CREDIT AGREEMENT
Dated as of July 21, 2022
among
VERIMARK HOSPITALITY GROUP INC., as Borrower,
THE GUARANTORS PARTY HERETO,
THE LENDERS FROM TIME TO TIME PARTY HERETO,
and
CRESCENT HARBOR BANK, NATIONAL ASSOCIATION, as Administrative Agent and Collateral Agent
$700,000,000 Senior Secured Term Loan B Facility
Administrative Agent, Collateral Agent, Lead Arranger and Bookrunner
CRESCENT HARBOR BANK, N.A.
CUSIP: 92347LAB8
Crescent Harbor Bank Internal Loan Reference: CHB-LF-2022-07814
CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of July 21, 2022, is entered into among VERIMARK HOSPITALITY GROUP INC., a Delaware corporation (the "Borrower"), the Guarantors party hereto, the Lenders from time to time party hereto, and CRESCENT HARBOR BANK, NATIONAL ASSOCIATION, as Administrative Agent and as Collateral Agent.
RECITALS
WHEREAS, the Borrower, Verimark Hospitality Group Inc., a corporation organized under the laws of the State of Delaware (EIN: 82-3741956; Delaware File Number: 7291843), with its principal executive offices located at 8200 West Palmetto Park Road, Suite 1500, Boca Raton, Florida 33433, and whose common equity is publicly traded on the New York Stock Exchange under the ticker symbol "VMRK", has requested that the Lenders extend credit to the Borrower in the form of term loans in an aggregate principal amount of $700,000,000;
WHEREAS, the proceeds of such Term Loans shall be used by the Borrower to (i) refinance in full the existing $625,000,000 Term Loan B facility (CUSIP: 92347LAA0) for which Greystone Federal Credit Corp. serves as administrative agent (the "Existing Term Loan Facility"), including the payment of all accrued interest, fees and applicable prepayment premiums in connection therewith, (ii) pay fees and expenses incurred in connection with such refinancing and the other transactions contemplated by this Agreement and the other Loan Documents, and (iii) fund permitted acquisitions and other general corporate purposes with the incremental proceeds, estimated to be approximately $75,000,000;
WHEREAS, the Lenders are willing to extend such credit to the Borrower on the terms and subject to the conditions set forth herein;
WHEREAS, the Guarantors have agreed to guarantee the Obligations of the Borrower under this Agreement and the other Loan Documents and to secure such Obligations as provided herein and therein; and
WHEREAS, it is the intent of the parties that the Term Loans shall constitute a senior secured first-lien term loan B facility that shares collateral on a pari passu basis with the Existing Revolving Credit Facility pursuant to the Intercreditor Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows:
ARTICLE I — DEFINITIONS AND ACCOUNTING TERMS
Section 1.01 Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"Adjusted EBITDA" means, for any period, Consolidated Net Income for such period, plus, without duplication, to the extent deducted in determining such Consolidated Net Income, (a) consolidated interest expense, (b) provisions for federal, state, local and foreign income taxes, (c) depreciation and amortization expense, (d) non-cash charges, losses and expenses, including stock-based compensation, impairment charges and other non-cash items, in each case other than any such non-cash charge representing an accrual or reserve for a cash expenditure in a future period, (e) restructuring charges, integration costs, severance expenses, transition costs and transaction-related fees, costs and expenses incurred in connection with acquisitions, dispositions, financings, amendments, offerings or similar transactions, in an aggregate amount not to exceed, for any applicable period, 20.0% of Adjusted EBITDA for such period (calculated prior to giving effect to such add-back), and (f) projected cost savings, operating expense reductions, synergies and related operating improvements reasonably identifiable and factually supportable and expected by the Borrower in good faith to be realized within 18 months after the relevant transaction or initiative, in an aggregate amount not to exceed 25.0% of Adjusted EBITDA for such period (calculated prior to giving effect to such add-back), minus, without duplication, (g) non-cash gains and income to the extent included in determining Consolidated Net Income. Adjusted EBITDA shall be determined for the applicable trailing four fiscal quarter period on a Pro Forma Basis. For reference, the Borrower's Adjusted EBITDA for fiscal year 2021 was $341,000,000.
"Adjusted Term SOFR" means, for any Interest Period, an interest rate per annum equal to (a) Term SOFR for such Interest Period plus (b) the SOFR Adjustment applicable to such Interest Period.
"Administrative Agent" means Crescent Harbor Bank, National Association, having its principal office at 600 Lexington Avenue, 34th Floor, New York, New York 10022, acting in its capacity as administrative agent for the Lenders hereunder, and its successors in such capacity appointed pursuant to Article IX.
"Administrative Agent's Office" means the office of the Administrative Agent specified in or determined in accordance with Section 10.02, or such other office as the Administrative Agent may from time to time notify the Borrower and the Lenders.
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly Controls, is Controlled by or is under common Control with such Person.
"Applicable Margin" means 3.75% per annum; provided that such Applicable Margin shall be subject to adjustment in accordance with the Most Favored Nation Provision set forth in Section 2.15.
"Applicable Rate" means, for any day, the rate per annum then applicable to the Term Loans pursuant to Section 2.06, including any Default Rate, as applicable.
"Approved Fund" means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender, or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
"Assignment and Assumption" means an assignment and assumption entered into by a Lender and an Eligible Assignee, and accepted by the Administrative Agent, substantially in the form of Exhibit C.
"Available Tenor" means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark or payment period for interest calculated with reference thereto that is or may be used for determining the length of an Interest Period pursuant to this Agreement.
"Bail-In Action" means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
"Bail-In Legislation" means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, rule, regulation or requirement for such EEA Member Country from time to time that is described in the EU Bail-In Legislation Schedule.
"Benchmark" means, initially, Adjusted Term SOFR; provided that if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to Adjusted Term SOFR or the then-current Benchmark, then "Benchmark" means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has become effective pursuant to Section 2.07.
"Benchmark Replacement" means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date: (1) Daily Simple SOFR plus the applicable Benchmark Replacement Adjustment; and (2) the sum of (i) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower giving due consideration to then-prevailing market convention for syndicated leveraged loans in the United States at such time and (ii) the applicable Benchmark Replacement Adjustment; provided that such Benchmark Replacement shall be determined in a manner consistent with ARRC-recommended hardwired fallback language to the extent then applicable and practicable.
"Benchmark Replacement Adjustment" means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor, the spread adjustment, or method for calculating or determining such spread adjustment, which may be a positive or negative value or zero, that has been selected by the Administrative Agent and the Borrower giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body and/or (b) any evolving or then-prevailing market convention for syndicated credit facilities in the United States.
"Benchmark Replacement Conforming Changes" means, with respect to any Benchmark Replacement, any technical, administrative or operational changes, including changes to the definition of "Business Day", the timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment notices, conversion or continuation notices, length of lookback periods, applicability of breakage provisions, and other administrative matters, that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice.
"Benchmark Replacement Date" means the earliest to occur of the applicable events set forth in the definition of "Benchmark Transition Event" that results in the replacement of the then-current Benchmark.
"Benchmark Transition Event" means the occurrence of one or more of the following events with respect to the then-current Benchmark: (a) a public statement or publication of information by or on behalf of the administrator of such Benchmark announcing that such administrator has ceased or will cease to provide such Benchmark, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide such Benchmark; (b) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark, the Federal Reserve Board, the Federal Reserve Bank of New York, the CME Term SOFR Administrator, an insolvency official with jurisdiction over the administrator for such Benchmark, a resolution authority with jurisdiction over the administrator for such Benchmark or a court or entity with similar insolvency or resolution authority over the administrator for such Benchmark, announcing that such Benchmark is no longer representative or may no longer be used; or (c) a public statement or publication of information by the Administrative Agent that adequate and reasonable means do not otherwise exist for determining such Benchmark.
"Borrower" means Verimark Hospitality Group Inc., a Delaware corporation.
"Borrowing Date" means July 21, 2022, which is the Closing Date and the date of the initial and sole borrowing under this Agreement.
"Borrowing Request" means a written notice of borrowing substantially in the form of Exhibit A.
"Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close; provided that, when used in connection with any SOFR-related determination, the term "Business Day" shall also exclude any day that is not a U.S. Government Securities Business Day.
"Cash Equivalents" means investments of the type customarily specified in leveraged credit agreements as cash equivalents, including direct obligations of, or obligations fully guaranteed by, the United States or any agency thereof, commercial paper rated at least A-1 or P-1, certificates of deposit and bankers' acceptances of recognized financial institutions, and money market funds investing primarily in such instruments.
"Change of Control" means the occurrence of any of the following: (a) any "person" or "group" (within the meaning of the Securities Exchange Act of 1934) shall acquire beneficial ownership of more than 50% of the voting Equity Interests of the Borrower; (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were neither nominated by the board of directors of the Borrower nor appointed by directors so nominated; or (c) the Borrower shall cease to own, directly or indirectly, 100% of the Equity Interests of each Guarantor, except as otherwise permitted by this Agreement.
"Closing Date" means July 21, 2022.
"Collateral" means all assets and property, whether real, personal or mixed, tangible or intangible, now owned or hereafter acquired by any Loan Party, in each case to the extent subject to any Lien created or purported to be created by any Security Document.
"Collateral Agent" means Crescent Harbor Bank, National Association, acting in its capacity as collateral agent for the Secured Parties hereunder and under the other Loan Documents.
"Commitment" means, with respect to each Lender, the amount set forth opposite such Lender's name on Schedule 2.01, representing such Lender's commitment to make its portion of the Term Loans on the Closing Date. The aggregate amount of the Commitments on the Closing Date is $700,000,000.
"Compliance Certificate" means a certificate substantially in the form of Exhibit D.
"Consolidated Net Income" means, for any period, the net income (or loss) of the Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded therefrom, without duplication, (a) extraordinary, unusual or non-recurring gains and losses, (b) gains or losses from the sale of assets other than inventory sold in the ordinary course of business, (c) the cumulative effect of changes in accounting principles, (d) gains or losses in respect of discontinued operations, and (e) non-cash gains and losses resulting from mark-to-market adjustments not realized in cash.
"Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through ownership of voting securities, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
"Credit Agreement" means this Credit Agreement, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.
"Daily Simple SOFR" means, for any day, SOFR for the day that is five U.S. Government Securities Business Days prior to such day, published by the Federal Reserve Bank of New York (or any successor administrator), subject to any conventions adopted by the Administrative Agent in accordance with Benchmark Replacement Conforming Changes.
"Default" means any event or condition that, with the giving of notice, the lapse of time or both, would constitute an Event of Default.
"Default Rate" means a rate per annum equal to the Applicable Rate otherwise in effect plus 2.00%.
"Disqualified Equity Interests" means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 91 days after the Maturity Date, other than solely for Qualified Equity Interests.
"Dollars" and "$" mean lawful money of the United States of America.
"EEA Financial Institution" means (a) any credit institution or investment firm established in any EEA Member Country that is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country that is a parent of an institution described in clause (a), or (c) any financial institution established in an EEA Member Country that is a subsidiary of an institution described in clause (a) or (b) and is subject to consolidated supervision with its parent.
"EEA Member Country" means any member state of the European Union, Iceland, Liechtenstein and Norway.
"EEA Resolution Authority" means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country having responsibility for the resolution of any EEA Financial Institution.
"Effective Yield" means, as to any Indebtedness, the effective yield thereof calculated in a manner customary for syndicated leveraged loan transactions, taking into account the Applicable Margin, any upfront fees or original issue discount paid generally to lenders of such Indebtedness (amortized over the shorter of (a) the term of such Indebtedness and (b) four years), and any floor applicable to the benchmark rate, but excluding arrangement, structuring, underwriting, commitment or similar fees not shared ratably with all lenders providing such Indebtedness.
"Eligible Assignee" means any Person that meets the customary eligibility criteria for assignees under syndicated term loan facilities of this type, including any commercial bank, savings bank, insurance company, financial institution, investment or mutual fund, pension fund, approved fund or other institutional investor; provided that, in no event shall the Borrower or any of its Affiliates or Subsidiaries be an Eligible Assignee.
"Environmental Laws" means all federal, state, local and foreign laws, rules, regulations, ordinances, codes, decrees, judgments, directives or judicial or administrative orders relating to pollution, the protection of the environment, natural resources or human health and safety as affected by hazardous materials.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Event" means any event or condition with respect to a Plan or Multiemployer Plan that could reasonably be expected to result in liability to the Borrower or any ERISA Affiliate, including any reportable event, withdrawal, termination, imposition of lien or funding deficiency.
"Event of Default" has the meaning assigned to such term in Section 8.01.
"Existing Credit Agreement" means that certain Credit Agreement dated as of February 14, 2020, among the Borrower, Greystone Federal Credit Corp., as administrative agent, and the lenders party thereto, providing for the Existing Term Loan Facility.
"Existing Revolving Credit Facility" means the senior secured revolving credit facility in an aggregate committed amount of $400,000,000 for which Crescent Harbor Bank, N.A. serves as administrative agent, sharing first-lien collateral with the Term Loans on a pari passu basis pursuant to the Intercreditor Agreement.
"Existing Term Loan Facility" has the meaning assigned to such term in the recitals hereto.
"FATCA" means Sections 1471 through 1474 of the Internal Revenue Code, as in effect on the Closing Date (or any amended or successor provisions that are substantively comparable and not materially more onerous), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code, and any intergovernmental agreement implementing any of the foregoing.
"Federal Funds Effective Rate" means, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published on the next succeeding Business Day by the Federal Reserve Bank of New York.
"Fee Letter" means that certain fee letter dated May 27, 2022, among the Borrower and Crescent Harbor Bank, N.A.
"Fund" means any Person (other than a natural person) that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.
"GAAP" means generally accepted accounting principles in the United States of America, as in effect on the Closing Date, subject to Section 1.03.
"Governmental Authority" means the government of the United States, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
"Guarantee Agreement" means the guarantee agreement executed on the Closing Date by the Guarantors in favor of the Administrative Agent for the benefit of the Secured Parties, as amended, restated, supplemented or otherwise modified from time to time.
"Guarantors" means, collectively, (a) Verimark Resort Properties LLC, a Delaware limited liability company, (b) VHG Management Services Inc., a Delaware corporation, (c) Verimark Convention Holdings LLC, a Delaware limited liability company, (d) Palmetto Beachfront Hotels LLC, a Florida limited liability company, (e) Cascadia Hospitality Corp., a Delaware corporation, and (f) each other Subsidiary of the Borrower that becomes a Guarantor pursuant to Section 6.12.
"Indebtedness" means, with respect to any Person, without duplication, (a) obligations for borrowed money, (b) obligations evidenced by bonds, debentures, notes or similar instruments, (c) obligations in respect of letters of credit, bankers' acceptances or similar credit transactions, (d) capitalized lease obligations, (e) obligations to pay the deferred purchase price of property or services, other than trade payables incurred in the ordinary course of business, (f) indebtedness of others secured by any Lien on property owned by such Person, whether or not such indebtedness has been assumed by such Person, and (g) guarantees of any of the foregoing.
"Incremental Term Loan" means any incremental term loan incurred pursuant to Section 2.14.
"Intercreditor Agreement" means that certain Amended and Restated Intercreditor Agreement, dated as of the Closing Date, among Crescent Harbor Bank, N.A., in its capacities as administrative agent and collateral agent hereunder and as agent under the Existing Revolving Credit Facility, the Borrower and the Guarantors, as amended, restated, supplemented or otherwise modified from time to time.
"Interest Payment Date" means, with respect to any Interest Period, the last day of such Interest Period and, in the case of any Interest Period of greater than three months, each date that is three months after the first day of such Interest Period and the last day of such Interest Period.
"Interest Period" means, with respect to any Term Loan, the period commencing on the applicable borrowing or continuation date and ending one month, three months or six months thereafter, as selected by the Borrower in accordance with this Agreement; provided that (a) any Interest Period that would otherwise end on a day other than a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the immediately preceding Business Day, and (b) no Interest Period shall end after the Maturity Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986.
"Investment" means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests or debt or other securities of another Person, (b) a loan, advance or capital contribution to, guarantee or assumption of debt of another Person, or (c) the purchase or other acquisition of assets constituting a business unit or line of business.
"Lenders" means the financial institutions listed on Schedule 2.01 and any assignee that becomes a party hereto pursuant to Section 10.07.
"Lien" means any mortgage, deed of trust, pledge, hypothecation, assignment, encumbrance, lien (statutory or other), charge or security interest or any other type of preferential arrangement in the nature thereof.
"Loan Documents" means this Agreement, the Guarantee Agreement, the Pledge and Security Agreement, the Intercreditor Agreement, each Mortgage, each Note, the Perfection Certificate, the IP Security Agreement and each other agreement, instrument, certificate or document executed and delivered by any Loan Party in connection herewith or therewith.
"Loan Party" means the Borrower and each Guarantor.
"Material Adverse Change" means any event, circumstance, development, occurrence or effect that has had, or could reasonably be expected to have, a Material Adverse Effect, and "Material Adverse Effect" means a material adverse effect on (a) the business, operations, property, liabilities or financial condition of the Borrower and its Subsidiaries, taken as a whole, (b) the ability of the Loan Parties, taken as a whole, to perform their payment or other material obligations under the Loan Documents, or (c) the validity, binding effect or enforceability of any Loan Document or the rights and remedies of the Administrative Agent, the Collateral Agent and the Lenders thereunder.
"Maturity Date" means July 21, 2029.
"MFN Sunset Date" means January 21, 2024, being the date that is 18 months after the Closing Date.
"MFN Threshold" means 0.50%.
"Mortgage" means each mortgage, deed of trust, assignment of leases and rents, fixture filing and/or security agreement executed and delivered by a Loan Party granting or purporting to grant a Lien on any Mortgaged Property in favor of the Collateral Agent for the benefit of the Secured Parties.
"Mortgaged Properties" means the real properties listed on Schedule 4.19, consisting of 42 hotel properties across 12 states, namely Florida (12), New York (6), California (5), Texas (4), Georgia (3), Colorado (3), Arizona (2), Illinois (2), Washington (2), Oregon (1), Nevada (1) and Virginia (1), having an aggregate appraised value of approximately $2,180,000,000.
"Most Favored Nation Provision" means the provision set forth in Section 2.15.
"Multiemployer Plan" means a multiemployer pension plan as defined in Section 4001(a)(3) of ERISA.
"Net Proceeds" means, with respect to any asset sale, issuance of Indebtedness, casualty event or other transaction, the aggregate cash proceeds received by the Borrower or any Subsidiary in connection therewith, net of (a) reasonable out-of-pocket fees and expenses incurred in connection therewith, (b) taxes paid or reasonably estimated to be payable in connection therewith, (c) amounts required to be applied to repay Indebtedness (other than the Obligations) secured by a permitted Lien on the asset sold, and (d) any reserves established in accordance with GAAP in respect of indemnities or adjustments in connection therewith.
"Note" means a Term Loan Note, substantially in the form of Exhibit B, if requested by a Lender pursuant to Section 2.16.
"Obligations" means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Term Loan, in each case whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising.
"OFAC" means the Office of Foreign Assets Control of the U.S. Department of the Treasury.
"OID" or "Original Issue discount" means 1.00% of the aggregate principal amount of the Term Loans, equal to $7,000,000, such that the net funding amount of the Term Loans on the Closing Date shall be $693,000,000.
"Organization Documents" means, with respect to any Person, the certificate or articles of incorporation, certificate of formation, certificate of limited partnership or similar organizational document of such Person and any bylaws, operating agreement, limited liability company agreement, partnership agreement or similar governing document.
"Participant" has the meaning set forth in Section 10.07.
"Permitted Acquisition" means any acquisition by the Borrower or any Subsidiary of all or substantially all of the assets of, or all or a majority of the Equity Interests in, a Person or business line, in each case to the extent permitted by this Agreement and subject to such conditions as are customary for syndicated term loan facilities.
"Permitted Indebtedness" means Indebtedness permitted under Section 7.01, including, without limitation, the Existing Revolving Credit Facility in an aggregate committed amount of $400,000,000 and the Senior Unsecured Notes in an aggregate principal amount of $245,000,000 due 2028, for which Atlantic Standard Trust Company acts as indenture trustee.
"Permitted Liens" means Liens permitted under Section 7.02.
"Perfection Certificate" means the perfection certificate, substantially in the form of Exhibit E, delivered by the Borrower on the Closing Date and as supplemented or updated from time to time.
"Person" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
"Pinnacle Credit Services" means the rating agency identified in Section 3.01(p), or any successor nationally recognized rating agency selected by the Borrower.
"Plan" means any employee benefit plan within the meaning of Section 3(3) of ERISA, other than a Multiemployer Plan, maintained for employees of the Borrower or any ERISA Affiliate.
"Pledge and Security Agreement" means that certain Pledge and Security Agreement dated as of the Closing Date among the Loan Parties and the Collateral Agent.
"Prepayment Premium" means the premium described in Section 2.05(b), equal to 1.00% of the principal amount of any Term Loans prepaid, repriced or refinanced in connection with a Repricing Transaction during the Repricing Protection Period.
"Pro Forma Basis" means, with respect to any transaction, that such transaction shall be given pro forma effect for purposes of the calculation of financial ratios and other financial tests as if such transaction had occurred on the first day of the applicable period of four consecutive fiscal quarters most recently ended for which financial statements are available, in accordance with Section 1.09.
"Qualified Equity Interests" means any Equity Interests that are not Disqualified Equity Interests.
"Register" has the meaning set forth in Section 10.07(c).
"Reinvestment Election" means the election of the Borrower to reinvest Net Proceeds of an asset sale or casualty event within the period permitted by this Agreement.
"Relevant Governmental Body" means the Federal Reserve Board or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board or the Federal Reserve Bank of New York, or any successor thereto.
"Repricing Protection Period" means the period from the Closing Date through and including January 21, 2023.
"Repricing Transaction" means any prepayment, refinancing, substitution, replacement or amendment of the Term Loans having the effect of reducing the Effective Yield applicable to the Term Loans, including any amendment to this Agreement resulting in a lower Applicable Margin, reduced benchmark floor or reduced fees payable to all Lenders.
"Required Lenders" means, as of any date of determination, Lenders holding more than 50% of the aggregate outstanding principal amount of the Term Loans at such time.
"Restricted Payment" means any dividend or other distribution on account of any Equity Interests of the Borrower or any Subsidiary, or any redemption, repurchase, retirement, defeasance or other acquisition of any Equity Interests or subordinated debt.
"Sanctioned Person" means any Person listed in any sanctions-related list of designated Persons maintained by OFAC, the United States Department of State, the United Nations Security Council, the European Union, His Majesty's Treasury of the United Kingdom or any other relevant sanctions authority.
"Sanctions" means any economic or financial sanctions or trade embargoes imposed, administered or enforced by OFAC, the United States Department of State, the United Nations Security Council, the European Union, His Majesty's Treasury of the United Kingdom or any other relevant sanctions authority.
"Secured Parties" means the Administrative Agent, the Collateral Agent and the Lenders.
"Security Documents" means the Pledge and Security Agreement, the Mortgages, the IP Security Agreement and each other security agreement, mortgage, deed of trust, pledge agreement, control agreement or similar instrument executed in favor of the Collateral Agent for the benefit of the Secured Parties.
"Senior Unsecured Notes" means the Borrower's senior unsecured notes in an aggregate principal amount of $245,000,000 due 2028, issued under an indenture for which Atlantic Standard Trust Company acts as indenture trustee.
"SOFR" means the secured overnight financing rate published by the Federal Reserve Bank of New York (or a successor administrator) on the website of the Federal Reserve Bank of New York, or any successor source.
"SOFR Adjustment" means, for any applicable Interest Period, (a) 0.10% for a one-month Interest Period, (b) 0.15% for a three-month Interest Period and (c) 0.25% for a six-month Interest Period.
"SOFR Floor" means 0.50%.
"Solvent" means, with respect to any Person, that as of the date of determination, (a) the fair value of the assets of such Person exceeds, on a consolidated basis, its debts and liabilities, subordinated, contingent or otherwise, (b) the present fair saleable value of the property of such Person is greater than the amount required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured, (c) such Person is able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured and (d) such Person does not have unreasonably small capital with which to conduct the business in which it is engaged.
"Subsidiary" means, with respect to any Person, any corporation, partnership, joint venture, limited liability company or other entity of which more than 50% of the outstanding Equity Interests having ordinary voting power to elect a majority of the board of directors or similar governing body are at the time owned, directly or indirectly, by such Person.
"Taxes" means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including interest, additions to tax and penalties applicable thereto.
"Term Loan" means each term loan made by a Lender to the Borrower pursuant to Section 2.01.
"Term SOFR" means, with respect to any applicable tenor for any Interest Period, the forward-looking term rate based on SOFR published by CME Group Benchmark Administration Limited (or a successor administrator approved by the Administrative Agent) for such tenor, as determined by the Administrative Agent at approximately 5:00 a.m. (New York City time) two U.S. Government Securities Business Days prior to the commencement of such Interest Period; provided that Term SOFR shall in no event be less than the SOFR Floor.
"Total Net Leverage Ratio" means, as of any date of determination, the ratio of (a) Consolidated Total Debt as of such date minus unrestricted cash and Cash Equivalents as of such date to (b) Adjusted EBITDA for the most recently ended period of four consecutive fiscal quarters.
"Transactions" means, collectively, the entering into and funding of this Agreement and the Term Loans, the refinancing of the Existing Term Loan Facility, the payment of fees and expenses in connection therewith, the execution and delivery of the Loan Documents and the use of proceeds contemplated hereby.
"UCC" means the Uniform Commercial Code as in effect from time to time in the State of New York or, if applicable, any other relevant jurisdiction.
"U.S. Government Securities Business Day" means any day except for (a) a Saturday, (b) a Sunday, or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
"USA PATRIOT Act" means The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001.
"Write-Down and Conversion Powers" means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the applicable Bail-In Legislation.
Section 1.02 Other Interpretive Provisions
With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:
(a) The meanings of defined terms are equally applicable to the singular and plural forms of such terms.
(b) The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation".
(c) Article, Section, Exhibit, Schedule and Annex references are to this Agreement unless otherwise specified.
(d) Any reference to any agreement or instrument shall be deemed to include all amendments, restatements, supplements and modifications thereto to the extent permitted by the Loan Documents.
(e) Any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such law.
(f) The words "asset" and "property" shall be construed to have the same meaning and shall include cash, securities, accounts and contract rights.
(g) References to any Person include such Person's successors and permitted assigns.
(h) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including", the words "to" and "until" each mean "to but excluding" and the word "through" means "to and including".
(i) Unless otherwise expressly provided herein, all references to time shall mean New York City time.
(j) All accounting terms not specifically defined herein shall be construed in accordance with GAAP, subject to Section 1.03.
(k) Unless otherwise expressly provided herein, all monetary amounts are expressed in Dollars.
Section 1.03 Accounting Terms
Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP as in effect on the Closing Date. The parties acknowledge and agree that this Agreement is intended to incorporate a "frozen GAAP" concept, and any subsequent change in GAAP or in the application thereof that would affect the computation of any financial covenant, ratio or basket shall be disregarded unless the Borrower and the Administrative Agent shall otherwise agree in writing. The Borrower's independent registered public accounting firm as of the Closing Date is Clearmont & Wharton LLP, and any reference in this Agreement to audited financial statements contemplates financial statements audited by such firm or another nationally or regionally recognized independent public accounting firm of comparable standing.
Section 1.04 Rounding
Any financial ratio required to be maintained by the Borrower or any financial ratio or test otherwise required to be calculated pursuant to this Agreement shall be calculated by the Administrative Agent or the Borrower, as applicable, and rounded to the second decimal place. Any amount used in determining compliance with any basket or threshold hereunder shall, unless otherwise specified, be calculated in Dollars and rounded to the nearest whole Dollar.
Section 1.05 References to Agreements and Laws
Unless otherwise expressly provided herein, any reference in this Agreement to any agreement, instrument or document shall mean such agreement, instrument or document as amended, restated, supplemented or otherwise modified from time to time to the extent such amendment, restatement, supplement or modification is not prohibited by this Agreement. Any reference to any law shall include all rules, regulations, official interpretations and orders promulgated thereunder.
Section 1.06 Times of Day
Unless otherwise expressly provided herein, all references to times of day shall mean New York City time, and any determination by the Administrative Agent as to the time of receipt of any notice, instruction or funds shall be conclusive absent manifest error.
Section 1.07 Rates — SOFR Notification
The parties acknowledge that interest on the Term Loans is determined by reference to SOFR-based benchmarks that are published by third parties and may be subject to change, discontinuation, unavailability or replacement. The Administrative Agent does not warrant, endorse or accept responsibility for the administration, publication, accuracy or availability of any Benchmark, Term SOFR, SOFR or any component thereof. The Administrative Agent shall have no liability to the Borrower, any Lender or any other Person for any inability to determine, or any error or delay in determining, any such rate, or for the implementation of any Benchmark Replacement or Benchmark Replacement Conforming Changes, except in each case as may result from the gross negligence or willful misconduct of the Administrative Agent as determined by a final non-appealable judgment of a court of competent jurisdiction.
Section 1.08 Letter of Credit Amounts
The parties acknowledge that this Agreement governs a term loan facility only and does not provide for any letters of credit. Accordingly, any concept relating to letter of credit exposure or letter of credit amounts is not applicable to this Agreement, except to the extent such concept is referenced in the definition of Revolving Credit Exposure or for purposes of distinguishing this Agreement from the Existing Revolving Credit Facility.
Section 1.09 Pro Forma Calculations
For purposes of calculating any financial ratio or test under this Agreement, including the Total Net Leverage Ratio, on a Pro Forma Basis:
(a) acquisitions, dispositions, incurrences or repayments of Indebtedness, Restricted Payments, Investments and other transactions specified in this Agreement shall be given pro forma effect as if they had occurred on the first day of the most recently ended period of four consecutive fiscal quarters for which financial statements are available;
(b) any Adjusted EBITDA attributable to an acquired business or asset shall be included only to the extent reasonably identifiable and factually supportable, as determined by the Borrower in good faith and, if requested by the Administrative Agent, supported by reasonably satisfactory documentation;
(c) any Adjusted EBITDA attributable to a disposed business or asset shall be excluded;
(d) cost savings, synergies and other operating improvements may be included to the extent permitted by the definition of Adjusted EBITDA; and
(e) for illustrative purposes, the parties acknowledge that, as of fiscal year 2021, the Borrower's last-twelve-month Adjusted EBITDA was $341,000,000, and calculations under this Agreement may use such amount as the baseline figure until updated financial statements are delivered pursuant to Section 6.01.
ARTICLE II — THE TERM LOAN FACILITY
Section 2.01 Term Loan Commitments
Subject to the terms and conditions set forth herein, each Lender severally agrees, and not jointly, to make on the Closing Date a single Term Loan to the Borrower in a principal amount equal to such Lender's Commitment as set forth on Schedule 2.01. The aggregate principal amount of the Commitments is $700,000,000.
The respective Commitments of the Lenders on the Closing Date are as follows:
The Commitments shall terminate automatically and in full upon the funding of the Term Loans on the Closing Date. Amounts repaid or prepaid in respect of the Term Loans may not be reborrowed.
Section 2.02 Borrowing Procedures
The Borrower shall deliver to the Administrative Agent a duly completed Borrowing Request not later than 1:00 p.m. three Business Days prior to the requested Borrowing Date. Such Borrowing Request shall be irrevocable and shall specify (a) the requested Borrowing Date, (b) the aggregate principal amount of the requested borrowing, which on the Closing Date shall be $700,000,000, and (c) the Interest Period selected by the Borrower, which for the initial borrowing shall be a one-month Interest Period based on Adjusted Term SOFR.
Promptly following receipt of a Borrowing Request, the Administrative Agent shall notify each Lender of the requested borrowing, the Borrowing Date and such Lender's pro rata share thereof. On the Borrowing Date, each Lender shall make available to the Administrative Agent not later than 1:00 p.m. the amount of such Lender's pro rata share of the borrowing, by wire transfer of immediately available funds to the account specified by the Administrative Agent.
The parties acknowledge that the Term Loans are issued with an Original Issue discount of 1.00%, equal to $7,000,000 in the aggregate. Accordingly, although the aggregate principal amount of the Term Loans shall be $700,000,000, the net funding amount available on the Closing Date shall be $693,000,000. The Administrative Agent shall disburse the proceeds of the Term Loans in accordance with the Funds Flow Memorandum delivered pursuant to Section 3.01(n).
Section 2.03 [Reserved]
This Section 2.03 is reserved.
Section 2.04 Repayment of Term Loans; Amortization
(a) The Borrower shall repay the principal amount of the Term Loans in consecutive quarterly installments, payable on the last Business Day of each fiscal quarter of the Borrower, commencing on September 30, 2022, in an amount equal to $1,750,000 per quarter. Such amount represents 0.25% of the original principal amount of the Term Loans, or 1.00% per annum.
(b) On the Maturity Date, the Borrower shall repay all remaining outstanding principal of the Term Loans, together with all accrued and unpaid interest thereon and all other Obligations then due and payable. Assuming all scheduled quarterly amortization payments are made when due, the balloon payment due on the Maturity Date would be approximately $651,000,000, representing the original principal amount of $700,000,000 less aggregate scheduled amortization of $49,000,000 over 28 quarters.
(c) Each amortization payment shall be applied ratably to the Term Loans of the Lenders in accordance with their respective pro rata shares.
Section 2.05 Prepayments
(a) Voluntary Prepayments. The Borrower may, upon at least three Business Days' prior written notice to the Administrative Agent, voluntarily prepay the Term Loans in whole or in part, without premium or penalty, in a minimum principal amount of $1,000,000 and integral multiples of $100,000 in excess thereof; provided that any such voluntary prepayment shall be subject to Section 2.05(b).
(b) Repricing Protection. If, on or prior to January 21, 2023, the Borrower effects any Repricing Transaction, then the Borrower shall pay to each affected Lender a Prepayment Premium equal to 1.00% of the aggregate principal amount of the Term Loans so prepaid, repriced, replaced, amended or refinanced. Without limiting the foregoing, if the Borrower were to prepay all $700,000,000 of the Term Loans during the Repricing Protection Period in connection with a transaction having the effect of reducing the Effective Yield on such loans, the aggregate premium payable under this Section 2.05(b) would equal $7,000,000. After January 21, 2023, no premium shall be payable under this Section 2.05(b).
(c) Mandatory Prepayments. The Borrower shall prepay the Term Loans with: (i) 100% of the Net Proceeds of any asset sale by the Borrower or any Subsidiary, subject to customary exceptions for dispositions permitted under Section 7.04, a de minimis threshold and reinvestment rights for Net Proceeds that the Borrower elects in good faith to reinvest in assets useful in the business within the period specified by the Administrative Agent consistent with market practice; (ii) 100% of the Net Proceeds of any issuance or incurrence of Indebtedness by the Borrower or any Subsidiary, other than Permitted Indebtedness; and (iii) a percentage of Excess Cash Flow for each fiscal year of the Borrower, to be determined based on the Total Net Leverage Ratio as of the end of such fiscal year, with such percentage stepping down as leverage declines, in accordance with customary term loan B market provisions.
(d) Application of Prepayments. Any prepayment of the Term Loans pursuant to this Section 2.05 shall be applied, unless otherwise directed by the Borrower and accepted by the Required Lenders, to the remaining scheduled amortization payments of the Term Loans in direct order of maturity. All such prepayments shall be applied ratably to the Term Loans of the Lenders in accordance with their respective pro rata shares.
(e) Notices. Voluntary prepayments shall require at least three Business Days' prior written notice. Mandatory prepayments shall be made within the time periods specified in this Section 2.05(c) or, to the extent not expressly specified, promptly upon receipt of the relevant Net Proceeds or determination of the relevant amount.
Section 2.06 Interest
(a) Interest Rate. Subject to the provisions of this Agreement, each Term Loan shall bear interest for each Interest Period at a rate per annum equal to Adjusted Term SOFR for such Interest Period plus the Applicable Margin. The Applicable Margin on the Closing Date is 3.75% per annum. By way of illustration only, as of the Closing Date, the one-month Term SOFR was 2.29%, and, adding the applicable SOFR Adjustment of 0.10% and the Applicable Margin of 3.75%, the all-in rate for the initial Interest Period would be 6.14% per annum. In no event shall Term SOFR be less than the SOFR Floor of 0.50%.