SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
AMENDMENT TO 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 4, 2005
Checkpoint Systems, Inc.
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(Exact name of registrant as specified in its charter)
Pennsylvania
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(State or other jurisdiction of incorporation or organization)
1-11257 22-1895850
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(Commission File Number) (I.R.S. Employer Identification No.)
101 Wolf Drive, P.O. Box 188, Thorofare, New Jersey 08086
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(Address of principal executive offices)
(856) 848-1800
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(Registrant's telephone number, including area code)
N/A
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(Former name or 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 (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12(b) under the Exchange
Act (17 CFR 240.14a-12(b))
[ ] 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.
On March 4, 2005, Checkpoint Systems, Inc. (the "Company") entered into
a Credit Agreement dated as of March 4, 2005 (the "Credit Agreement") by and
among the Company; Checkpoint Manufacturing Japan Co., Ltd.; certain foreign
subsidiaries of the Company from time to time party thereto as borrowers
(collectively, the "Foreign Borrowers"); certain domestic subsidiaries of the
Company from time to time party thereto (collectively, the "US Guarantors");
certain foreign subsidiaries of the Company from time to time party thereto as
guarantors (collectively, the "Foreign Guarantors"); the Lenders party thereto;
Wachovia Bank, National Association, as Administrative Agent, Issuing Bank and
Swingline Lender (the "Administrative Agent"); Bank of Tokyo-Mitsubishi Trust
Company, as Syndication Agent; JPMorgan Chase Bank, N.A., as Documentation
Agent; and Harris Trust and Savings Bank, as Documentation Agent. The Credit
Agreement provides for an unsecured $130,000,000 multi-currency US revolving
credit facility ("US Revolving Loans") and an unsecured $20,000,000
multi-currency Japanese revolving credit facility ("Japanese Revolving Loans,"
and together with the US Revolving Loans, the "Loans"). Subject to the terms and
conditions set forth in the Credit Agreement, so long as no default or event of
default has occurred and is continuing, the Company and the Foreign Borrowers
have the right to increase the US revolving credit facility by $50,000,000.
On March 4, 2005, the Company borrowed $60,000,000 under the Credit
Agreement and used these proceeds to repay, in full, all amounts outstanding
under its then-existing senior collateralized multi-currency credit facility
("Prior Credit Facility"). The Prior Credit Facility was made pursuant to a
Credit Agreement, dated October 27, 1999, by and among the Company, First Union
National Bank, as Administrative Agent, and the lenders named therein, which
agreement was terminated and replaced with the Credit Agreement on March 4,
2005. The Prior Credit Facility included a $275,000,000 equivalent
multi-currency term note and a $100,000,000 equivalent multi-currency revolving
line of credit.
The Company intends to use any other proceeds from borrowing under the
Credit Agreement to provide for the working capital and general corporate needs
of the Company, including acquisitions permitted under the Credit Agreement.
The description of the Credit Agreement included in Item 2.03 below is
incorporated by reference into this Item 1.01.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement of a Registrant.
As discussed above, on March 4, 2005, the Company and certain of its
subsidiaries entered into the Credit Agreement. Unless terminated earlier, the
Credit Agreement will mature on March 4, 2010, and the principal amount
outstanding thereunder, together with all accrued and unpaid interest and other
amounts owed thereunder, if any, must be repaid in full on such date, and all
outstanding letters of credit must be cash collateralized on such date.
Loans under the Credit Agreement will, at the Company's option, bear
interest at (a) for Loans comprised in whole or in part of alternate base rate
loans, a per annum rate equal to the greater of (i) the Administrative Agent's
prime rate, or (ii) the federal funds rate plus 0.5% per annum, plus, in each
case, a margin based upon the Company's leverage ratio, (b) for Loans comprised
in whole or in part of LIBOR rate loans, a per annum rate equal to the LIBOR
rate plus a margin based upon the Company's leverage ratio, (c) for Loans
comprised of Swingline Loans (as defined below) that are denominated in US
dollars, a per annum rate equal to the rate set forth in (a) above, and (d) for
Loans comprised of Swingline Loans denominated in euros, a per annum rate equal
to the LIBOR market index rate plus a margin based upon the Company's leverage
ratio.
Letters of credit under the Credit Agreement will be issued by the
Administrative Agent. Swingline loans ("Swingline Loans") are available to the
Company for short-term borrowings in an aggregate amount of up to $15,000,000
outstanding at any time.
The Credit Agreement contains covenants, including, without limitation,
covenants that place conditions upon the ability of the Company and its
subsidiaries to incur certain additional indebtedness, create or permit liens on
assets, or engage in mergers, consolidations or acquisitions. The Credit
Agreement also (a) requires the Company and its subsidiaries to maintain (i) a
leverage ratio of less than or equal to 3.00 to 1.00, and (ii) an interest
coverage ratio of greater than or equal to 3.50 to 1.00, and (b) prevents the
Company and its subsidiaries from making capital expenditures in excess of
$30,000,000 during any fiscal year of the Company, plus up to $10,000,000 of the
unused amount for the prior fiscal year.
If an event of default under the Credit Agreement shall occur and be
continuing, including the non-payment of principal or interest, the commitments
under the Credit Agreement may be terminated and the principal amount
outstanding thereunder, together with all accrued and unpaid interest and other
amounts owed thereunder, if any, may be declared immediately due and payable.
The Company may add certain foreign subsidiaries as borrowers under the
Credit Agreement. All obligations under the Credit Agreement will be guaranteed
by the Company and the US Guarantors, which initially include Checkpoint
Security Systems Group, Inc., Checkpoint Caribbean, Inc. and Checkpoint Systems
of Puerto Rico, Inc. The obligations of the Foreign Borrowers under the Credit
Agreement will be guaranteed by the Foreign Guarantors. Initially, there are no
Foreign Borrowers or Foreign Guarantors under the Credit Agreement.
The dollar amounts referenced hereunder shall mean, (a) with respect to
US dollars, such amount, and (b) with respect to an amount of any permitted
foreign currency, the approximate foreign currency equivalent.
The description of the Credit Agreement included in Item 1.01 above is
incorporated by reference into this Item 2.03.
The description of the Credit Agreement is qualified in its entirety by
reference to the Credit Agreement which is filed as Exhibit 99.1 hereto.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
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99.1 Credit Agreement dated as of March 4, 2005
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.
Checkpoint Systems, Inc. Dated: March 9, 2005
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/s/ W. Craig Burns
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Executive Vice President,
Chief Financial Officer
And Treasurer
Checkpoint Systems, Inc.
Index of Exhibits
Exhibit
Number Description
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99.1 Credit Agreement dated as of March 4, 2005