a copy of this Amendment in form and substance reasonably acceptable to the Administrative Agent, duly executed by the Borrower and each other Loan Party, the Administrative Agent, the Collateral Agent and Lenders sufficient to constitute Required Lenders;
(b) payment of all fees required to be paid to the Administrative Agent and the Lenders on or before the Sixth Amendment Effective Date, and all expenses in connection with this Amendment required to be reimbursed in accordance with Section 10.04 of the Credit Agreement, in each case, to the extent invoiced or otherwise documented no later than the date that is two (2) Business Days prior to the Sixth Amendment Effective Date or, if Borrower fails to provide at least three (3) Business Days prior notice of the desired Sixth Amendment Effective Date, no later than the date that is on or before the Sixth Amendment Effective Date;
(c) the Administrative Agent shall have received copies of the complete, fully executed second amendment to the Term Loan Agreement, in form and substance satisfactory to the Administrative Agent and the Lenders (the Term Loan Third Amendment), including all schedules, annexes and exhibits thereto, and each other material document, agreement or instrument entered into by any Loan Parties in connection with the Term Loan Third Amendment;
(d) the Administrative Agent shall have received an amendment to the Consultant Engagement Letter in form and substance satisfactory to it;
(e) no order, injunction or judgment has been entered into prohibiting the closing of this Amendment;
(f) the representations and warranties set forth in Section 6 of this Amendment shall be true and correct; and
(g) the Administrative Agent and the Lenders shall have received copies of all indications of interest or any LOI received by the Investment Bank or the Borrower in connection with the Sale Process subject to redaction of the names and identifying information of any potential buyer, investor or refinancing party to the extent required by the terms of such indication of interest or LOI or any applicable confidentiality agreement.
3. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
4. Binding Effect. This Amendment shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.
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5. Affirmation of Loan Parties. Each Loan Party hereby consents to the amendments and modifications to the Existing Credit Agreement effected hereby, and confirms and agrees that, notwithstanding the effectiveness of this Amendment, each Loan Document to which such Loan Party is a party is, and the obligations of such Loan Party contained in the Existing Credit Agreement, as amended and modified hereby, or in any other Loan Documents to which it is a party are, and shall continue to be, in full force and effect and are hereby ratified and confirmed in all respects, in each case as amended and modified by this Amendment. Without limiting the generality of the foregoing, the execution of this Amendment shall not constitute a novation, and the Collateral Documents and all of the Collateral described therein and Liens granted in favor of the Administrative Agent created thereunder do and shall continue to secure the payment of all Obligations of the Loan Parties under the Loan Documents to the extent provided in the Collateral Documents and that all such Liens continue to be perfected as security for the Obligations secured thereby.
6. Representations and Warranties. In order to induce the Administrative Agent, the Collateral Agent and the Consenting Lenders to enter into this Agreement, each Loan Party represents and warrants to the Administrative Agent, the Collateral Agent and the Lenders as follows:
(a) the representations and warranties made by each Loan Party in Article V of the Existing Credit Agreement and in each of the other Loan Documents to which such Loan Party is a party are true and correct in all material respects (or in all respects in the case of any representation and warranty qualified by materiality or Material Adverse Effect) on and as of the date hereof, except to the extent that such representations and warranties expressly relate to an earlier date in which case they are true and correct in all material respects (or in all respects in the case of any representation and warranty qualified by materiality or Material Adverse Effect) as of such earlier date, and except that the representations and warranties contained in subsections (a) and (b) of Section 5.05 of the Credit Agreement will be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 of the Credit Agreement;
(b) the Persons appearing as Guarantors on the signature pages to this Amendment constitute all Persons who are required to be Guarantors pursuant to the terms of the Credit Agreement (other than AFI Australia) and the other Loan Documents, including without limitation all Persons who became Subsidiaries or were otherwise required to become Guarantors after the Closing Date, and each of such Persons has become and remains a party to a Guaranty as a guarantor thereunder;
(c) this Amendment has been duly authorized, executed and delivered by each of the other Loan Parties party hereto and constitutes a legal, valid and binding obligation of each such party, except as may be limited by general principles of equity or by the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors rights generally; and
(d) after giving effect to this Amendment, no Default or Event of Default has occurred and is continuing.
7. Reference to and Effect on the Credit Agreement and the Loan Documents.
(a) On and after the effectiveness of this Amendment, each reference in the Credit Agreement to this Agreement, hereunder, hereof or words of like import referring to the Credit Agreement and each reference in the Notes and each of the other Loan Documents to the Credit Agreement, thereunder, thereof or words of like import referring to the Credit Agreement shall mean and be a reference to the Existing Credit Agreement, as amended and modified by this Amendment.
(b) The Credit Agreement, the Notes and each of the other Loan Documents, as specifically amended and modified by this Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed.
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(c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver or novation of any right, power or remedy of any Lender, L/C Issuer, Swing Line Lender, the Collateral Agent or the Administrative Agent under any of the Loan Documents, nor constitute a waiver or novation of any provision of any of the Loan Documents.
(d) The Administrative Agent, the Lenders and the Loan Parties agree that this Amendment shall be a Loan Document for all purposes of the Credit Agreement (as specifically amended by this Amendment) and the other Loan Documents.
8. Waiver, Modification, Etc. No provision or term of this Amendment may be modified, altered, waived, discharged or terminated orally, but only by an instrument in writing executed by the party against whom such modification, alteration, waiver, discharge or termination is sought to be enforced.
9. Headings. The headings listed herein are for convenience only and do not constitute matters to be construed in interpreting this Amendment.
10. Counterparts. This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or in pdf or similar format by electronic mail shall be effective as delivery of a manually executed counterpart of this Amendment.
11. Release; Indemnification.
(a) Release. In further consideration of Administrative Agents, Collateral Agents and each Consenting Lenders execution of this Amendment, the Borrower and the Guarantors, individually and on behalf of their successors (including any trustees or any debtor-in-possession acting on behalf of Borrower or a Guarantor), assigns, subsidiaries and affiliates, hereby forever release each of the Administrative Agent, Collateral Agent and the Lenders and their respective successors, assigns, parents, subsidiaries, and affiliates and their officers, employees, directors, agents and attorneys (collectively, the Releasees) from any and all debts, claims, demands, liabilities, responsibilities, disputes, causes, damages, actions and causes of actions (whether at law or in equity), and obligations of every nature whatsoever (other than any obligations to advance Loans under and in accordance with the Credit Agreement), whether liquidated or unliquidated, whether matured or unmatured, whether fixed or contingent that Borrower or any Guarantor has or may have against the Releasees, or any of them, in each case which arise from or relate to any actions which the Releasees, or any of them, have or may have taken or omitted to take in connection with the Credit Agreement or the other Loan Documents prior to the date hereof (including with respect to the Obligations, any Collateral and any third parties liable in whole or in part for the Obligations). This provision shall survive and continue in full force and effect whether or not the Loan Parties shall satisfy all other provisions of the Credit Agreement or the other Loan Documents.
(b) Related Indemnity. The Borrower and each Guarantor hereby agree that its release of the Releasees set forth in Section 11(a) hereof shall include an obligation to indemnify and hold the Releasees, or any of them, harmless with respect to any and all liabilities, obligations, losses, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever incurred by the Releasees, or any of them, whether direct, indirect or consequential, as a result of or arising from or relating to any proceeding by, or on behalf of any Person, including officers, directors, agents, trustees, creditors, partners or shareholders of the Borrower or any Guarantor or any parent, subsidiary or affiliate of Borrower or such Guarantor, whether threatened or initiated, asserting any claim for legal or equitable remedy under any statutes, regulation, common law principle or otherwise arising from or in connection with the negotiation, preparation, execution, delivery, performance, administration and enforcement of this
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Amendment or any other document executed in connection herewith; provided, that Borrower shall not be liable for any indemnification to a Releasee to the extent that any such liability, obligation, loss, penalty, action, judgment, suit, cost, expense or disbursement results from the applicable Releasees gross negligence or willful misconduct, as finally determined by a court of competent jurisdiction. The foregoing indemnity shall survive the payment in full of the Obligations and the termination of the Credit Agreement and the other Loan Documents.
12. Consent to Term Loan Third Amendment. In accordance with Section 5.2 of the Intercreditor Agreement as in effect immediately prior to the Sixth Amendment Effective Date, each of the undersigned Consenting Lenders hereby authorizes the Administrative Agent to consent to, and the Administrative Agent hereby consents to the amendments to the Term Loan Agreement effected by, the Term Loan Third Amendment in the form and substance attached as Annex A hereto.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their authorized officers as of the day and year first above written.
BANK OF AMERICA, N.A., as Administrative Agent, Collateral Agent and Australian Security Trustee | ||
By: | /s/ Matthew OKeefe | |
Typed Name: Matthew OKeefe | ||
Typed Title: Senior Vice President |
Armstrong Flooring, Inc.
Sixth Amendment to Credit Agreement
Signature Page
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their authorized officers as of the day and year first above written.
BANK OF AMERICA, N.A., as a Lender, L/C Issuer and Swingline Lender | ||
By: | /s/ Matthew OKeefe | |
Typed Name: Matthew OKeefe | ||
Typed Title: Senior Vice President |
Armstrong Flooring, Inc.
Sixth Amendment to Credit Agreement
Signature Page
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their authorized officers as of the day and year first above written.
JPMORGAN CHASE BANK, N.A., as a Lender | ||
By: | /s/ Bonnie J. David | |
Typed Name: Bonnie J. David | ||
Typed Title: Authorized Officer |
Armstrong Flooring, Inc.
Sixth Amendment to Credit Agreement
Signature Page
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their authorized officers as of the day and year first above written.
TRUIST BANK, as a Lender | ||
By: | /s/ JC Fanning | |
Typed Name: JC Fanning | ||
Typed Title: Director |
Armstrong Flooring, Inc.
Sixth Amendment to Credit Agreement
Signature Page
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their authorized officers as of the day and year first above written.
HSBC BANK USA, NATIONAL ASSOCIATION, as a Lender | ||
By: |
/s/ Stephen M. Ellsworth | |
Typed Name: Stephen M. Ellsworth | ||
Typed Title: Vice President |
Armstrong Flooring, Inc.
Sixth Amendment to Credit Agreement
Signature Page
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their authorized officers as of the day and year first above written.
MANUFACTURERS AND TRADERS TRUST COMPANY, as a Lender | ||
By: | /s/ Anca Filippi | |
Typed Name: Anca Filippi | ||
Typed Title: Managing Director |
Armstrong Flooring, Inc.
Sixth Amendment to Credit Agreement
Signature Page
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their authorized officers as of the day and year first above written.
BORROWER: | ARMSTRONG FLOORING, INC. | |||||
By: | /s/ Michel Vermette | |||||
Typed Name: Michel Vermette | ||||||
Typed Title: President and CEO | ||||||
GUARANTOR: | AFI LICENSING LLC | |||||
By: | /s/ Christopher S. Parisi | |||||
Typed Name: Christopher S. Parisi | ||||||
Typed Title: Secretary |
Armstrong Flooring, Inc.
Sixth Amendment to Credit Agreement
Signature Page
Annex A
Term Loan Third Amendment
Exhibit 10.2
THIRD AMENDMENT TO TERM LOAN AGREEMENT
This THIRD AMENDMENT TO TERM LOAN AGREEMENT, dated as of March 31, 2022 (this Amendment), is by and among PATHLIGHT CAPITAL LP, in its capacity as administrative agent (in such capacity, together with its successors and permitted assigns in such capacity, the Administrative Agent) and as collateral agent (in such capacity together with its successors and permitted assigns in such capacity, the Collateral Agent), the Lenders under and as defined in the Existing Credit Agreement defined below party hereto (collectively, the Consenting Lenders), ARMSTRONG FLOORING, INC., a Delaware corporation (the Company), ARMSTRONG FLOORING PTY LTD, an Australian proprietary limited company (the Australian Borrower, and together with the Company, collectively, the Borrowers and each, a Borrower), and the guarantors party hereto (collectively with the Borrowers, the Loan Parties).
W I T N E S E T H :
WHEREAS, the Administrative Agent, certain financial institutions from time to time party thereto as lenders (collectively, the Lenders) and the Loan Parties are parties to that certain Term Loan Agreement, dated as of June 23, 2020 (as otherwise heretofore amended, supplemented or modified, the Existing Credit Agreement; the Existing Credit Agreement as amended hereby and as otherwise amended, restated, supplemented or modified from time to time in accordance with its terms, including by this Amendment, the Credit Agreement; capitalized terms used but not defined herein shall have the meanings set forth in the Existing Credit Agreement).
WHEREAS, the Company has conducted a comprehensive sale process as contemplated in the Existing Credit Agreement, in response to which the Company received expressions of interest from several parties regarding potential transactions involving the Company; following receipt and review of such expressions of interest, the Companys board of directors has instructed the Companys management and the Companys advisors to pursue implementation of those expressions of interest which the Companys board of directors believes are most likely to maximize the value to be realized by the Companys stockholders and other stakeholders, subject to further negotiation and documentation.
WHEREAS, the Borrowers have requested that the Administrative Agent and the Lenders consent to certain amendments to the Existing Credit Agreement to, inter alia, extend certain of the deadlines related to the sale process set forth in the Existing Credit Agreement, as more specifically set forth herein.
WHEREAS, the Administrative Agent and the Consenting Lenders have agreed to such requests, subject to the terms and conditions of this Amendment.
WHEREAS, by this Amendment, the Administrative Agent, the Collateral Agent and the Consenting Lenders (which Consenting Lenders constitute the Required Lenders), and the Borrowers desire and intend to evidence the amendments set forth herein.
NOW THEREFORE, in consideration of the foregoing and the mutual agreements and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Amendments to Credit Agreement. Effective as of the Third Amendment Effective Date (as defined below), the Existing Credit Agreement is hereby amended as follows:
(a) The definition of Fee Letter in Section 1.01 of the Existing Credit Agreement is amended by restating such definition as follows:
Fee Letter means the Third Amended and Restated Fee Letter dated as of March 31, 2022, between the Borrowers and the Administrative Agent.
(b) The definition of Sale Deadline in Section 1.01 of the Existing Credit Agreement is amended by restating such definition as follows:
Sale Deadline means June 15, 2022.
(c) Section 6.26 of the Existing Credit Agreement is amended by deleting clause (d) thereof and inserting the following new clause (d) in lieu thereof:
(d) No later than May 2, 2022, the Loan Parties shall cause Investment Bank to deliver to the Administrative Agent a fully-executed, binding purchase agreement, merger agreement or other similar agreement with a buyer or investor (the PSA), which fully-executed PSA shall (i) provide for a cash purchase price in an amount sufficient to cause the occurrence of the Facility Termination Date and payment in full of all obligations under the ABL Credit Agreement in accordance therewith and otherwise be in form and substance reasonably satisfactory to Administrative Agent, (ii) be subject to limited conditionality relative to the obligations of the purchaser customary for public company transactions of the type contemplated by the applicable expression of interest, limited to the following (and in no event to include any financing contingency) (A) receipt by the parties of necessary regulatory approvals, (B) truth and accuracy of representations and warranties as of the date of closing such transaction within a customary material adverse effect standard, (C) the applicable Loan Parties compliance in all material respects of their covenants and agreements under the applicable purchase agreement through the date of closing, (D) the absence of any applicable law or order of any Governmental Authority prohibiting or limiting the transaction and (E) requisite U.S. Borrower shareholder approval, and (iii) otherwise in form and substance reasonably satisfactory to Administrative Agent.
(d) Section 6.26 of the Existing Credit Agreement is amended by deleting clause (f) thereof and inserting the following new clause (f) in lieu thereof:
(f) At least once every calendar week, or more frequently as requested by the Administrative Agent, the U.S. Borrower shall conduct or cause to be conducted update conference calls with the Investment Bank, the Consultant, the Administrative Agent and the Lenders (and the Borrowers and the Administrative Agents respective counsel) regarding the Sale Process and, reasonably in advance of each such call, shall deliver to the Administrative Agent (for circulation to the Lenders) the then-current draft of the PSA and any work plan and/or closing checklist with respect to the transactions contemplated by the PSA and provide updates to the Administrative Agent regarding the planned disposition or liquidation of any assets of U.S. Borrower in connection with the transactions contemplated by the PSA, if any, and any proposed changes to U.S. Borrowers business or operations in connection with such transactions. U.S. Borrower shall cause the Consultant to deliver to it any
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deliverables required under the Consultant Engagement Letter and, as soon as practicable (but in no event later than three days after receipt), U.S. Borrower shall deliver or cause to be delivered copies of such deliverables to the Administrative Agent for distribution to the Lenders. Prior to distribution to shareholders, U.S. Borrower shall deliver to the Administrative Agent copies of any proxy statement or other solicitation materials relating to the intended sale(s) of the assets or equity interests of the Borrowers.
2. Conditions Precedent. The amendments, consents and other agreements contained herein shall only be effective upon the satisfaction or waiver by the Administrative Agent and Consenting Lenders of each of the following conditions precedent (the date of such satisfaction or waiver, the Third Amendment Effective Date):
(a) the Administrative Agent shall have received a copy of (i) this Amendment in form and substance reasonably acceptable to the Administrative Agent, duly executed by the Borrowers and each other Loan Party, the Administrative Agent, the Collateral Agent and Lenders sufficient to constitute Required Lenders and (ii) the Fee Letter, dated as of the date hereof, in form and substance reasonably acceptable to the Administrative Agent, duly executed by the Borrowers;
(b) payment of all fees required to be paid to the Administrative Agent and the Lenders on or before the Third Amendment Effective Date, and all expenses in connection with this Amendment required to be reimbursed in accordance with Section 11.04 of the Credit Agreement, in each case, to the extent invoiced or otherwise documented no later than the date that is on or before the Third Amendment Effective Date;
(c) the Administrative Agent shall have received copies of the complete, fully executed sixth amendment to the ABL Credit Agreement, in form and substance satisfactory to the Administrative Agent and the Lenders (the ABL Amendment), including all schedules, annexes and exhibits thereto, and each other material document, agreement or instrument entered into by any Loan Parties in connection with the ABL Amendment;
(d) the Administrative Agent shall have received an amendment to the Consultant Engagement Letter in form and substance satisfactory to the Administrative Agent;
(e) no order, injunction or judgment has been entered into prohibiting the closing of this Amendment;
(f) the representations and warranties set forth in Section 6 of this Amendment shall be true and correct; and
(g) the Administrative Agent shall have received copies of all indications of interest or any LOI received by the Investment Bank or any Borrower in connection with the Sale Process subject to redaction of the names and identifying information of any potential buyer, investor or refinancing party to the extent required by the terms of such indication of interest or LOI or any applicable confidentiality agreement.
3. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
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4. Binding Effect. This Amendment shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.
5. Affirmation of Loan Parties. Each Loan Party hereby consents to the amendments and modifications to the Existing Credit Agreement effected hereby, and confirms and agrees that, notwithstanding the effectiveness of this Amendment, each Loan Document to which such Loan Party is a party is, and the obligations of such Loan Party contained in the Existing Credit Agreement, as amended and modified hereby, or in any other Loan Documents to which it is a party are, and shall continue to be, in full force and effect and are hereby ratified and confirmed in all respects, in each case as amended and modified by this Amendment. Without limiting the generality of the foregoing, the execution of this Amendment shall not constitute a novation, and the Collateral Documents and all of the Collateral described therein and Liens granted in favor of the Administrative Agent created thereunder do and shall continue to secure the payment of all Obligations of the Loan Parties under the Loan Documents to the extent provided in the Collateral Documents and that all such Liens continue to be perfected as security for the Obligations secured thereby.
6. Representations and Warranties. In order to induce the Administrative Agent, the Collateral Agent and the Consenting Lenders to enter into this Agreement, each Loan Party represents and warrants to the Administrative Agent, the Collateral Agent and the Lenders as follows:
(a) the representations and warranties made by each Loan Party in Article V of the Existing Credit Agreement and in each of the other Loan Documents to which such Loan Party is a party are true and correct in all material respects (or in all respects in the case of any representation and warranty qualified by materiality or Material Adverse Effect) on and as of the date hereof, except to the extent that such representations and warranties expressly relate to an earlier date in which case they are true and correct in all material respects (or in all respects in the case of any representation and warranty qualified by materiality or Material Adverse Effect) as of such earlier date, and except that the representations and warranties contained in subsections (a) and (b) of Section 5.05 of the Credit Agreement will be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 of the Credit Agreement;
(b) the Persons appearing as Guarantors on the signature pages to this Amendment constitute all Persons who are required to be Guarantors pursuant to the terms of the Credit Agreement and the other Loan Documents, including without limitation all Persons who became Subsidiaries or were otherwise required to become Guarantors after the Closing Date, and each of such Persons has become and remains a party to a Guaranty as a guarantor thereunder;
(c) this Amendment has been duly authorized, executed and delivered by each of the other Loan Parties party hereto and constitutes a legal, valid and binding obligation of each such party, except as may be limited by general principles of equity or by the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors rights generally; and
(d) after giving effect to this Amendment, no Default or Event of Default has occurred and is continuing.
7. Reference to and Effect on the Credit Agreement and the Loan Documents.
(a) On and after the effectiveness of this Amendment, each reference in the Credit Agreement to this Agreement, hereunder, hereof or words of like import referring to the Credit Agreement and each reference in the Notes and each of the other Loan Documents to the Credit Agreement, thereunder, thereof or words of like import referring to the Credit Agreement shall mean and be a reference to the Existing Credit Agreement as amended and modified by this Amendment.
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(b) The Credit Agreement, the Notes and each of the other Loan Documents, as specifically amended and modified by this Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver or novation of any right, power or remedy of any Lender, the Collateral Agent or the Administrative Agent under any of the Loan Documents, nor constitute a waiver or novation of any provision of any of the Loan Documents.
(d) The Administrative Agent, the Lenders and the Loan Parties agree that this Amendment shall be a Loan Document for all purposes of the Credit Agreement (as specifically amended by this Amendment) and the other Loan Documents.
8. Waiver, Modification, Etc. No provision or term of this Amendment may be modified, altered, waived, discharged or terminated orally, but only by an instrument in writing executed by the party against whom such modification, alteration, waiver, discharge or termination is sought to be enforced.
9. Headings. The headings listed herein are for convenience only and do not constitute matters to be construed in interpreting this Amendment.
10. Counterparts. This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or in pdf or similar format by electronic mail shall be effective as delivery of a manually executed counterpart of this Amendment.
11. Release; Indemnification
(a) Release. In further consideration of Administrative Agents, Collateral Agents and each Consenting Lenders execution of this Amendment, the Borrower and the Guarantors, individually and on behalf of their successors (including any trustees or any debtor-in-possession acting on behalf of Borrower or a Guarantor), assigns, subsidiaries and affiliates, hereby forever release each of the Administrative Agent, Collateral Agent and the Lenders and their respective successors, assigns, parents, subsidiaries, and affiliates and their officers, employees, directors, agents and attorneys (collectively, the Releasees) from any and all debts, claims, demands, liabilities, responsibilities, disputes, causes, damages, actions and causes of actions (whether at law or in equity), and obligations of every nature whatsoever (other than any obligations to advance Loans under and in accordance with the Credit Agreement), whether liquidated or unliquidated, whether matured or unmatured, whether fixed or contingent that Borrower or any Guarantor has or may have against the Releasees, or any of them, in each case which arise from or relate to any actions which the Releasees, or any of them, have or may have taken or omitted to take in connection with the Credit Agreement or the other Loan Documents prior to the date hereof (including with respect to the Obligations, any Collateral and any third parties liable in whole or in part for the Obligations). This provision shall survive and continue in full force and effect whether or not the Loan Parties shall satisfy all other provisions of the Credit Agreement or the other Loan Documents.
(b) Related Indemnity. The Borrower and each Guarantor hereby agree that its release of the Releasees set forth in Section 11(a) hereof shall include an obligation to indemnify and hold the Releasees, or any of them, harmless with respect to any and all liabilities, obligations, losses, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever incurred by
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the Releasees, or any of them, whether direct, indirect or consequential, as a result of or arising from or relating to any proceeding by, or on behalf of any Person, including officers, directors, agents, trustees, creditors, partners or shareholders of the Borrower or any Guarantor or any parent, subsidiary or affiliate of Borrower or such Guarantor, whether threatened or initiated, asserting any claim for legal or equitable remedy under any statutes, regulation, common law principle or otherwise arising from or in connection with the negotiation, preparation, execution, delivery, performance, administration and enforcement of this Amendment or any other document executed in connection herewith; provided, that Borrower shall not be liable for any indemnification to a Releasee to the extent that any such liability, obligation, loss, penalty, action, judgment, suit, cost, expense or disbursement results from the applicable Releasees gross negligence or willful misconduct, as finally determined by a court of competent jurisdiction. The foregoing indemnity shall survive the payment in full of the Obligations and the termination of the Credit Agreement and the other Loan Documents.
12. Consent to Sixth Amendment to ABL Credit Agreement. In accordance with Section 5.2 of the Intercreditor Agreement as in effect immediately prior to the Third Amendment Effective Date, each of the undersigned Consenting Lenders hereby authorizes the Administrative Agent to consent to, and the Administrative Agent hereby consents to the amendments to the ABL Credit Agreement effected by, the ABL Amendment in the form and substance attached as Annex A hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their authorized officers as of the day and year first above written.
PATHLIGHT CAPITAL LP, as Administrative Agent, Collateral Agent and Australian Security Trustee | ||
By: | /s/ Katie Hendricks | |
Typed Name: Katie Hendricks | ||
Typed Title: Managing Director |
Armstrong Flooring, Inc.
Third Amendment to Term Loan Agreement
Signature Page
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their authorized officers as of the day and year first above written.
PATHLIGHT CAPITAL FUND I LP, as a Lender | ||
By: | Pathlight Partners GP LLC, its General Partner | |
By: | /s/ Katie Hendricks | |
Typed Name: Katie Hendricks | ||
Typed Title: Managing Director |
Armstrong Flooring, Inc.
Third Amendment to Term Loan Agreement
Signature Page
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their authorized officers as of the day and year first above written.
BORROWERS: | ARMSTRONG FLOORING, INC. | |||||
By: | /s/ Amy P. Trojanowski | |||||
Typed Name: Amy P. Trojanowski | ||||||
Typed Title: SVP, CFO |
ARMSTRONG FLOORING PTY LTD | ||||||
By: | /s/ Rob McLorinan | |||||
Typed Name: Rob McLorinan | ||||||
Typed Title: Director |
GUARANTOR: |
AFI LICENSING LLC | |||||
By: | /s/ Christopher S. Parisi | |||||
Typed Name: Christopher S. Parisi | ||||||
Typed Title: Secretary |
Armstrong Flooring, Inc.
Third Amendment to Term Loan Agreement
Signature Page
Annex A
Sixth Amendment to ABL Credit Agreement
[See attached.]