Item 1.01. Entry into a Material Definitive Agreement.
On July 1, 2022, Automatic Data Processing, Inc.,
a Delaware corporation (the “Company”), entered into a $3.75 billion 364-Day Credit Agreement (the “364-Day Facility”)
with a group of lenders.
The 364-Day Facility replaced the Company’s
prior $3.75 billion 364-day facility, entered into on June 9, 2021 (as amended, restated, supplemented or otherwise modified), which was
terminated on July 1, 2022. JPMorgan Chase Bank, N.A. acts as Administrative Agent, and Bank of America, N.A., BNP Paribas, Wells Fargo
Bank, N.A. and Deutsche Bank Securities Inc., as Syndication Agents for the 364-Day Facility.
Two borrowing options will be available under
the 364-Day Facility: (i) a competitive advance option and (ii) a revolving credit option. The competitive advance option will be provided
on an uncommitted competitive advance basis through an auction mechanism. The revolving credit will be provided on a committed basis.
Under each option, amounts borrowed and repaid may be reborrowed subject to availability under the 364-Day Facility.
The Lenders’ commitments under the 364-Day
Facility will expire on June 30, 2023 and any borrowings outstanding will mature and be payable on such date (or, at the option of the
Company, subject to the accuracy of all representations and warranties and the absence of any default, on June 30, 2024).
Under the 364-Day Facility, interest under a competitive
advance option will be payable at the rates obtained from bids selected by the Company in accordance with the competitive auction procedures
set forth in the 364-Day Facility.
At the Company’s option, under the 364-Day
Facility, revolving loans denominated in U.S. Dollars will bear interest at a floating rate per annum based on margin over a Term SOFR-based
rate for a one or three month interest period as selected by the Company or a margin over a floating rate per annum determined by reference
to the highest of (i) JPMorgan Chase Bank, N.A.’s prime rate, (ii) the federal funds effective rate plus 0.50% per annum, and (iii)
a Term SOFR-based rate for a one month interest period plus 1% per annum.
In addition, the Company will pay a commitment
fee on the aggregate unused commitments at a rate of 0.0175% per annum. Also, the Company will pay a term-out fee of 0.75% of the amount
of any loans outstanding under the 364-Day Facility after June 30, 2023.
The 364-Day Facility’s other terms are substantially
similar to the terms of the facility it replaced, including customary covenants that restrict the Company’s and its borrowing subsidiaries’
ability to create liens or other encumbrances, enter into sale and leaseback transactions and enter into consolidations, mergers and transfers
of all or substantially all of their respective assets. The 364-Day Facility contains customary events of default that would permit the
lenders to accelerate the loans, including the failure to make timely payments under the 364-Day Facility or other material indebtedness,
the failure to satisfy covenants and specified events of bankruptcy and insolvency.
The Company has agreed to guarantee any obligations
of any of its subsidiaries that are entitled to borrow the funds under the 364-Day Facility. Borrowings under the 364-Day Facility may
be used for general corporate purposes.
The 364-Day Facility is led by J.P. Morgan Chase
Bank, N.A., BofA Securities, Inc., BNP Paribas Securities Corp., Wells Fargo Securities, LLC and Deutsche Bank Securities Inc., as Joint
Lead Arrangers and Joint Bookrunners. Barclays Bank PLC and MUFG, Ltd. are Documentation Agents for the 364-Day Facility.
Certain of the lenders under the 364-Day Facility,
and their respective affiliates, have performed, and may in the future perform for the Company and its subsidiaries, various commercial
banking, investment banking, underwriting and other financial advisory services, for which they have received, and will receive, customary
fees and expenses.
The foregoing description is qualified in its
entirety by reference to the 364-Day Facility, which is filed as Exhibit 10.1 hereto and incorporated herein by reference.