Item 1.01 Entry into a Material Definitive Agreement.
On March 20, 2020, the Company entered into a Third Amended and Restated Credit Agreement (the “2020 Credit Agreement”), by and among the Company, the lenders party thereto, Citizens Bank, National Association and Wells Fargo Bank, National Association, as joint lead arrangers, and JPMorgan Chase Bank, National Association as joint lead arranger and administrative agent for such lenders (the “Agent”), pursuant to which the terms of the Company’s existing multi-currency, secured credit facility were revised to provide a secured revolving facility (the “2020 Revolving Facility”) in an aggregate principal amount of $75.0 million, with a sublimit of $10.0 million which can be used for letters of credit for the account of the Company or its subsidiaries that are parties to the Credit Agreement. The proceeds of the 2020 Revolving Facility will be used to refinance the Company’s existing credit facility, for working capital and general corporate purposes and for other approved purposes. The aggregate principal amount of the 2020 Revolving Facility may be increased by a maximum of $25.0 million upon the request of the Company, subject to the terms of the 2020 Credit Agreement. The 2020 Credit Agreement expires on March 20, 2025. The Company may elect to make loans under the 2020 Revolving Facility in US Dollars, Euros, Canadian Dollars, Sterling, Japanese Yen or such other freely convertible foreign currency.
Interest payable on amounts borrowed under the 2020 Revolving Facility in any LIBOR quoted currency is based upon, at the Company’s option, a specified interest margin (as summarized below) plus (1) the greatest of: (a) the Agent’s prime rate, (b) the Federal Funds rate, or (c) the adjusted LIBOR rate applicable to loans for a one-month period plus 1.00% (the “Base Rate”) or (2) a defined Adjusted LIBOR rate. An interest margin of 0.25% is added to Base Rate loans. Depending upon the Company’s leverage ratio, an interest rate margin ranging from 1.50% to 2.75% per annum is added to the applicable adjusted LIBOR rate or CDOR Rate to determine the interest payable on LIBOR or CDOR loans, as applicable. The 2020 Credit Agreement includes a replacement rate for LIBOR in the event that the LIBOR rate is discontinued. The Company is required to pay a quarterly fee of 0.25% per annum to 0.40% per annum on the unused portion of the 2020 Revolving Facility, which is determined based on the Company’s leverage ratio each quarter. Additional customary fees apply with respect to letters of credit.
The obligations of the Company under the 2020 Credit Agreement are secured by pledges of stock in certain domestic and foreign subsidiaries, as well as guarantees by all of the Company’s domestic subsidiaries. The obligations of the Company and the guarantors under the 2020 Credit Agreement are secured by substantially all the assets (excluding real estate) of the Company and such domestic subsidiary guarantors. The 2020 Credit Agreement restricts the Company from paying cash dividends and requires the Company to comply with other customary covenants, representations, and warranties, including the maintenance of specific financial ratios. The financial maintenance covenants include an interest coverage ratio and a leverage ratio. If the Company is not in compliance with any of these covenant restrictions, the credit facility could be terminated by the lenders, and all amounts outstanding pursuant to the credit facility could become immediately payable.
The foregoing description of the 2020 Credit Agreement does not purport to be a complete description of the parties’ rights and obligations under the 2020 Credit Agreement and the other documents and transactions contemplated by the 2020 Credit Agreement. As such, the foregoing description is qualified in its entirety by the reference to the complete text of the 2020 Credit Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by this reference.