EnviroStar, Inc. (NYSEMKT:EVI) Files An 8-K Entry into a Material Definitive AgreementItem 1.01
Amendment to Credit Agreement
As previously reported, on October 7, 2016, EnviroStar, Inc., a Delaware corporation (the “Company”), entered into a credit agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association (the “Bank”). The Credit Agreement provides for a total aggregate commitment of the Bank of $20,000,000, consisting of a maximum $15,000,000 revolving line of credit (the “Line of Credit”), and a $5,000,000 term loan facility (the “Term Loan”). The Company’s obligation to repay advances under the Line of Credit is evidenced by a Revolving Line of Credit Note, dated as of October 7, 2016, and the Company’s obligation to repay the Term Loan is evidenced by a Term Note, dated as of October 7, 2016 (the “Original Term Note”). Interest accrues on the outstanding principal amount of the Line of Credit at an annual rate equal to Daily One Month LIBOR (as defined in the Credit Agreement) plus 2.25% and on the outstanding principal amount of the Term Loan at an annual rate equal to Daily One Month LIBOR plus 2.85%. The Credit Agreement has a term of five years and matures on October 10, 2021.
On October 30, 2017, the Company, Western State Design, Inc., a Delaware corporation, Steiner-Atlantic Corp., a Florida corporation, DryClean USA License Corp., a Florida corporation, Martin-Ray Laundry Systems, Inc., a Delaware corporation, and Tri-State Technical Services, Inc., a Delaware corporation (“Tri-State”), entered into a Second Amendment and Ratification of Credit Agreement and Other Loan Documents (the “Amendment”), which, among other things, (i) increases the total aggregate commitment of the Bank under the Credit Agreement from $20,000,000 to $22,172,339 by increasing the maximum amount under the Term Loan from $5,000,000 to $7,172,399, as evidenced by an Amended and Restated Term Loan, dated as of October 30, 2017 (the “Amended Term Note”), which amend, restates, increases and supersedes the Original Term Note, and (ii) adds Tri-State as a co-guarantor under the Credit Agreement. In connection therewith, Tri-State executed and delivered to Bank (a) a Continuing Guaranty, dated as of October 30, 2017, in favor of Bank (the “Guaranty”), and (b) a Security Agreement: Business Assets, dated as of October 30, 2017, in favor of Bank (the “Security Agreement”), which secures Tri-State’s obligations under the Guaranty and the other Loan Documents (as defined in the Amendment).
The descriptions of the Amendment, the Amended Term Note, the Guaranty and the Security Agreement set forth herein do not purport to be complete and are subject to, and qualified in their entirety by reference to, the Amendment, the Amended Term Note, the Guaranty and the Security Agreement, copies of which are attached hereto as Exhibits 10.1, 10 2, 10.3, and 10.4, respectively, and are incorporated herein by reference.
Stockholders Agreement
On June 19, 2017, Vernon Matthew Stephenson (the “Stockholder”), Symmetric Capital, LLC (“Symmetric I”), Symmetric Capital II, LLC (“Symmetric II” and collectively with Symmetric I, “Symmetric”) and certain of Symmetric’s affiliates, including Henry M. Nahmad, the Manager of Symmetric I and the Manager of Symmetric II, entered into a Stockholders
Agreement with the Company (the “Stockholders Agreement”), to which, among other things, the Stockholder agreed to vote all shares of common stock, par value $0.025 per share (the “Common Stock”), owned by him at any time during the term of the Stockholders Agreement in accordance with the recommendations or directions of the Company’s Board of Directors and granted to the Company and its designees an irrevocable proxy and power of attorney in furtherance thereof. The Stockholders Agreement contains certain transfer restrictions with respect to the shares of the Common Stock held by the Stockholder. The Stockholders Agreement also includes certain tag-along provisions with respect to certain proposed sales of Common Stock by Symmetric and its affiliates. The Stockholders Agreement has a term of five years, subject to earlier termination under certain circumstances.
The description of the Stockholders Agreement set forth herein does not purport to be complete and is subject to, and qualified in its entirety by reference, to the Stockholders Agreement, a copy of which is attached hereto as Exhibit 4.1, and is incorporated herein by reference.
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
On October 31, 2017, the Company, through its wholly-owned subsidiary Tri-State, completed its acquisition of substantially all of the assets of Tri-State Technical Services, Inc., a Georgia corporation (the “Seller,” and collectively with the Stockholder, the “Selling Group”), to the terms of the Asset Purchase Agreement, dated as of September 8, 2017 (the “Asset Purchase Agreement”), by and among the Company and Tri-State, on the one hand, and the Selling Group, on the other hand. The execution of the Asset Purchase Agreement was previously disclosed in a Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on September 11, 2017.
Consistent with the previously disclosed terms of the Asset Purchase Agreement, the purchase price for the asset acquisition is $16,500,000, subject to working capital and other adjustments, consisting of: (i) $8,250,000 in cash (the “Cash Amount”), of which $2,100,000 was deposited in an escrow account for 24 months after the date of the closing of the asset acquisition (subject to extension in certain circumstances); and (ii) 338,115 shares of Common Stock. The Company funded the Cash Amount through borrowings under the Line of Credit and the Term Loan.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
| Item 3.02 | Unregistered Sales of Equity Securities. |
The information set forth in Item 2.01 and of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.
On November 1, 2017, the Company issued a press release announcing that it has completed the acquisition of substantially all of the assets of the Seller. A copy of the press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(a)The required financial statements of the acquired business will be filed by amendment to this Current Report on Form 8-K not later than 71 calendar days after the date that this initial Current Report on Form 8-K was required to be filed.
(b)The required pro forma financial information will be filed by amendment to this Current Report on Form 8-K not later than 71 calendar days after the date that this initial Current Report on Form 8-K was required to be filed.
(c)Not applicable.
(d) Exhibits:
| 4.1 | Stockholders Agreement, dated as of October 31, 2017, by and among EnviroStar, Inc., Symmetric Capital LLC, Symmetric Capital II LLC, Henry M. Nahmad and Vernon Matthew Stephenson. |
| 10.1 | Second Amendment and Ratification of Credit Agreement and Other Loan Documents, dated as of October 30, 2017, by and among EnviroStar, Inc., Steiner-Atlantic Corp., DryClean USA License Corp., Western State Design, Inc., Martin-Ray Laundry Systems, Inc., Tri-State Technical Services, Inc. and Wells Fargo Bank, National Association. |
| 10.2 | Amended and Restated Term Note, dated October 30, 2017. |
| 10.3 | Security Agreement, dated as of October 30, 2017, by Tri-State Technical Services, Inc. in favor of Wells Fargo Bank, National Association. |
| 10.4 | Continuing Guaranty of Tri-State Technical Services, Inc. in favor of Wells Fargo Bank, National Association, dated as of October 30, 2017. |
| 99.1 | Press release of EnviroStar, Inc., dated November 1, 2017. |
EnviroStar, Inc. ExhibitEX-4.1 2 ex4-1.htm EX-4.1 Stockholders Agreement This Stockholders Agreement (this “Agreement”),…To view the full exhibit click here
About EnviroStar, Inc. (NYSEMKT:EVI)
EnviroStar, Inc., through its subsidiary, Steiner-Atlantic Corp., distributes commercial and industrial laundry and dry cleaning equipment, and steam and hot water boilers manufactured by others; supplies replacement parts and accessories, and provides maintenance services to its customers, and designs and plans turnkey laundry, dry cleaning and boiler systems for its institutional, retail, industrial and commercial customers. The Company, through its subsidiary, DRYCLEAN USA License Corp. owns rights to the name DRYCLEAN USA, which it franchises and licenses to retail drycleaners in the United States, the Caribbean and Latin America. It sells a line of commercial and industrial laundry and dry cleaning equipment and steam and hot water boilers manufactured by others, as well as related replacement parts and accessories, and provides maintenance services. It also sells replacement parts and accessories for the products it sells and provides maintenance services to its customers.