Item 2.03. Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of Registrant.
On April 18, 2017, the
Company entered into a senior secured credit agreement (the “New Credit Agreement”), by and among the Company, as borrower,
the lenders party thereto, as lenders, Wells Fargo Bank, National Association, as administrative agent for the lenders, swingline
lender and issuing lender, and Bank of America, N.A., as an issuing lender, that provides for a $500 million, five-year revolving
credit facility (the “Revolving Credit Facility”), including a $75 million sublimit for the issuance of standby letters
of credit.
Proceeds from the Revolving
Credit Facility are restricted for use solely for (i) the repayment of the indebtedness outstanding under the Former Credit Agreement,
(ii) ongoing working capital and for other general corporate purposes (including acquisitions and capital expenditures), and (iii) to
pay costs, fees, commissions and expenses in connection with the transactions contemplated by the New Credit Agreement. The Company
is required to pay a commitment fee at a rate per annum ranging from 0.175% to 0.35% on the average daily unused portion of the
Revolving Credit Facility based on the Company’s Total Net Leverage Ratio.
The Company may at any
time and from time to time prepay Revolving Credit Loans and Swingline Loans, in whole or in part, without premium or penalty,
subject to the obligation to indemnify each of the lenders against any actual loss or expense (including any loss or expense arising
from the liquidation or reemployment of funds obtained by it to maintain a LIBOR Rate Loan or from fees payable to terminate the
deposits from which such funds were obtained) with respect to the early termination of any LIBOR Rate Loan. The New Credit Agreement
provides for mandatory prepayment at any time if the Revolving Credit Outstandings exceed the Revolving Credit Commitment, in an
amount equal to such excess. Subject to certain exceptions, the New Credit Agreement also provides for mandatory prepayment upon
certain asset dispositions, casualty events and issuances of indebtedness, the proceeds of which will be applied to borrowings
under the Revolving Credit Facility without requiring the permanent reduction thereof.
Interest under the Revolving
Credit Facility for Revolving Credit Loans will be determined based on alternative rates that we may choose in accordance with
the New Credit Agreement, including a Base Rate plus an applicable margin, and LIBOR Rate plus an applicable margin, depending
on our Total Net Leverage Ratio as set forth in the table below (initially set at LIBOR Rate plus 1.50% or Base Rate plus 0.50%):
Total Net
Leverage Ratio
|
LIBOR Rate
Loans Interest
Margin
|
Base Rate
Loans Interest
Margin
|
Equal to or greater
than 3.25 to 1.00
|
2.00%
|
1.00%
|
Equal to or greater
than 2.50 to 1.00,
but less than
3.25 to 1.00
|
1.75%
|
0.75%
|
Equal to or greater
than 1.75 to 1.00,
but less than
2.50 to 1.00
|
1.50%
|
0.50%
|
Equal to or greater
than 1.00 to 1.00,
but less than
1.75 to 1.00
|
1.25%
|
0.25%
|
Less than
1.00 to 1.00
|
1.00%
|
0.00%
|
“Base Rate”
is defined as the highest of (a) the Prime Rate, (b) the Federal Funds Rate
plus
0.50% and (c) LIBOR for an Interest
Period of one month
plus
1% and is subject to a floor of 1.75% until the Company’s swap contract is terminated at
which time the floor will be reduced to 1.00%.
“LIBOR Rate”
is defined as (a) for any interest rate calculation with respect to a LIBOR Rate Loan, the rate of interest per annum determined
on the basis of the rate as set by the ICE Benchmark Administration (“ICE”) for deposits in Dollars for a period equal
to the applicable interest period which appears on Reuters Screen LIBOR01 Page (or any applicable successor page) at approximately
11:00 a.m. (London time) two (2) London Banking Days prior to the first day of the applicable interest period and (b) for any interest
rate calculation with respect to a Base Rate Loan, the rate of interest per annum determined on the basis of the rate as set by
ICE for deposits in Dollars for an Interest Period equal to one month (commencing on the date of determination of such interest
rate) which appears on the Reuters Screen LIBOR01 Page (or any applicable successor page) at approximately 11:00 a.m. (London time)
on such date of determination, or, if such date is not a Business Day, then the immediately preceding Business Day. LIBOR Rate
Loans are subject to a floor of 0.75% until the Company’s swap contract is terminated at which time the floor will be reduced
to 0.00%.
Pursuant to (i) an unconditional
guarantee agreement and (ii) a collateral agreement, each entered into by the Company and the Company’s existing domestic
subsidiaries on April 18, 2017, the Company’s obligations under the New Credit Agreement are (or will be) jointly and severally
and fully and unconditionally guaranteed on a senior basis by all of the Company’s existing and certain future domestic subsidiaries
and are secured by substantially all of the assets of the Company and the Company’s existing and certain future domestic
subsidiaries (subject to certain exclusions), including 100% of the equity interests of the Company’s domestic subsidiaries
and 65% of the voting equity interests of the Company’s directly owned foreign subsidiaries (and 100% of the non-voting equity
interests of the Company’s directly owned foreign subsidiaries).
The New Credit Agreement
contains customary restrictive covenants, subject to certain permitted amounts and exceptions, including covenants limiting the
ability of the Company to incur additional indebtedness, pay dividends and make other restricted payments, repurchase shares of
our outstanding stock and create certain liens.
The New Credit Agreement
contains financial maintenance covenants, a maximum Consolidated Total Net Leverage Ratio and a Consolidated Interest Coverage
Ratio. Our Consolidated Total Net Leverage Ratio as of the last day of any fiscal quarter, commencing with the fiscal quarter ending
June 30, 2017, may not exceed 3.50 to 1.00, subject to certain exceptions. Our Consolidated Interest Coverage Ratio as of the last
day of any fiscal quarter, commencing with the fiscal quarter ending June 30, 2017, may not be less than 3.00 to 1.00. Upon the
occurrence of an Event of Default, among other things, amounts outstanding under the New Credit Agreement may be accelerated and
the commitments may be terminated.
The New Credit Agreement
also provides for an incremental term loan and revolving loan facility, pursuant to which we may request that the lenders under
the New Credit Agreement, and potentially other lenders, provide up to $200 million of either term loans on terms determined pursuant
to the relevant Lender Joinder Agreement or revolving loans on terms substantially consistent with those provided under the New
Credit Agreement. Among other things, the utilization of the incremental facility is conditioned on no Event of Default existing,
except such condition may be limited to payment and bankruptcy Events of Default under certain circumstances in connection with
a permitted acquisition.
In the ordinary course
of business, certain of the lenders under the New Credit Agreement and their respective affiliates have engaged, and may in the
future engage, in commercial banking and/or investment banking transactions with the Company and its affiliates for which they
have in the past received, and may in the future receive, customary fees.
The foregoing description
of the New Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the
New Credit Agreement, which is filed as Exhibit 10.1 to this Current Report and incorporated by reference herein.