EXECUTION VERSION
CREDIT AGREEMENT
dated as of
July 9, 2024
among
CLOUDIUM TECHNOLOGIES PLC, as Borrower,
MERIDIAN ATLANTIC BANK, N.A., as Administrative Agent, Collateral Agent, Swingline Lender and an Issuing Bank,
IRONCLAD CAPITAL MARKETS LLC, as Co-Arranger,
and
THE SEVERAL LENDERS FROM TIME TO TIME PARTIES HERETO
________________________________________
$3,740,000,000 Senior Secured Term Loan B Facility $500,000,000 Senior Secured Revolving Credit Facility
________________________________________
MERIDIAN ATLANTIC BANK, N.A., as Lead Arranger, Sole Bookrunner and Administrative Agent
IRONCLAD CAPITAL MARKETS LLC, as Co-Arranger and Joint Bookrunner
Lenders' Counsel: Winthrop & Hale LLP 901 New York Avenue NW, Washington, DC 20001 125 Old Broad Street, London EC2N 1AR
This CREDIT AGREEMENT (this "Agreement") is entered into as of July 9, 2024, among CLOUDIUM TECHNOLOGIES PLC, a public limited company incorporated under the laws of England and Wales (Company No. 09734521) (the "Borrower"); MERIDIAN ATLANTIC BANK, N.A., a national banking association, as Administrative Agent, Collateral Agent, Swingline Lender and an Issuing Bank (in such capacities, the "Administrative Agent"); IRONCLAD CAPITAL MARKETS LLC, a Delaware limited liability company, as Co-Arranger; and the several banks, financial institutions and other lenders from time to time party hereto (each a "Lender" and collectively, the "Lenders").
PRELIMINARY STATEMENTS
WHEREAS, pursuant to that certain Agreement and Plan of Merger dated as of January 22, 2024 (the "Merger Agreement"), among the Borrower, Stratos Merger Sub Inc., a Delaware corporation ("Merger Sub"), and Solara Digital Infrastructure Fund VI LP, a Delaware limited partnership ("Parent" or "Sponsor"), Merger Sub is merging with and into the Borrower on the Closing Date, with the Borrower surviving as a wholly owned subsidiary of Parent (the "Acquisition");
WHEREAS, in connection with the Acquisition, Parent has requested that the Lenders provide (a) a senior secured term loan B facility in an aggregate principal amount of $3,740,000,000 (the "Term Loan B Facility") and (b) a senior secured revolving credit facility in an aggregate principal amount of $500,000,000 (the "Revolving Facility"), to be used, together with the Equity Contribution and Rollover Equity, to (i) finance the Acquisition, (ii) repay in full the Existing Credit Agreement, (iii) fund the Escrow Amount and (iv) pay Transaction Costs; and
WHEREAS, the Lenders have agreed to extend such credit on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Defined Terms
As used in this Agreement (including the recitals hereto), the following terms shall have the following meanings, which shall be equally applicable to both the singular and plural forms of the terms defined:
"ABR" means, for any day, a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 0.50%, (b) the Prime Rate in effect on such day and (c) Term SOFR for a one-month Interest Period plus 1.00%; provided that in no event shall ABR be less than 1.00% per annum.
"Acquisition" means the acquisition of 100% of the equity interests of the Borrower by Parent pursuant to the Merger Agreement, by which Merger Sub is merging with and into the Borrower, with the Borrower surviving as a wholly owned Subsidiary of Parent.
"Administrative Agent" means Meridian Atlantic Bank, N.A., 383 Madison Avenue, New York, NY 10179, in its capacity as administrative agent for the Lenders hereunder, and any successor administrative agent appointed pursuant to Section 9.06.
"Affiliate" means, with respect to any Person, another Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by or is under common Control with such Person; provided that, notwithstanding the foregoing, (a) none of the Sponsor, its portfolio companies (other than the Borrower and its Subsidiaries) or any co-investor (including Solara Digital Co-Invest VI-A LP) shall be deemed an Affiliate of the Borrower for purposes of Section 7.07, and (b) neither the Administrative Agent nor any Lender shall be deemed an Affiliate of any Loan Party.
"Agreement" has the meaning set forth in the preamble.
"Applicable Rate" means (a) with respect to Term Loans that are SOFR Loans, 3.25% per annum, and with respect to Term Loans that are ABR Loans, 2.25% per annum, and (b) with respect to Revolving Loans that are SOFR Loans, 2.75% per annum, and with respect to Revolving Loans that are ABR Loans, 1.75% per annum. The Applicable Rate for the commitment fee under Section 2.09(a) shall initially be 0.375% per annum and shall be subject to step-down as provided therein.
"Bankruptcy Code" means Title 11 of the United States Code.
"Borrower" means Cloudium Technologies plc, a public limited company incorporated under the laws of England and Wales (Company No. 09734521; EIN 83-2196754), with registered office at 45 Broadwick Street, London W1F 0DB, United Kingdom, and US headquarters at 600 Townsend Street, Suite 800, San Francisco, CA 94103.
"Business Day" means any day other than Saturday, Sunday or a day on which commercial banks are authorized or required by law to be closed in New York City or London.
"Capital Expenditures" means, for any period, the aggregate amount of all expenditures of the Borrower and its Restricted Subsidiaries for fixed or capital assets (including in respect of Capital Lease Obligations) that are (or would be) required to be capitalized and shown on the consolidated balance sheet of the Borrower in accordance with GAAP.
"Change of Control" means the occurrence of any of the following: (a) Parent shall cease to own, directly or indirectly, at least 50.1% of the issued and outstanding equity interests of the Borrower on a fully-diluted basis; (b) the Borrower shall cease to own, directly or indirectly, 100% of the equity interests of each Subsidiary Guarantor (subject to customary exceptions for Permitted Dispositions, dissolutions of Immaterial Subsidiaries and issuances of director qualifying shares); or (c) a "change of control" (or similar event) shall occur under any Material Indebtedness, requiring the Borrower to repurchase, redeem, offer to repurchase or repay such Material Indebtedness.
"Closing Date" means July 9, 2024.
"Co-Arranger" means Ironclad Capital Markets LLC, 200 West Street, New York, NY 10282, in its capacity as Co-Arranger and Joint Bookrunner hereunder.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all "Collateral" as defined in the Guarantee and Collateral Agreement and all other assets subject to a Lien under any Security Document.
"Collateral Agent" means Meridian Atlantic Bank, N.A., in its capacity as collateral agent for the Secured Parties under the Guarantee and Collateral Agreement and the other Security Documents.
"Commitment Fee Rate" means 0.375% per annum, subject to step-down as provided in Section 2.09(a).
"Consolidated EBITDA" means, for any period, Consolidated Net Income for such period, plus (without duplication and to the extent deducted in determining Consolidated Net Income for such period):
(i) Consolidated interest expense (including capitalized interest, imputed interest and interest expense in respect of Capital Lease Obligations);
(ii) provision for income taxes;
(iii) depreciation and amortization;
(iv) non-cash equity-based compensation expense;
(v) fees, costs, expenses and charges (including Transaction Costs) incurred in connection with the Transactions, in an aggregate amount not to exceed $185,000,000;
(vi) restructuring charges, business optimization costs, integration costs and severance, in an aggregate amount not to exceed the greater of (x) $40,000,000 and (y) 10% of Consolidated EBITDA (calculated before giving effect to this clause (vi)) in any Test Period;
(vii) cost savings, operating expense reductions, restructuring charges and expenses, and synergies projected by the Borrower in good faith to be realized within 24 months following the action giving rise thereto (calculated on a run-rate basis, net of the amount of actual benefits realized during such period), including up to $110,000,000 of run-rate synergies projected in connection with the Transactions; provided that the aggregate amount added back pursuant to this clause (vii) shall not exceed 25% of Consolidated EBITDA (calculated after giving effect to this clause (vii)) in any Test Period;
minus (a) non-cash gains (other than accruals of revenue in the ordinary course), and (b) extraordinary gains, in each case, for such period; all as calculated on a Pro Forma Basis in accordance with Section 1.07.
"Consolidated Net Income" means, for any period, the consolidated net income (or loss) of the Borrower and its Restricted Subsidiaries for such period, determined in accordance with GAAP.
"Debt Commitment Letter" means the commitment letter dated January 22, 2024, from Meridian Atlantic Bank, N.A. and Ironclad Capital Markets LLC to Parent, committing to provide $4,240,000,000 of senior secured credit facilities in connection with the Acquisition, together with the term sheets attached thereto.
"Default" means any event or condition that constitutes an Event of Default or that, with the giving of notice, the lapse of time, or both, would, unless cured or waived, become an Event of Default.
"Default Rate" means an interest rate equal to the Applicable Rate then in effect plus 2.00% per annum.
"Disqualified Institution" means any Person identified as such on the list delivered by the Borrower to the Administrative Agent on or prior to the Closing Date, as such list may be supplemented from time to time in accordance with Section 10.06(d), including any competitor of the Borrower.
"Dollar Equivalent" has the meaning set forth in Section 1.09.
"Equity Commitment Letter" means the equity commitment letter dated January 22, 2024, from Parent to Merger Sub, committing $2,832,888,096 of cash equity.
"Equity Contribution" means the cash equity contribution of $2,832,888,096 to be made by Parent (directly or indirectly through Merger Sub) to the Borrower on the Closing Date pursuant to the Equity Commitment Letter.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"ERISA Event" has the meaning customary in credit agreements of this type, referring to reportable events, plan terminations, withdrawal liability and similar occurrences under ERISA.
"Escrow Agent" means Cobalt Trust Company, 100 Wall Street, New York, NY 10005.
"Escrow Amount" means $544,000,000, representing 8% of the Acquisition consideration, to be deposited with the Escrow Agent on the Closing Date pursuant to the Merger Agreement.
"Event of Default" has the meaning set forth in Section 8.01.
"Excess Cash Flow" has the meaning customary in credit agreements of this type, comprising Consolidated EBITDA less scheduled debt service, Capital Expenditures actually made (subject to carry-forward provisions), taxes paid in cash, Permitted Acquisition consideration paid in cash and other customary deductions, all calculated for the applicable fiscal year on a consolidated basis.
"Existing Credit Agreement" means the Credit Agreement dated March 15, 2021, among the Borrower and Atlas Commercial Lending Corp., 300 Vesey Street, New York, NY 10281, as administrative agent, providing for a term loan facility ($620,000,000 outstanding) and a revolving credit facility ($200,000,000 drawn against a $400,000,000 capacity), which is being repaid in full on the Closing Date in an aggregate amount of $820,000,000.
"FATCA" means Sections 1471 through 1474 of the Code as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.
"Federal Funds Rate" means, for any day, the rate calculated by the Federal Reserve Bank of New York based on such day's federal funds transactions by depositary institutions.
"Fee Letter" means the confidential fee letter dated January 22, 2024, among the Arrangers and Parent.
"First Lien Net Leverage Ratio" means, as of any date of determination, the ratio of (a) Consolidated First Lien Net Debt as of such date to (b) Consolidated EBITDA for the most recently ended four fiscal quarter period for which financial statements have been (or were required to have been) delivered pursuant to Section 6.01.
"Fiscal Year" means the fiscal year of the Borrower ending September 30.
"Floor" means 0.00% per annum.
"GAAP" means generally accepted accounting principles in the United States as in effect from time to time, subject to the frozen GAAP election set forth in Section 1.03.
"Governmental Authority" means any nation or government, any state, province or other political subdivision thereof, and any agency, authority, instrumentality, regulatory body, court or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers.
"Guarantee and Collateral Agreement" means the Guarantee and Collateral Agreement dated as of July 9, 2024, among the Borrower, the Subsidiary Guarantors and the Collateral Agent.
"Guarantors" or "Subsidiary Guarantors" means, collectively, each direct and indirect Material Domestic Subsidiary and each Material Foreign Subsidiary (in each case, subject to customary limitations, including limitation of the pledge of voting equity of first-tier "controlled foreign corporations" (within the meaning of Section 957 of the Code) to 65% to avoid deemed-dividend issues under Section 956 of the Code), including, without limitation, Cloudium Technologies UK Ltd. (Company No. 11287456, registered at 45 Broadwick Street, London W1F 0DB), Cloudium Technologies India Pvt. Ltd. (incorporated in Bangalore, Karnataka, India), and Cloudium Solutions GmbH (incorporated in Berlin, Germany).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
"Incremental Facility" has the meaning set forth in Section 2.14.
"Indebtedness" has the meaning customary in credit agreements of this type, including obligations for borrowed money, evidenced by notes or similar instruments, in respect of letters of credit, Capital Lease Obligations, purchase-money obligations, guarantees of the foregoing and net obligations under Swap Contracts.
"Insolvency Proceeding" means any bankruptcy, insolvency, receivership, administration, liquidation, winding-up or similar proceeding, including any proceeding under the Bankruptcy Code or the UK Insolvency Act 1986.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of July 9, 2024, among Meridian Atlantic Bank, N.A. (as First Lien Agent), Parent and other secured parties from time to time party thereto.
"Interest Period" means, with respect to any SOFR Loan, the period commencing on the date of borrowing or continuation thereof and ending on the numerically corresponding day one, three or six months thereafter, as elected by the Borrower in accordance with Section 2.02.
"Lead Arranger" means Meridian Atlantic Bank, N.A., in its capacity as Lead Arranger and Sole Bookrunner hereunder.
"Lenders' Counsel" means Winthrop & Hale LLP (Christine Novak, Lead Partner), acting as counsel to the Administrative Agent and the Lenders.
"LIBOR" — [Reserved]. LIBOR is not used in this Agreement, all references to LIBOR having been transitioned to SOFR.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest of any kind or nature whatsoever.
"Loan Documents" means this Agreement, the Guarantee and Collateral Agreement, each other Security Document, the Intercreditor Agreement, the Fee Letter, each Note, each Loan Notice, each LC Request, each Compliance Certificate and each other document executed and delivered in connection herewith or therewith.
"Loan Party" means the Borrower and each Subsidiary Guarantor.
"Material Adverse Effect" means a material adverse effect on (a) the business, assets, financial condition or results of operations of the Borrower and its Restricted Subsidiaries taken as a whole, (b) the ability of the Loan Parties (taken as a whole) to perform their payment obligations under the Loan Documents or (c) the rights and remedies of the Administrative Agent and the Lenders under the Loan Documents; provided that, in each case, the definition of "Material Adverse Effect" shall exclude any effect resulting from (i) pandemics, epidemics or similar outbreaks, (ii) acts of war, terrorism or armed hostilities, (iii) changes in applicable law or GAAP or the interpretation thereof, and (iv) general market, economic, financial, industry or political conditions, in each case except to the extent such effect disproportionately impacts the Borrower and its Restricted Subsidiaries relative to other similarly situated companies (which disproportionate impact shall be considered). The foregoing definition is consistent with, and shall be interpreted consistently with, the "material adverse effect" definition in the Merger Agreement.
"Material Indebtedness" means Indebtedness (other than the Loans) of the Borrower or any Restricted Subsidiary in an aggregate outstanding principal amount exceeding $50,000,000.
"Merger Agreement" means the Agreement and Plan of Merger dated as of January 22, 2024, among Cloudium Technologies plc, Stratos Merger Sub Inc. and Solara Digital Infrastructure Fund VI LP, as amended, restated or otherwise modified from time to time in accordance with its terms (and, with respect to any modification adverse to the Lenders, subject to Section 7.10).
"Merger Sub" means Stratos Merger Sub Inc., a Delaware corporation (DE File No. 7923841), formed on January 8, 2024, with registered office at 1209 Orange Street, Wilmington, DE 19801.
"Net Cash Proceeds" has the meaning customary in credit agreements of this type, referring to gross cash proceeds from an event or transaction, net of transaction costs, taxes paid or reasonably estimated to be payable, amounts required to be applied to repay other Indebtedness secured by a Lien on the applicable asset, and reasonable reserves.
"Parent" or "Sponsor" means Solara Digital Infrastructure Fund VI LP, a Delaware limited partnership (EIN 87-4523190), with principal office at 1200 Market Street, Suite 3400, Wilmington, DE 19801, whose general partner is Solara Fund VI GP LLC.
"Permitted Holders" means, collectively, (a) Solara Digital Infrastructure LP, (b) Solara Digital GP LLC, (c) Solara Fund VI GP LLC, (d) Solara Digital Infrastructure Fund VI LP, (e) Solara Digital Co-Invest VI-A LP, (f) Marcus Elliston, (g) Priya Narasimhan and (h) any investment fund, account or vehicle managed, advised or sponsored by, or under common management with, any of the foregoing.
"Person" means any natural person, corporation, limited liability company, partnership, joint venture, association, trust, Governmental Authority or other entity.
"Pro Forma Basis" means, with respect to any calculation of Consolidated EBITDA or a financial ratio, giving pro forma effect to Specified Transactions (including Permitted Acquisitions, dispositions, incurrences and repayments of Indebtedness) as if such transactions had been consummated on the first day of the applicable Test Period, in accordance with Section 1.07.
"Required Lenders" means, at any time, Lenders holding more than 50% of the sum of (a) the aggregate outstanding principal amount of the Term Loans plus (b) the aggregate Revolving Commitments (or, if the Revolving Commitments have been terminated, the aggregate outstanding principal amount of the Revolving Loans and LC Obligations); provided that the Loans, Revolving Commitments and LC Obligations of any Defaulting Lender shall be disregarded for purposes of this definition.
"Responsible Officer" means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer, controller, general counsel or secretary of the Borrower, or any other officer designated by the Borrower and reasonably acceptable to the Administrative Agent.
"Restricted Subsidiary" means each Subsidiary of the Borrower other than an Unrestricted Subsidiary.
"Revolving Commitment" means, as to each Revolving Lender, its obligation to make Revolving Loans, participate in Swingline Loans and participate in Letters of Credit, in an aggregate amount not to exceed the amount set forth opposite such Lender's name on Schedule 1.01 (as such amount may be adjusted from time to time in accordance with this Agreement). The aggregate Revolving Commitments of all Revolving Lenders on the Closing Date is $500,000,000.
"Revolving Facility" means the revolving credit facility provided under this Agreement in an aggregate principal amount of $500,000,000.
"Revolving Lender" means each Lender having a Revolving Commitment or holding a Revolving Loan.
"Revolving Loan" means a revolving loan made pursuant to Section 2.01(b).
"Revolving Maturity Date" means July 9, 2029.
"Rollover Equity" means, collectively, the equity interests rolled over into Parent (or an Affiliate thereof) on the Closing Date by (a) Jonathan Hargrove, in respect of 50% of his 7,736,400 shares of the Borrower at $36.92 per share (approximately $142,814,544), and (b) Pinnacle Growth Ventures LLC, in respect of 60% of its 21,367,200 shares of the Borrower at $36.92 per share (approximately $473,241,408), for an aggregate Rollover Equity amount of approximately $616,055,952.
"R&W Insurance Policy" means the buyer-side representation and warranty insurance policy issued by Northfield Assurance Ltd. (Policy No. NFA-TRI-2024-00487), with a policy limit of $680,000,000, retention of $544,000,000 and premium of $13,600,000.
"Secured Parties" means, collectively, the Administrative Agent, the Collateral Agent, each Issuing Bank, the Swingline Lender, each Lender, each provider of Secured Hedge Agreements (as defined in the Guarantee and Collateral Agreement) and each provider of Secured Cash Management Agreements (as defined in the Guarantee and Collateral Agreement).
"Security Documents" means the Guarantee and Collateral Agreement and each other pledge, security, mortgage, deed of trust, debenture, charge, account control agreement or similar document executed and delivered by a Loan Party in favor of the Collateral Agent.
"SOFR" means the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York (or a successor administrator).
"SOFR Loan" means a Loan that bears interest at a rate based on Term SOFR.
"Solvency Certificate" means the certificate delivered pursuant to Section 4.01(d), substantially in the form of Exhibit J.
"Solvent", with respect to any Person, means that, as of any date of determination, (a) the fair value of the assets of such Person exceeds its liabilities (including contingent liabilities on a fairly-valued basis), (b) such Person is able to pay its debts as they become due, (c) such Person's capital is not unreasonably small in relation to its business or contemplated transactions, and (d) such Person does not intend to incur, or believe it will incur, debts beyond its ability to pay as they become due.
"Subsidiary" means, as to any Person, any corporation, partnership, limited liability company or other entity of which more than 50% of the outstanding equity interests having ordinary voting power to elect the board of directors (or equivalent) is, at the time of determination, owned or controlled, directly or indirectly, by such Person and/or one or more of its Subsidiaries. Unless otherwise specified, "Subsidiary" means a Subsidiary of the Borrower and includes Cloudium Technologies UK Ltd., Cloudium Technologies India Pvt. Ltd. and Cloudium Solutions GmbH.
"Swingline Commitment" means $50,000,000, as a sublimit of the Revolving Facility.
"Swingline Lender" means Meridian Atlantic Bank, N.A., in its capacity as swingline lender.
"Term Lender" means each Lender holding a Term Loan or Term Loan Commitment.
"Term Loan" means a term loan made pursuant to Section 2.01(a).
"Term Loan B Facility" means the term loan facility provided under this Agreement in an aggregate principal amount of $3,740,000,000.
"Term Loan Commitment" means, as to each Term Lender, its commitment to make its portion of the Term Loans on the Closing Date, in an aggregate principal amount not to exceed the amount set forth opposite such Lender's name on Schedule 1.01.
"Term Loan Maturity Date" means July 9, 2031.
"Term SOFR" means, for any Interest Period, the Term SOFR Reference Rate for a tenor comparable to such Interest Period, as published by CME Group Benchmark Administration Limited (or a successor administrator), on the day that is two U.S. Government Securities Business Days prior to the first day of such Interest Period.
"Test Period" means, as of any date of determination, the most recently ended four consecutive fiscal quarter period for which financial statements have been (or were required to have been) delivered pursuant to Section 6.01.
"Ticking Fee" means the ticking fee payable pursuant to Section 2.09(b).
"Total Net Leverage Ratio" means, as of any date of determination, the ratio of (a) Consolidated Total Net Debt as of such date to (b) Consolidated EBITDA for the most recently ended Test Period.
"Transaction Costs" means all fees, costs and expenses incurred by the Borrower, Parent, Merger Sub or their respective Affiliates in connection with the Transactions, including advisory, legal, financing, insurance, regulatory and proxy-related fees and expenses, estimated in an aggregate amount of $185,000,000.
"Transactions" means, collectively, (a) the Acquisition, (b) the funding of the Term Loans and, to the extent drawn on the Closing Date, the Revolving Loans, (c) the Equity Contribution, (d) the Rollover Equity, (e) the repayment in full of the Existing Credit Agreement (in an aggregate amount of $820,000,000), (f) the deposit of the Escrow Amount with the Escrow Agent, and (g) the payment of Transaction Costs.
"Unrestricted Subsidiary" means any Subsidiary of the Borrower designated as such pursuant to Section 6.13.
Section 1.02. Other Interpretive Provisions
With reference to this Agreement and each other Loan Document, unless otherwise specified: (a) the definitions of terms herein shall apply equally to the singular and plural forms; (b) the words "hereof," "herein," "hereunder" and words of similar import shall refer to this Agreement as a whole and not to any particular provision; (c) Article, Section, Schedule and Exhibit references are to this Agreement unless otherwise specified; (d) the word "including" shall be deemed to be followed by the phrase "without limitation"; (e) references to any Person include such Person's successors and permitted assigns; (f) references to any statute or regulation are to such statute or regulation as amended and any successor thereto; (g) references to any Loan Document or other agreement include such document or agreement as amended, restated, supplemented or otherwise modified from time to time in accordance with its terms; and (h) headings are for convenience of reference only and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
Section 1.03. Accounting Terms
All accounting terms not specifically defined herein shall be construed in accordance with GAAP as in effect from time to time. Notwithstanding the foregoing, the Borrower may, at any time, elect (a) that all determinations of GAAP shall be made using GAAP as in effect on the Closing Date (the "Frozen GAAP Election") or (b) to use IFRS in lieu of GAAP; provided that, in each case, the Borrower shall provide the Administrative Agent with a reconciliation of any material differences reasonably requested by the Administrative Agent. Notwithstanding anything herein to the contrary, for purposes of the Loan Documents, all obligations of a Person that would be characterized as operating lease obligations under GAAP as of the Closing Date shall continue to be treated as operating lease obligations (and not as Capital Lease Obligations or Indebtedness) regardless of any change in GAAP.
Section 1.04. Rounding
Any financial ratios required to be maintained or calculated under this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed in this Agreement, and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number) to the number of places by which such ratio is expressed. Financial ratios shall be calculated to two decimal places.
Section 1.05. Times of Day
Unless otherwise specified, all references herein to times of day shall be references to New York City (Eastern) time (daylight or standard, as applicable).
Section 1.06. Letter of Credit Amounts
For purposes of any calculation of the amount of any Letter of Credit denominated in a currency other than Dollars, the amount of such Letter of Credit shall be deemed to be the Dollar Equivalent thereof, calculated as of the date of issuance and re-calculated as of the last Business Day of each calendar quarter.
Section 1.07. Pro Forma Calculations
For purposes of calculating any financial ratio or determining compliance with any covenant that references Consolidated EBITDA, all Specified Transactions (including the Transactions, any Permitted Acquisition, any material disposition, any incurrence or repayment of Indebtedness and the making or repayment of Investments) consummated during the applicable Test Period or thereafter and on or prior to the date of determination shall be given pro forma effect as if such Specified Transactions had been consummated on the first day of the applicable Test Period. Pro forma adjustments shall include (a) run-rate cost savings, synergies and operating expense reductions projected in good faith by the Borrower to be realized within 24 months following such Specified Transaction (subject to the aggregate cap set forth in the definition of "Consolidated EBITDA"), including up to $110,000,000 of run-rate synergies projected in connection with the Transactions, and (b) other pro forma adjustments that would be permitted under Regulation S-X promulgated by the Securities and Exchange Commission or that are otherwise reasonably acceptable to the Administrative Agent.
Section 1.08. Divisions
For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction's laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its equity interests at such time.
Section 1.09. Exchange Rates
The Dollar Equivalent of any amount denominated in a currency other than Dollars shall be determined by the Administrative Agent using the spot rate of exchange for the applicable currency in the New York foreign exchange market on the applicable determination date, as published by the Administrative Agent or such other publicly available source as the Administrative Agent may select.
ARTICLE II
THE COMMITMENTS AND CREDIT EXTENSIONS
Section 2.01. The Loans
(a) Term Loan B Commitments. Subject to the terms and conditions set forth herein, each Term Lender severally agrees to make a single loan in Dollars to the Borrower on the Closing Date in an amount equal to such Lender's Term Loan Commitment. The aggregate principal amount of Term Loans made on the Closing Date shall be $3,740,000,000. Amounts borrowed under this Section 2.01(a) and repaid or prepaid may not be reborrowed. The Term Loans shall be funded in full on July 9, 2024.
(b) Revolving Commitments. Subject to the terms and conditions set forth herein, each Revolving Lender severally agrees to make Revolving Loans in Dollars to the Borrower from time to time during the period from the Closing Date to but excluding the Revolving Maturity Date, in an aggregate principal amount at any time outstanding that will not result in (i) such Revolving Lender's Revolving Exposure exceeding such Lender's Revolving Commitment or (ii) the aggregate Revolving Exposure of all Revolving Lenders exceeding the aggregate Revolving Commitments ($500,000,000). No Revolving Loans shall be drawn on the Closing Date. Amounts borrowed under this Section 2.01(b) may be repaid and reborrowed prior to the Revolving Maturity Date, which is July 9, 2029.
(c) Swingline Loans. Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to the Borrower from time to time during the period from the Closing Date to but excluding the Revolving Maturity Date, in an aggregate principal amount at any time outstanding that will not exceed the Swingline Commitment of $50,000,000, which shall be a sublimit of, and shall be reserved against availability under, the Revolving Facility.
Section 2.02. Borrowings, Conversions, and Continuations of Loans
Each borrowing of SOFR Loans and each continuation or conversion thereof shall be made pursuant to a Loan Notice (Exhibit A) delivered to the Administrative Agent (a) not later than 12:00 noon three U.S. Government Securities Business Days prior to the proposed date of borrowing, continuation or conversion in the case of SOFR Loans, and (b) not later than 12:00 noon on the proposed date of borrowing in the case of ABR Loans. Each Loan Notice shall be irrevocable and shall specify the date, amount, Class, Type, initial Interest Period (if applicable) and account for funding. Each SOFR Borrowing shall be in a minimum amount of $1,000,000 (and integral multiples of $500,000 in excess thereof). ABR Borrowings shall be in a minimum amount of $500,000 (and integral multiples of $100,000 in excess thereof). Interest Periods for SOFR Loans shall be one, three or six months, at the Borrower's election. If no election is made as to Interest Period, the Borrower shall be deemed to have selected an Interest Period of one month.
Section 2.03. Letters of Credit
Subject to the terms and conditions hereof, each Issuing Bank agrees to issue, from time to time from the Closing Date to but excluding the fifth Business Day prior to the Revolving Maturity Date, Letters of Credit denominated in Dollars or an Alternative Currency for the account of the Borrower; provided that the aggregate LC Exposure shall not at any time exceed $75,000,000 (the "LC Sublimit"), and no Letter of Credit shall be issued if such issuance would cause the Revolving Exposure to exceed the aggregate Revolving Commitments. The initial Issuing Banks shall be Meridian Atlantic Bank, N.A. and any other Lender designated as an Issuing Bank with the consent of the Borrower and such Lender. No Letter of Credit shall have an expiry date later than the earlier of (x) twelve months after the date of issuance (subject to auto-renewal on notice terms customary to the applicable Issuing Bank) and (y) the fifth Business Day prior to the Revolving Maturity Date, unless cash collateralized on terms satisfactory to the Administrative Agent and the applicable Issuing Bank.
Section 2.04. Swingline Loans
The Swingline Lender shall make Swingline Loans upon request of the Borrower by notice delivered not later than 1:00 p.m. on the proposed date of such Swingline Loan. Each Swingline Loan shall be in a minimum amount of $500,000 and shall bear interest at ABR plus the Applicable Rate. Each Revolving Lender is deemed to have purchased, and hereby agrees to purchase from the Swingline Lender, an undivided participating interest in each Swingline Loan in an amount equal to its Applicable Percentage of Revolving Commitments. The Swingline Lender may, at any time, require settlement of participations by delivering a notice to the Revolving Lenders, whereupon each Revolving Lender shall fund its Applicable Percentage of the outstanding Swingline Loans.
Section 2.05. Prepayments
(a) Voluntary Prepayments.
(i) Term Loans. The Borrower may voluntarily prepay Term Loans, in whole or in part, at any time without premium or penalty, subject to (A) Section 3.05 breakage costs and (B) the following repricing protection: if, at any time during the period from the Closing Date to and including the six-month anniversary of the Closing Date, the Borrower (1) prepays all or any portion of the Term Loans with the proceeds of substantially concurrent indebtedness at a lower effective yield, or (2) enters into an amendment reducing the effective yield applicable to the Term Loans, then the Borrower shall pay a premium equal to 1.00% of the aggregate principal amount so prepaid or repriced (the "Soft Call Premium"). No Soft Call Premium shall be payable in connection with a change of control, transformative acquisition or initial public offering.
(ii) Revolving Loans. Revolving Loans may be voluntarily prepaid, in whole or in part, at any time without premium or penalty, subject to Section 3.05 breakage costs (if applicable).
(iii) Minimum Amounts. Voluntary prepayments shall be in a minimum aggregate principal amount of $1,000,000 (and integral multiples of $500,000 in excess thereof), or, if less, the entire outstanding principal amount of the applicable Loans.
(b) Mandatory Prepayments.
(i) Excess Cash Flow. Not later than the fifth Business Day following the delivery of financial statements pursuant to Section 6.01(a) for each fiscal year (commencing with the fiscal year ending September 30, 2025), the Borrower shall prepay Term Loans in an aggregate principal amount equal to (A) 50% of Excess Cash Flow for such fiscal year, if the Total Net Leverage Ratio as of the last day of such fiscal year was greater than 5.00:1.00; (B) 25% of Excess Cash Flow, if the Total Net Leverage Ratio as of such date was less than or equal to 5.00:1.00 but greater than 3.50:1.00; and (C) 0%, if the Total Net Leverage Ratio as of such date was less than or equal to 3.50:1.00, in each case less voluntary prepayments of Term Loans made during such fiscal year (or, at the Borrower's election, during the subsequent fiscal year prior to the required prepayment date).
(ii) Asset Sale Proceeds. Within five Business Days following receipt by the Borrower or any Restricted Subsidiary of Net Cash Proceeds from any asset sale or other disposition (other than a Permitted Disposition of the types customarily excluded in credit agreements of this type) in an amount exceeding $25,000,000 individually or $50,000,000 in the aggregate during any fiscal year, the Borrower shall prepay Term Loans in an amount equal to 100% of such Net Cash Proceeds; provided that the Borrower may retain and reinvest such Net Cash Proceeds in productive assets of the general type used in the business of the Borrower and its Restricted Subsidiaries within 365 days following receipt (plus an additional 180 days if committed to reinvest during the initial 365-day period).
(iii) Debt Issuance Proceeds. Within one Business Day following receipt by the Borrower or any Restricted Subsidiary of Net Cash Proceeds from the incurrence of any Indebtedness not permitted under Section 7.02, the Borrower shall prepay Term Loans in an amount equal to 100% of such Net Cash Proceeds.
(iv) Insurance and Condemnation Proceeds. Within five Business Days following receipt by the Borrower or any Restricted Subsidiary of Net Cash Proceeds from any casualty, condemnation or similar event in an aggregate amount exceeding $25,000,000, the Borrower shall prepay Term Loans in an amount equal to 100% of such Net Cash Proceeds, subject to the same reinvestment rights as in clause (ii) above.
(v) Facilities Subject to Prepayment. Mandatory prepayments under this Section 2.05(b) shall be applied to the Term Loan B Facility only. No mandatory prepayment shall be applied to the Revolving Facility, and the Revolving Commitments shall not be reduced as a result of any mandatory prepayment.
(c) Application of Prepayments. Mandatory prepayments of Term Loans shall be applied pro rata across the outstanding Term Loans, and to the remaining scheduled installments thereof in inverse order of maturity. Each Term Lender may elect, by written notice delivered to the Administrative Agent not later than 5:00 p.m. on the third Business Day prior to the applicable prepayment date, to decline to receive its pro rata share of any mandatory prepayment (a "Declining Lender"). Amounts declined by Declining Lenders shall, at the Borrower's election, either (i) be applied to prepay the Term Loans held by non-declining Lenders on a pro rata basis or (ii) be retained by the Borrower.
Section 2.06. Termination or Reduction of Commitments
The Borrower may, upon written notice to the Administrative Agent not less than three Business Days prior to the effective date, terminate the Revolving Commitments in whole or reduce the Revolving Commitments ratably in an aggregate amount of not less than $10,000,000 or an integral multiple of $5,000,000 in excess thereof; provided that no such reduction shall reduce the Revolving Commitments below the sum of the outstanding Revolving Exposure. Each such notice shall be irrevocable; provided that a notice of termination may be conditioned upon the closing of a specified refinancing, disposition or other transaction, in which case such notice may be revoked if such condition is not satisfied. The Revolving Commitments shall automatically terminate on the Revolving Maturity Date.
Section 2.07. Repayment of Loans
(a) Term Loans — Scheduled Amortization. The Borrower shall repay the aggregate outstanding principal amount of the Term Loans in consecutive quarterly installments, each equal to 0.25% of the original aggregate principal amount thereof ($9,350,000 per installment, based on the initial $3,740,000,000 principal amount), payable on the last Business Day of each fiscal quarter, commencing December 31, 2024, and continuing through the fiscal quarter ended June 30, 2031; provided that the remaining outstanding principal amount of the Term Loans, together with all accrued and unpaid interest thereon, shall be due and payable in full on the Term Loan Maturity Date (July 9, 2031). Scheduled amortization payments shall be reduced pro rata by any prepayments applied to remaining installments.
(b) Revolving Loans. The Borrower shall repay the aggregate outstanding principal amount of the Revolving Loans, together with all accrued and unpaid interest thereon and all other outstanding Revolving Obligations, in full on the Revolving Maturity Date. Prior to the Revolving Maturity Date, the Borrower may repay and reborrow Revolving Loans subject to the terms and conditions of this Agreement.
Section 2.08. Interest
(a) Rate. Each Loan shall bear interest at a rate per annum equal to:
(i) with respect to Term Loans that are SOFR Loans: Term SOFR for the applicable Interest Period plus 3.25%, subject to the Floor of 0.00%;
(ii) with respect to Term Loans that are ABR Loans: ABR plus 2.25%;
(iii) with respect to Revolving Loans that are SOFR Loans: Term SOFR for the applicable Interest Period plus 2.75%, subject to the Floor of 0.00%;
(iv) with respect to Revolving Loans that are ABR Loans: ABR plus 1.75%; and
(v) upon the occurrence and during the continuance of an Event of Default under Section 8.01(a) or (f), or (with respect to any other Event of Default) at the election of the Required Lenders, all outstanding Obligations shall bear interest at the Default Rate (Applicable Rate plus 2.00% per annum).
(b) Interest Periods. Interest Periods for SOFR Loans shall be one, three or six months, as elected by the Borrower in accordance with Section 2.02.
(c) Payment. Interest on each SOFR Loan shall be payable in arrears on the last day of the applicable Interest Period (and, for any Interest Period longer than three months, on each date that is three months after the first day of such Interest Period), and on the applicable maturity date. Interest on ABR Loans shall be payable in arrears on the last Business Day of each calendar quarter and on the applicable maturity date.
Section 2.09. Fees
(a) Commitment Fee (Revolving). The Borrower shall pay to the Administrative Agent, for the account of each Revolving Lender, a commitment fee accruing at the rate of 0.375% per annum on the daily average unused portion of such Lender's Revolving Commitment during the period from the Closing Date to and including the Revolving Maturity Date; provided that, at any time when the First Lien Net Leverage Ratio is less than or equal to 3.50:1.00, the commitment fee rate shall step down to 0.25% per annum. The commitment fee shall be payable quarterly in arrears on the last Business Day of each calendar quarter, commencing December 31, 2024, and on the Revolving Maturity Date.
(b) Ticking Fee (Term Loans). The Borrower shall pay to the Administrative Agent, for the account of each Term Lender, a ticking fee accruing at the rate of 0.25% per annum on the undrawn amount of such Lender's Term Loan Commitment during the period from and including April 22, 2024 (being the date that is 90 days after the signing of the Merger Agreement on January 22, 2024) to but excluding the earlier of the Closing Date and the date on which the Term Loan Commitments terminate. Accrued ticking fees shall be payable on the Closing Date in a single lump sum.
(c) Letter of Credit Fees. The Borrower shall pay (i) to the Administrative Agent, for the account of each Revolving Lender, a participation fee accruing at the rate equal to the Applicable Rate for Revolving Loans that are SOFR Loans (i.e., 2.75% per annum) on the daily average LC Exposure of such Lender, and (ii) to each Issuing Bank for its own account, a fronting fee accruing at the rate of 0.125% per annum on the average daily undrawn and unreimbursed LC Exposure of Letters of Credit issued by such Issuing Bank, together with such Issuing Bank's customary issuance, amendment, drawing and other administrative fees.
(d) Administrative Agent Fees. The Borrower shall pay to the Administrative Agent such fees as are set forth in the Fee Letter dated January 22, 2024.
Section 2.10. Computation of Interest and Fees
All computations of interest for SOFR Loans and all computations of commitment fees, ticking fees and letter of credit fees shall be made on the basis of a year of 360 days and the actual number of days elapsed. Computations of interest for ABR Loans (when ABR is determined by reference to the Prime Rate) shall be made on the basis of a year of 365 or 366 days, as applicable, and the actual number of days elapsed. Each determination of an interest rate or fee by the Administrative Agent shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error.
Section 2.11. Evidence of Indebtedness
The Administrative Agent shall maintain, at its office in New York City, a copy of each Assignment and Assumption delivered to it and a register (the "Register") for the recordation of the names and addresses of the Lenders, the Commitments of, and the outstanding principal amounts and interest owing to, each Lender. The entries in the Register shall be conclusive absent manifest error. Upon written request by any Lender, the Borrower shall execute and deliver a promissory note (Exhibit D or Exhibit E) evidencing such Lender's Loans.
Section 2.12. Payments Generally; Administrative Agent's Clawback
All payments to be made by the Borrower under any Loan Document shall be made in Dollars in immediately available funds, without setoff, deduction or counterclaim, not later than 2:00 p.m. on the due date, to the Administrative Agent at the following account, or such other account as the Administrative Agent may from time to time specify: Meridian Atlantic Bank, N.A. (ABA and account number as separately notified to the Borrower). Any payment received after 2:00 p.m. shall be deemed received on the next Business Day. If the Administrative Agent has made available to any Lender any amount not in fact received from the Borrower (or vice versa), such Lender (or the Borrower) shall promptly repay such amount together with interest at the Federal Funds Rate.
Section 2.13. Sharing of Payments by Lenders
If any Lender obtains a payment (whether voluntary, involuntary, through setoff or otherwise) in respect of the Loans held by it in excess of its ratable share of such payment, such Lender shall promptly purchase participations in the Loans of the other Lenders as necessary such that all Lenders share such payment ratably; provided that if any such excess payment is thereafter recovered from such Lender, the purchase shall be rescinded to the extent of such recovery.
Section 2.14. Incremental Facilities
(a) Right to Request Incremental Facilities. The Borrower may, on one or more occasions after the Closing Date, by written notice to the Administrative Agent, request (i) additional Term Loans of the same Class as the initial Term Loans or of a new Class ("Incremental Term Loans") and/or (ii) increases in the Revolving Commitments ("Incremental Revolving Commitments"; together with Incremental Term Loans, "Incremental Facilities"), in an aggregate amount not to exceed the sum of:
(A) the greater of (x) $700,000,000 and (y) 100% of Consolidated EBITDA for the most recently ended Test Period (the "Free-and-Clear Amount"), plus
(B) an unlimited amount so long as, on a Pro Forma Basis after giving effect to the incurrence thereof (assuming, for purposes of such calculation only, that all such incremental Indebtedness is secured on a pari passu basis with the Term Loans and giving pro forma effect to any Permitted Acquisition or Investment funded with the proceeds thereof), the Total Net Leverage Ratio does not exceed 5.00:1.00 (the "Incurrence Test"),