The Term Loan Credit Agreement contains customary representations, warranties and affirmative covenants. The Term Loan Credit Agreement also contains negative covenants that limit, subject to certain exceptions, baskets and thresholds, the TLB Borrowers’ ability to, among other things, (i) incur additional debt, (ii) create, assume or suffer to exist liens, (iii) make investments or acquisitions, (iv) change the nature of the TLB Borrowers’ business, (v) consolidate, merge, sell or purchase assets, (vi) pay dividends and make distribution or other restricted payments and (vii) enter into transactions with affiliates.
The Term Loan Credit Agreement also contains customary events of default, including nonpayment of principal when due, nonpayment of interest, fees or other amounts after a stated grace period, inaccuracy of representations and warranties, violations of covenants, subject in certain cases to negotiated grace periods, certain bankruptcies and liquidations, cross-default and cross-acceleration to material indebtedness, certain unsatisfied judgments, certain ERISA-related events, and a change in control of the Company (as defined in the Term Loan Credit Agreement). If an event of default occurs and is continuing, the lenders would be entitled to take various actions, including requiring the TLB Borrowers to repay all amounts outstanding under the Term Loan Credit Agreement.
The TLB Loans are senior debt of the Company pari passu in right of payment with all other senior debt of the Company, including the Company’s obligations under the Amended Existing Credit Agreement. The obligations of the TLB Borrowers under the Term Loan Credit Agreement are secured by a perfected first priority security interest in substantially all of the tangible and intangible personal property assets of the TLB Loan Parties, which liens are pari passu in right of priority with the liens securing repayment of obligations of the Company under the Amended Existing Credit Agreement.
Certain of the lenders that are parties to the Term Loan Credit Agreement and their respective affiliates are full-service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage, and other financial and non-financial activities and services. Certain of these financial institutions and their respective affiliates have provided, and may in the future provide, certain of these services to the TLB Loan Parties and to persons and entities with relationships with the TLB Loan Parties, for which they received or will receive customary fees and expenses.
The foregoing description of the Term Loan Credit Agreement is a summary only, does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Term Loan Credit Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report and is incorporated by reference herein.
Fourth Amendment to Third Amended and Restated Credit Agreement
As previously disclosed, the Company, certain of its wholly owned subsidiaries in their capacity as co-borrowers (collectively with the Company, the “Existing Credit Agreement Borrowers”), and certain of the Company’s wholly owned subsidiaries in their capacity as guarantors (collectively with the Existing Credit Agreement Borrowers, the “Existing Credit Agreement Loan Parties”) are party to that certain Third Amended and Restated Credit Agreement with PNC Bank, National Association, as successor to BBVA USA, as administrative agent and lender, PNC Capital Markets, as joint lead arranger and sole bookrunner, Regions Bank and BofA Securities, each as a joint arranger, and certain other lenders party thereto (as amended from time to time, the “Existing Credit Agreement”).
On October 30, 2024, the Existing Credit Agreement Loan Parties entered into the Fourth Amendment to the Existing Credit Agreement (the “Amendment,” and the Existing Credit Agreement, as amended by the Amendment, the “Amended Existing Credit Agreement”) to, among other things, permit (i) the Acquisition, (ii) entry into the Term Loan Credit Agreement in connection with the Acquisition, and (iii) certain liens to be granted to secure the indebtedness incurred under the Term Loan Credit Agreement on a pari passu basis with the liens securing the Company’s obligations under the Amended Existing Credit Agreement pursuant to that certain Intercreditor Agreement entered into concurrently with the Term Loan Credit Agreement. In addition, concurrently with the TLB Effective Date, Lone Star was joined as a borrower under the Amended Existing Credit Agreement and Lone Star’s subsidiaries were joined as guarantors.
The Amendment also modifies certain negative covenants and adjusts the maximum consolidated net leverage ratio permitted under the Amended Existing Credit Agreement as follows: (i) for each fiscal quarter ending on or prior to September 30, 2024, a maximum consolidated net leverage ratio of 3.50 to 1.00; (ii) for each fiscal quarter ending December 31, 2024 through and including September 30, 2025, a maximum consolidated net leverage ratio of 4.50 to 1.00; (iii) for each fiscal quarter ending December 31, 2025 through and including September 30, 2026, a maximum consolidated net leverage ratio of 4.00 to 1.00; and (iv) for each fiscal quarter ending December 31, 2026 and thereafter, a maximum consolidated net leverage ratio of 3.50 to 1.00. Except as modified by the Amendment, the terms of the Existing Credit Agreement remain the same.