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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 1, 2024
Or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to____________
Commission File Number: 000-31285
TTM TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware |
|
91-1033443 |
|
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
200 East Sandpointe, Suite 400, Santa Ana, California 92707
(Address of principal executive offices)
(714) 327-3000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading symbol(s) |
Name of each exchange on which registered |
Common Stock, $0.001 par value |
TTMI |
Nasdaq Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
☑ |
Accelerated filer |
☐ |
Non-accelerated filer |
☐ |
Smaller reporting company |
☐ |
|
|
Emerging growth company |
☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
As of August 2, 2024, there were outstanding 101,951,376 shares of the registrant’s Common Stock, $0.001 par value.
TTM TECHNOLOGIES, INC.
Form 10-Q
For the Quarter Ended July 1, 2024
TABLE OF CONTENTS
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
TTM TECHNOLOGIES, INC.
Consolidated Condensed Balance Sheets
As of July 1, 2024 and January 1, 2024
|
|
As of |
|
|||||
|
|
July 1, 2024 |
|
|
January 1, 2024 |
|
||
|
|
(Unaudited) |
|
|||||
|
|
(In thousands, except par value) |
|
|||||
ASSETS |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
446,247 |
|
|
$ |
450,208 |
|
Accounts receivable, net |
|
|
400,714 |
|
|
|
413,557 |
|
Contract assets |
|
|
340,120 |
|
|
|
292,050 |
|
Inventories |
|
|
216,906 |
|
|
|
213,075 |
|
Receivable from sale of Shanghai E-MS (SH E-MS) property |
|
|
— |
|
|
|
6,737 |
|
Prepaid expenses and other current assets |
|
|
48,644 |
|
|
|
54,060 |
|
Total current assets |
|
|
1,452,631 |
|
|
|
1,429,687 |
|
Property, plant, and equipment, net |
|
|
838,243 |
|
|
|
807,667 |
|
Operating lease right-of-use assets |
|
|
81,886 |
|
|
|
86,286 |
|
Goodwill |
|
|
702,735 |
|
|
|
702,735 |
|
Definite-lived intangibles, net |
|
|
210,355 |
|
|
|
236,711 |
|
Deposits and other non-current assets |
|
|
57,514 |
|
|
|
60,577 |
|
Total assets |
|
$ |
3,343,364 |
|
|
$ |
3,323,663 |
|
|
|
|
|
|
|
|
||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Short-term debt, including current portion of long-term debt |
|
$ |
2,625 |
|
|
$ |
3,500 |
|
Accounts payable |
|
|
371,189 |
|
|
|
334,609 |
|
Contract liabilities |
|
|
128,782 |
|
|
|
126,508 |
|
Accrued salaries, wages, and benefits |
|
|
89,546 |
|
|
|
98,561 |
|
Other current liabilities |
|
|
119,958 |
|
|
|
140,806 |
|
Total current liabilities |
|
|
712,100 |
|
|
|
703,984 |
|
Long-term debt, net of discount and issuance costs |
|
|
913,428 |
|
|
|
914,336 |
|
Operating lease liabilities |
|
|
76,172 |
|
|
|
80,786 |
|
Other long-term liabilities |
|
|
112,765 |
|
|
|
113,518 |
|
Total long-term liabilities |
|
|
1,102,365 |
|
|
|
1,108,640 |
|
Commitments and contingencies (Note 14) |
|
|
|
|
|
|
||
Equity: |
|
|
|
|
|
|
||
Common stock, $0.001 par value; 300,000 shares authorized; 113,109 and 111,282 |
|
|
113 |
|
|
|
111 |
|
Treasury stock – common stock at cost; 11,164 and 9,174 shares as of July 1, 2024 |
|
|
(157,570 |
) |
|
|
(123,091 |
) |
Additional paid-in capital |
|
|
894,328 |
|
|
|
880,963 |
|
Retained earnings |
|
|
818,941 |
|
|
|
782,123 |
|
Accumulated other comprehensive loss |
|
|
(26,913 |
) |
|
|
(29,067 |
) |
Total stockholders’ equity |
|
|
1,528,899 |
|
|
|
1,511,039 |
|
Total liabilities and stockholders' equity |
|
$ |
3,343,364 |
|
|
$ |
3,323,663 |
|
See accompanying notes to consolidated condensed financial statements.
3
TTM TECHNOLOGIES, INC.
Consolidated Condensed Statements of Operations
For the Quarter and Two Quarters Ended July 1, 2024 and July 3, 2023
|
|
Quarter Ended |
|
|
Two Quarters Ended |
|
||||||||||
|
|
July 1, 2024 |
|
|
July 3, 2023 |
|
|
July 1, 2024 |
|
|
July 3, 2023 |
|
||||
|
|
(Unaudited) |
|
|||||||||||||
|
|
(In thousands, except per share data) |
|
|||||||||||||
Net sales |
|
$ |
605,137 |
|
|
$ |
546,509 |
|
|
$ |
1,175,250 |
|
|
$ |
1,090,946 |
|
Cost of goods sold |
|
|
487,910 |
|
|
|
448,002 |
|
|
|
954,304 |
|
|
|
906,316 |
|
Gross profit |
|
|
117,227 |
|
|
|
98,507 |
|
|
|
220,946 |
|
|
|
184,630 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling and marketing |
|
|
19,798 |
|
|
|
18,180 |
|
|
|
40,092 |
|
|
|
39,482 |
|
General and administrative |
|
|
38,604 |
|
|
|
37,840 |
|
|
|
82,274 |
|
|
|
72,913 |
|
Research and development |
|
|
8,547 |
|
|
|
6,424 |
|
|
|
15,868 |
|
|
|
13,509 |
|
Amortization of definite-lived intangibles |
|
|
10,256 |
|
|
|
3,852 |
|
|
|
21,685 |
|
|
|
25,816 |
|
Restructuring charges |
|
|
1,036 |
|
|
|
10,803 |
|
|
|
4,974 |
|
|
|
14,970 |
|
Total operating expenses |
|
|
78,241 |
|
|
|
77,099 |
|
|
|
164,893 |
|
|
|
166,690 |
|
Operating income |
|
|
38,986 |
|
|
|
21,408 |
|
|
|
56,053 |
|
|
|
17,940 |
|
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
(12,219 |
) |
|
|
(11,843 |
) |
|
|
(24,543 |
) |
|
|
(24,650 |
) |
Loss on extinguishment of debt |
|
|
— |
|
|
|
(1,154 |
) |
|
|
— |
|
|
|
(1,154 |
) |
(Loss) gain on sale of subsidiary |
|
|
— |
|
|
|
(69 |
) |
|
|
— |
|
|
|
1,270 |
|
Other, net |
|
|
3,765 |
|
|
|
5,068 |
|
|
|
13,091 |
|
|
|
6,266 |
|
Total other expense, net |
|
|
(8,454 |
) |
|
|
(7,998 |
) |
|
|
(11,452 |
) |
|
|
(18,268 |
) |
Income (loss) before income taxes |
|
|
30,532 |
|
|
|
13,410 |
|
|
|
44,601 |
|
|
|
(328 |
) |
Income tax (provision) benefit |
|
|
(4,180 |
) |
|
|
(6,586 |
) |
|
|
(7,783 |
) |
|
|
1,338 |
|
Net income |
|
$ |
26,352 |
|
|
$ |
6,824 |
|
|
$ |
36,818 |
|
|
$ |
1,010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic earnings per share |
|
$ |
0.26 |
|
|
$ |
0.07 |
|
|
$ |
0.36 |
|
|
$ |
0.01 |
|
Diluted earnings per share |
|
|
0.25 |
|
|
|
0.07 |
|
|
|
0.35 |
|
|
|
0.01 |
|
See accompanying notes to consolidated condensed financial statements.
4
TTM TECHNOLOGIES, INC.
Consolidated Condensed Statements of Comprehensive Income (Loss)
For the Quarter and Two Quarters Ended July 1, 2024 and July 3, 2023
|
|
Quarter Ended |
|
|
Two Quarters Ended |
|
||||||||||
|
|
July 1, 2024 |
|
|
July 3, 2023 |
|
|
July 1, 2024 |
|
|
July 3, 2023 |
|
||||
|
|
(Unaudited) |
|
|||||||||||||
|
|
(In thousands) |
|
|||||||||||||
Net income |
|
$ |
26,352 |
|
|
$ |
6,824 |
|
|
$ |
36,818 |
|
|
$ |
1,010 |
|
Other comprehensive (loss) income, net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Pension obligation adjustments, net |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
Foreign currency translation adjustments, net |
|
|
(56 |
) |
|
|
(463 |
) |
|
|
(858 |
) |
|
|
(433 |
) |
Derecognition of foreign currency translation adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,627 |
) |
Net unrealized gain on cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized gain on effective cash flow hedges during |
|
|
921 |
|
|
|
5,820 |
|
|
|
4,740 |
|
|
|
5,140 |
|
Amounts realized in the statement of operations, net |
|
|
(861 |
) |
|
|
(726 |
) |
|
|
(1,728 |
) |
|
|
(721 |
) |
Net |
|
|
60 |
|
|
|
5,094 |
|
|
|
3,012 |
|
|
|
4,419 |
|
Other comprehensive income (loss), net of tax |
|
|
4 |
|
|
|
4,630 |
|
|
|
2,154 |
|
|
|
(2,641 |
) |
Comprehensive income (loss), net of tax |
|
$ |
26,356 |
|
|
$ |
11,454 |
|
|
$ |
38,972 |
|
|
$ |
(1,631 |
) |
See accompanying notes to consolidated condensed financial statements.
5
TTM TECHNOLOGIES, INC.
Consolidated Condensed Statements of Stockholders’ Equity
For the Two Quarters Ended July 1, 2024 and July 3, 2023
|
|
Common Stock |
|
|
Treasury Stock |
|
|
Additional |
|
|
Retained |
|
|
Accumulated |
|
|
Total |
|
||||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Earnings |
|
|
Loss |
|
|
Equity |
|
||||||||
|
|
(Unaudited) |
|
|||||||||||||||||||||||||||||
|
|
(In thousands) |
|
|||||||||||||||||||||||||||||
Balance, January 1, 2024 |
|
|
111,282 |
|
|
$ |
111 |
|
|
|
(9,174 |
) |
|
$ |
(123,091 |
) |
|
$ |
880,963 |
|
|
$ |
782,123 |
|
|
$ |
(29,067 |
) |
|
$ |
1,511,039 |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,466 |
|
|
|
— |
|
|
|
10,466 |
|
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,150 |
|
|
|
2,150 |
|
Issuance of common stock for |
|
|
227 |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Issuance of common stock for |
|
|
41 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Repurchases of common stock |
|
|
— |
|
|
|
— |
|
|
|
(600 |
) |
|
|
(9,334 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9,334 |
) |
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,787 |
|
|
|
— |
|
|
|
— |
|
|
|
6,787 |
|
Balance, April 1, 2024 |
|
|
111,550 |
|
|
$ |
112 |
|
|
|
(9,774 |
) |
|
$ |
(132,425 |
) |
|
$ |
887,749 |
|
|
$ |
792,589 |
|
|
$ |
(26,917 |
) |
|
$ |
1,521,108 |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
26,352 |
|
|
|
— |
|
|
|
26,352 |
|
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4 |
|
|
|
4 |
|
Issuance of common stock for |
|
|
1,559 |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Repurchases of common stock |
|
|
— |
|
|
|
— |
|
|
|
(1,390 |
) |
|
|
(25,145 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(25,145 |
) |
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,580 |
|
|
|
— |
|
|
|
— |
|
|
|
6,580 |
|
Balance, July 1, 2024 |
|
|
113,109 |
|
|
$ |
113 |
|
|
|
(11,164 |
) |
|
$ |
(157,570 |
) |
|
$ |
894,328 |
|
|
$ |
818,941 |
|
|
$ |
(26,913 |
) |
|
$ |
1,528,899 |
|
|
|
Common Stock |
|
|
Treasury Stock |
|
|
Additional |
|
|
Retained |
|
|
Accumulated |
|
|
Total |
|
||||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Earnings |
|
|
Loss |
|
|
Equity |
|
||||||||
|
|
(Unaudited) |
|
|||||||||||||||||||||||||||||
|
|
(In thousands) |
|
|||||||||||||||||||||||||||||
Balance, January 2, 2023 |
|
|
109,598 |
|
|
$ |
110 |
|
|
|
(7,370 |
) |
|
$ |
(98,659 |
) |
|
$ |
858,077 |
|
|
$ |
800,841 |
|
|
$ |
(24,790 |
) |
|
$ |
1,535,579 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,814 |
) |
|
|
— |
|
|
|
(5,814 |
) |
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7,271 |
) |
|
|
(7,271 |
) |
Issuance of common stock for |
|
|
337 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Issuance of common stock for |
|
|
21 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,240 |
|
|
|
— |
|
|
|
— |
|
|
|
5,240 |
|
Balance, April 3, 2023 |
|
|
109,956 |
|
|
$ |
110 |
|
|
|
(7,370 |
) |
|
$ |
(98,659 |
) |
|
$ |
863,317 |
|
|
$ |
795,027 |
|
|
$ |
(32,061 |
) |
|
$ |
1,527,734 |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,824 |
|
|
|
— |
|
|
|
6,824 |
|
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,630 |
|
|
|
4,630 |
|
Issuance of common stock |
|
|
1,284 |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,121 |
|
|
|
— |
|
|
|
— |
|
|
|
5,121 |
|
Balance, July 3, 2023 |
|
|
111,240 |
|
|
$ |
111 |
|
|
|
(7,370 |
) |
|
$ |
(98,659 |
) |
|
$ |
868,437 |
|
|
$ |
801,851 |
|
|
$ |
(27,431 |
) |
|
$ |
1,544,309 |
|
See accompanying notes to consolidated condensed financial statements.
6
TTM TECHNOLOGIES, INC.
Consolidated Condensed Statements of Cash Flows
For the Two Quarters Ended July 1, 2024 and July 3, 2023
|
|
Two Quarters Ended |
|
|||||
|
|
July 1, 2024 |
|
|
July 3, 2023 |
|
||
|
|
(Unaudited) |
|
|||||
|
|
(In thousands) |
|
|||||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net income |
|
$ |
36,818 |
|
|
$ |
1,010 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation of property, plant, and equipment |
|
|
50,879 |
|
|
|
50,190 |
|
Amortization of definite-lived intangible assets |
|
|
26,356 |
|
|
|
34,047 |
|
Amortization of debt discount and issuance costs |
|
|
1,024 |
|
|
|
1,225 |
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
1,154 |
|
Deferred income taxes |
|
|
(209 |
) |
|
|
(495 |
) |
Stock-based compensation |
|
|
13,367 |
|
|
|
10,361 |
|
Gain on sale of subsidiary |
|
|
— |
|
|
|
(1,270 |
) |
Other |
|
|
(9,193 |
) |
|
|
(234 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable, net |
|
|
12,843 |
|
|
|
76,590 |
|
Contract assets |
|
|
(48,070 |
) |
|
|
22,110 |
|
Inventories |
|
|
(3,831 |
) |
|
|
(19,082 |
) |
Prepaid expenses and other current assets |
|
|
(11,031 |
) |
|
|
(7,580 |
) |
Accounts payable |
|
|
24,198 |
|
|
|
(35,678 |
) |
Contract liabilities |
|
|
2,274 |
|
|
|
11,265 |
|
Accrued salaries, wages, and benefits |
|
|
(9,015 |
) |
|
|
(40,911 |
) |
Other current liabilities |
|
|
(660 |
) |
|
|
(21,740 |
) |
Net cash provided by operating activities |
|
|
85,750 |
|
|
|
80,962 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
||
Proceeds from sale of SH E-MS property |
|
|
6,737 |
|
|
|
61,769 |
|
Purchase of property, plant, and equipment and other assets |
|
|
(88,811 |
) |
|
|
(80,467 |
) |
Proceeds from sale of property, plant, and equipment and other assets |
|
|
29,560 |
|
|
|
343 |
|
Proceeds from sale of subsidiary, net of cash disposed |
|
|
— |
|
|
|
6,039 |
|
Net cash used in investing activities |
|
|
(52,514 |
) |
|
|
(12,316 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Repurchases of common stock |
|
|
(34,479 |
) |
|
|
— |
|
Repayment of long-term debt borrowings |
|
|
(2,625 |
) |
|
|
(290,697 |
) |
Proceeds from long-term debt borrowing |
|
|
— |
|
|
|
234,818 |
|
Refund of customer deposits |
|
|
— |
|
|
|
(7,500 |
) |
Payment of debt issuance costs |
|
|
— |
|
|
|
(5,487 |
) |
Payment of original issue discount |
|
|
— |
|
|
|
(3,500 |
) |
Net cash used in financing activities |
|
|
(37,104 |
) |
|
|
(72,366 |
) |
Effect of foreign currency exchange rates on cash and cash equivalents |
|
|
(93 |
) |
|
|
(313 |
) |
Net decrease in cash and cash equivalents |
|
|
(3,961 |
) |
|
|
(4,033 |
) |
Cash and cash equivalents at beginning of period |
|
|
450,208 |
|
|
|
402,749 |
|
Cash and cash equivalents at end of period |
|
$ |
446,247 |
|
|
$ |
398,716 |
|
Supplemental cash flow information: |
|
|
|
|
|
|
||
Cash paid, net for interest |
|
$ |
27,048 |
|
|
$ |
26,050 |
|
Cash paid, net for income taxes |
|
|
11,475 |
|
|
|
25,618 |
|
Supplemental disclosure of noncash investing and financing activities: |
|
|
|
|
|
|
||
Property, plant, and equipment recorded in accounts payable and other current liabilities |
|
$ |
75,271 |
|
|
$ |
19,993 |
|
Cashless extinguishment of debt for issuance of new long-term debt borrowing |
|
|
— |
|
|
|
115,182 |
|
See accompanying notes to consolidated condensed financial statements.
7
TTM TECHNOLOGIES, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)
(Dollars and shares in thousands, except per share data)
(1) Nature of Operations and Basis of Presentation
TTM Technologies, Inc. (the Company or TTM) is a leading global manufacturer of technology solutions including mission systems, radio frequency (RF) components/RF microwave/microelectronic assemblies, and quick-turn and technologically advanced printed circuit boards (PCB). The Company provides time-to-market and volume production of advanced technology products and offers a one-stop design, engineering, and manufacturing solution to customers. This solution allows the Company to align technology developments with the diverse needs of the Company’s customers and to enable them to reduce the time required to develop new products and bring them to market.
The Company serves a diversified customer base in various markets throughout the world, including aerospace and defense, data center computing, automotive, medical, industrial and instrumentation related products, and networking. The Company’s customers include original equipment manufacturers (OEMs), electronic manufacturing services (EMS) providers, original design manufacturers (ODMs), distributors, and government agencies (both domestic and allied foreign governments).
The accompanying unaudited consolidated condensed financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s most recent Annual Report on Form 10-K. The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s consolidated condensed financial statements and accompanying notes. Due, in part, to the conflict between Russia and Ukraine, and the conflict in Israel and the Gaza Strip, the global economy and financial markets have been volatile. As such, the Company has considered information available to it as of the date of issuance of these financial statements and is not aware of any specific events or circumstances that would require an update to its estimates or judgments, or a revision to the carrying value of its assets or liabilities. The actual results the Company experienced may differ materially and adversely from its estimates. The Company uses a 52/53 week fiscal calendar with the fourth quarter ending on the Monday nearest December 31.
Recently Issued Accounting Standards Not Yet Adopted
In March 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-02, Codification Improvements - Amendments to Remove References to the Concepts Statements, to remove various references to concepts statements from the Accounting Standards Codification (ASC). These amendments clarify guidance, simplify wording or structure of guidance, and other minor improvements. The amendments are effective for fiscal years beginning after December 15, 2024, applied prospectively, with early adoption and retrospective application permitted. The impact of the adoption of the amendments in this update is not expected to be material to the Company's consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. The update will be effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements not yet issued or made available for issuance. The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements and related disclosures, but expects additional disclosures upon adoption.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements and related disclosures, but expects additional disclosures upon adoption.
8
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the Securities and Exchange Commission’s Disclosure Update and Simplification Initiative, which modifies the disclosure or presentation requirements of a variety of topics in the ASC in response to the SEC’s Release No. 33-10532, Disclosure Update and Simplification Initiative, and align the ASC requirements with the SEC’s regulations. For entities subject to the SEC's existing disclosure requirements, the effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective. Early adoption is prohibited. The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements and related disclosures.
(2) Share Repurchase Program
On May 3, 2023, the Company's Board of Directors authorized and approved a share repurchase program (2023 Repurchase Program), under which the Company may repurchase up to $100,000 in value of the Company’s outstanding shares of common stock from time to time through May 3, 2025. The Company may repurchase shares through open market purchases, privately-negotiated transactions, or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended (Exchange Act), which sets certain restrictions on the method, timing, price, and volume of open market stock repurchases. In addition, the Company adopted one trading plan in accordance with Rule 10b5-1 of the Exchange Act to facilitate certain purchases that may be effected under the share repurchase program. The timing, manner, price, and amount of any repurchases will be determined at the Company’s discretion, and the share repurchase program may be suspended, terminated, or modified at any time for any reason. The repurchase program does not obligate the Company to acquire any specific number of shares.
During the quarter ended July 1, 2024, the Company repurchased 1,390 shares of common stock for a total cost of $25,145 (including commissions) and during the two quarters ended July 1, 2024, the Company repurchased 1,990 shares of common stock for a total cost of $34,479 (including commissions). As of July 1, 2024, the remaining amount in value available to be repurchased under the 2023 Repurchase Program was approximately $41,088.
(3) Significant Customers and Concentration of Credit Risk
Financial instruments that are potentially subject to concentrations of credit risk are primarily cash and cash equivalents and accounts receivable.
The Company had cash and cash equivalents held by its foreign subsidiaries of $174,623 and $195,928 as of July 1, 2024 and January 1, 2024, respectively. The Company maintains its cash and cash equivalents with major financial institutions and such balances exceed Federal Deposit Insurance Corporation insurance limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk on cash and cash equivalents.
In the normal course of business, the Company extends credit to its customers. Some customers to whom the Company extends credit are located outside the United States. The Company performs on-going credit evaluations of customers, does not require collateral, and considers the credit risk profile of the entity from which the receivable is due in further evaluating collection risk. As of July 1, 2024 and January 1, 2024, there were no customers that accounted for 10% or more of the Company's accounts receivable.
The Company’s customers include both OEMs and EMS companies. The Company’s OEM customers often direct a significant portion of their purchases through EMS companies. While the Company’s customers include both OEM and EMS providers, the Company measures customer concentration based on OEM companies, as they are the ultimate end customers.
For the quarter and two quarters ended July 1, 2024, one customer accounted for approximately 11% of the Company's net sales. For the quarter and two quarters ended July 3, 2023, one customer accounted for approximately 13% of the Company's net sales.
9
(4) Revenues
As of July 1, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations for long-term contracts was $413,941. The Company expects to recognize revenue on approximately 49% of the remaining performance obligations for the Company’s long-term contracts over the next 12 months with the remaining amount expected to be recognized thereafter.
For contracts in which anticipated total costs exceed the total expected revenue, an estimated loss is recognized in the period when identifiable. A provision for the entire amount of the estimated loss is recorded on a cumulative basis. The estimated remaining costs to complete for loss contracts as of July 1, 2024 and January 1, 2024 were $35,227 and $25,213, respectively.
Revenue recognized for the two quarters ended July 1, 2024 from amounts recorded as contract liabilities as of January 1, 2024 was $28,205. Revenue recognized for the two quarters ended July 3, 2023 from amounts recorded as contract liabilities as of January 2, 2023 was $27,069.
Revenue from products and services transferred to customers over time and at a point in time accounted for 96% and 4%, respectively, of the Company’s revenue for both the quarter and two quarters ended July 1, 2024 and July 3, 2023.
Disaggregated revenue by principal end markets with reportable segments was as follows:
|
|
Quarter Ended July 1, 2024 |
|
|
Quarter Ended July 3, 2023 |
|
||||||||||||||||||
|
|
PCB |
|
|
RF and Specialty Components (RF&S Components) |
|
|
Total |
|
|
PCB |
|
|
RF&S Components |
|
|
Total |
|
||||||
|
|
(In thousands) |
|
|||||||||||||||||||||
End Markets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Aerospace and Defense |
|
$ |
272,789 |
|
|
$ |
— |
|
|
$ |
272,789 |
|
|
$ |
254,284 |
|
|
$ |
— |
|
|
$ |
254,284 |
|
Automotive |
|
|
82,698 |
|
|
|
— |
|
|
|
82,698 |
|
|
|
92,374 |
|
|
|
— |
|
|
|
92,374 |
|
Data Center Computing |
|
|
124,052 |
|
|
|
63 |
|
|
|
124,115 |
|
|
|
64,305 |
|
|
|
51 |
|
|
|
64,356 |
|
Medical/Industrial/Instrumentation |
|
|
86,416 |
|
|
|
722 |
|
|
|
87,138 |
|
|
|
88,979 |
|
|
|
745 |
|
|
|
89,724 |
|
Networking |
|
|
30,152 |
|
|
|
8,245 |
|
|
|
38,397 |
|
|
|
36,589 |
|
|
|
9,182 |
|
|
|
45,771 |
|
Total |
|
$ |
596,107 |
|
|
$ |
9,030 |
|
|
$ |
605,137 |
|
|
$ |
536,531 |
|
|
$ |
9,978 |
|
|
$ |
546,509 |
|
|
|
Two Quarters Ended July 1, 2024 |
|
|
Two Quarters Ended July 3, 2023 |
|
||||||||||||||||||
|
|
PCB |
|
|
RF&S Components |
|
|
Total |
|
|
PCB |
|
|
RF&S Components |
|
|
Total |
|
||||||
|
|
(In thousands) |
|
|||||||||||||||||||||
End Markets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Aerospace and Defense |
|
$ |
537,565 |
|
|
$ |
— |
|
|
$ |
537,565 |
|
|
$ |
486,576 |
|
|
$ |
— |
|
|
$ |
486,576 |
|
Automotive |
|
|
156,315 |
|
|
|
— |
|
|
|
156,315 |
|
|
|
185,841 |
|
|
|
— |
|
|
|
185,841 |
|
Data Center Computing |
|
|
243,429 |
|
|
|
122 |
|
|
|
243,551 |
|
|
|
122,175 |
|
|
|
51 |
|
|
|
122,226 |
|
Medical/Industrial/Instrumentation |
|
|
165,209 |
|
|
|
1,456 |
|
|
|
166,665 |
|
|
|
189,747 |
|
|
|
1,662 |
|
|
|
191,409 |
|
Networking |
|
|
55,430 |
|
|
|
15,724 |
|
|
|
71,154 |
|
|
|
86,303 |
|
|
|
18,591 |
|
|
|
104,894 |
|
Total |
|
$ |
1,157,948 |
|
|
$ |
17,302 |
|
|
$ |
1,175,250 |
|
|
$ |
1,070,642 |
|
|
$ |
20,304 |
|
|
$ |
1,090,946 |
|
10
(5) Composition of Certain Consolidated Condensed Financial Statement Captions
|
|
As of |
|
|||||
|
|
July 1, 2024 |
|
|
January 1, 2024 |
|
||
|
|
(In thousands) |
|
|||||
Inventories: |
|
|
|
|
|
|
||
Raw materials |
|
$ |
164,961 |
|
|
$ |
165,666 |
|
Work-in-process |
|
|
49,657 |
|
|
|
45,494 |
|
Finished goods |
|
|
2,288 |
|
|
|
1,915 |
|
Inventories |
|
$ |
216,906 |
|
|
$ |
213,075 |
|
|
|
|
|
|
|
|
||
Property, plant, and equipment, net: |
|
|
|
|
|
|
||
Land and land use rights |
|
$ |
68,705 |
|
|
$ |
71,131 |
|
Buildings and improvements |
|
|
511,699 |
|
|
|
512,148 |
|
Machinery and equipment |
|
|
1,070,313 |
|
|
|
986,527 |
|
Furniture and fixtures and other |
|
|
10,513 |
|
|
|
10,157 |
|
Construction-in-progress |
|
|
61,477 |
|
|
|
90,940 |
|
Property, plant, and equipment, gross |
|
|
1,722,707 |
|
|
|
1,670,903 |
|
Less: Accumulated depreciation |
|
|
(884,464 |
) |
|
|
(863,236 |
) |
Property, plant, and equipment, net |
|
$ |
838,243 |
|
|
$ |
807,667 |
|
|
|
|
|
|
|
|
||
Other current liabilities: |
|
|
|
|
|
|
||
Accrued capital expenditures |
|
$ |
14,681 |
|
|
$ |
35,026 |
|
Sales return and allowances |
|
|
12,910 |
|
|
|
12,301 |
|
Accrued facility operating costs |
|
|
9,264 |
|
|
|
10,172 |
|
Operating leases |
|
|
8,160 |
|
|
|
8,433 |
|
Housing fund |
|
|
7,609 |
|
|
|
7,749 |
|
Warranty |
|
|
7,055 |
|
|
|
10,557 |
|
Interest |
|
|
6,873 |
|
|
|
9,399 |
|
Income taxes payable |
|
|
6,231 |
|
|
|
5,466 |
|
Accrued professional fees |
|
|
6,145 |
|
|
|
3,276 |
|
Restructuring |
|
|
594 |
|
|
|
1,179 |
|
Derivative liabilities |
|
|
65 |
|
|
|
297 |
|
Other |
|
|
40,371 |
|
|
|
36,951 |
|
Other current liabilities |
|
$ |
119,958 |
|
|
$ |
140,806 |
|
|
|
|
|
|
|
|
||
Other long-term liabilities: |
|
|
|
|
|
|
||
Deferred income taxes |
|
$ |
44,664 |
|
|
$ |
44,238 |
|
Customer deposits |
|
|
28,390 |
|
|
|
29,820 |
|
Finance leases |
|
|
12,405 |
|
|
|
12,799 |
|
Defined benefit pension plan liability |
|
|
748 |
|
|
|
836 |
|
Derivative liabilities |
|
|
— |
|
|
|
1,476 |
|
Other |
|
|
26,558 |
|
|
|
24,349 |
|
Other long-term liabilities |
|
$ |
112,765 |
|
|
$ |
113,518 |
|
11
(6) Goodwill
Goodwill by reportable segment was as follows:
|
|
PCB |
|
|
RF&S Components |
|
|
Total |
|
|||
|
|
(In thousands) |
|
|||||||||
As of July 1, 2024 and January 1, 2024 |
|
|
|
|
|
|
|
|
|
|||
Goodwill |
|
$ |
810,235 |
|
|
$ |
177,200 |
|
|
$ |
987,435 |
|
Accumulated impairment losses |
|
|
(171,400 |
) |
|
|
(113,300 |
) |
|
|
(284,700 |
) |
Carrying amount |
|
$ |
638,835 |
|
|
$ |
63,900 |
|
|
$ |
702,735 |
|
(7) Definite-lived Intangibles
The components of definite-lived intangibles were as follows:
|
|
Gross |
|
|
Accumulated |
|
|
Net |
|
|
Weighted |
|
||||
|
|
(In thousands) |
|
|
(In years) |
|
||||||||||
As of July 1, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Customer relationships |
|
$ |
324,730 |
|
|
$ |
(149,076 |
) |
|
$ |
175,654 |
|
|
|
11.8 |
|
Technology |
|
|
66,650 |
|
|
|
(31,949 |
) |
|
|
34,701 |
|
|
|
8.2 |
|
Total |
|
$ |
391,380 |
|
|
$ |
(181,025 |
) |
|
$ |
210,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
As of January 1, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Customer relationships |
|
$ |
416,230 |
|
|
$ |
(222,766 |
) |
|
$ |
193,464 |
|
|
|
11.2 |
|
Technology |
|
|
66,650 |
|
|
|
(27,278 |
) |
|
|
39,372 |
|
|
|
8.2 |
|
Backlog |
|
|
13,000 |
|
|
|
(9,750 |
) |
|
|
3,250 |
|
|
|
2.0 |
|
Trade names |
|
|
2,500 |
|
|
|
(1,875 |
) |
|
|
625 |
|
|
|
2.0 |
|
Total |
|
$ |
498,380 |
|
|
$ |
(261,669 |
) |
|
$ |
236,711 |
|
|
|
|
|
Definite-lived intangibles are amortized using the straight-line method of amortization over the useful life. Amortization expense was $12,591 and $26,356 for the quarter and two quarters ended July 1, 2024, respectively, and $6,275 and $34,047 for the quarter and two quarters ended July 3, 2023, respectively. For the quarter and two quarters ended July 1, 2024, $2,335 and $4,671, respectively, of amortization expense was included in cost of goods sold. For the quarter and two quarters ended July 3, 2023, $2,423 and $8,231, respectively, of amortization expense was included in cost of goods sold.
In connection with the finalization of acquired identifiable intangible asset valuation during the quarter ended July 3, 2023 related to the Company's acquisition in 2022 of Telephonics, the Company recorded a net reduction in amortization expense of $2,862, which included $4,813 of amortization expense and a reduction in amortization expense of $5,117 and $2,558 due to the change in amortization period, which corresponded to the fiscal year ended January 2, 2023 and quarter ended April 3, 2023, respectively. The Company recorded amortization expense of $15,252 related to the acquired identifiable intangible assets during the two quarters ended July 3, 2023 (of which $5,627 corresponded to the fiscal year ended January 2, 2023 due to the change in amortization period). For the quarter and two quarters ended July 3, 2023, $1,475 and $5,900, respectively, of amortization expense related to the acquired identifiable intangible assets was included in cost of goods sold (of which $2,950 corresponded to the fiscal year ended January 2, 2023).
Estimated aggregate amortization for definite-lived intangible assets for the next five years and thereafter is as follows:
|
|
(In thousands) |
|
|
Remaining 2024 |
|
$ |
18,536 |
|
2025 |
|
|
36,897 |
|
2026 |
|
|
36,897 |
|
2027 |
|
|
34,543 |
|
2028 |
|
|
30,997 |
|
Thereafter |
|
|
52,485 |
|
Total |
|
$ |
210,355 |
|
12
(8) Long-term Debt and Letters of Credit
Long-term debt was as follows:
|
|
As of July 1, 2024 |
|
|
As of January 1, 2024 |
|
||||||||||||
|
|
Interest Rate |
|
Principal |
|
|
Interest Rate |
|
Principal |
|
||||||||
|
|
(In thousands, except interest rates) |
|
|||||||||||||||
Senior Notes due March 2029 |
|
|
4.00 |
|
% |
|
$ |
500,000 |
|
|
|
4.00 |
|
% |
|
$ |
500,000 |
|
Term Loan due May 2030 |
|
|
8.08 |
|
|
|
|
346,500 |
|
|
|
8.10 |
|
|
|
|
349,125 |
|
Asia ABL Revolving Loan due June 2028 |
|
|
6.63 |
|
|
|
|
80,000 |
|
|
|
6.65 |
|
|
|
|
80,000 |
|
Total debt |
|
|
|
|
|
|
926,500 |
|
|
|
|
|
|
|
929,125 |
|
||
Less: Unamortized debt issuance costs |
|
|
|
|
|
|
(7,398 |
) |
|
|
|
|
|
|
(8,021 |
) |
||
Less: Unamortized debt discount |
|
|
|
|
|
|
(3,049 |
) |
|
|
|
|
|
|
(3,268 |
) |
||
Subtotal |
|
|
|
|
|
|
916,053 |
|
|
|
|
|
|
|
917,836 |
|
||
Less: Current maturities |
|
|
|
|
|
|
(2,625 |
) |
|
|
|
|
|
|
(3,500 |
) |
||
Long-term debt, less current maturities |
|
|
|
|
|
$ |
913,428 |
|
|
|
|
|
|
$ |
914,336 |
|
||
Debt Covenants
Borrowings under the Senior Notes due March 2029 and Term Loan due May 2030 (Term Loan Facility) are subject to certain affirmative and negative covenants, including limitations on indebtedness, corporate transactions, investments, dispositions, and restricted payments.
Under the occurrence of certain events, the U.S. Asset-Based Lending Credit Agreement (U.S. ABL) and Asia Asset-Based Lending Credit Agreement (Asia ABL) (collectively, the ABL Revolving Loans) are subject to various financial covenants, including leverage and fixed charge coverage ratios.
Debt Issuance Costs and Debt Discount
Remaining unamortized debt issuance costs and debt discount were as follows:
|
|
As of July 1, 2024 |
|
As of January 1, 2024 |
||||||||||||||||||||||
|
|
Debt |
|
|
Debt |
|
|
Effective |
|
Debt |
|
|
Debt |
|
|
Effective |
||||||||||
|
|
(In thousands, except interest rates) |
||||||||||||||||||||||||
Senior Notes due March 2029 |
|
$ |
3,727 |
|
|
$ |
— |
|
|
|
4.18 |
|
% |
|
$ |
4,085 |
|
|
$ |
— |
|
|
|
4.18 |
|
% |
Term Loan due May 2030 |
|
|
3,671 |
|
|
|
3,049 |
|
|
|
8.26 |
|
|
|
|
3,936 |
|
|
|
3,268 |
|
|
|
8.26 |
|
|
Total |
|
$ |
7,398 |
|
|
$ |
3,049 |
|
|
|
|
|
|
$ |
8,021 |
|
|
$ |
3,268 |
|
|
|
|
|
||
The above debt issuance costs and debt discount are recorded as a reduction of the debt and are amortized into interest expense using an effective interest rate over the duration of the debt.
The remaining unamortized debt issuance costs for the ABL Revolving Loans of $1,421 and $1,603 as of July 1, 2024 and January 1, 2024, respectively, are included in deposits and other non-current assets and are amortized to interest expense over the duration of the ABL Revolving Loans using the straight-line method of amortization.
As of July 1, 2024, the remaining weighted average amortization period for all unamortized debt issuance costs and debt discount was 5.3 years.
Refinancing of Term Loan Facility
On August 1, 2024, the Company entered into a First Amendment to its Amended and Restated Term Loan Credit Agreement, dated as of May 30, 2023, by and among the Company, as Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, and the several lenders from time to time parties thereto, pursuant to which the Company closed its $346,500 of a senior secured term loan (New Term Loan Facility) that bears interest at a floating rate of 1-month Chicago Mercantile Exchange (CME) Term Secured Overnight Financing Rate (SOFR) plus an applicable margin of 2.25%, 50 basis points lower than the previous Term Loan Facility issued in May 2023. The New Term Loan Facility is issued at par, maintains the same maturity of May 30, 2030 as the previous Term Loan Facility, and the majority is a cashless rollover from the previous Term Loan Facility.
13
(9) Income Taxes
The Company’s effective tax rate is impacted by the mix of foreign and U.S. income, tax rates in China and Hong Kong, the U.S. federal income tax rate, apportioned state income tax rates, the generation of credits, and deductions available to the Company as well as changes in valuation allowances and certain non-deductible items. No tax benefit was recorded on the losses incurred in certain foreign jurisdictions as a result of corresponding increases in the valuation allowances in these jurisdictions.
During the quarter and two quarters ended July 1, 2024, the Company’s effective tax rate was impacted by a net discrete benefit of $3,348 and $2,861, respectively. This is primarily related to a windfall tax benefit of the stock-based compensation releases and finalization of China and Canada corporate income tax returns, which was partially offset by the approval of the Company’s renewal application for High and New Technology Enterprise status for two of the Company’s manufacturing subsidiaries in China (including the impact on the respective subsidiaries’ deferred tax amounts), and accrued interest expense on existing uncertain tax positions.
The Company has various foreign subsidiaries formed or acquired to conduct or support its business outside the U.S. The Company expects its earnings attributable to most foreign subsidiaries may be repatriated back to the U.S. and so a deferred tax liability has been recorded for foreign withholding taxes and the estimated federal/state tax impact on any repatriation. For those other companies with earnings currently being reinvested outside of the U.S., no deferred tax liability on undistributed earnings has been recorded.
(10) Segment Information
The Company’s reportable segments are the segments for which separate financial information is available and upon which operating results are evaluated by the chief operating decision maker to assess performance and to allocate resources.
The Company, including the chief operating decision maker, evaluates segment performance based on reportable segment income, which is operating income before amortization of intangibles. Interest expense and interest income are not presented by segment since they are not included in the measure of segment profitability reviewed by the chief operating decision maker. All inter‑segment transactions have been eliminated. Net sales by segment, operating segment income, and segment assets were as follows:
|
|
Quarter Ended |
|
|
Two Quarters Ended |
|
|
||||||||||
|
|
July 1, 2024 |
|
|
July 3, 2023 |
|
|
July 1, 2024 |
|
|
July 3, 2023 |
|
|
||||
|
|
(In thousands) |
|||||||||||||||
Net Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
PCB |
|
$ |
596,107 |
|
|
$ |
536,531 |
|
|
$ |
1,157,948 |
|
|
$ |
1,070,642 |
|
|
RF&S Components |
|
|
9,030 |
|
|
|
9,978 |
|
|
|
17,302 |
|
|
|
20,304 |
|
|
Total net sales |
|
$ |
605,137 |
|
|
$ |
546,509 |
|
|
$ |
1,175,250 |
|
|
$ |
1,090,946 |
|
|
Operating Segment Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
PCB |
|
$ |
90,927 |
|
|
$ |
58,479 |
|
|
$ |
160,579 |
|
|
$ |
110,113 |
|
|
RF&S Components |
|
|
2,052 |
|
|
|
3,202 |
|
|
|
3,714 |
|
|
|
5,370 |
|
|
Corporate and Other |
|
|
(41,402 |
) |
|
|
(33,998 |
) |
|
|
(81,884 |
) |
|
|
(63,496 |
) |
|
Total operating segment income |
|
|
51,577 |
|
|
|
27,683 |
|
|
|
82,409 |
|
|
|
51,987 |
|
|
Amortization of definite-lived intangibles (1) |
|
|
(12,591 |
) |
|
|
(6,275 |
) |
|
|
(26,356 |
) |
|
|
(34,047 |
) |
|
Total operating income |
|
|
38,986 |
|
|
|
21,408 |
|
|
|
56,053 |
|
|
|
17,940 |
|
|
Total other expense |
|
|
(8,454 |
) |
|
|
(7,998 |
) |
|
|
(11,452 |
) |
|
|
(18,268 |
) |
|
Income (loss) before income taxes |
|
$ |
30,532 |
|
|
$ |
13,410 |
|
|
$ |
44,601 |
|
|
$ |
(328 |
) |
|
|
|
As of |
|
|||||
|
|
July 1, 2024 |
|
|
January 1, 2024 |
|
||
|
|
(In thousands) |
|
|||||
Segment Assets: |
|
|
|
|
|
|
||
PCB |
|
$ |
2,103,247 |
|
|
$ |
2,032,202 |
|
RF&S Components |
|
|
136,021 |
|
|
|
142,520 |
|
Corporate and Other |
|
|
1,104,096 |
|
|
|
1,148,941 |
|
Total assets |
|
$ |
3,343,364 |
|
|
$ |
3,323,663 |
|
The Corporate and Other category primarily includes operating expenses that are not included in the segment operating performance measures. Corporate and Other consists primarily of corporate governance functions such as finance, accounting, information technology, and human resources personnel, as well as global sales and marketing personnel, research and development costs, and acquisition and integration costs associated with acquisitions and divestitures.
14
The Company markets and sells its products in approximately 60 countries. Other than in the United States and Taiwan, the Company does not conduct business in any country in which its net sales in that country exceed 10% of the Company’s total net sales. Net sales are attributed to countries by country invoiced and were as follows:
|
|
Quarter Ended |
|
|
Two Quarters Ended |
|
||||||||||
|
|
July 1, 2024 |
|
|
July 3, 2023 |
|
|
July 1, 2024 |
|
|
July 3, 2023 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Net Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States |
|
$ |
308,774 |
|
|
$ |
319,122 |
|
|
$ |
609,733 |
|
|
$ |
630,563 |
|
Taiwan |
|
|
73,931 |
|
|
|
37,439 |
|
|
|
142,855 |
|
|
|
65,382 |
|
Other |
|
|
222,432 |
|
|
|
189,948 |
|
|
|
422,662 |
|
|
|
395,001 |
|
Total net sales |
|
$ |
605,137 |
|
|
$ |
546,509 |
|
|
$ |
1,175,250 |
|
|
$ |
1,090,946 |
|
(11) Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss, net of tax, were as follows:
|
|
Foreign |
|
|
Pension |
|
|
Cash Flow |
|
|
Total |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Ending balance as of January 1, 2024 |
|
$ |
(32,860 |
) |
|
$ |
2,530 |
|
|
$ |
1,263 |
|
|
$ |
(29,067 |
) |
Other comprehensive (loss) income |
|
|
(858 |
) |
|
|
— |
|
|
|
4,740 |
|
|
|
3,882 |
|
Amounts reclassified from accumulated |
|
|
— |
|
|
|
— |
|
|
|
(1,728 |
) |
|
|
(1,728 |
) |
Net year to date other comprehensive (loss) |
|
|
(858 |
) |
|
|
— |
|
|
|
3,012 |
|
|
|
2,154 |
|
Ending balance as of July 1, 2024 |
|
$ |
(33,718 |
) |
|
$ |
2,530 |
|
|
$ |
4,275 |
|
|
$ |
(26,913 |
) |
(12) Financial Instruments
Derivatives
Interest Rate Swaps
The Company’s business is exposed to risk resulting from fluctuations in interest rates on certain SOFR based variable rate debt. Increases in interest rates increase interest expenses relating to the outstanding variable rate borrowings and increase the cost of debt. Fluctuations in interest rates can also lead to significant fluctuations in the fair value of the debt obligations.
On March 23, 2023, the Company entered into a four-year pay-fixed, receive-floating (1-month CME Term SOFR), interest rate swap arrangement with a notional amount of $250,000 for the period beginning April 1, 2023 and ending on April 1, 2027. Under the terms of the interest rate swap, the Company pays a fixed rate of 3.49% against a portion of its Term SOFR-based debt and receives a floating 1-month CME Term SOFR during the swap period.
At inception, the Company designated the interest rate swap as a cash flow hedge and the fair value of the interest rate swap was zero. The change in the fair value of the interest rate swap is recorded as a component of accumulated other comprehensive loss, net of tax in the Company's consolidated condensed balance sheets. No ineffectiveness was recognized for the quarter and two quarters ended July 1, 2024.
Commodity Price Risk Management
The Company uses various raw materials in the manufacturing of PCBs. Copper clad laminates (CCLs), a key raw material for the manufacture of PCBs, are made from epoxy resin, glass cloth, and copper foil. The Company only buys a small amount of copper directly. However, copper is a major driver of laminate cost. The Company enters into commodity contracts to hedge copper as a proxy for hedging laminate. As of July 1, 2024, the Company has commodity contracts with a notional quantity of (i) 0.6 metric tonnes for the period beginning July 1, 2024 and ending on September 30, 2024, (ii) 0.5 metric tonnes for the period beginning October 1, 2024 and ending on December 31, 2024, (iii) 0.5 metric tonnes for the period beginning January 1, 2025 and ending on March 31, 2025, and (iv) 0.5 metric tonnes for the period beginning April 1, 2025 and ending on June 30, 2025. The changes in the fair value of these commodity contracts are recorded in cost of goods sold in the consolidated condensed statements of operations. The commodity contracts decreased cost of goods sold by $609 and $1,040 for the quarter and two quarters ended July 1, 2024, respectively. The commodity contracts increased cost of goods sold by $1,423 and $382 for the quarter and two quarters ended July 3, 2023, respectively. These commodity contracts are not designated as accounting hedges.
15
The fair values of derivative instruments in the consolidated condensed balance sheets were as follows:
|
|
Asset/(Liability) Fair Value |
|
|||||
|
|
July 1, 2024 |
|
|
January 1, 2024 |
|
||
|
|
(In thousands) |
|
|||||
Cash flow derivative instruments designated as hedges: |
|
|
|
|
|
|
||
Interest rate swap: |
|
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
$ |
3,876 |
|
|
$ |
3,253 |
|
Deposits and other non-current assets |
|
|
1,917 |
|
|
|
— |
|
Other long-term liabilities |
|
|
— |
|
|
|
(1,476 |
) |
Net asset |
|
$ |
5,793 |
|
|
$ |
1,777 |
|
Cash flow derivative instruments not designated as hedges: |
|
|
|
|
|
|
||
Commodity contracts: |
|
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
$ |
889 |
|
|
$ |
— |
|
Other current liabilities |
|
|
— |
|
|
|
(297 |
) |
Net asset (liability) |
|
$ |
889 |
|
|
$ |
(297 |
) |
Amounts recorded in accumulated other comprehensive loss related to derivatives designated as cash flow hedges, as well as the amounts recorded in each caption in the consolidated condensed statements of operations when derivative amounts are reclassified out of accumulated other comprehensive loss were as follows:
|
|
|
|
Quarter Ended July 1, 2024 |
|
|
Quarter Ended July 3, 2023 |
|
||||||||||
|
|
Financial |
|
Gain Recognized in Other Comprehensive Income |
|
|
Amounts |
|
|
Gain Recognized in Other Comprehensive Income |
|
|
Amounts |
|
||||
|
|
|
|
(In thousands) |
|
|||||||||||||
Cash flow derivative instruments designated as hedges: |
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swap |
|
Interest expense |
|
$ |
1,232 |
|
|
$ |
1,158 |
|
|
$ |
7,710 |
|
|
$ |
(968 |
) |
|
|
|
|
Two Quarters Ended July 1, 2024 |
|
|
Two Quarters Ended July 3, 2023 |
|
||||||||||
|
|
Financial |
|
Gain Recognized in Other Comprehensive Income |
|
|
Amounts |
|
|
Gain Recognized in Other Comprehensive Loss |
|
|
Amounts |
|
||||
|
|
|
|
(In thousands) |
|
|||||||||||||
Cash flow derivative instruments designated as hedges: |
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swap |
|
Interest expense |
|
$ |
6,340 |
|
|
$ |
(2,323 |
) |
|
$ |
6,809 |
|
|
$ |
(968 |
) |
The activity associated with the designated cash flow hedges reflected in accumulated other comprehensive loss was as follows:
|
|
Two Quarters Ended |
|
|||||
|
|
July 1, 2024 |
|
|
July 3, 2023 |
|
||
|
|
(In thousands) |
|
|||||
Beginning balance, net of tax |
|
$ |
1,263 |
|
|
$ |
(85 |
) |
Changes in fair value gain, net of tax |
|
|
4,740 |
|
|
|
5,140 |
|
Reclassification to earnings |
|
|
(1,728 |
) |
|
|
(721 |
) |
Ending balance, net of tax |
|
$ |
4,275 |
|
|
$ |
4,334 |
|
16
(13) Fair Value Measures
The Company measures at fair value its financial and non-financial assets by using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price, based on the highest and best use of the asset or liability.
The carrying amount and estimated fair value of the Company’s financial instruments were as follows:
|
|
As of July 1, 2024 |
|
|
As of January 1, 2024 |
|
||||||||||
|
|
Carrying |
|
|
Fair Value |
|
|
Carrying |
|
|
Fair Value |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Derivative assets, current |
|
$ |
4,765 |
|
|
$ |
4,765 |
|
|
$ |
3,282 |
|
|
$ |
3,282 |
|
Derivative assets, non-current |
|
|
1,917 |
|
|
|
1,917 |
|
|
|
— |
|
|
|
— |
|
Derivative liabilities, current |
|
|
65 |
|
|
|
65 |
|
|
|
297 |
|
|
|
297 |
|
Derivative liabilities, non-current |
|
|
— |
|
|
|
— |
|
|
|
1,476 |
|
|
|
1,476 |
|
Senior Notes due March 2029 |
|
|
496,273 |
|
|
|
457,305 |
|
|
|
495,915 |
|
|
|
455,035 |
|
Term Loan due May 2030 |
|
|
339,780 |
|
|
|
347,585 |
|
|
|
341,921 |
|
|
|
351,743 |
|
ABL Revolving Loans |
|
|
80,000 |
|
|
|
80,000 |
|
|
|
80,000 |
|
|
|
80,000 |
|
The fair value of the derivative instruments was determined using pricing models developed based on the 1-month CME Term SOFR swap rate, foreign currency exchange rates, and other observable market data, including quoted market prices, as appropriate using Level 2 inputs. The values were adjusted to reflect non-performance risk of both the counterparty and the Company, as necessary.
The fair value of the long-term debt was estimated based on quoted market prices or discounting the debt over its life using current market rates for similar debt as of July 1, 2024 and January 1, 2024, which are considered Level 2 inputs.
As of July 1, 2024 and January 1, 2024, the Company’s other financial instruments included cash and cash equivalents, accounts receivable, contract assets, accounts payable, and contract liabilities. The carrying amount of these instruments approximates fair value.
The majority of the Company’s non-financial assets and liabilities, which include goodwill, intangible assets, inventories, and property, plant, and equipment, are not required to be carried at fair value on a recurring basis. However, if certain triggering events occur (or are tested at least annually in the case of goodwill) such that a non-financial instrument is required to be evaluated for impairment, based upon a comparison of the non-financial instrument’s fair value to its carrying value, an impairment is recorded to reduce the carrying value to the fair value, if the carrying value exceeds the fair value.
(14) Commitments and Contingencies
Legal Matters
The Company is subject to various legal matters, which it considers normal for its business activities. While the Company currently believes that the amount of any reasonably possible loss for known matters would not be material to the Company’s financial condition, the outcome of these actions is inherently difficult to predict. In the event of an adverse outcome, the ultimate potential loss could have a material adverse effect on the Company’s financial condition or results of operations in a particular period. The Company has accrued amounts for its loss contingencies which are probable and estimable as of July 1, 2024 and January 1, 2024 and included as a component of other current liabilities. However, these amounts are not material to the consolidated condensed financial statements of the Company.
Offset Agreements
The Company has and may continue to enter into industrial cooperation agreements, sometimes referred to as offset agreements, as a condition to obtaining orders for products and services from customers in foreign countries. These agreements are intended to promote investment in the applicable country, and the Company’s obligations under these agreements may be satisfied through activities that do not require the Company to use cash, including transferring technology or providing manufacturing and other consulting support. The obligations under these agreements may also be satisfied through the use of cash for activities such as purchasing supplies from in-country vendors, setting up support centers, research and development investments, acquisitions, and building or leasing facilities for in-country operations. The amount of the offset requirement is determined by contract value awarded and negotiated percentages with customers. As of July 1, 2024, the Company had outstanding offset agreements of approximately $27,963, some of which extend through 2028. Offset programs usually extend over several years and in some cases provide for penalties in the event the Company fails to perform in accordance with contract requirements. To date, the Company has not been obligated to pay any such penalties.
17
Supplier Finance Program Obligations
The Company has agreements with financial institutions to facilitate payments to certain suppliers. Under the terms of the agreements, the Company confirms the validity of each supplier invoice to the respective financial institution upon receipt. The supplier receives payment from the financial institution, and the Company pays the financial institution based on the terms negotiated, which generally range from 160 days to 360 days. Liabilities associated with these agreements are recorded in accounts payable on the consolidated condensed balance sheets and amounted to $5,057 and $18,832 as of July 1, 2024 and January 1, 2024, respectively.
(15) Earnings Per Share
The reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share is as follows:
|
|
Quarter Ended |
|
|
Two Quarters Ended |
|
||||||||||
|
|
July 1, 2024 |
|
|
July 3, 2023 |
|
|
July 1, 2024 |
|
|
July 3, 2023 |
|
||||
|
|
(In thousands, except per share amounts) |
|
|||||||||||||
Net income |
|
$ |
26,352 |
|
|
$ |
6,824 |
|
|
$ |
36,818 |
|
|
$ |
1,010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic weighted average shares |
|
|
101,234 |
|
|
|
102,759 |
|
|
|
101,593 |
|
|
|
102,570 |
|
Dilutive effect of performance-based restricted stock |
|
|
2,655 |
|
|
|
2,061 |
|
|
|
2,400 |
|
|
|
2,005 |
|
Diluted shares |
|
|
103,889 |
|
|
|
104,820 |
|
|
|
103,993 |
|
|
|
104,575 |
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
0.26 |
|
|
$ |
0.07 |
|
|
$ |
0.36 |
|
|
$ |
0.01 |
|
Diluted |
|
$ |
0.25 |
|
|
$ |
0.07 |
|
|
$ |
0.35 |
|
|
$ |
0.01 |
|
PRUs, RSUs, and stock options to purchase 330 and 177 shares of common stock for the quarter and two quarters ended July 1, 2024, respectively, and 524 and 345 shares of common stock for the quarter and two quarters ended July 3, 2023, respectively, were not included in the computation of diluted earnings per share. The PRUs were not included in the computation of diluted earnings per share because the performance conditions had not been met at July 1, 2024 and July 3, 2023, and for the RSUs and stock options, the options’ exercise prices or the total expected proceeds under the treasury stock method was greater than the average market price of common stock during the applicable quarter and two quarters and, as a result, the impact would be anti-dilutive.
(16) Stock-Based Compensation
Performance-based Restricted Stock Units
The Company maintains a long-term incentive program for executives that provides for the issuance of PRUs, representing hypothetical shares of the Company’s common stock that may be issued. Under the PRU program, a target number of PRUs is awarded at the beginning of each three-year performance period. The number of shares of common stock released at the end of the performance period depends on performance during the period and may range from zero to 2.4 times the target number for PRUs awarded before 2023 and zero to 2.0 times the target number for PRUs awarded in 2023 and thereafter. For PRUs awarded before 2023, the performance metrics of the PRU program are based on (a) annual financial targets, which are based on revenue and earnings before interest, tax, depreciation, and amortization expense (EBITDA), each equally weighted, and (b) an overall modifier based on the Company’s total stockholder return (TSR) relative to a group of peer companies selected by the Company’s compensation committee, over the three‑year performance period. For PRUs awarded in 2023 and thereafter, the performance metrics of the PRU program are based on (a) annual financial targets, which are based on revenue and EBITDA, each equally weighted, and (b) the three-year TSR performance result, which will be an additive component to the Company’s financial results of the aggregated three-year measurement period.
18
Under the PRU program, financial goals with respect to one or more target milestones are set at the beginning of each fiscal year and performance is reviewed at the end of that year. The percentage to be applied to each participant’s target award ranges from zero to 160% for PRUs awarded before 2023 and zero to 200% for PRUs awarded in 2023 and thereafter, based upon the extent to which the target milestones are achieved. If specific performance threshold levels for the target milestones are met, the amount earned for that element over the three-year performance period will be applied equally for PRUs awarded before 2023 and 80% for PRUs awarded in 2023 and thereafter, of the participants’ PRU award to determine the number of units earned.
At the end of the three-year performance period, the total units earned, if any, are adjusted by the TSR calculation. The TSR calculation is a percentage ranging from zero to 150% for PRUs awarded before 2023 and zero to 200% for PRUs awarded in 2023 and thereafter, determined on the Company’s TSR based on stock price changes relative to a group of peer companies selected by the Company’s compensation committee for the same three-year period. For outstanding PRU awards granted before 2023, the TSR is used as an overall modifier of the three-year performance period such that the base calculations are multiplied by the TSR modifier, ranging from zero to 200%, based on the relative performance of the Company’s stock price as compared to its TSR peer group. For PRUs awarded in 2023 and thereafter, the TSR calculation will be applied to 20% of the participants’ PRU award to determine the number of additional units earned.
Stock-based Compensation Expense and Unrecognized Compensation Costs
Stock-based compensation expense recognized in the accompanying consolidated condensed statements of operations was as follows:
|
|
Quarter Ended |
|
|
Two Quarters Ended |
|
||||||||||
|
|
July 1, 2024 |
|
|
July 3, 2023 |
|
|
July 1, 2024 |
|
|
July 3, 2023 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Cost of goods sold |
|
$ |
1,941 |
|
|
$ |
1,497 |
|
|
$ |
3,970 |
|
|
$ |
3,159 |
|
Selling and marketing |
|
|
836 |
|
|
|
698 |
|
|
|
1,704 |
|
|
|
1,439 |
|
General and administrative |
|
|
3,468 |
|
|
|
2,677 |
|
|
|
7,063 |
|
|
|
5,239 |
|
Research and development |
|
|
335 |
|
|
|
249 |
|
|
|
630 |
|
|
|
524 |
|
Stock-based compensation expense recognized |
|
$ |
6,580 |
|
|
$ |
5,121 |
|
|
$ |
13,367 |
|
|
$ |
10,361 |
|
A summary of total unrecognized compensation costs as of July 1, 2024 was as follows:
|
|
Unrecognized Compensation Costs |
|
|
Remaining Weighted Average |
|
||
|
|
(In thousands) |
|
|
(In years) |
|
||
RSU awards |
|
$ |
56,973 |
|
|
|
1.7 |
|
PRU awards |
|
|
7,314 |
|
|
|
1.8 |
|
Total |
|
$ |
64,287 |
|
|
|
|
|
19
(17) Restructuring Charges
On February 8, 2023, the Company announced a consolidation plan, pursuant to which the Company ceased operations at three of its manufacturing facilities during the fiscal year ended January 1, 2024 and consolidated the operations of those facilities into other Company facilities. The three manufacturing facilities were PCB operations located in Anaheim and Santa Clara, California, and Hong Kong. The Company recorded $25,742 of restructuring charges and $5,161 of accelerated depreciation since the February 8, 2023 announcement.
In addition to this consolidation plan, the Company recognized employee separation, contract termination, and other costs during the quarter and two quarters ended July 1, 2024 and July 3, 2023 in connection with other global realignment restructuring efforts. Contract termination and other costs primarily represented plant closure costs.
Restructuring costs by reportable segment were as follows:
|
|
Quarter Ended July 1, 2024 |
|
|
Quarter Ended July 3, 2023 |
|
||||||||||||||||||
|
|
Employee |
|
|
Contract |
|
|
Total |
|
|
Employee |
|
|
Contract |
|
|
Total |
|
||||||
|
|
(In thousands) |
|
|||||||||||||||||||||
Reportable Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PCB |
|
$ |
— |
|
|
$ |
1,053 |
|
|
$ |
1,053 |
|
|
$ |
7,385 |
|
|
$ |
2,999 |
|
|
$ |
10,384 |
|
RF&S Components |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
14 |
|
|
|
— |
|
|
|
14 |
|
Corporate and Other |
|
|
— |
|
|
|
(17 |
) |
|
|
(17 |
) |
|
|
179 |
|
|
|
226 |
|
|
|
405 |
|
Total |
|
$ |
— |
|
|
$ |
1,036 |
|
|
$ |
1,036 |
|
|
$ |
7,578 |
|
|
$ |
3,225 |
|
|
$ |
10,803 |
|
|
|
Two Quarters Ended July 1, 2024 |
|
|
Two Quarters Ended July 3, 2023 |
|
||||||||||||||||||
|
|
Employee |
|
|
Contract |
|
|
Total |
|
|
Employee |
|
|
Contract |
|
|
Total |
|
||||||
|
|
(In thousands) |
|
|||||||||||||||||||||
Reportable Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
PCB |
|
$ |
— |
|
|
$ |
4,943 |
|
|
$ |
4,943 |
|
|
$ |
11,142 |
|
|
$ |
3,185 |
|
|
$ |
14,327 |
|
RF&S Components |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
14 |
|
|
|
— |
|
|
|
14 |
|
Corporate and Other |
|
|
— |
|
|
|
31 |
|
|
|
31 |
|
|
|
305 |
|
|
|
324 |
|
|
|
629 |
|
Total |
|
$ |
— |
|
|
$ |
4,974 |
|
|
$ |
4,974 |
|
|
$ |
11,461 |
|
|
$ |
3,509 |
|
|
$ |
14,970 |
|
Accrued restructuring costs are included as a component of other current liabilities in the consolidated condensed balance sheet. The utilization of the accrued restructuring costs was as follows:
|
|
Employee |
|
|
Contract |
|
|
Total |
|
|||
|
|
(In thousands) |
|
|||||||||
Accrued as of January 1, 2024 |
|
$ |
994 |
|
|
$ |
185 |
|
|
$ |
1,179 |
|
Charged to expense |
|
|
— |
|
|
|
4,974 |
|
|
|
4,974 |
|
Amount paid |
|
|
(416 |
) |
|
|
(5,143 |
) |
|
|
(5,559 |
) |
Accrued as of July 1, 2024 |
|
$ |
578 |
|
|
$ |
16 |
|
|
$ |
594 |
|
20
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Statement Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (Report) contains forward-looking statements regarding future events or our future financial and operational performance. Forward-looking statements include statements regarding markets for our products; trends in net sales, gross profits, and estimated expense levels; liquidity and anticipated cash needs and availability; and any statement that contains the words “anticipate,” “believe,” “plan,” “forecast,” “foresee,” “estimate,” “project,” “expect,” “seek,” “target,” “intend,” “goal,” and other similar expressions. The forward-looking statements included in this report reflect our current expectations and beliefs, and we do not undertake publicly to update or revise these statements, even if experience or future changes make it clear that any projected results expressed in this report or future quarterly reports to stockholders, press releases, or company statements will not be realized. In addition, the inclusion of any statement in this report does not constitute an admission by us that the events or circumstances described in such statement are material. Furthermore, we wish to caution and advise readers that these statements are based on assumptions that may not materialize and may involve risks and uncertainties, many of which are beyond our control, that could cause actual events or performance to differ materially from those contained or implied in these forward-looking statements. These risks and uncertainties include the risks identified under the heading "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended January 1, 2024, as updated by our other filings with the Securities and Exchange Commission (SEC), and described elsewhere in this Report. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated condensed financial statements and the related notes and the other financial information included in this Report, as well as the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our Annual Report on Form 10-K for the fiscal year ended January 1, 2024, filed with the SEC.
COMPANY OVERVIEW
We are a leading global manufacturer of technology solutions including mission systems, radio frequency (RF) components/RF microwave/microelectronic assemblies, and quick-turn and technologically advanced printed circuit boards (PCB). We focus on providing time-to-market and volume production of advanced technology products and offer a one-stop design, engineering, and manufacturing solution to our customers. This solution allows us to align technology development with the diverse needs of our customers and to enable them to reduce the time required to develop new products and bring them to market. We serve a diversified customer base consisting of approximately 1,500 customers in various markets throughout the world, including aerospace and defense, data center computing, automotive, medical, industrial and instrumentation, and networking. Our customers include original equipment manufacturers (OEMs), electronic manufacturing services (EMS) providers, original design manufacturers (ODMs), distributors, and government agencies (both domestic and allied foreign governments).
RECENT DEVELOPMENTS
On August 1, 2024, we entered into a First Amendment to our Amended and Restated Term Loan Credit Agreement, dated as of May 30, 2023, by and among us, as Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, and the several lenders from time to time parties thereto, pursuant to which we closed a $346.5 million senior secured term loan (New Term Loan Facility) that bears interest at a floating rate of 1-month Chicago Mercantile Exchange (CME) Term Secured Overnight Financing Rate (SOFR) plus an applicable margin of 2.25%, 50 basis points lower than our previous Term Loan issued in May 2023 (Term Loan Facility). The New Term Loan Facility amends and restates our previous Term Loan Facility. The New Term Loan Facility is issued at par, maintains the same maturity of May 30, 2030 as the previous Term Loan Facility, and the majority is a cashless rollover from the previous Term Loan Facility. We estimate we will incur fees and expenses of approximately $1.0 million related to the refinancing activity. The new financing is expected to generate annual interest savings of approximately $1.7 million.
On November 1, 2023, we announced our selection of Syracuse, New York as the location for a new proposed advanced technology PCB manufacturing facility. We expect that the proposed facility will bring advanced technology capability for our domestic high-volume production of ultra-high-density interconnect (HDI) PCBs in support of national security requirements. We believe the planned investment aligns with New York State’s continuing focus on the region as a premier technology hub for U.S. electronics and the recent selection of Buffalo-Rochester-Syracuse (BRS) for the Federal Tech Hub designation. The project reflects our support for cultivating a stronger microelectronics ecosystem in New York and across the U.S. Aerospace and Defense industrial base. We have broken ground on the 24-acre property adjacent to our existing facility in Syracuse for the campus expansion and the site for the new facility, and we expect initial low rate production within 18 to 24 months. Phase one of the proposed project, including capital for campus-wide improvements is estimated to be $100.0 million to $130.0 million, and is anticipated to run through 2026. Our planned capital investment commitments will be determined after finalizing terms with various stakeholders.
21
FINANCIAL OVERVIEW
While our customers include both OEMs and EMS providers, we measure customers based on OEM companies, as they are the ultimate end customers. Sales to our ten largest customers collectively accounted for 54% of our net sales for both the quarter and two quarters ended July 1, 2024. Sales to our ten largest customers collectively accounted for 50% and 49% of our net sales for the quarter and two quarters ended July 3, 2023, respectively. We sell to OEMs both directly and indirectly through EMS providers.
The percentage of our net sales attributable to each of the principal end markets we served was as follows:
|
|
Quarter Ended |
|
Two Quarters Ended |
||||||||||||||||
|
|
July 1, 2024 |
|
July 3, 2023 |
|
July 1, 2024 |
|
July 3, 2023 |
||||||||||||
End Markets (1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Aerospace and Defense |
|
|
45 |
|
% |
|
|
47 |
|
% |
|
|
46 |
|
% |
|
|
45 |
|
% |
Automotive |
|
|
14 |
|
|
|
|
17 |
|
|
|
|
13 |
|
|
|
|
17 |
|
|
Data Center Computing |
|
|
21 |
|
|
|
|
12 |
|
|
|
|
21 |
|
|
|
|
11 |
|
|
Medical/Industrial/Instrumentation |
|
|
14 |
|
|
|
|
16 |
|
|
|
|
14 |
|
|
|
|
17 |
|
|
Networking |
|
|
6 |
|
|
|
|
8 |
|
|
|
|
6 |
|
|
|
|
10 |
|
|
Total |
|
|
100 |
|
% |
|
|
100 |
|
% |
|
|
100 |
|
% |
|
|
100 |
|
% |
We derive revenues primarily from the sale of PCBs, engineered systems using customer-supplied engineering and design plans as well as our long-term contracts related to the design and manufacture of highly sophisticated intelligence, surveillance, and communications solutions, and RF and microwave/microelectronics components, assemblies, and subsystems. Orders for products generally correspond to the production schedules of our customers and are supported with firm purchase orders. Our customers have continuous control of the work in progress and finished goods throughout the PCB and engineered systems manufacturing process, as these are built to customer specifications with no alternative use, and there is an enforceable right of payment for work performed to date. As a result, we recognize revenue progressively over time based on the extent of progress towards completion of the performance obligation. We recognize revenue based on a cost method as it best depicts the transfer of control to the customer which takes place as we incur costs. Revenues are recorded proportionally as costs are incurred.
We also manufacture certain components, assemblies, subsystems, and completed systems which service our RF and Specialty Components (RF&S Components) customers and certain aerospace and defense customers. We recognize revenue at a point in time upon transfer of control of the products to our customer. Point in time recognition was determined as our customers do not simultaneously receive or consume the benefits provided by our performance and the asset being manufactured has alternative uses to us.
Net sales consist of gross sales less an allowance for returns, which typically have been approximately 2% of gross sales. We provide our customers a limited right of return for defective PCBs including components, subsystems, and assemblies. We record an estimate for sales returns and allowances at the time of sale based on historical results and anticipated returns.
Cost of goods sold consists of materials, labor, outside services, and overhead expenses incurred in the manufacture and testing of our products. Shipping and handling fees and related freight costs and supplies associated with shipping products are also included as a component of cost of goods sold. Many factors affect our gross margin, including capacity utilization, product mix, production volume, supply chain issues, and yield.
Selling and marketing expenses consist primarily of salaries, labor related benefits, and commissions paid to our internal sales force, independent sales representatives, and our sales support staff, as well as costs associated with marketing materials and trade shows.
General and administrative costs primarily include the salaries for executive, finance, accounting, information technology, and human resources personnel, as well as expenses for accounting and legal assistance, incentive compensation expense, and gains or losses on the sale or disposal of property, plant, and equipment.
Research and development expenses consist primarily of salaries and labor related benefits paid to our research and development staff, as well as material costs.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our consolidated condensed financial statements included in this Report have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses, and related disclosure of contingent assets and liabilities.
22
See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended January 1, 2024 for further discussion of critical accounting policies and estimates. There were no material changes to our critical accounting policies and estimates since January 1, 2024.
RESULTS OF OPERATIONS
The relationship of various items to net sales in our consolidated condensed statements of operations was as follows:
|
|
Quarter Ended |
|
Two Quarters Ended |
||||||||||||||||
|
|
July 1, 2024 |
|
July 3, 2023 |
|
July 1, 2024 |
|
July 3, 2023 |
||||||||||||
Net sales |
|
|
100.0 |
|
% |
|
|
100.0 |
|
% |
|
|
100.0 |
|
% |
|
|
100.0 |
|
% |
Cost of goods sold |
|
|
80.6 |
|
|
|
|
82.0 |
|
|
|
|
81.2 |
|
|
|
|
83.1 |
|
|
Gross profit |
|
|
19.4 |
|
|
|
|
18.0 |
|
|
|
|
18.8 |
|
|
|
|
16.9 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling and marketing |
|
|
3.3 |
|
|
|
|
3.3 |
|
|
|
|
3.4 |
|
|
|
|
3.6 |
|
|
General and administrative |
|
|
6.4 |
|
|
|
|
6.9 |
|
|
|
|
7.0 |
|
|
|
|
6.7 |
|
|
Research and development |
|
|
1.4 |
|
|
|
|
1.2 |
|
|
|
|
1.4 |
|
|
|
|
1.2 |
|
|
Amortization of definite-lived intangibles |
|
|
1.7 |
|
|
|
|
0.7 |
|
|
|
|
1.8 |
|
|
|
|
2.4 |
|
|
Restructuring charges |
|
|
0.2 |
|
|
|
|
2.0 |
|
|
|
|
0.4 |
|
|
|
|
1.4 |
|
|
Total operating expenses |
|
|
13.0 |
|
|
|
|
14.1 |
|
|
|
|
14.0 |
|
|
|
|
15.3 |
|
|
Operating income |
|
|
6.4 |
|
|
|
|
3.9 |
|
|
|
|
4.8 |
|
|
|
|
1.6 |
|
|
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
(2.0 |
) |
|
|
|
(2.2 |
) |
|
|
|
(2.1 |
) |
|
|
|
(2.2 |
) |
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
|
(0.2 |
) |
|
|
|
— |
|
|
|
|
(0.1 |
) |
|
Gain on sale of subsidiary |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
0.1 |
|
|
Other, net |
|
|
0.6 |
|
|
|
|
0.9 |
|
|
|
|
1.1 |
|
|
|
|
0.6 |
|
|
Total other expense, net |
|
|
(1.4 |
) |
|
|
|
(1.5 |
) |
|
|
|
(1.0 |
) |
|
|
|
(1.6 |
) |
|
Income before income taxes |
|
|
5.0 |
|
|
|
|
2.4 |
|
|
|
|
3.8 |
|
|
|
|
— |
|
|
Income tax (provision) benefit |
|
|
(0.7 |
) |
|
|
|
(1.2 |
) |
|
|
|
(0.7 |
) |
|
|
|
0.1 |
|
|
Net income |
|
|
4.3 |
|
% |
|
|
1.2 |
|
% |
|
|
3.1 |
|
% |
|
|
0.1 |
|
% |
The following discussion and analysis is for the quarter and two quarters ended July 1, 2024, compared to the quarter and two quarters ended July 3, 2023, unless otherwise stated.
Net Sales
Total net sales increased $58.6 million, or 10.7%, to $605.1 million for the second quarter of 2024 from $546.5 million for the second quarter of 2023. The increase in total net sales primarily resulted from an increase in net sales for the PCB reportable segment of $59.6 million, or 11.1%, to $596.1 million for the second quarter of 2024 from $536.5 million for the second quarter of 2023. The primary driver of this increase was demand growth in our aerospace and defense and data center computing end markets, partially offset by demand weakness in our automotive, networking, and medical, industrial, and instrumentation end markets. Net sales for the RF&S Components reportable segment decreased $1.0 million, or 9.5%, to $9.0 million for the second quarter of 2024 from $10.0 million for the second quarter of 2023, which was primarily due to lower demand in our networking end market.
Total net sales increased $84.4 million or 7.7%, to $1,175.3 million for the first two quarters of 2024 from $1,090.9 million for the first two quarters of 2023. This increase in total net sales primarily resulted from an increase in net sales for the PCB reportable segment of $87.3 million, or 8.2%, to $1,157.9 million for the first two quarters of 2024 from $1,070.6 million for the first two quarters of 2023. The primary driver of this increase was demand growth in our aerospace and defense and data center computing end markets, partially offset by demand weakness in our networking, automotive, and medical, industrial, and instrumentation end markets, and by the sale of our Shanghai backplane business in the first quarter of 2023, which had the effect of reducing $8.4 million of net sales when comparing the first two quarters of 2024 to the first two quarters of 2023. Net sales for the RF&S Components reportable segment decreased $3.0 million, or 14.8%, to $17.3 million for the first two quarters of 2024 from $20.3 million for the first two quarters of 2023, which was primarily due to lower demand in our networking end market.
Gross Margin
Overall gross margin increased to 19.4% for the second quarter of 2024 from 18.0% for the second quarter of 2023. Gross margin for the PCB reportable segment increased to 20.0% for the second quarter of 2024 from 18.6% for the second quarter of 2023. This increase was due to higher sales volume, particularly in the data center computing end market, and improved operational execution. Gross margin for the RF&S Components reportable segment decreased to 49.8% for the second quarter of 2024 from 57.4% for the second quarter of 2023, primarily due to lower sales.
23
Overall gross margin increased to 18.8% for the first two quarters of 2024 from 16.9% for the first two quarters of 2023. Gross margin for the PCB reportable segment increased to 19.7% for the first two quarters of 2024 from 17.6% for the first two quarters of 2023. This increase was due to higher sales volume, particularly in the data center computing end market, and improved operational execution. Gross margin for the RF&S Components reportable segment decreased to 48.7% for the first two quarters of 2024 from 53.5% for the first two quarters of 2023, primarily due to lower sales.
An important factor affecting gross margins is capacity utilization, which is measured by the actual production as a percentage of maximum capacity. This measure is particularly important in our high-volume PCB facilities in Asia, as a significant portion of our operating costs are fixed in nature. North America utilization figures are not as meaningful as Asia because bottlenecks in these high mix low volume facilities tend to occur in areas outside of plating, which is the core process that we use for calculating utilization rates. Capacity utilization for the second quarter of 2024 in our Asia and North America PCB facilities was 64% and 39%, respectively, compared to 46% and 38%, respectively, for the second quarter of 2023. Capacity utilization for the first two quarters of 2024 in our Asia and North America PCB facilities was 58% and 38%, respectively, compared to 49% and 38%, respectively, for the first two quarters of 2023. The increase in capacity utilization in our Asia PCB facilities was due to continued strong data center demand.
Selling and Marketing Expenses
Selling and marketing expenses increased $1.6 million to $19.8 million, or 3.3% of net sales, for the second quarter of 2024 from $18.2 million, or 3.3% of net sales, for the second quarter of 2023. The increase in selling and marketing expenses was primarily due to increases in labor costs and commissions. The selling and marketing expenses as a percentage of net sales was flat as a result of higher net sales offset by increased expenses.
Selling and marketing expenses increased $0.6 million to $40.1 million, or 3.4% of net sales, for the first two quarters of 2024 from $39.5 million, or 3.6% of net sales, for the first two quarters of 2023. The increase in selling and marketing expenses was primarily due to increases in certain personnel costs and stock-based compensation, partially offset by a decrease in commissions. The selling and marketing expenses as a percentage of net sales decreased as a result of higher net sales.
General and Administrative Expenses
General and administrative expenses increased $0.8 million to $38.6 million, or 6.4% of net sales, for the second quarter of 2024 from $37.8 million, or 6.9% of net sales, for the second quarter of 2023. The increase in general and administrative expenses was primarily due to increases in consulting and legal expenses, bad debt, labor costs, and the write down of our Hong Kong building of $6.1 million, partially offset by gains on the sale of assets primarily related to the sale of two buildings vacated by the closure of our Anaheim and Santa Clara plants of $14.4 million. The general and administrative expenses as a percentage of net sales decreased as a result of higher net sales.
General and administrative expenses increased $9.4 million to $82.3 million, or 7.0% of net sales, for the first two quarters of 2024 from $72.9 million, or 6.7% of net sales, for the first two quarters of 2023. The increase in general and administrative expenses was primarily due to increases in labor costs, consulting and legal expenses, incentive compensation, bad debt, stock-based compensation, and the write down of our Hong Kong building of $6.1 million, partially offset by gains on the sale of assets primarily related to the sale of two buildings vacated by the closure of our Anaheim and Santa Clara plants of $14.4 million.
Research and Development Expenses
Research and development expenses increased $2.1 million to $8.5 million, or 1.4% of net sales, for the second quarter of 2024 from $6.4 million, or 1.2% of net sales, for the second quarter of 2023. The increase in research and development expenses was primarily due to increases in labor costs and research and development projects.
Research and development expenses increased $2.4 million to $15.9 million, or 1.4% of net sales, for the first two quarters of 2024 from $13.5 million, or 1.2% of net sales, for the first two quarters of 2023. The increase in research and development expenses was primarily due to increases in labor costs and research and development projects.
Total Other Expense, Net
Total other expense, net increased $0.5 million to $8.5 million for the second quarter of 2024 from $8.0 million for the second quarter of 2023, primarily due to a $2.8 million decrease in foreign currency gain mainly resulting from higher monetary liabilities than assets in Renminbi (RMB) in the second quarter of 2024 as compared to the second quarter of 2023 and an increase in interest expense of $0.4 million, partially offset by an increase in interest income of $1.5 million and the absence of $1.2 million of loss on extinguishment in the second quarter of 2024 as compared to the second quarter of 2023. We utilize the RMB at our China facilities for employee-related expenses, RMB denominated purchases, and other costs of running our operations in China.
Total other expense, net decreased $6.8 million to $11.5 million for the first two quarters of 2024 from $18.3 million for the first two quarters of 2023, primarily due to an increase in interest income of $3.3 million and an increase in foreign currency gains of $2.9 million resulting from the weakening RMB in the first two quarters of 2024 compared to the first two quarters of 2023.
24
Income Taxes
Income tax expense decreased $2.4 million to $4.2 million for the second quarter of 2024 from $6.6 million for the second quarter of 2023. The decrease in income tax expense was primarily due to a windfall tax benefit of the stock-based compensation releases and finalization of China and Canada corporate income tax returns which was partially offset by the absence in the second quarter of 2024 of the release of uncertain tax position benefits that existed in the second quarter of 2023.
Income tax expense increased $9.1 million to $7.8 million for the first two quarters of 2024 from an income tax benefit of $1.3 million for the first two quarters of 2023. The increase in income tax expense for the first two quarters of 2024 was primarily due to an increase in pre-tax income for the first two quarters of 2024, the absence in the first two quarters of 2024 of the release of uncertain tax position benefits that existed in the first two quarters of 2023, and the approval of our renewal application for High and New Technology Enterprise status for two of our manufacturing subsidiaries in China (including the impact on the respective subsidiaries’ deferred tax amounts), but partially offset by a windfall tax benefit of the stock-based compensation releases and finalization of China and Canada corporate income tax returns.
Our effective tax rate is primarily impacted by the mix of foreign and U.S. income, tax rates in China and Hong Kong, the U.S. federal income tax rate, apportioned state income tax rates, the generation of credits and deductions available to us as well as changes in valuation allowances and certain non-deductible items. We had a net deferred income tax liability of $42.9 million and $54.4 million as of July 1, 2024 and July 3, 2023, respectively.
Liquidity and Capital Resources
Our principal sources of liquidity have been cash provided by operations, the issuance of debt, and borrowings under our revolving credit facility. Our principal uses of cash have been to finance capital expenditures, finance acquisitions, fund working capital requirements, repay debt obligations, and repurchase common stock. We anticipate that financing capital expenditures, financing acquisitions, funding working capital requirements, servicing debt, and repurchasing common stock will be the principal demands on our cash in the future.
Cash flow provided by operating activities during the first two quarters of 2024 was $85.8 million as compared to cash flow provided by operating activities of $81.0 million in the same period in 2023. The increase in cash flow was primarily due to an increase in net income of $35.8 million partially offset by an increased investment in working capital.
Net cash used in investing activities during the first two quarters of 2024 was $52.5 million, primarily resulting from the use of $88.8 million for purchases of property, plant and equipment and other assets. This is partially offset by the receipt of $29.6 million of proceeds from the sale of property, plant, and equipment and other assets primarily related to the sale of two buildings vacated by the closure of our Anaheim and Santa Clara plants and $6.7 million of proceeds from the sale of property associated with our Shanghai E‑MS subsidiary. Net cash used in investing activities was approximately $12.3 million for the first two quarters of 2023, primarily reflecting the use of $80.5 million for purchases of property, plant, and equipment and other assets, partially offset by the receipt of $61.8 million of proceeds from the sale of property associated with our Shanghai E‑MS subsidiary and $6.0 million of proceeds from the sale of our Shanghai Backplane Assembly subsidiary, net of cash disposed.
Net cash used in financing activities during the first two quarters of 2024 was $37.1 million reflecting the use of $34.5 million for repurchases of common stock and $2.6 million for the repayment of long-term debt borrowings. Net cash used in financing activities during the first two quarters of 2023 was $72.4 million, primarily reflecting repayment of long-term debt borrowings of $290.7 million, refund of customer deposits of $7.5 million, payment of debt issuance costs of $5.5 million, and payment of original issue discount of $3.5 million, partially offset by the receipt of proceeds from long-term debt borrowing of $234.8 million.
As of July 1, 2024, we had cash and cash equivalents of $446.2 million, of which $174.6 million was held by our foreign subsidiaries, primarily in China. Should we choose to remit cash to the United States from our foreign locations, we may incur tax obligations which would reduce the amount of cash ultimately available to the United States. However, we believe there would be no material tax consequences not previously accrued for the repatriation of this cash.
Our total 2024 capital expenditures are expected to be in the range of $190.0 million to $210.0 million.
Share Repurchases
On May 3, 2023, our Board of Directors authorized a share repurchase program (2023 Repurchase Program) allowing us to repurchase up to $100.0 million of our common stock from time to time through May 3, 2025. During the quarter ended July 1, 2024, we repurchased 1.4 million shares of our common stock for a total cost of $25.1 million (including commissions) and during the two quarters ended July 1, 2024, we repurchased 2.0 million shares of our common stock for a total cost of $34.5 million (including commissions). As of July 1, 2024, the remaining amount in value available to be repurchased under the 2023 Repurchase Program was approximately $41.1 million.
25
Long-term Debt and Letters of Credit
As of July 1, 2024, we had $916.1 million of outstanding debt, net of discount and debt issuance costs, composed of $496.3 million of Senior Notes due March 2029, $339.8 million under the Term Loan Facility, and $80.0 million under the Asia Asset-Based Lending Credit Agreement (Asia ABL).
Pursuant to the terms of the Senior Notes due March 2029 and Term Loan Facility, we are subject to certain affirmative and negative covenants, including limitations on indebtedness, corporate transactions, investments, dispositions, and restricted payments. Under the U.S. Asset-Based Lending Credit Agreement (U.S. ABL) and Asia ABL (collectively, the ABL Revolving Loans), we are also subject to various financial covenants, including leverage and fixed charge coverage ratios. As of July 1, 2024, we were in compliance with the covenants under the Senior Notes due March 2029, Term Loan Facility, and ABL Revolving Loans.
Based on our current level of operations, we believe that cash generated from operations, cash on hand, and cash from the issuance of term and revolving debt will be adequate to meet our currently anticipated capital expenditure, debt service, and working capital needs for the next 12 months. Additional information regarding our indebtedness, including information about the credit available under our debt facilities, interest rates, and other key terms of our outstanding indebtedness, is included in Part I, Item 1, Note 8, Long‑term Debt and Letters of Credit, of the Notes to Consolidated Condensed Financial Statements included in this Report.
Supplier Finance Program Obligations
We have agreements with financial institutions to facilitate payments to certain suppliers. Under the terms of the agreements, we confirm the validity of each supplier invoice to the respective financial institution upon receipt. The supplier receives payment from the financial institution, and we pay the financial institution based on the terms negotiated, which generally range from 160 days to 360 days. Liabilities associated with these agreements are recorded in accounts payable on the consolidated condensed balance sheets and amounted to $5.1 million and $18.8 million as of July 1, 2024 and January 1, 2024, respectively.
Contractual Obligations and Commitments
As part of our on-going operations, we enter into contractual arrangements that obligate us to make future cash payments. These obligations impact our liquidity and capital resource needs. Our estimated future obligations consist of long-term debt obligations, interest on debt obligations, derivative liabilities, purchase obligations, and leases. As of July 1, 2024, there were no material changes outside the ordinary course of business since January 1, 2024 to our contractual obligations and commitments and the related cash requirements.
Offset Agreements
We have and may continue to enter into industrial cooperation agreements, sometimes referred to as offset agreements, as a condition to obtaining orders for our products and services from customers in foreign countries. As of July 1, 2024, we had outstanding offset agreements of approximately $28.0 million, some of which extend through 2028. Offset programs usually extend over several years and in some cases provide for penalties in the event we fail to perform in accordance with contract requirements. To date, we have not been obligated to pay any such penalties. For details about our offset agreements, see Part I, Item 1, Note 14, Commitments and Contingencies, of the Notes to Consolidated Condensed Financial Statements included in this Report.
Seasonality
We tend to experience modest seasonal softness in the first and third quarters due to holidays and vacation periods in China and North America, respectively, which limit production leading to stronger revenue levels in the second and fourth quarters.
Recently Issued Accounting Standards
For a description of recently adopted and issued accounting standards, including the respective dates of adoption and the expected effects on our results of operations and financial condition, see Part I, Item 1, Note 1, Nature of Operations and Basis of Presentation, of the Notes to Consolidated Condensed Financial Statements included in this Report.
26
Item 3. Quantitative and Qualitative Disclosures About Market Risk
In the normal course of business operations, we are exposed to risks associated with fluctuations in interest rates, foreign currency exchange rates, and commodity prices. We address these risks through controlled risk management that includes the use of derivative financial instruments to economically hedge or reduce these exposures. We do not enter into derivative financial instruments for trading or speculative purposes.
We have not experienced any losses to date on any derivative financial instruments due to counterparty credit risk.
To ensure the adequacy and effectiveness of our commodity price hedge positions, we continually monitor our commodity hedge price positions, both on a stand-alone basis and in conjunction with their underlying commodity price exposures, from an accounting and economic perspective. However, given the inherent limitations of forecasting and the anticipatory nature of the exposures intended to be hedged, we cannot be assured that such programs will offset more than a portion of the adverse financial impact resulting from unfavorable movements in commodity prices. In addition, the timing of the accounting for recognition of gains and losses related to mark-to-market instruments for any given period may not coincide with the timing of gains and losses related to the underlying economic exposures and, therefore, may adversely affect our consolidated operating results and financial position.
For additional information regarding our interest rate swap arrangement and commodity contracts, see Part I, Item 1, Note 12, Financial Instruments, of the Notes to Consolidated Condensed Financial Statements included in this Quarterly Report on Form 10-Q (Report).
Interest Rate Risks
Our business is exposed to risk resulting from fluctuations in interest rates. Our interest expense is more sensitive to fluctuations in the general level of Term Secured Overnight Financing Rate (SOFR) interest rates than to changes in rates in other markets. Increases in interest rates would increase interest expense relating to our outstanding variable rate borrowings and increase the cost of debt. Fluctuations in interest rates can also lead to significant fluctuations in the fair value of our debt obligations.
On March 23, 2023, we entered into a four-year pay-fixed, receive-floating (1-month Chicago Mercantile Exchange (CME) Term SOFR), interest rate swap arrangement with a notional amount of $250.0 million for the period beginning April 1, 2023 and ending on April 1, 2027. Under the terms of the interest rate swap, we pay a fixed rate of 3.49% against a portion of our Term SOFR-based debt and receive floating 1-month CME Term SOFR during the swap period.
See Liquidity and Capital Resources and Long-term Debt and Letters of Credit appearing in Part I, Item 2 of this Report for further discussion of our financing facilities and capital structure. As of July 1, 2024, approximately 80.9% of our total debt was based on fixed rates. Based on our borrowings as of July 1, 2024, an assumed 100 basis point change in variable rates would cause our annual interest cost to change by $1.8 million.
Foreign Currency Exchange Rate Risks
In the normal course of business, we are exposed to risks associated with fluctuations in foreign currency exchange rates related to transactions that are denominated in currencies other than our functional currencies, as well as the effects of translating amounts denominated in a foreign currency to the U.S. Dollar as a normal part of our financial reporting process. Most of our foreign operations have the U.S. Dollar as their functional currency, however, one of our China facilities utilizes the Renminbi (RMB), which results in recognition of translation adjustments included as a component of other comprehensive income (loss). Our foreign exchange exposure results primarily from employee-related and other costs of running our operations in foreign countries, foreign currency denominated purchases, and translation of balance sheet accounts denominated in foreign currencies. We do not engage in hedging to manage this foreign currency risk.
Commodity Price Risks
We are exposed to certain commodity risks associated with prices for various raw materials, particularly copper, which may negatively affect our profitability. Copper clad laminates (CCLs), a key raw material for the manufacture of printed circuit boards (PCBs), are made from epoxy resin, glass cloth, and copper foil. We only buy a small amount of copper directly. However, copper is a major driver of laminate cost. We are hedging copper as a proxy for hedging laminate. We will continue to evaluate our commodity risks and may utilize commodity forward purchase contracts more in the future.
27
Debt Instruments
The fiscal calendar maturities of our debt instruments through 2028 and thereafter were as follows:
|
|
As of July 1, 2024 |
||||||||||||||||||||||||||||||||
|
|
Remaining 2024 |
|
|
2025 |
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
Thereafter |
|
|
Total |
|
|
Fair Value |
|
|
Weighted |
||||||||
|
|
(In thousands) |
|
|
|
|||||||||||||||||||||||||||||
US$ Variable Rate (1) |
|
$ |
875 |
|
|
$ |
3,500 |
|
|
$ |
3,500 |
|
|
$ |
4,375 |
|
|
$ |
83,500 |
|
|
$ |
330,750 |
|
|
$ |
426,500 |
|
|
$ |
427,585 |
|
|
7.81% |
US$ Fixed Rate |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
500,000 |
|
|
|
500,000 |
|
|
|
457,305 |
|
|
4.00% |
Total |
|
$ |
875 |
|
|
$ |
3,500 |
|
|
$ |
3,500 |
|
|
$ |
4,375 |
|
|
$ |
83,500 |
|
|
$ |
830,750 |
|
|
$ |
926,500 |
|
|
$ |
884,890 |
|
|
|
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Securities Exchange Act of 1934, as amended (Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our CEO and CFO have concluded that, as of July 1, 2024 such disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and (ii) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosures.
In designing and evaluating our disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Changes in Internal Control over Financial Reporting
We continue to expand our implementation of an enterprise resource planning (ERP) system on a worldwide basis, which is expected to improve the efficiency of the financial reporting and related transaction processes. We have completed the implementation at certain locations and as a result, we made changes to our processes and procedures which, in turn, resulted in changes to our internal control over financial reporting, including the implementation of additional controls. We are in the process of rolling out the ERP system to our remaining locations to standardize the ERP system.
There were no other changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended July 1, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
28
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become a party to various legal proceedings arising in the ordinary course of our business. There can be no assurance that we will prevail in any such litigation. We believe that the amount of any reasonably possible or probable loss for known matters would not be material to our financial statements; however, the outcome of these actions is inherently difficult to predict. In the event of an adverse outcome, the ultimate potential loss could have a material adverse effect on our financial condition, results of operations, or cash flows in a particular period.
Item 1A. Risk Factors
There have been no material changes in our risk factors as previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 1, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
The following table provides information about repurchases by us of shares of our common stock during the quarter ended July 1, 2024:
Period |
|
Total Number of Shares Purchased |
|
|
Average Price Paid per Share (1) |
|
|
Total Number of Shares Purchased As Part of Publicly Announced Program (2) |
|
|
Maximum Approximate Dollar of Shares that May Yet be Purchased Under the Program (3) |
|
||||
|
|
(In thousands, except per share data) |
|
|||||||||||||
April 2, 2024 - April 29, 2024 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
66,234 |
|
April 30, 2024 - May 27, 2024 |
|
|
1,390 |
|
|
|
18.09 |
|
|
|
1,390 |
|
|
|
41,088 |
|
May 28, 2024 - July 1, 2024 |
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— |
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— |
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— |
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41,088 |
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Total for the quarter ended July 1, 2024 |
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1,390 |
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$ |
18.09 |
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1,390 |
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Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the quarter ended July 1, 2024, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5‑1(c) or any “non-Rule 10b5-1 trading arrangement,” as such term is defined in Item 408 of Regulation S-K.
29
Item 6. Exhibits
Exhibit |
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Filed/Furnished |
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Incorporated by Reference |
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Number |
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Exhibit Description |
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Herewith |
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Form |
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File Number |
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Exhibit |
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Filing Date |
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3.1 |
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TTM Technologies, Inc. Amended and Restated Certificate of Incorporation, effective May 8, 2024 |
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8-K |
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000-31285 |
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3.1 |
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May 10, 2024 |
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3.2 |
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8-K/A |
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000-31285 |
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3.3 |
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June 10, 2024 |
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3.3 |
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8-K |
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000-31285 |
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3.2 |
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May 10, 2024 |
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10.1 |
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X |
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10.2 |
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X |
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31.1 |
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CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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X |
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31.2 |
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CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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X |
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32.1* |
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CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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X |
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32.2* |
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CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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X |
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101.INS |
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Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
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104 |
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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* Furnished herewith. The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q (Report) are not deemed filed with the Commission and are not to be incorporated by reference into any filing of Registrant under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this Report, irrespective of any general incorporation language contained in such filing.
30
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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TTM Technologies, Inc. |
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/s/ Thomas T. Edman |
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Dated: August 6, 2024 |
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Thomas T. Edman |
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President and Chief Executive Officer |
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(Principal Executive Officer) |
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/s/ Daniel L. Boehle |
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Dated: August 6, 2024 |
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Daniel L. Boehle |
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Executive Vice President and Chief Financial Officer |
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(Principal Financial Officer and Principal Accounting Officer) |
31
Exhibit 10.1
EXECUTION VERSION
FIRST AMENDMENT
FIRST AMENDMENT, dated as of June 10, 2024 (this “Amendment”), to that certain Amended and Restated ABL Credit Agreement, dated as of May 30, 2023 (as amended, supplemented or otherwise modified from time to time prior to the date hereof, the “Credit Agreement”), among TTM TECHNOLOGIES, INC. (the “Borrower”), the several banks and other financial institutions or entities from time to time parties thereto (the “Lenders”), JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity, the “Administrative Agent”) and the other agents parties thereto.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make, and have made, certain loans and other extensions of credit to the Borrower;
WHEREAS, the Borrower wishes to amend the Credit Agreement in the form attached hereto as Exhibit A (the “Amended Credit Agreement”);
WHEREAS, the Borrower and each party to this Amendment designated as a “Lender” on its signature page hereto (each an “ABL Lender”) is willing to consent to the amendments set forth herein;
WHEREAS, upon the occurrence of the First Amendment Effective Date (as defined in Section 3 of this Amendment), the Credit Agreement will be deemed amended as set forth in Section 2 hereto; and
NOW THEREFORE, in consideration of the premises and mutual covenants hereinafter set forth, the parties hereto agree as follows:
2
[remainder of page intentionally left blank]
3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective duly authorized officers as of the day and year first above written.
TTM TECHNOLOGIES, INC., as Borrower |
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By: |
/s/ Daniel L. Boehle |
6/10/2024 |
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Name: |
Daniel L. Boehle |
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Title: |
Chief Financial Officer |
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First Amendment to ABL Credit Agreement
TTM Technologies, Inc.
JPMORGAN CHASE BANK, N.A., as Administrative Agent and a Lender |
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By: |
/s/ Kristin Jang |
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Name: |
Kristin Jang |
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Title: |
Vice President |
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First Amendment to ABL Credit Agreement
TTM Technologies, Inc.
Bank of America, N.A., as a Lender |
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By: |
/s/ Ron Bornstein |
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Name: |
Ron Bornstein |
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Title: |
Senior Vice President |
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First Amendment to ABL Credit Agreement
TTM Technologies, Inc.
Truist Bank, as a Lender |
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By: |
/s/ Cathleen Marston |
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Name: |
Cathleen Marston |
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Title: |
Vice President |
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First Amendment to ABL Credit Agreement
TTM Technologies, Inc.
HSBC Bank USA, N.A., as a Lender |
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By: |
/s/ Kevin MacWilliams |
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Name: |
Kevin MacWilliams |
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Title: |
Vice President |
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First Amendment to ABL Credit Agreement
TTM Technologies, Inc.
Barclays Bank PLC, as a Lender |
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By: |
/s/ Koruthu Mathew |
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Name: |
Koruthu Mathew |
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Title: |
Vice President |
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First Amendment to ABL Credit Agreement
TTM Technologies, Inc.
EXHIBIT A
Conformed through First Amendment, dated as of June 10, 2024
AMENDED AND RESTATED ABL CREDIT AGREEMENT
among
TTM TECHNOLOGIES, INC.
as Borrower,
The Several Lenders from Time to Time Parties Hereto,
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent,
BARCLAYS BANK PLC,
BOFA SECURITIES, INC and
TRUIST SECURITIES, INC.
as Syndication Agents,
and
HSBC SECURITIES (USA) INC.,
as Documentation Agent
Dated as of May 30, 2023,
JPMORGAN CHASE BANK, N.A.,
BARCLAYS BANK PLC,
BOFA SECURITIES, INC and
TRUIST SECURITIES, INC.
as Joint Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
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Page |
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SECTION 1 DEFINITIONS |
1 |
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1.1 |
Defined Terms |
1 |
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1.2 |
Other Definitional Provisions |
48 |
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1.3 |
Interest Rates; Benchmark Notification |
49 |
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1.4 |
Letter of Credit Amounts |
49 |
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1.5 |
Divisions |
50 |
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1.6 |
Limited Condition Acquisitions |
50 |
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SECTION 2 AMOUNT AND TERMS OF COMMITMENTS |
50 |
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2.1 |
Commitments |
50 |
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2.2 |
Procedure for Revolving Loan Borrowing |
50 |
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2.3 |
Protective Advances |
51 |
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2.4 |
[Reserved] |
52 |
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2.5 |
[Reserved] |
52 |
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2.6 |
[Reserved] |
52 |
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2.7 |
[Reserved] |
52 |
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2.8 |
Fees, etc. |
52 |
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2.9 |
Termination or Reduction of Commitments |
52 |
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2.10 |
Optional Prepayments |
52 |
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2.11 |
Prepayment of Loans |
53 |
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2.12 |
Conversion and Continuation Options |
53 |
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2.13 |
Limitations on Term Benchmark Borrowings |
54 |
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2.14 |
Interest Rates and Payment Dates |
54 |
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2.15 |
Computation of Interest and Fees |
54 |
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2.16 |
Inability to Determine Interest Rate |
55 |
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2.17 |
Pro Rata Treatment and Payments |
57 |
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2.18 |
Requirements of Law |
59 |
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2.19 |
Taxes |
61 |
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2.20 |
Break Funding Payments |
64 |
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2.21 |
Change of Lending Office |
64 |
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2.22 |
Replacement of Lenders |
65 |
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2.23 |
Defaulting Lenders |
65 |
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2.24 |
Incremental Facilities |
66 |
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SECTION 3 LETTERS OF CREDIT |
67 |
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3.1 |
L/C Commitment |
67 |
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3.2 |
Procedure for Issuance of Letter of Credit |
68 |
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3.3 |
Fees and Other Charges |
68 |
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3.4 |
L/C Participations |
69 |
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3.5 |
Reimbursement Obligation of the Borrower |
69 |
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3.6 |
Obligations Absolute |
70 |
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3.7 |
Letter of Credit Payments |
70 |
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3.8 |
Applications |
71 |
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SECTION 4 REPRESENTATIONS AND WARRANTIES |
71 |
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4.1 |
Financial Condition |
71 |
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4.2 |
No Change |
71 |
i
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4.3 |
Existence; Compliance with Law |
71 |
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4.4 |
Power; Authorization; Enforceable Obligations |
72 |
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4.5 |
No Legal Bar |
72 |
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4.6 |
Litigation |
72 |
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4.7 |
No Default |
72 |
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4.8 |
Ownership of Property; Liens |
72 |
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4.9 |
Intellectual Property |
72 |
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4.10 |
Taxes |
73 |
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4.11 |
Federal Regulations |
73 |
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4.12 |
Labor Matters |
73 |
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4.13 |
ERISA |
73 |
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4.14 |
Investment Company Act; Other Regulations |
74 |
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4.15 |
Subsidiaries; Capital Stock |
74 |
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4.16 |
Use of Proceeds |
74 |
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4.17 |
Environmental Matters |
74 |
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4.18 |
Accuracy of Information, etc. |
75 |
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4.19 |
Security Documents |
75 |
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4.20 |
Solvency |
76 |
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4.21 |
Senior Indebtedness |
76 |
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4.22 |
Regulation H |
76 |
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4.23 |
Anti-Corruption Laws and Sanctions |
76 |
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4.24 |
Affected Financial Institutions |
77 |
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4.25 |
Plan Asset Matters |
77 |
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SECTION 5 CONDITIONS PRECEDENT |
77 |
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5.1 |
Conditions to Amendment and Restatement of Existing Credit Agreement and Initial Extension of Credit |
77 |
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5.2 |
Conditions to Each Extension of Credit |
80 |
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SECTION 6 AFFIRMATIVE COVENANTS |
81 |
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6.1 |
Financial Statements |
81 |
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6.2 |
Certificates; Borrowing Base; Other Information |
82 |
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6.3 |
Payment of Obligations |
84 |
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6.4 |
Maintenance of Existence; Compliance |
84 |
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6.5 |
Maintenance of Property; Insurance |
84 |
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6.6 |
Inspection of Property; Books and Records; Discussions; Appraisals; Field Examinations |
85 |
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6.7 |
Notices |
86 |
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6.8 |
Environmental Laws |
86 |
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6.9 |
[Reserved] |
86 |
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6.10 |
Additional Collateral, etc |
87 |
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6.11 |
Designation of Subsidiaries |
88 |
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6.12 |
Deposit Account Control Agreements |
89 |
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6.13 |
Post-Closing Covenants |
89 |
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SECTION 7 NEGATIVE COVENANTS |
89 |
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7.1 |
Consolidated Fixed Charge Coverage Ratio |
89 |
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7.2 |
Indebtedness |
89 |
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7.3 |
Liens |
93 |
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7.4 |
Fundamental Changes |
96 |
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7.5 |
Disposition of Property |
97 |
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7.6 |
Restricted Payments |
99 |
ii
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7.7 |
Investments |
100 |
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7.8 |
Optional Payments and Modifications of Certain Debt Instruments |
101 |
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7.9 |
Transactions with Affiliates |
102 |
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7.10 |
Sales and Leasebacks |
102 |
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7.11 |
Swap Agreements |
103 |
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7.12 |
Changes in Fiscal Periods |
103 |
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7.13 |
Negative Pledge Clauses |
103 |
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7.14 |
Clauses Restricting Subsidiary Distributions |
103 |
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7.15 |
Lines of Business |
104 |
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7.16 |
Use of Proceeds |
104 |
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SECTION 8 EVENTS OF DEFAULT |
104 |
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SECTION 9 THE AGENTS |
107 |
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9.1 |
Appointment |
107 |
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9.2 |
Delegation of Duties |
107 |
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9.3 |
Exculpatory Provisions |
107 |
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9.4 |
Reliance by Administrative Agent |
108 |
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9.5 |
Notice of Default |
108 |
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9.6 |
Non-Reliance on Agents and Other Lenders |
108 |
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9.7 |
Indemnification |
109 |
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9.8 |
Agent in Its Individual Capacity |
109 |
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9.9 |
Successor Administrative Agent |
109 |
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9.10 |
Arranger, Syndication Agent and Documentation Agent |
110 |
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9.11 |
Certain ERISA Matters |
110 |
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9.12 |
Acknowledgements of Lenders and Issuing Lenders |
111 |
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9.13 |
Credit Bidding |
112 |
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SECTION 10 MISCELLANEOUS |
113 |
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10.1 |
Amendments and Waivers |
113 |
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10.2 |
Notices |
115 |
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10.3 |
No Waiver; Cumulative Remedies |
116 |
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10.4 |
Survival of Representations and Warranties |
116 |
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10.5 |
Payment of Expenses and Taxes; Indemnity; Limitation of Liability |
116 |
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10.6 |
Successors and Assigns; Participations and Assignments |
119 |
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10.7 |
Adjustments; Set-off |
122 |
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10.8 |
Counterparts; Electronic Execution |
122 |
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10.9 |
Severability |
123 |
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10.10 |
Integration |
123 |
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10.11 |
GOVERNING LAW |
123 |
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10.12 |
Submission To Jurisdiction; Waivers |
123 |
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10.13 |
Acknowledgements |
124 |
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10.14 |
Releases of Guarantees and Liens |
125 |
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10.15 |
Confidentiality |
125 |
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10.16 |
WAIVERS OF JURY TRIAL |
126 |
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10.17 |
USA Patriot Act |
127 |
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10.18 |
Intercreditor Agreement |
127 |
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10.19 |
Acknowledgement and Consent to Bail-In of Affected Financial Institutions |
127 |
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10.20 |
Acknowledgement Regarding Any Supported QFCs |
127 |
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10.21 |
Amendment and Restatement; No Novation; Existing LIBOR Loans |
128 |
iii
SCHEDULES: |
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1.1A |
Commitments |
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1.1B |
Mortgaged Property |
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1.1C |
Specified Foreign Account Debtors |
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3.1 |
Existing Letters of Credit |
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4.13 |
Pension Plans |
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4.15 |
Subsidiaries |
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4.19(a) |
UCC Filing Jurisdictions |
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5.1(k) |
Existing Mortgages |
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7.2(e) |
Existing Indebtedness |
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7.3(f) |
Existing Liens |
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7.5(l) |
Scheduled Dispositions |
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7.7(k) |
Existing Investments |
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EXHIBITS: |
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A |
Form of Guarantee and Collateral Agreement |
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B |
Form of Compliance Certificate |
|
C |
Form of Closing Certificate |
|
D |
[Reserved] |
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E |
Form of Assignment and Assumption |
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F |
[Reserved] |
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G |
[Reserved] |
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H |
Form of U.S. Tax Compliance Certificate |
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I-1 |
Form of Increased Facility Activation Notice—Incremental Revolving Commitments |
|
I-2 |
Form of New Lender Supplement |
|
J |
Form of Borrowing Base Certificate |
|
K |
Form of Intercreditor Agreement |
|
L |
Form of Solvency Certificate |
|
i
AMENDED AND RESTATED ABL CREDIT AGREEMENT (this “Agreement”), dated as of May 30, 2023, among TTM Technologies, Inc., a Delaware corporation (the “Borrower”), the several banks and other financial institutions or entities from time to time parties to this Agreement (the “Lenders”), JPMorgan Chase Bank, N.A., as administrative agent, and the other agents from time to time parties hereto.
The Borrower has requested that the Lenders amend and restate the ABL Credit Agreement dated as of May 31, 2015 (as amended from time to time prior to the Closing Date (as defined below), the “Existing Credit Agreement”), among the Borrower, the several banks and other financial institutions or entities from time to time parties thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents parties thereto, and the Lenders are willing to do so on the terms and conditions set forth herein.
In consideration of the mutual covenants and agreements herein contained, the parties hereto hereby agree that the Existing Credit Agreement shall be amended and restated in its entirety, as of the Closing Date (as defined below), as follows:
“2029 Senior Notes”: the Borrower’s 4.000% senior notes due 2029 issued pursuant to the 2029 Senior Notes Indenture.
“2029 Senior Notes Indenture”: the Senior Notes Indenture, dated as of March 10, 2021, among the Borrower, as issuer, the guarantors party thereto and Wilmington Trust, National Association, as trustee.
“ABR”: a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus ½ of 1% and (c) the Adjusted Term SOFR Rate for a one month Interest Period as published two U.S. Government Securities Business Days prior to such day (or if such day is not a U.S. Government Securities Business Day, the immediately preceding U.S. Government Securities Business Day) plus 1.0%; provided that for the purpose of this definition, the Adjusted Term SOFR Rate for any day shall be based on the Term SOFR Reference Rate at approximately 5:00 a.m. Chicago time on such day (or any amended publication time for the Term SOFR Reference Rate, as specified by the CME Term SOFR Administrator in the Term SOFR Reference Rate methodology). Any change in ABR due to a change in the Prime Rate, the NYFRB Rate or the Adjusted Term SOFR Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the Adjusted Term SOFR Rate, respectively. If ABR is being used as an alternate rate of interest pursuant to Section 2.16 (for the avoidance of doubt, only until the Benchmark Replacement has been determined pursuant to Section 2.16(b)), then ABR shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above. For the avoidance of doubt, if ABR as determined pursuant to the foregoing would be less than 1.0%, such rate shall be deemed to be 1.0% for purposes of this Agreement.
“ABR Loans”: Loans the rate of interest applicable to which is based upon the ABR.
“Acceptable Field Examination”: a field examination conducted by the Administrative Agent or its designee of the Accounts, Inventory and related working capital matters of the Borrower and its Subsidiaries and of the related data processing and other systems of the Borrower and its Subsidiaries, the results of which shall be satisfactory to the Administrative Agent in its Permitted Discretion.
“Acceptable Inventory Appraisal”: an appraisal of the Inventory of the Borrower and its Subsidiaries from a firm (or firms) satisfactory to the Administrative Agent, which appraisal(s) shall be satisfactory to the Administrative Agent in its Permitted Discretion.
“Account”: as defined in the Guarantee and Collateral Agreement.
“Account Debtor”: any Person obligated on an Account.
“Additional Permitted Amount”: as defined in the definition of Permitted Refinancing Indebtedness.
“Adjusted Daily Simple SOFR”: an interest rate per annum equal to (a) the Daily Simple SOFR, plus (b) 0.10%; provided that if the Adjusted Daily Simple SOFR as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.
“Adjusted Term SOFR Rate”: for any Interest Period, an interest rate per annum equal to (a) the Term SOFR Rate for such Interest Period, plus (b) 0.10%; provided that if the Adjusted Term SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.
“Adjustment Date”: as defined in the Applicable Pricing Grid.
“Administrative Agent”: JPMCB, together with its affiliates, as the administrative agent for the Lenders under this Agreement and the other Loan Documents, together with any of its successors.
“Affected Financial Institution”: (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate”: as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.
“Agents”: the collective reference to the Administrative Agent and any other agent identified on the cover page of this Agreement.
“Agent Indemnitee”: as defined in Section 9.7.
“Aggregate Exposure”: with respect to any Lender at any time, an amount equal to the amount of such Lender’ Commitment then in effect or, if the Commitments have been terminated, the amount of such Lender’s Revolving Extensions of Credit then outstanding.
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“Aggregate Exposure Percentage”: with respect to any Lender at any time, the ratio (expressed as a percentage) of such Lender’s Aggregate Exposure at such time to the Aggregate Exposure of all Lenders at such time.
“Agreement”: as defined in the preamble hereto.
“Ancillary Document”: as defined in Section 10.8(b).
“Anti-Corruption Laws”: all laws, rules and regulations of any jurisdiction applicable to the Borrower or its Subsidiaries from time to time concerning or relating to bribery or corruption, including the U.S. Foreign Corrupt Practices Act of 1977, as amended.
“Applicable Margin”: a rate per annum determined pursuant to the Applicable Pricing Grid based on average daily Availability for the most recently ended fiscal quarter immediately preceding such Adjustment Date.
“Applicable Pricing Grid”: the table set forth below:
Availability |
Applicable Margin for ABR Loans |
Applicable Margin for Term Benchmark Loans and RFR Loans |
> 50% of the Line Cap |
0.25% |
1.25% |
≤ 50% but > 25% of the Line Cap |
0.375% |
1.375% |
≤ 25% of the Line Cap |
0.50% |
1.50% |
For the purposes of the Applicable Pricing Grid, changes in the Applicable Margin resulting from changes in the average daily Availability shall become effective three Business Days after the last Borrowing Base Certificate in respect of a period ending on (or immediately prior to) the last day of the most recently ended fiscal quarter (a “Quarter-End Certificate”) is delivered to the Lenders pursuant to Section 6.2(g) (such third Business Day, the “Adjustment Date”) and shall remain in effect until the next change to be effected pursuant to this paragraph; provided that (subject to the two succeeding sentences of this paragraph) from the Closing Date until the first Adjustment Date occurring thereafter, the Applicable Margin for ABR Loans shall be 0.25% and the Applicable Margin for Term Benchmark Loans or, if applicable, RFR Loans, shall be 1.25%. If, as of any date that a Quarter-End Certificate is scheduled to be delivered pursuant to Section 6.2(g), any Borrowing Base Certificate required to be delivered on or prior to such date shall not have been delivered, then, until three Business Days after the date on which all required Borrowing Base Certificates are delivered, the highest rate set forth in each column of the Applicable Pricing Grid shall apply. In addition, during the occurrence and continuance of an Event of Default, the Administrative Agent or the Required Lenders may, at their option, by notice to the Borrower (which notice may be revoked at the option of the Administrative Agent or the Required Lenders, as applicable, notwithstanding any provision of Section 10.1 requiring the consent of “each Lender directly affected thereby” for reductions in interest rates), declare that the highest rate set forth in each column of the Applicable Pricing Grid shall apply.
“Applicable Reference Period”: as at any date of determination, the most recently ended Reference Period for which financial statements with respect to each fiscal quarter included in such Reference Period have been delivered pursuant to Section 6.1(a) or 6.1(b) (or, prior to the delivery of any such financial statements, the Reference Period ended April 3, 2023).
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“Application”: an application, in such form as the Issuing Lender may specify from time to time, requesting the Issuing Lender to open a Letter of Credit.
“Approved Fund”: as defined in Section 10.6(b).
“Arranger”: the Joint Lead Arrangers and Bookrunners identified on the cover page of this Agreement.
“Asia Facility”: the “Asia Facility” (as defined under the Existing Credit Agreement) until such agreement is amended, amended and restated, refinanced or otherwise modified after the Closing Date pursuant to a facility agreement, loan agreement or credit agreement (or other similar agreement for borrowed money), to be entered into by TTM Technologies China Limited and TTM Technologies Trading (Asia) Company Limited, each as a borrower, TTM Technologies China Limited, TTM Technologies Trading (Asia) Company Limited, TTM Technologies (Hong Kong) Company Limited, Oriental Printed Circuits Limited, OPC Manufacturing Limited, and TTM Technologies (Asia Pacific) Limited each as original guarantors, and The Hongkong and Shanghai Banking Corporation Limited, as arranger, original lender, facility agent, security trustee and issuing bank (as amended, modified or replaced from time to time in a manner not prohibited by this Agreement) (it being understood that Restricted Subsidiaries of TTM Technologies (Asia Pacific) Limited may be added as co-borrowers or guarantors of the Asia Facility).
“Assignee”: as defined in Section 10.6(b).
“Assignment and Assumption”: an Assignment and Assumption, substantially in the form of Exhibit E.
“Attributable Indebtedness”: in respect of any sale and leaseback transaction, as at the time of determination, the present value (discounted at the implied interest rate in such transaction compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such sale and leaseback transaction (including any period for which such lease has been extended or may, at the option of the lessor, be extended).
“Availability”: at any time, an amount equal to (a) the Line Cap minus (b) the Total Revolving Extensions of Credit then outstanding (calculated, with respect to any Defaulting Lender, as if such Defaulting Lender had funded its Revolving Percentage of all outstanding Revolving Loans).
“Available Commitment”: as to any Revolving Lender at any time, an amount equal to the excess, if any, of (a) such Lender’s Commitment then in effect over (b) such Lender’s Revolving Extensions of Credit then outstanding.
“Available Tenor”: as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark (or component thereof) or payment period for interest calculated with reference to such Benchmark (or component thereof), as applicable, that is or may be used for determining the length of an Interest Period for any term rate or otherwise, for determining any frequency of making payments of interest calculated pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to clause (e) of Section 2.16.
“Average Utilization”: for any period, an amount, expressed as a percentage, equal to (a) the daily average Total Revolving Extensions of Credit for such period divided by (b) the daily average Total Commitments for such period.
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“Bail-In Action”: 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”: (a) 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, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Banking Services”: each and any of the following bank services provided to any Loan Party by any Lender or any of its Affiliates: (a) commercial credit cards, (b) stored value cards, (c) purchasing cards and (d) treasury, depositary or cash management services (including controlled disbursement, automated clearinghouse transactions, return items, overdrafts and interstate depository network services) or any similar transaction.
“Banking Services Obligations”: with respect to the Loan Parties, any and all obligations of the Loan Parties, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor) in connection with Banking Services.
“Banking Services Reserves”: all Reserves that the Administrative Agent from time to time establishes in its Permitted Discretion for Banking Services then provided or outstanding.
“Bankruptcy Code”: Title 11 of the United States Code (11 U.S.C. § 101 et seq.).
“Bankruptcy Event”: with respect to any Person, such Person becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, provided, further, that such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.
“Base Incremental Amount”: $800,000,000.
“Benchmark”: initially, with respect to any (i) RFR Loan, the Daily Simple SOFR or (ii) Term Benchmark Loan, the Term SOFR Rate; provided that if a Benchmark Transition Event, and the related Benchmark Replacement Date have occurred with respect to the Daily Simple SOFR or Term SOFR Rate, as applicable, or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (b) of Section 2.16.
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“Benchmark Replacement”: 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:
If the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Adjustment”: with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement, 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 for the applicable Corresponding Tenor giving due consideration to (i) 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 on the applicable Benchmark Replacement Date and/or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for dollar-denominated syndicated credit facilities at such time.
“Benchmark Replacement Conforming Changes”: with respect to any Benchmark Replacement and/or any Term Benchmark Loan, any technical, administrative or operational changes (including changes to the definition of “ABR,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent reasonably decides may be appropriate to reflect the adoption and implementation of such Benchmark and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent reasonably decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent reasonably determines that no market practice for the administration of such Benchmark exists, in such other manner of administration as the Administrative Agent reasonably decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
“Benchmark Replacement Date”: with respect to any Benchmark, the earliest to occur of the following events with respect to such then-current Benchmark:
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For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event”: with respect to any Benchmark, the occurrence of one or more of the following events with respect to such then-current Benchmark:
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
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“Benchmark Unavailability Period”: with respect to any Benchmark, the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.16 and (y) ending at the time that a Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.16.
“Beneficial Ownership Certification”: a certification regarding beneficial ownership or control as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation”: 31 C.F.R. § 1010.230.
“Benefit Plan”: any (a) “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) “plan” as defined in and subject to Section 4975 of the Code, or (c) Person whose assets include (for purposes of Section 3(42) of ERISA or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan.”
“Benefitted Lender”: as defined in Section 10.7(a).
“BHC Act Affiliate”: of a party means an “affiliate’ (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Board”: the Board of Governors of the Federal Reserve System of the United States (or any successor).
“Borrower”: as defined in the preamble hereto.
“Borrowing” means Loans of the same Type, made, converted or continued on the same date and, in the case of Term Benchmark Loans, as to which a single Interest Period is in effect.
“Borrowing Base”: at any time, the sum of:
provided that (i) in no event shall the aggregate amount of Eligible Foreign Accounts included in the Borrowing Base pursuant to clause (a) exceed the lesser of (x) $60,000,000 and (y) 85% of the Loan Parties’ Eligible Accounts that are Eligible Foreign Accounts and (ii) in determining the Net Orderly Liquidation Value percentage with respect to Inventory, the Administrative Agent may determine such percentage on a blended, product-line or other basis as it determines in its Permitted Discretion.
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The Administrative Agent may, in its Permitted Discretion reduce the advance rates set forth above or (following (to the extent practicable) reasonable prior notice to, and consultation with, the Borrower) adjust Reserves or reduce one or more of the other elements used in computing the Borrowing Base, with any such changes to be effective three days after delivery of notice thereof to the Borrower and the Lenders; provided that if consultation with the Borrower and/or notice to the Borrower and the Lenders is not practicable or if failure to implement any such change within a shorter time period would, in the good faith judgment of the Administrative Agent, reasonably be expected to result in a Material Adverse Effect or materially and adversely affect the Collateral or the rights of the Lenders under the Loan Documents, such change may be implemented within a shorter time as determined by the Administrative Agent in its Permitted Discretion. Subject to the immediately preceding sentence, the Borrowing Base at any time shall be determined by reference to the most recent Borrowing Base Certificate delivered to the Administrative Agent pursuant to Section 6.2(g) of this Agreement.
“Borrowing Base Certificate”: a certificate, signed and certified as accurate and complete by a Responsible Officer of the Borrower, in substantially the form of Exhibit J or another form which is acceptable to the Administrative Agent in its sole discretion.
“Borrowing Base Eligible Facilities”: warehouses owned or leased by Loan Parties that are located in the United States or Canada; provided that no warehouse leased by a Loan Party shall be considered a Borrowing Base Eligible Facility unless the Administrative Agent has received a Collateral Access Agreement in respect thereof that continues to be in effect or a Rent Reserve has been taken in respect thereof.
“Borrowing Date”: any Business Day specified by the Borrower as a date on which the Borrower requests the relevant Lenders to make Loans hereunder.
“Borrowing Request” means a request by the Borrower for a Borrowing in accordance with Section 2.2, which shall be in a form approved by the Administrative Agent.
“Business”: as defined in Section 4.17(b).
“Business Day”: any day (other than a Saturday or a Sunday) on which banks are open for business in New York City; provided that, in addition to the foregoing, a Business Day shall be (a) in relation to RFR Loans and any interest rate settings, fundings, disbursements, settlements or payments of any such RFR Loan, or any other dealings of such RFR Loan and (b) in relation to Loans referencing the Adjusted Term SOFR Rate and any interest rate settings, fundings, disbursements, settlements or payments of any such Loans referencing the Adjusted Term SOFR Rate or any other dealings of such Loans referencing the Adjusted Term SOFR Rate, any such day that is a U.S. Government Securities Business Day.
“Canadian Dollars”: the lawful currency of Canada.
“Capital Expenditures”: for any period, with respect to any Person, the aggregate of all expenditures by such Person and its Restricted Subsidiaries for the acquisition or leasing (pursuant to a capital lease) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) that is required to be capitalized under GAAP on a consolidated balance sheet of such Person and its Restricted Subsidiaries.
“Capital Lease Obligations”: as to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases or financing leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.
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“Capital Stock”: any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing, but excluding any debt securities convertible into any of the foregoing.
“Cash Equivalents”: (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within two years from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of six months or less from the date of acquisition issued by any Lender or by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $250,000,000; (c) commercial paper of an issuer rated at least A-2 by Standard & Poor’s Ratings Services (“S&P”) or P-2 by Moody’s Investors Service, Inc. (“Moody’s”), or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within nine months from the date of acquisition; (d) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days, with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of two years or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s; (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this definition; (g) money market mutual or similar funds that invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition; or (h) money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as amended, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5,000,000,000.
“CFC”: (a) each Person that is a “controlled foreign corporation” for purposes of the Code and (b) any Subsidiary owned directly or indirectly by such Person.
“CFC Holding Company”: means a Subsidiary substantially all the assets of which consist of Equity Interests in Foreign Subsidiaries that each constitute a CFC and/or Indebtedness or accounts receivable owed by Foreign Subsidiaries that each constitute a CFC or are treated as owed by any such Foreign Subsidiaries for U.S. federal income tax purposes.
“Change of Control”: (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Exchange Act and the rules of the SEC thereunder) of Capital Stock of the Borrower representing more than 35% of either the aggregate ordinary voting power or the aggregate equity value represented by the issued and outstanding Capital Stock of the Borrower; (b) persons who were (i) directors of the Borrower on the Closing Date, (ii) nominated by the board of directors of the Borrower or (iii) appointed by directors who were directors of the Borrower on the Closing Date or were nominated as provided in clause (ii) above ceasing to occupy a majority of the seats (excluding vacant seats) on the board of directors of the Borrower; or (c) the occurrence of any “change in control” (or similar event, however denominated) with respect to the Borrower under and as defined in any indenture or other agreement or instrument evidencing or governing the rights of the holders of any Material Indebtedness of the Borrower or any of its Restricted Subsidiaries.
“Closing Date”: May 30, 2023.
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“CME Term SOFR Administrator”: CME Group Benchmark Administration Limited as administrator of the forward-looking term Secured Overnight Financing Rate (SOFR) (or a successor administrator).
“Code”: the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.
“Collateral”: all property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Document.
“Collateral Access Agreement”: any landlord waiver or other agreement, in form and substance reasonably satisfactory to the Administrative Agent, between the Administrative Agent and any third party (including any bailee, consignee, customs broker, or other similar Person) in possession of any Collateral or any landlord of any real property where any Collateral is located, as such landlord waiver or other agreement may be amended, restated, or otherwise modified from time to time.
“Collection Account”: individually and collectively, each “Collection Account” referred to in the Guarantee and Collateral Agreement.
“Commitment”: as to any Lender, the obligation of such Lender, if any, to make Revolving Loans and participate in Letters of Credit and Protective Advances in an aggregate principal and/or face amount not to exceed the amount set forth under the heading “Commitment” opposite such Lender’s name on Schedule 1.1A or in the Assignment and Assumption or Increased Facility Activation Notice pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The original amount of the Total Commitments on the Closing Date is $150,000,000.
“Commitment Fee Rate”: 0.25% per annum.
“Commodity Exchange Act”: the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.
“Compliance Certificate”: a certificate duly executed by a Responsible Officer substantially in the form of Exhibit B.
“Connection Income Taxes”: Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Consolidated Coverage Ratio”: as of the last day of any Reference Period, the ratio of (x) Consolidated EBITDA for such period to (y) Consolidated Interest Expense for such period.
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“Consolidated EBITDA”: for any period, Consolidated Net Income for such period plus, without duplication and to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (a) income tax expense, (b) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness (including the Loans and the Term Loans), (c) depreciation and amortization expense, (d) [reserved], (e) amortization of intangibles (including, but not limited to, impairment of goodwill) and organization costs, (f) any extraordinary, unusual or non-recurring expenses or losses, (g) [reserved], (h) cash charges in respect of strategic market reviews, stay or sign-on bonuses, integration-related bonuses, restructuring, consolidation, severance or discontinuance of any portion of operations, employees and/or management, (i) the amount of “run-rate” cost savings, operating expense reductions, operating improvements and synergies that are reasonably identifiable, factually supportable and projected by the Borrower in good faith to be realized as a result of mergers and other business combinations, Permitted Acquisitions, divestitures, insourcing initiatives, cost savings initiatives, plant consolidations, openings and closings, product rationalization and other similar initiatives after the Closing Date, in each case to the extent not prohibited by this Agreement (collectively, “Initiatives”) (calculated on a pro forma basis as though such cost savings, operating expense reductions, operating improvements and synergies had been realized on the first day of the relevant Reference Period), net of the amount of actual benefits realized in respect thereof; provided that (i) actions in respect of such cost-savings, operating expense reductions, operating improvements and synergies have been, or will be, taken within 24 months of the applicable Initiative, (ii) no cost savings, operating expense reductions, operating improvements or synergies shall be added pursuant to this clause (i) to the extent duplicative of any expenses or charges otherwise added to (or excluded from) Consolidated EBITDA, whether through a pro forma adjustment or otherwise, for such period, (iii) projected amounts (and not yet realized) may no longer be added in calculating Consolidated EBITDA pursuant to this clause (i) to the extent occurring more than eight fiscal quarters after the applicable Initiative, (iv) the Borrower must deliver to the Administrative Agent (A) a certificate of a Responsible Officer setting forth such estimated cost-savings, operating expense reductions, operating improvements and synergies and (B) information and calculations supporting in reasonable detail such estimated cost savings, operating expense reductions, operating improvements and synergies and (v) with respect to any Reference Period, the aggregate amount added back in the calculation of Consolidated EBITDA for such Reference Period pursuant to this clause (i) shall not exceed 30% of Consolidated EBITDA (calculated prior to giving effect to any add-backs pursuant to this clause (i)) and (j) non-recurring cash expenses recognized for restructuring costs, integration costs and business optimization expenses in connection with any Initiative, and minus, to the extent included in the statement of such Consolidated Net Income for such period, the sum of (i) any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, gains on the sales of assets outside of the ordinary course of business), (ii) income tax credits (to the extent not netted from income tax expense) and (iii) any other non-cash income (other than normal accruals in the ordinary course of business for non-cash income that represents an accrual for cash income in a future period). For the purposes of calculating Consolidated EBITDA for any Reference Period pursuant to any determination of the Consolidated Leverage Ratio or Consolidated Secured Leverage Ratio, (i) if at any time during such Reference Period the Borrower or any Restricted Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period and (ii) if during such Reference Period the Borrower or any Restricted Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period.
“Consolidated First Lien Debt”: at any date, Consolidated Total Debt at such date that is secured by Liens on the Collateral that do not rank junior to the Liens on the Collateral securing the Loans (it being understood that the Term Loans and any other Consolidated Total Debt that is secured by Liens on all or a portion of the Collateral that are senior to, or pari passu with, the Liens on such Collateral securing the Loans shall be considered Consolidated First Lien Debt).
“Consolidated First Lien Leverage Ratio”: as at the last day of any Reference Period, the ratio of (a)(i) Consolidated First Lien Debt on such day less (ii) the aggregate Unrestricted Cash of the Group Members on such day to (b) Consolidated EBITDA for such period.
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“Consolidated Fixed Charge Coverage Ratio”: for any period, the ratio of (a) Consolidated EBITDA for such period less the aggregate amount actually paid by the Borrower and its Restricted Subsidiaries during such period on account of Unfinanced Capital Expenditures less expenses for taxes paid in cash during such period to (b) Consolidated Fixed Charges for such period.
“Consolidated Fixed Charges”: for any period, the sum (without duplication) of (a) Consolidated Interest Expense for such period, (b) scheduled principal payments made during such period on account of principal of Indebtedness of the Borrower or any Restricted Subsidiary, (c) Restricted Payments made in cash during such period pursuant to Section 7.6(g) or (h), (d) Capital Lease Obligation payments and (e) cash contributions to any Plan, all calculated for the Borrower and its Restricted Subsidiaries on a consolidated basis and, to the extent applicable, in accordance with GAAP.
“Consolidated Interest Expense”: for any period, with respect to the Borrower and its Restricted Subsidiaries, the sum, without duplication, of the aggregate cash interest expense of the Borrower and its Restricted Subsidiaries for such period, calculated on a consolidated basis, to the extent such expense was deducted (and not added back) in computing Consolidated Net Income (including pay in kind interest payments, amortization of original issue discount, the interest components of Capital Lease Obligations, receivable fees and net payments and receipts (if any) pursuant to interest rate Swap Obligations (other than in connection with the early termination thereof) but excluding any non-cash interest expense attributable to the movement in the mark-to-market valuation of Indebtedness, Swap Obligations or other derivative instruments, all amortization and write-offs of deferred financing fees, debt issuance costs, commissions, discounts, fees and expenses and expensing of any bridge, commitment or other financing fees, costs of surety bonds, charges owed with respect to letters of credit, bankers’ acceptances or similar facilities and all discounts, commissions, fees and other charges associated with any Indebtedness).
“Consolidated Leverage Ratio”: as at the last day of any Reference Period, the ratio of (a)(i) Consolidated Total Debt on such day less (ii) the aggregate Unrestricted Cash of the Group Members on such day to (b) Consolidated EBITDA for such period.
“Consolidated Net Income”: for any period, the consolidated net income (or loss) of the Borrower and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded:
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“Consolidated Secured Debt”: at any date, Consolidated Total Debt at such date that is secured by a Lien on any property of any Group Member.
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“Consolidated Secured Leverage Ratio”: as at the last day of any Reference Period, the ratio of (a)(i) Consolidated Secured Debt on such day less (ii) the aggregate Unrestricted Cash of the Group Members on such day to (b) Consolidated EBITDA for such period.
“Consolidated Total Debt”: at any date (without duplication), all Capital Lease Obligations, purchase money Indebtedness, Indebtedness for borrowed money and letters of credit (but only to the extent drawn and not reimbursed), in each case of the Borrower and its Restricted Subsidiaries at such date, determined on a consolidated basis in accordance with GAAP.
“Convertible Indebtedness” means debt securities, the terms of which provide for conversion into, or exchange for, Capital Stock (other than Disqualified Capital Stock) of the issuer, cash (in an amount determined by reference to the price of such Capital Stock) or a combination of Capital Stock (other than Disqualified Capital Stock) and/or cash (in an amount determined by reference to the price of such Capital Stock).
“Contractual Obligation”: as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
“Covered Entity”: any of the following:
“Covered Party”: as defined in Section 10.20.
“Credit Party”: the Administrative Agent, the Issuing Lender or any other Lender and, for the purposes of Section 10.13 only, any other Agent and the Arranger.
“Daily Simple SOFR”: for any day (a “SOFR Rate Day”), a rate per annum equal SOFR for the day (such day “SOFR Determination Date”) that is five (5) U.S. Government Securities Business Day prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower.
“Default”: any of the events specified in Section 8, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.
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“Default Right”: a “Default Right” as defined in, and interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“Defaulting Lender”: any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or Protective Advances or (iii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or any Credit Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by the Administrative Agent or any Issuing Lender, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations as of the date of certification) to fund prospective Loans and participations in then outstanding Letters of Credit and Protective Advances under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s receipt of such written certification in form and substance satisfactory to it and the Administrative Agent, or (d) has become the subject of a Bankruptcy Event.
“Deposit Account Control Agreement”: individually and collectively, each “Deposit Account Control Agreement” referred to in the Guarantee and Collateral Agreement.
“Deposit Accounts”: as defined in the Guarantee and Collateral Agreement.
“Designated Non-Cash Consideration”: the fair market value of non-cash consideration received by the Borrower or one of its Restricted Subsidiaries in connection with a Disposition that is so designated as Designated Non-Cash Consideration pursuant to a certificate of a Responsible Officer, setting forth the basis of such valuation, less the amount of cash and Cash Equivalents received in connection with a subsequent sale of such Designated Non-Cash Consideration within 180 days of receipt thereof.
“Dilution Factors”: without duplication, with respect to any period, the aggregate amount of all deductions, credit memos, returns, adjustments, allowances, bad debt write-offs and other non-cash credits which are recorded to reduce accounts receivable in a manner consistent with current and historical accounting practices of the Loan Parties as determined by the Administrative Agent in its Permitted Discretion (following (to the extent practicable) reasonable prior notice to, and consultation with, the Borrower).
“Dilution Ratio”: at any date, the amount (expressed as a percentage) equal to (a) the aggregate amount of the applicable Dilution Factors for the twelve (12) most recently ended fiscal months (or such shorter period as determined by the Administrative Agent in its Permitted Discretion (following (to the extent practicable) reasonable prior notice to, and consultation with, the Borrower)) divided by (b) total gross sales for the twelve (12) most recently ended fiscal months (or the applicable shorter period determined by the Administrative Agent in its Permitted Discretion (following (to the extent practicable) reasonable prior notice to, and consultation with, the Borrower)).
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“Dilution Reserve”: at any date, the applicable Dilution Ratio multiplied by the Eligible Accounts.
“Disposition”: with respect to any property, any sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition (in one transaction or in a series of transactions and whether effected pursuant to a division or otherwise) thereof. The terms “Dispose” and “Disposed of” shall have correlative meanings.
“Disqualified Capital Stock”: with respect to any Person, any Capital Stock of such Person that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, either mandatorily or at the option of the holder thereof), or upon the happening of any event or condition:
in each case, on or prior to the date that is 91 days after the Revolving Termination Date (or, in the case of any such Capital Stock outstanding on the Closing Date, the Closing Date); provided, however, that (i) Capital Stock of any Person that would not constitute Disqualified Capital Stock but for terms thereof giving holders thereof the right to require such Person to redeem or purchase such Capital Stock upon the occurrence of an “asset sale” or a “change of control” (or similar event, however denominated) shall not constitute Disqualified Capital Stock if any such requirement becomes operative only after repayment in full of all the Loans and all other Obligations that are accrued and payable and (ii) Capital Stock of any Person that is issued to any employee or to any plan for the benefit of employees or by any such plan to such employees shall not constitute Disqualified Capital Stock solely because it may be required to be repurchased by such Person or any of its subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability.
“Disqualified Lenders”: (a) certain banks, financial institutions, other institutional lenders and other Persons that have been specified in writing to the Administrative Agent by the Borrower prior to the Closing Date and (b) competitors of the Borrower and its Restricted Subsidiaries that are specified in writing to the Administrative Agent by the Borrower from time to time that are reasonably acceptable to the Administrative Agent (provided that any such written specification of a competitor by the Borrower to the Administrative Agent occurring on or after the Closing Date shall be deemed not delivered and not effective unless delivered by the Borrower to the Administrative Agent by email to JPMDQ_Contact@jpmorgan.com).
“Documentation Agent”: the Documentation Agent identified on the cover page of this Agreement.
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“Documents”: as defined in the Guarantee and Collateral Agreement.
“Dollars” and “$”: dollars in lawful currency of the United States.
“Domestic Subsidiary”: any Restricted Subsidiary of the Borrower organized under the laws of any jurisdiction within the United States.
“EEA Financial Institution”: (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country”: any of the member states of the European Union, Iceland, Liechtenstein and Norway.
“EEA Resolution Authority”: any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Electronic Signature”: an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.
“Eligible Accounts”: at any time, the Accounts of the Loan Parties which the Administrative Agent determines in its Permitted Discretion (following (to the extent practicable) reasonable prior notice to, and consultation with, the Borrower) are eligible as the basis for the extension of Revolving Loans and the issuance of Letters of Credit. Without limiting the Administrative Agent’s Permitted Discretion provided herein, Eligible Accounts shall not include any Account:
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In determining the amount of an Eligible Account, the face amount of an Account may, in the Administrative Agent’s Permitted Discretion (following (to the extent practicable) reasonable prior notice to, and consultation with, the Borrower), be reduced by, without duplication, to the extent not reflected in such face amount, (i) the amount of all accrued and actual discounts, claims, credits or credits pending, promotional program allowances, price adjustments, finance charges or other allowances (including any amount that any Loan Party may be obligated to rebate to an Account Debtor pursuant to the terms of any agreement or understanding (written or oral)) and (ii) the aggregate amount of all cash received in respect of such Account but not yet applied by the applicable Loan Party to reduce the amount of such Account.
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Standards of eligibility may be made more restrictive from time to time by the Administrative Agent in its Permitted Discretion, following (to the extent practicable) reasonable prior notice to, and consultation with, the Borrower, with any such changes to be effective four days after delivery of notice thereof to the Borrower and the Lenders; provided that if consultation with the Borrower and/or notice to the Borrower and the Lenders is not practicable or if failure to implement any such change within a shorter time period would, in the good faith judgment of the Administrative Agent, reasonably be expected to result in a Material Adverse Effect or materially and adversely affect the Collateral or the rights of the Lenders under the Loan Documents, such change may be implemented within a shorter time as determined by the Administrative Agent in its Permitted Discretion.
“Eligible Assignee”: (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund, (d) any commercial bank and (e) any other financial institution or investment fund engaged as a primary activity in the ordinary course of its business in making or investing in commercial loans or debt securities, other than, in each case, (i) a natural person or (ii) the Borrower, any Subsidiary or any other Affiliate of the Borrower; provided that solely for purposes of an assignment pursuant to Section 10.6(b), “Eligible Assignee” shall not include any Person that is a Disqualified Lender at the time of such assignment.
“Eligible Foreign Account”: a Foreign Account that is owed by an Account Debtor listed on Schedule 1.1C, as such Schedule may be updated from time to time in the Administrative Agent’s Permitted Discretion after written request by the Borrower.
“Eligible Inventory”: at any time, the Inventory of the Loan Parties which the Administrative Agent determines in its Permitted Discretion (following (to the extent practicable) reasonable prior notice to, and consultation with, the Borrower) is eligible as the basis for the extension of Revolving Loans and the issuance of Letters of Credit. Without limiting the Administrative Agent’s Permitted Discretion provided herein, Eligible Inventory shall not include any Inventory:
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Standards of eligibility may be made more restrictive from time to time by the Administrative Agent in its Permitted Discretion, after consultation (to the extent practicable) with the Borrower, with any such changes to be effective four days after delivery of notice thereof to the Borrower and the Lenders; provided that if consultation with the Borrower and/or notice to the Borrower and the Lenders is not practicable or if failure to implement any such change within a shorter time period would, in the good faith judgment of the Administrative Agent, reasonably be expected to result in a Material Adverse Effect or materially and adversely affect the Collateral or the rights of the Lenders under the Loan Documents, such change may be implemented within a shorter time as determined by the Administrative Agent in its Permitted Discretion.
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“Eligible Inventory Locations”: the five Borrowing Base Eligible Facilities of the Loan Parties that contain the greatest value of Eligible Inventory of the Loan Parties, which facilities shall be updated no more than once in any fiscal year at the Permitted Discretion of the Administrative Agent. On the Closing Date, it is agreed that each of the Borrower’s warehouses located in Syracuse, New York, Stafford Springs, Connecticut, Salem, New Hampshire, Stafford, Connecticut and Littleton, Colorado shall constitute Eligible Inventory Locations.
“Environmental Laws”: any and all foreign, Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or other Requirements of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time hereafter be in effect.
“ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder.
“ERISA Affiliate”: (a) any entity, whether or not incorporated, that is under common control with a Group Member within the meaning of Section 4001(a)(14) of ERISA; (b) any corporation that is a member of a controlled group of corporations within the meaning of Section 414(b) of the Code of which a Group Member is a member; (c) any trade or business (whether or not incorporated) that is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Code of which a Group Member is a member; and (d) with respect to any Group Member, any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Code of which any corporation described in clause (b) above or any trade or business described in clause (c) above is a member. Any former ERISA Affiliate of any Group Member shall continue to be considered an ERISA Affiliate of the Group Member within the meaning of this definition with respect to the period such entity was an ERISA Affiliate of the Group Member and with respect to liabilities arising after such period for which the Group Member could be liable under the Code or ERISA.
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“ERISA Event”: (a) the failure of any Plan to comply with any material provisions of ERISA and/or the Code or with the material terms of such Plan; (b) the existence with respect to any Plan of a non-exempt Prohibited Transaction; (c) any Reportable Event; (d) the failure of any Group Member or ERISA Affiliate to make by its due date a required installment under Section 430(j) of the Code with respect to any Pension Plan or any failure by any Pension Plan to satisfy the minimum funding standards (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Pension Plan, whether or not waived in accordance with Section 412(c) of the Code or Section 302(c) of ERISA; (e) a determination that any Pension Plan is, or is expected to be, in “at risk” status (within the meaning of Section 430 of the Code or Section 303 of ERISA); (f) the filing pursuant to Section 412 of the Code or Section 302 of ERISA of an application for a waiver of the minimum funding standard with respect to any Pension Plan; (g) the occurrence of any event or condition which could reasonably be expected to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or the incurrence by any Group Member or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Pension Plan, including but not limited to the imposition of any Lien in favor of the PBGC or any Pension Plan; (h) the receipt by any Group Member or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Pension Plan or to appoint a trustee to administer any Pension Plan under Section 4042 of ERISA; (i) the failure by any Group Member or any ERISA Affiliate to make any required contribution to a Multiemployer Plan pursuant to Sections 431 or 432 of the Code; (j) the incurrence by any Group Member or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Pension Plan or Multiemployer Plan; (k) the receipt by any Group Member or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from a Group Member or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, Insolvent, in “endangered” or “critical” status (within the meaning of Sections 431 or 432 of the Code or Sections 304 or 305 of ERISA), or terminated (within the meaning of Section 4041A of ERISA) or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (l) the failure by any Group Member or any ERISA Affiliate to pay when due (after expiration of any applicable grace period) any installment payment with respect to Withdrawal Liability under Section 4201 of ERISA; (m) the withdrawal by any Group Member or any ERISA Affiliate from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability to any Group Member or any ERISA Affiliate pursuant to Section 4063 or 4064 of ERISA; (n) the imposition of liability on any Group Member or any ERISA Affiliate pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (o) the occurrence of an act or omission which could give rise to the imposition on any Group Member or any ERISA Affiliate of fines, penalties, taxes or related charges under Chapter 43 of the Code or under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any Plan; (p) the assertion of a material claim (other than routine claims for benefits) against any Plan other than a Multiemployer Plan or the assets thereof, or against any Group Member or any ERISA Affiliate in connection with any Plan; (q) receipt from the IRS of notice of the failure of any Pension Plan (or any other Plan intended to be qualified under Section 401(a) of the Code) to qualify under Section 401(a) of the Code, or the failure of any trust forming part of any Pension Plan (or any other Plan) to qualify for exemption from taxation under Section 501(a) of the Code; or (r) the imposition of a Lien pursuant to Section 430(k) of the Code or pursuant to Section 303(k) or 4068 of ERISA with respect to any Pension Plan.
“EU Bail-In Legislation Schedule”: the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.
“Event of Default”: any of the events specified in Section 8, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.
“Exchange Act”: the Securities Exchange Act of 1934, as amended.
“Excluded Swap Obligation”: with respect to any Loan Party (a) any Swap Obligation if, and to the extent that, and only for so long as, all or a portion of the guarantee of such Loan Party of, or the grant by such Loan Party of a security interest to secure, as applicable, such Swap Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Loan Party’s failure to constitute an “eligible contract participant,” as defined in the Commodity Exchange Act and the regulations thereunder, at the time the guarantee of (or grant of such security interest by, as applicable) such Loan Party becomes or would become effective with respect to such Swap Obligation or (b) any other Swap Obligation designated as an “Excluded Swap Obligation” of such Loan Party as specified in any agreement between the relevant Loan Parties and counterparty applicable to such Swap Obligations, and agreed by the Administrative Agent. If a Swap Obligation arises under a master agreement governing more than one Swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to Swaps for which such guarantee or security interest is or becomes illegal.
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“Excluded Taxes”: any of the following Taxes imposed on or with respect to a Credit Party or required to be withheld or deducted from a payment to a Credit Party, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of a Credit Party being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. Federal withholding Taxes imposed on amounts payable to or for the account of a Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) a Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 2.22) or (ii) a Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.19, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender acquired the applicable interest in a Loan or Commitment or to such Lender immediately before it changed its lending office, (c) Taxes attributable to a Credit Party’s failure to comply with Section 2.19(f) and (d) any U.S. Federal withholding Taxes imposed under FATCA.
“Existing Credit Agreement”: as defined in the preamble to this Agreement.
“Existing Letters of Credit”: the letters of credit existing on the Closing Date and identified on Schedule 3.1.
“Existing LIBOR Loans”: as defined in Section 10.20(b).
“Existing Mortgages”: the Mortgages existing on the Closing Date and identified on Schedule 5.1(k), as amended by the Mortgage Amendments as and when delivered in accordance with this Agreement.
“FATCA”: Sections 1471 through 1474 of the Code, as of the Closing Date (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, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules, or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.
“Federal Funds Effective Rate”: for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depositary institutions, as determined in such manner as shall be set forth on the NYFRB’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as the effective federal funds rate; provided that if the Federal Funds Effective Rate as so determined would be less than 0.0%, such rate shall be deemed to be 0.0% for the purposes of this Agreement.
“Federal Reserve Board”: the Board of Governors of the Federal Reserve System of the United States of America.
“Fee Payment Date”: (a) 15 days after the end of each April, July, October and January and (b) the last day of the Revolving Commitment Period.
“First Amendment Effective Date”: June 10, 2024.
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“Flood Laws”: collectively, (i) the National Flood Insurance Reform Act of 1994 (which comprehensively revised the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973) as now or hereafter in effect or any successor statute thereto, (ii) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto and (iii) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.
“Floor”: the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the Adjusted Term SOFR Rate or the Adjusted Daily Simple SOFR, as applicable. For the avoidance of doubt the initial Floor for each of Adjusted Term SOFR Rate or the Adjusted Daily Simple SOFR shall be 0.0%.
“Foreign Account”: an Account that is owed by an Account Debtor which (i) does not maintain its chief executive office in the U.S. or Canada or (ii) is not organized under applicable law of the U.S., any state of the U.S., Canada, or any province of Canada.
“Foreign Benefit Arrangement”: any employee benefit arrangement mandated by non-U.S. law that is maintained or contributed to by any Group Member, any ERISA Affiliate or any other entity related to a Group Member on a controlled group basis.
“Foreign Plan”: each employee benefit plan (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA) that is not subject to US law and is maintained or contributed to by any Group Member, or ERISA Affiliate or any other entity related to a Group Member on a controlled group basis.
“Foreign Plan Event”: with respect to any Foreign Benefit Arrangement or Foreign Plan, (a) the failure to make or, if applicable, accrue in accordance with normal accounting practices, any employer or employee contributions required by applicable law or by the terms of such Foreign Benefit Arrangement or Foreign Plan; (b) the failure to register or loss of good standing with applicable regulatory authorities of any such Foreign Benefit Arrangement or Foreign Plan required to be registered; or (c) the failure of any Foreign Benefit Arrangement or Foreign Plan to comply with any material provisions of applicable law and regulations or with the material terms of such Foreign Benefit Arrangement or Foreign Plan.
“Foreign Subsidiary”: any Restricted Subsidiary of the Borrower that is not a Domestic Subsidiary.
“Full Cash Dominion Period”: (a) each period when a Specified Event of Default shall have occurred and be continuing, (b) at any time after the Closing Date, each period beginning on the first day on which Availability is less than the greater of (i) 7.5% of the Line Cap and (ii) $10,500,000 and (c) at any time after the Closing Date, each period beginning on the fifth consecutive Business Day on which Availability is less than the greater of (i) 10% of the Line Cap and (ii) $14,000,000; provided that any such Full Cash Dominion Period commencing pursuant to clause (b) or (c) shall end when and if Availability shall have been not less than such specified level for 30 consecutive days.
“Funding Office”: the office of the Administrative Agent specified in Section 10.2 or such other office as may be specified from time to time by the Administrative Agent as its funding office by written notice to the Borrower and the Lenders.
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“GAAP”: generally accepted accounting principles in the United States as in effect from time to time. In the event that any “Accounting Change” (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then the Borrower and the Administrative Agent agree to enter into negotiations to promptly amend such provisions of this Agreement so as to reflect equitably such Accounting Changes with the desired result that the criteria for evaluating the Borrower’s results of operations and/or financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made. Until such time as such an amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred. “Accounting Changes” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC.
“Governmental Authority”: any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization (including the National Association of Insurance Commissioners).
“Group Members”: the collective reference to the Borrower and its Restricted Subsidiaries.
“Guarantee and Collateral Agreement”: the Amended and Restated ABL Guarantee and Collateral Agreement, dated as of the Closing Date, executed and delivered by the Borrower and each Subsidiary Guarantor, substantially in the form of Exhibit A.
“Guarantee Obligation”: as to any Person (the “guaranteeing person”), any obligation, including a reimbursement, counterindemnity or similar obligation, of the guaranteeing Person that guarantees or in effect guarantees, or which is given to induce the creation of a separate obligation by another Person (including any bank under any letter of credit) that guarantees or in effect guarantees, any Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith.
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“Immaterial Subsidiary”: Wirekraft Industries, LLC; provided that if, at any time, any such Subsidiary shall have revenues, assets or operations, such Subsidiary shall cease to be an Immaterial Subsidiary.
“Increased Facility Activation Notice”: a notice substantially in the form of Exhibit I-1 or in such other form as is reasonably acceptable to the Administrative Agent.
“Increased Facility Closing Date”: any Business Day designated as such in an Increased Facility Activation Notice.
“Incremental Cap”: at any time, the sum of (A) the Voluntary Prepayment Amount and (B) an unlimited additional amount so long as (x) in respect of any Permitted Additional Junior Lien Indebtedness, the Consolidated Secured Leverage Ratio for the Applicable Reference Period, calculated on a Pro Forma Basis as of the date of incurrence thereof (but excluding from Unrestricted Cash in making such pro forma calculation the Net Cash Proceeds of such Indebtedness), is not in excess of 3.75 to 1.00 (or if such Indebtedness is incurred in connection with an Investment permitted hereunder, such Consolidated Secured Leverage Ratio is less than or equal to the Consolidated Secured Leverage Ratio immediately prior to such transaction) or (y) in respect of Permitted Unsecured Indebtedness, (1) the Consolidated Leverage Ratio for the Applicable Reference Period, calculated on a Pro Forma Basis as of the date of incurrence thereof (but excluding from Unrestricted Cash in making such pro forma calculation the Net Cash Proceeds of such Indebtedness), is not in excess of 4.25 to 1.00 (or if such Indebtedness is incurred in connection with an Investment permitted hereunder, such Consolidated Leverage Ratio is less than or equal to the Consolidated Leverage Ratio immediately prior to such transaction) or (2) the Consolidated Coverage Ratio for the Applicable Reference Period, calculated on a Pro Forma Basis as of the date of incurrence thereof, is no less than 2.00:1.00 (it being understood that (i) the Borrower shall be deemed to have utilized amounts under clause (B) above prior to utilization of amounts under clauses (A) above or the Base Incremental Amount and (ii) the proceeds from any incurrence under such clauses and under the Base Incremental Amount may be utilized in a single transaction by first calculating the incurrence under clause (B) above and then calculating the incurrence under clause (A) above and any incurrence utilizing the Base Incremental Amount); provided that in no event shall any Incremental Equivalent Indebtedness consisting of Permitted Additional Junior Lien Indebtedness be incurred as a result of any Voluntary Prepayment Amount attributable to prepayments of Permitted Unsecured Indebtedness.
“Incremental Commitments”: as defined in Section 2.24(a).
“Incremental Equivalent Indebtedness”: Indebtedness incurred or issued by a Loan Party consisting of Permitted Additional Junior Lien Indebtedness (which, for purposes of clarity, may include Incremental Term Loans) or Permitted Unsecured Indebtedness.
“Incremental Term Loans”: term loans made to the Borrower pursuant to Section 2.24(a) of the Term Loan Credit Agreement as in effect on the First Amendment Effective Date.
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“Indebtedness”: of any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than (i) trade payables incurred in the ordinary course of such Person’s business and not overdue more than 90 days, (ii) deferred compensation payable to directors, officers or employees of any Group Member and (iii) any purchase price adjustment or earnout obligation until such adjustment or obligation becomes a liability on the balance sheet of such Person in accordance with GAAP), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under or in respect of acceptances, letters of credit, surety bonds or similar arrangements, (g) the liquidation value of all redeemable preferred Disqualified Capital Stock of such Person, (h) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (g) above, (i) all obligations of the kind referred to in clauses (a) through (h) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation (but only to the extent of the lesser of (i) the amount of such Indebtedness and (ii) the fair market value of such property), and (j) for the purposes of Section 8(e) only, all obligations of such Person in respect of Swap Agreements. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor.
“Indemnified Taxes”: (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a) above, Other Taxes.
“Indemnitee”: as defined in Section 10.5(b).
“Insolvent”: with respect to any Multiemployer Plan, the condition that such plan is insolvent within the meaning of Section 4245 of ERISA.
“Intellectual Property”: as defined in the Guarantee and Collateral Agreement.
“Intercreditor Agreement”: the Amended and Restated ABL/Term Loan Intercreditor Agreement, dated as of the Closing Date, among the Borrower, the Subsidiary Guarantors, the Administrative Agent and the Term Loan Administrative Agent, substantially in the form of Exhibit K.
“Interest Election Request” means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.12, which shall be in a form approved by the Administrative Agent.
“Interest Payment Date”: (a) as to any ABR Loan, the first day of each January, April, July and October to occur while such Loan is outstanding and the final maturity date of such Loan, (b) as to any Term Benchmark Loan, the last day of each Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Term Benchmark Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period, and the final maturity date of such Loan, (c) as to any RFR Loan, (1) each date that is on the numerically corresponding day in each calendar month that is one month after the Borrowing of such Loan (or, if there is no such numerically corresponding day in such month, then the last day of such month) and (2) the final maturity date of such Loan and (d) as to any Loan (other than any Revolving Loan that is an ABR Loan), the date of any repayment or prepayment made in respect thereof.
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“Interest Period”: as to any Term Benchmark Loan, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, three or six months thereafter (in each case, subject to the availability for the Benchmark applicable to the relevant Loan or Commitment), as the Borrower may elect; provided that, all of the foregoing provisions relating to Interest Periods are subject to the following:
For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.
“Inventory”: as defined in the Guarantee and Collateral Agreement.
“Inventory Reserves”: reserves against Inventory equal to the sum of the following, each as determined by the Administrative Agent in its Permitted Discretion (following (to the extent practicable) reasonable prior notice to, and consultation with, the Borrower):
(a) a reserve for shrink, or discrepancies that arise pertaining to inventory quantities on hand between the Borrower’s perpetual accounting system, and physical counts of the Inventory which will be based on the applicable Loan Party’s historical practice and experience;
(b) a reserve for Inventory which is designated to be returned to vendor or which is recognized as not to customer specifications by the applicable Loan Party;
(c) a revaluation reserve whereby capitalized favorable variances shall be deducted from Eligible Inventory and unfavorable variances shall not be added to Eligible Inventory; and
(d) a lower of the cost or market reserve for any differences between the Loan Parties’ actual cost to produce versus its selling price to third parties, determined on a product line basis.
“Investment Grade Eligible Accounts”: Eligible Accounts owing by an Account Debtor (a) whose securities are rated BBB- or better by S&P or Baa3 or better by Moody’s at such time and (b) who is organized under the laws of any jurisdiction within the United States.
“Investments”: as defined in Section 7.7.
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“IRS”: the United States Internal Revenue Service.
“Issuing Lender”: each of JPMCB and any other Revolving Lender approved by the Administrative Agent and the Borrower that has agreed in its sole discretion to act as an “Issuing Lender” hereunder, or any of their respective affiliates, in each case in its capacity as issuer of any Letter of Credit. Each reference herein to “the Issuing Lender” shall be deemed to be a reference to the relevant Issuing Lender.
“Joint Venture”: a joint venture, partnership or other similar arrangement entered into by the Borrower or any Restricted Subsidiary, whether in corporate, partnership or other legal form; provided that in no event shall any Subsidiary be considered to be a Joint Venture.
“JPMCB”: JPMorgan Chase Bank, N.A.
“Junior Indebtedness”: (a) any Subordinated Indebtedness, (b) any Indebtedness of any Group Member that is secured by a Lien on the Collateral that is junior to the Lien on the Collateral securing the Obligations (including, for the avoidance of doubt, the Term Loans and any Permitted Refinancing Indebtedness in respect of the foregoing) and (c) any Material Unsecured Indebtedness of any Group Member.
“L/C Commitment”: $50,000,000, as such amount may be reduced from time to time by the mutual agreement of the Administrative Agent and the Borrower.
“L/C Disbursement”: a payment made by an Issuing Lender pursuant to a Letter of Credit, including in respect of a time draft presented thereunder.
“L/C Exposure”: at any time, the total L/C Obligations. The L/C Exposure of any Revolving Lender at any time shall be its Revolving Percentage of the total L/C Exposure at such time. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Article 29(a) of the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce Publication No. 600 (or such later version thereof as may be in effect at the applicable time) or Rule 3.13 or Rule 3.14 of the International Standby Practices, International Chamber of Commerce Publication No. 590 (or such later version thereof as may be in effect at the applicable time) or similar terms of the Letter of Credit itself, or if compliant documents have been presented but not yet honored, such Letter of Credit shall be deemed to be “outstanding” and “undrawn” in the amount so remaining available to be paid, and the obligations of the Borrower and each Lender shall remain in full force and effect until the Issuing Lender and the Lenders shall have no further obligations to make any payments or disbursements under any circumstances with respect to any Letter of Credit.
“L/C Obligations”: at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit that have not then been reimbursed pursuant to Section 3.5.
“L/C Participants”: the collective reference to all the Revolving Lenders other than the Issuing Lender.
“Lender Parent”: with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a Subsidiary.
“Lender-Related Person”: as defined in Section 10.5(c).
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“Lenders”: as defined in the preamble hereto.
“Letters of Credit”: as defined in Section 3.1(a).
“Liabilities”: any losses, claims (including intraparty claims), demands, damages or liabilities of any kind.
“Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having substantially the same economic effect as any of the foregoing).
“Line Cap”: at any time, an amount equal to the lesser of (a) the Total Commitments and (b) the Borrowing Base.
“Limited Condition Acquisition”: any Permitted Acquisition or similar acquisition by the Parent or one or more of its Subsidiaries permitted pursuant to the Loan Documents whose consummation is not conditioned on the availability of, or on obtaining, third party financing.
“Loan”: any loan made by any Lender pursuant to this Agreement, including Protective Advances.
“Loan Documents”: this Agreement, the Security Documents, the Intercreditor Agreement, the Notes and any amendment, waiver, supplement or other modification to any of the foregoing.
“Loan Parties”: the Borrower and the Subsidiary Guarantors.
“Material Acquisition”: any acquisition of property or series of related acquisitions of property that (a) constitutes assets comprising all or substantially all of an operating unit of a business or constitutes all or substantially all of the common stock of a Person and (b) involves the payment of consideration by the Group Members in excess of $35,000,000.
“Material Adverse Effect”: a material adverse effect on (a) the business, property, operations or financial condition of the Borrower and its Restricted Subsidiaries taken as a whole or (b) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder.
“Material Disposition”: any Disposition of property or series of related Dispositions of property that yields gross proceeds to the Group Members in excess of $35,000,000.
“Material Indebtedness”: Indebtedness (other than the Loans) or Swap Obligations of any one or more of the Borrower and the Restricted Subsidiaries in an aggregate principal amount of $50,000,000 or more; provided that any Indebtedness outstanding under the Asia Facility shall be deemed to be Material Indebtedness. For purposes of determining Material Indebtedness, the “principal amount” of any Swap Obligation at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower and/or any applicable Restricted Subsidiary would be required to pay if the applicable Swap Agreement were terminated at such time.
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“Material Unsecured Indebtedness”: any Indebtedness in an aggregate principal amount of $25,000,000 or more that is not secured by a Lien on any property of any Group Member.
“Materials of Environmental Concern”: any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including asbestos, polychlorinated biphenyls, per- and polyfluoroalkyl substances and urea-formaldehyde insulation.
“Mortgage Amendment” as defined in Section 5.1(k).
“Mortgaged Properties”: the real properties listed on Schedule 1.1B and any real property that becomes subject to a Mortgage pursuant to this Agreement, in each case as to which the Administrative Agent for the benefit of the Secured Parties shall be granted a Lien pursuant to the Mortgages.
“Mortgages”: each of the mortgages, deeds of trust and/or deeds to secure debt made by any Loan Party in favor of, or for the benefit of, the Administrative Agent for the benefit of the Secured Parties (with such changes thereto as shall be advisable under the law of the jurisdiction in which such mortgage, deed of trust or deed to secure debt is to be recorded), including any Mortgages executed and delivered pursuant to Sections 5.1(k), 6.10(b) and 6.13.
“Multiemployer Plan”: a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which any Group Member or any ERISA Affiliate (i) makes or is obligated to make contributions, (ii) during the preceding five plan years, has made or been obligated to make contributions or (iii) has any actual or contingent liability.
“Multiple Employer Plan”: a Plan which has two or more contributing sponsors (including any Group Member or any ERISA Affiliate) at least two of whom are not under common control, as such a Plan is described in Section 4064 of ERISA.
“Net Cash Proceeds”: in connection with any issuance or sale of Capital Stock or any incurrence of Indebtedness, the cash proceeds received from such issuance or incurrence, net of attorneys’ fees, investment banking fees, accountants’ fees, underwriting discounts and commissions and other customary fees and expenses actually incurred in connection therewith.
“Net Orderly Liquidation Value”: with respect to Inventory of any Person, the orderly liquidation value thereof as determined in a manner reasonably acceptable to the Administrative Agent by an appraiser reasonably acceptable to the Administrative Agent, net of all costs of liquidation thereof.
“New Lender”: as defined in Section 2.24(b).
“New Lender Supplement”: as defined in Section 2.24(b).
“Non-Guarantor Debt Basket”: an amount equal to the greater of $150,000,000 and 45.0% of Consolidated EBITDA for the most recently ended Reference Period.
“Non-Investment Grade Eligible Accounts”: Eligible Accounts that are not Investment Grade Eligible Accounts.
“Non-U.S. Lender”: a Lender that is not a U.S. Person.
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“Not Otherwise Applied”: in respect of any amount, such amount has not previously been (and is not currently being) applied to any other use or transaction.
“Notes”: the collective reference to any promissory note evidencing Loans.
“NYFRB”: the Federal Reserve Bank of New York.
“NYFRB Rate”: for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a federal funds transaction quoted at 11:00 a.m. on such day received by the Administrative Agent from a federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates as so determined be less than 0.0%, such rate shall be deemed to be 0.0% for purposes of this Agreement.
“NYFRB’s Website”: the website of the NYFRB at http://www.newyorkfed.org, or any successor source.
“Obligations”: collectively, (a) the unpaid principal of and interest on (including interest accruing after the maturity of the Loans and Reimbursement Obligations and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and Reimbursement Obligations, all other obligations and liabilities of the Borrower to the Administrative Agent or to any Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which arise under, out of, or in connection with, this Agreement, any other Loan Document, the Letters of Credit or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including all fees, charges and disbursements of counsel to the Administrative Agent or to any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise, (b) all Banking Services Obligations and (c) all Secured Swap Obligations.
“Other Connection Taxes”: with respect to any Credit Party, Taxes imposed as a result of a present or former connection between such Credit Party and the jurisdiction imposing such Tax (other than connections arising from such Credit Party having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to, or enforced, any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes”: all present or future stamp, court, or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.22).
“Overnight Bank Funding Rate”: for any day, the rate comprised of both overnight federal funds and overnight eurodollar transactions denominated in Dollars by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on the NYFRB’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate.
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“Participant”: as defined in Section 10.6(c).
“Participant Register”: as defined in Section 10.6(c).
“Patriot Act”: as defined in Section 10.17.
“Payment”: as defined in Section 9.12(c)(i).
“Payment Notice” as defined in Section 9.12(c)(2).
“Payment Condition”: with respect to any Permitted Acquisition, Restricted Payment or other transaction designated herein as subject to the “Payment Conditions”, the satisfaction of the following conditions:
“Payment Notice” has the meaning assigned to it in Section 9.12(c)(ii).
“PBGC”: the Pension Benefit Guaranty Corporation established under Section 4002 of ERISA and any successor entity performing similar functions.
“Pension Plan”: any employee benefit plan (including a Multiple Employer Plan, but not including a Multiemployer Plan) that is subject to Title IV of ERISA, Section 412 of the Code or Section 302 of ERISA (i) which is or was sponsored, maintained or contributed to by, or required to be contributed to by, any Group Member or any ERISA Affiliate or (ii) with respect to which any Group Member or any ERISA Affiliate has any actual or contingent liability.
“Permitted Acquisition”: the purchase or other acquisition by the Borrower or any Restricted Subsidiary of all or a majority of the Capital Stock of, or all or substantially all of the property of, any Person, or of any business or division of any Person; provided that with respect to each purchase or other acquisition (i) after giving effect thereto, the Borrower and its Restricted Subsidiaries are in compliance with Section 7.15 and (ii) any such newly created or acquired Subsidiary shall, to the extent required by Section 6.10, comply with the requirements of Section 6.10.
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“Permitted Additional Junior Lien Indebtedness”: Indebtedness of any Loan Party (a) that is (and any Guarantees thereof by any Loan Party are) secured by a Lien on the Collateral that, with respect to the ABL Priority Collateral, is junior to the Lien on the Collateral securing the Obligations on terms reasonably satisfactory to the Administrative Agent and is not secured by any other property or assets of the Borrower or any of its Restricted Subsidiaries other than Collateral, (b) is subject to the Intercreditor Agreement or such other intercreditor agreement in form and substance reasonably satisfactory to the Administrative Agent, (c) that does not mature earlier than the date that is 91 days after the Revolving Termination Date, (d) that does not provide for any amortization, mandatory prepayment, redemption or repurchase (other than (i) with respect to any Permitted Additional Junior Lien Indebtedness in the form of term loans, customary nominal amortization and customary prepayments with (x) “excess cash flow”, (y) the proceeds of any debt incurrences not permitted pursuant to the terms of the documentation governing such term loans and (z) the proceeds of asset sales, or events of loss (it being understood that the terms of the Incremental Term Loans meet the requirements of this clause (d)(i)), (ii) with respect to any other Permitted Additional Junior Lien Indebtedness, customary mandatory prepayments, redemptions or repurchases (or offers to repurchase) upon a change of control, fundamental change, asset sale or event of loss, (iii) customary acceleration rights after an event of default and, (iv) for the avoidance of doubt, rights to convert or exchange into Capital Stock of the Borrower in the case of convertible or exchangeable Indebtedness) prior to the date that is 91 days after the Revolving Termination Date, (e) that contains covenants, events of default, guarantees and other terms that are customary for similar Indebtedness in light of then-prevailing market conditions (it being understood and agreed that such Indebtedness shall include financial maintenance covenants only to the extent any such financial maintenance covenant is (i) applicable only to periods after the Revolving Termination Date or (ii) added to the Loan Documents for the benefit of the Lenders) and, when taken as a whole (except as explicitly permitted pursuant to clause (d)(i) or (d)(ii) above, and other than interest rates, rate floors, fees and optional prepayment or redemption terms), are not more favorable to the lenders or investors providing such Permitted Additional Junior Lien Indebtedness, as the case may be, than those set forth in the Loan Documents are with respect to the Lenders (other than covenants or other provisions applicable only to periods after the Revolving Termination Date); provided that a certificate of a Responsible Officer delivered to the Administrative Agent at least five Business Days prior to the incurrence of such Indebtedness or the modification, refinancing, refunding, renewal or extension thereof (or such shorter period of time as may reasonably be agreed by the Administrative Agent), together with a reasonably detailed description of the material terms and conditions of such resulting Indebtedness or drafts of the material definitive documentation relating thereto, stating that the Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirements shall be conclusive, and (f) that is not guaranteed by any Person other than by the Borrower and/or Restricted Subsidiaries that are Loan Parties.
“Permitted Convertible Indebtedness”: Convertible Indebtedness that is not guaranteed by any Person.
“Permitted Discretion”: a determination made in good faith and in the exercise of reasonable (from the perspective of a secured asset-based lender) business judgment.
“Permitted Encumbrances”: Liens permitted pursuant to Section 7.3(a), (b), (c), (d), (e) or (n); provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness (other than with respect to Section 7.3(n)).
“Permitted Liens”: Liens permitted pursuant to Section 7.3.
“Permitted Receivables Facility”: any Receivables Facility; provided that the aggregate outstanding and uncollected amount of accounts receivable pledged, sold, conveyed or otherwise transferred in connection with all such Receivables Facilities shall not exceed $30,000,000 at any time.
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“Permitted Refinancing Indebtedness ”: with respect to any Indebtedness of any Person (the “Original Indebtedness”), any modification, refinancing, refunding, replacement, renewal or extension of such Indebtedness, in whole or in part; provided, that (i) no Person that is not an obligor with respect to the Original Indebtedness shall be an obligor with respect to such Permitted Refinancing Indebtedness, (ii) the final maturity and weighted average life to maturity of such Indebtedness shall not be shortened as a result of such modification, refinancing, refunding, replacement, renewal or extension, (iii) in the case of any modification, refinancing, refunding, replacement, renewal or extension of Indebtedness incurred pursuant Section 7.2(b), the other material terms and conditions of such Indebtedness after giving effect to such modification, refinancing, refunding, replacement, renewal or extension, taken as a whole (other than interest rates, rate floors, fees and optional prepayment or redemption terms), shall not be materially more restrictive as determined by the Borrower in good faith, (iv) (x) in the case of any Original Indebtedness consisting of a revolving credit facility, the committed amount (in the case of a revolving credit facility) or principal of such Permitted Refinancing Indebtedness does not exceed the committed amount in respect of the Original Indebtedness and (y) otherwise, the principal amount (or accreted value or committed amount, if applicable) thereof does not exceed the principal amount (or accreted value or committed amount, if applicable) of the Original Indebtedness, except in each case by an amount (such amount, the “Additional Permitted Amount”) equal to unpaid accrued interest and premium thereon at such time plus reasonable fees and expenses incurred in connection with such modification, refinancing, refunding, replacement, renewal or extension, (v) for the avoidance of doubt, the Original Indebtedness is paid down (or commitments in respect thereof are reduced) on a dollar-for-dollar basis by such Permitted Refinancing Indebtedness (other than by the Additional Permitted Amount), (vi) if the Original Indebtedness shall have been subordinated to the Obligations, such Permitted Refinancing Indebtedness shall also be subordinated to the Obligations on terms not less favorable in any material respect to the Lenders and (vii) such Permitted Refinancing Indebtedness shall not be secured by any Lien on any asset other than the assets that secured such Original Indebtedness (or would have been required to secure such Original Indebtedness pursuant to the terms thereof) or, in the event Liens securing such Original Indebtedness shall have been contractually subordinated to any Lien securing the Obligations, by any Lien that shall not have been contractually subordinated to at least the same extent.
“Permitted Unsecured Indebtedness”: Indebtedness of any Loan Party (a) that is not (and any Guarantees thereof by any Loan Party are not) secured by any collateral (including the Collateral), (b) that does not mature earlier than the date that is 91 days after the Revolving Termination Date, (c) that does not provide for any amortization, mandatory prepayment, redemption or repurchase (other than upon a change of control, fundamental change, customary asset sale or event of loss mandatory offers to purchase and customary acceleration rights after an event of default and, for the avoidance of doubt, rights to convert or exchange into Capital Stock of the Borrower in the case of convertible or exchangeable Indebtedness) prior to the date that is 91 days after the Revolving Termination Date, (d) that contains covenants, events of default, guarantees and other terms that are customary for similar Indebtedness in light of then-prevailing market conditions (it being understood and agreed that such Indebtedness shall not include any financial maintenance covenants and that applicable negative covenants shall be incurrence-based to the extent customary for similar Indebtedness) and, when taken as a whole (other than interest rates, rate floors, fees and optional prepayment or redemption terms), are not more favorable to the lenders or investors providing such Permitted Unsecured Indebtedness, as the case may be, than those set forth in the Loan Documents are with respect to the Lenders (other than covenants or other provisions applicable only to periods after the Revolving Termination Date); provided that a certificate of a Responsible Officer delivered to the Administrative Agent at least five Business Days prior to the incurrence of such Indebtedness or the modification, refinancing, refunding, renewal or extension thereof (or such shorter period of time as may reasonably be agreed by the Administrative Agent), together with a reasonably detailed description of the material terms and conditions of such resulting Indebtedness or drafts of the material definitive documentation relating thereto, stating that the Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirements shall be conclusive, and (e) that is not guaranteed by any Person other than on an unsecured basis by the Borrower and/or Restricted Subsidiaries that are Loan Parties.
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“Person”: an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.
“Plan”: any employee benefit plan as defined in Section 3(3) of ERISA, including any employee welfare benefit plan (as defined in Section 3(1) of ERISA), any employee pension benefit plan (as defined in Section 3(2) of ERISA but excluding any Multiemployer Plan), and any plan which is both an employee welfare benefit plan and an employee pension benefit plan, and in respect of which any Group Member or any ERISA Affiliate is (or, if such Plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in section 3(5) of ERISA.
“Pledged Collateral”: as defined in the Guarantee and Collateral Agreement.
“Prime Rate”: the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as reasonably determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as reasonably determined by the Administrative Agent). Each change in the Prime Rate shall be effective from and including the date such change is publicly announced or quoted as being effective.
“Pro Forma Basis”: with respect to the calculation of any test or covenant hereunder, such test or covenant being calculated after giving effect to (a) any designation of a Restricted Subsidiary as an Unrestricted Subsidiary, (b) any designation of an Unrestricted Subsidiary as a Restricted Subsidiary, (c) any Material Acquisition, (d) any Material Disposition, and (e) any assumption, incurrence, repayment or other Disposition of Indebtedness (all of the foregoing, “Applicable Transactions”) using, for purposes of determining such compliance, the historical financial statements of all entities or assets so designated, acquired or sold (to the extent available) and the consolidated financial statements of the Borrower and its Restricted Subsidiaries, which shall be reformulated as if all Applicable Transactions during the Applicable Reference Period, or subsequent to the Applicable Reference Period and on or prior to the date of such calculation, had been consummated at the beginning of such period (and shall include, with respect to any Material Acquisition or Material Disposition, any adjustments calculated in accordance with (and subject to the requirements and limitations of) clause (i) of the definition of “Consolidated EBITDA”); provided that with respect to any assumption, incurrence, repayment or other Disposition of Indebtedness (i) if such Indebtedness has a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the date of calculation had been the applicable rate for the entire period (taking into account any Swap Obligations applicable to such Indebtedness if such Swap Obligation has a remaining term as at the date of calculation in excess of 12 months), (ii) interest on Capital Lease Obligations shall be deemed to accrue at an interest rate reasonably determined by a Responsible Officer to be the rate of interest implicit in such Capital Lease Obligation in accordance with GAAP, (iii) interest on any Indebtedness under a revolving credit facility shall be based upon the average daily balance of such Indebtedness during the applicable period and (iv) interest on Indebtedness that may be optionally determined at an interest rate based upon a factor of a prime or similar rate, an applicable interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate as the Borrower may designate. For the avoidance of doubt, in calculating fixed charges, (x) the fixed charges attributable to any Indebtedness assumed or incurred during the Applicable Reference Period or subsequent to the Applicable Reference Period and on or prior to the date of such calculation shall be included and (y) the fixed charges attributable to any Indebtedness repaid (other than Indebtedness incurred under a revolving facility unless such Indebtedness has been permanently repaid and the related commitment terminated and not replaced) or otherwise Disposed of during the Applicable Reference Period or subsequent to the Applicable Reference Period and on or prior to the date of such calculation shall be excluded.
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To the extent any leverage ratio is being tested on a Pro Forma Basis in connection with the incurrence of any revolving Indebtedness, such leverage ratio shall be calculated assuming such revolving Indebtedness is fully drawn.
“Pro Forma Period”: with respect to any Restricted Payment, Investment or prepayment of Indebtedness (any of the foregoing, a “Specified Event”), the period (a) commencing 30 days prior to the date such Specified Event is proposed by the Borrower to occur and (b) ending on the date such Specified Event is proposed by the Borrower to occur.
“Prohibited Transaction”: as defined in Section 406 of ERISA and Section 4975(c) of the Code.
“Projections”: as defined in Section 6.2(c).
“Properties”: as defined in Section 4.17(a).
“Protective Advance Exposure”: at any time, the sum of the aggregate amount of all outstanding Protective Advances at such time. The Protective Advance Exposure of any Revolving Lender at any time shall be its Revolving Percentage of the total Protective Advance Exposure at such time.
“Protective Advances”: as defined in Section 2.3.
“PTE”: a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“Public-Sider”: a Lender whose representatives may trade in securities of the Borrower or any of its Subsidiaries while in possession of the financial statements provided by the Borrower under the terms of this Agreement.
“QFC”: a “qualified financial contract” as defined in, and interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
“QFC Credit Support”: as defined in Section 10.20.
“Qualified Capital Stock”: Capital Stock of the Borrower other than Disqualified Capital Stock.
“Quarter-End Certificate”: as defined in the Applicable Pricing Grid
“Receivables Facility”: the collective reference to any Receivables Purchase Facility or Receivables Securitization Facility.
“Receivables Purchase Facility”: any one or more receivables purchase or financing facilities entered into in connection with any continuing accounts receivables discounting, factoring or financing arrangement with terms and conditions reasonably satisfactory to the Administrative Agent and pursuant to which the Borrower or any Restricted Subsidiary may pledge, sell, convey or otherwise transfer its accounts receivable to any Person (other than the Borrower or a Restricted Subsidiary) in exchange for cash (including, in the case of any pledge of accounts receivables, cash proceeds of loans made by such Person that are secured by such pledged accounts receivables) in an amount equal to or greater than the fair market value (as determined in good faith by the Borrower and taking into account customary discount fees or customary discount factors) of the accounts receivables so pledged, sold, conveyed or transferred.
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“Receivables Securitization Facility”: any one or more receivables financing facilities the obligations of which are non-recourse (except for customary representations, warranties, covenants and indemnities made in connection with such facilities) to the Borrower and its Restricted Subsidiaries (other than a Receivables Subsidiary) pursuant to which the Borrower or any Restricted Subsidiary sells its accounts receivable to either (a) a Person that is not a Restricted Subsidiary or (b) a Receivables Subsidiary that in turn funds such purchase by purporting to sell the accounts receivable to a Person that is not a Restricted Subsidiary or by borrowing from such a Person or from another Receivables Subsidiary that in turn funds itself by borrowing from such a Person.
“Receivables Subsidiary”: any Subsidiary of the Borrower formed for the purpose of facilitating or entering into one or more Receivables Facilities, and in each case engages only in activities reasonably related or incidental thereto; provided that each Receivables Subsidiary shall at all times be 100% owned by a Loan Party.
“Reference Period”: each period of four consecutive fiscal quarters of the Borrower.
“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is the Term SOFR Rate, 5:00 a.m. (Chicago time) on the day that is two U.S. Government Securities Business Days preceding the date of such setting, (2) if the RFR for such Benchmark is Daily Simple SOFR, then four Business Days prior to such setting or (3) if such Benchmark is none of the Term SOFR Rate or Daily Simple SOFR, the time determined by the Administrative Agent in its reasonable discretion.
“Register”: as defined in Section 10.6(b)(iv).
“Regulation U”: Regulation U of the Board as in effect from time to time.
“Reimbursement Obligation”: the obligation of the Borrower to reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit.
“Related Indebtedness”: with respect to any Material Indebtedness, (a) such Material Indebtedness and (b) any Indebtedness that refinances such Material Indebtedness in whole or in part.
“Related Parties”: with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.
“Relevant Governmental Body”: the Federal Reserve Board and/or the NYFRB, or a committee officially endorsed or convened by the Federal Reserve Board and/or the NYFRB or, in each case, any successor thereto.
“Relevant Rate”: (i) with respect to any Term Benchmark Borrowing, the Adjusted Term SOFR Rate or (ii) with respect to any RFR Borrowing, the Adjusted Daily Simple SOFR, as applicable.
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“Rent Reserve”: with respect to any store, warehouse distribution center, regional distribution center or depot where any Inventory subject to Liens arising by operation of law is located, a reserve equal to three months’ rent at such store, warehouse distribution center, regional distribution center or depot.
“Report”: reports prepared by the Administrative Agent or another Person showing the results of appraisals, field examinations or audits pertaining to the assets of the Loan Parties from information furnished by or on behalf of the Borrower, after the Administrative Agent has exercised its rights of inspection pursuant to this Agreement, which Reports may be distributed to the Lenders by the Administrative Agent.
“Reportable Event”: any of the events set forth in Section 4043(c) of ERISA, with respect to a Pension Plan, other than those events as to which notice is waived pursuant to DOL Reg. Section 4043 as in effect on the Closing Date (no matter how such notice requirement may be changed in the future).
“Reported Banking Services Obligations”: Banking Services Obligations of any Loan Party owing to one or more Lenders or their respective Affiliates; provided that, as of any date of determination, such obligations shall constitute Reported Banking Services Obligations solely to the extent that the Lender party thereto or its Affiliate (other than JPMCB) shall have reported the amount of such outstanding obligations to the Administrative Agent as of the last day of the previous fiscal quarter on or prior to the date that is 15 days following the end of such fiscal quarter (or (x) prior to the date that is 15 days following the end of the first fiscal quarter following the Closing Date, within 15 days of the Closing Date such Lender or Affiliate shall have reported the amount of such outstanding obligations as of the Closing Date, and (y) within 10 days of any request therefor by the Administrative Agent, such Lender or Affiliate shall have reported the amount of such outstanding obligations as of any other date reasonably requested by the Administrative Agent).
“Reported Secured Swap Obligations”: Secured Swap Obligations of any Loan Party owing to one or more Lenders or their respective Affiliates; provided that, as of any date of determination, such obligations shall constitute Reported Secured Swap Obligations solely to the extent that as of any date of determination, such Lender party thereto or its Affiliate (other than JPMCB) shall have reported the amount of such outstanding Swap Obligations to the Administrative Agent as of the last day of the previous fiscal quarter on or prior to the date that is 15 days following the end of such fiscal quarter (or (x) prior to the date that is 15 days following the end of the first fiscal quarter following the Closing Date, within 30 days of the Closing Date such Lender or Affiliate shall have reported the amount of such outstanding obligations as of the Closing Date and (y) within 10 days of any request therefor by the Administrative Agent, such Lender or Affiliate shall have reported the amount of such outstanding Swap Obligations as of any other date reasonably requested by the Administrative Agent).
“Required Lenders”: at any time, the holders of more than 50% of the Total Commitments then in effect or, if the Commitments have been terminated, the Total Revolving Extensions of Credit then outstanding.
“Requirement of Law”: as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
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“Reserves”: Dilution Reserves, Rent Reserves and any other reserves which the Administrative Agent deems necessary, in its Permitted Discretion (following (to the extent practicable) reasonable prior notice to, and consultation with, the Borrower), to maintain (including (but without duplication of other reserves or adjustments), Banking Services Reserves, reserves for consignee's, warehousemen’s and bailee’s charges, reserves for Swap Obligations, reserves for contingent liabilities of any Loan Party, reserves for uninsured losses of any Loan Party, reserves for uninsured, underinsured, un-indemnified or under-indemnified liabilities or potential liabilities with respect to any litigation and reserves for taxes, fees, assessments, and other governmental charges) with respect to the Collateral or any Loan Party.
“Resolution Authority”: an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer”: the chief executive officer, president or chief financial officer of the Borrower, but in any event, with respect to financial matters, the chief financial officer of the Borrower.
“Restricted Debt Payment”: as defined in Section 7.8(a).
“Restricted Payments”: as defined in Section 7.6.
“Restricted Subsidiary”: any Subsidiary of the Borrower other than an Unrestricted Subsidiary.
“Revolving Commitment Period”: the period from and including the Closing Date to the Revolving Termination Date.
“Revolving Extensions of Credit”: as to any Revolving Lender at any time, an amount equal to the sum of (a) the aggregate principal amount of all Revolving Loans held by such Lender then outstanding, (b) such Lender’s Revolving Percentage of the L/C Obligations then outstanding and (c) such Lender’s Revolving Percentage of the Protective Advances then outstanding.
“Revolving Lender”: each Lender that has a Commitment or that holds Revolving Loans.
“Revolving Loans”: as defined in Section 2.1(a).
“Revolving Percentage”: as to any Revolving Lender at any time, the percentage which such Lender’s Commitment then constitutes of the Total Commitments or, at any time after the Commitments shall have expired or terminated, the percentage which the aggregate principal amount of such Lender’s Revolving Loans then outstanding constitutes of the aggregate principal amount of the Revolving Loans then outstanding, provided, that, in the event that the Revolving Loans are paid in full prior to the reduction to zero of the Total Revolving Extensions of Credit, the Revolving Percentages shall be determined in a manner designed to ensure that the other outstanding Revolving Extensions of Credit shall be held by the Revolving Lenders on a comparable basis. Notwithstanding the foregoing, in the case of Section 2.23 when a Defaulting Lender shall exist, Revolving Percentages shall be determined without regard to any Defaulting Lender’s Commitment.
“Revolving Termination Date”: the earlier of (a) May 30, 2028 and (b) the date that is 90 days prior to the final scheduled maturity of any Material Indebtedness if as of such 90th day there is more than $50,000,000 outstanding of Related Indebtedness in respect of such Material Indebtedness that matures prior to the date that is 91 days after the date set forth in clause (a) above.
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“RFR Borrowing”: as to any Borrowing, the RFR Loans comprising such Borrowing.
“RFR Loan”: a Loan that bears interest at a rate based on the Adjusted Daily Simple SOFR.
“Sanctioned Country”: at any time, a country, region or territory which is itself, or whose government is, the subject or target of any Sanctions (at the time of the Closing Date, Crimea, Kherson, so-called Donetsk People’s Republic, so-called Luhansk People’s Republic, and Zaporizhzhia regions of Ukraine, Cuba, Iran, North Korea and Syria).
“Sanctioned Person”: at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State or by the United Nations Security Council, the European Union, any European Union member state or HM’s Treasury of the United Kingdom, (b) any Person operating, organized or resident in a Sanctioned Country; (c) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b); or (d) any Person otherwise the subject or target of Sanctions.
“Sanctions”: economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State or (b) the United Nations Security Council, the European Union, any European Union member state or HM’s Treasury of the United Kingdom.
“SEC”: the Securities and Exchange Commission, any successor thereto and any analogous Governmental Authority.
“Secured Parties”: as defined in the Guarantee and Collateral Agreement.
“Secured Swap Obligations”: Swap Obligations of any Loan Party owing to one or more Lenders or their respective Affiliates; provided that at or prior to the time that any transaction relating to such Swap Obligation is executed (or, if later, the Closing Date) the Borrower (other than for transactions with JPMCB and its Affiliates) and the Lender party thereto or its Affiliate (other than JPMCB) shall have delivered written notice to the Administrative Agent that such a transaction has been entered into and that it constitutes a Secured Swap Obligation entitled to the benefits of the Security Documents.
“Securities Accounts”: as defined in the Guarantee and Collateral Agreement.
“Security Documents”: the collective reference to the Guarantee and Collateral Agreement, the Mortgages and all other security documents (including intellectual property security agreements) hereafter delivered to the Administrative Agent granting a Lien on any property of any Person to secure the obligations and liabilities of any Loan Party under any Loan Document.
“SOFR”: a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
“SOFR Administrator”: the NYFRB (or a successor administrator of the secured overnight financing rate).
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“SOFR Administrator’s Website”: the NYFRB’s website, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“SOFR Determination Date”: as defined in the definition of “Daily Simple SOFR”.
“SOFR Rate Day”: as defined in the definition of “Daily Simple SOFR”.
“Solvent”: when used with respect to any Person, means that, as of any date of determination, (a) the fair value of the assets of such Person, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise, (b) the present fair saleable value of the assets of such Person will be greater than the amount that will be required to pay the probable liabilities on its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured, (c) such Person will be able to pay its debts and liabilities, subordinated, continent or otherwise, as such debts and liabilities become absolute and matured and (d) such Person will not have an unreasonably small capital with which to conduct the business in which it is engaged as such business is conducted as of such date of determination and proposed to be conducted following such date.
“Specified Event of Default”: the occurrence of an Event of Default under Section 8(a), 8(b) (with respect to any Borrowing Base Certificate), 8(d) (with respect to any breach of Section 6.2(g), Section 6.2(h) or Section 6.12 of this Agreement or Sections 8.1 or 8.2 of the Guarantee and Collateral Agreement) or Section 8(f).
“Subject Indebtedness”: as defined in Section 10.1.
“Subordinated Indebtedness”: any Indebtedness of any Group Member that is expressly subordinated in right of payment to the Obligations; provided that, for the avoidance of doubt, Indebtedness under the Term Loan Credit Agreement shall not be considered Subordinated Indebtedness.
“Subsidiary”: as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
“Subsidiary Guarantor”: (i) each Restricted Subsidiary of the Borrower that is a Domestic Subsidiary (other than any Immaterial Subsidiary, any CFC Holding Company or any Subsidiary of a Foreign Subsidiary or a CFC Holding Company) and (ii) each other Restricted Subsidiary that is an obligor under or guarantor in respect of the Term Loans or any Permitted Refinancing Indebtedness in respect thereof.
“Supermajority Lenders”: at any time, the holders of more than 66 2/3% of (a) until the Closing Date, the Commitments then in effect and (b) thereafter, the Total Commitments then in effect or, if the Commitments have been terminated, the Total Revolving Extensions of Credit then outstanding.
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“Supported QFC”: as defined in Section 10.20.
“Swap”: any agreement, contract, or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.
“Swap Agreement”: any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or any of its Subsidiaries shall be a “Swap Agreement”.
“Swap Obligation”: with respect to any Person, any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Swap Agreements, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any Swap Agreement transaction.
“Syndication Agent”: the Syndication Agent identified on the cover page of this Agreement.
“Taxes”: all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Term Benchmark”: when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted Term SOFR Rate.
“Term Loan Administrative Agent”: JPMCB, as administrative agent under the Term Loan Documents, and its successors and assigns.
“Term Loan Credit Agreement”: the Term Loan Credit Agreement, dated as of the Closing Date, among the Borrower, the lenders and agents party thereto and the Term Loan Administrative Agent.
“Term Loan Documents”: collectively (a) the Term Loan Credit Agreement, (b) the Term Loan Security Documents, (c) the Intercreditor Agreement, (d) any promissory note evidencing loans under the Term Loan Credit Agreement and (e) any amendment, waiver, supplement or other modification to any of the documents described in clauses (a) through (d).
“Term Loan Obligations Payment Date”: as defined in the Intercreditor Agreement.
“Term Loan Priority Collateral”: as defined in the Intercreditor Agreement.
“Term Loan Representative”: as defined in the Intercreditor Agreement.
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“Term Loan Security Documents”: the collective reference to the Guarantee and Collateral Agreement (as defined in the Term Loan Credit Agreement), the Mortgages (as defined in the Term Loan Credit Agreement) and all other security documents (including intellectual property security agreements) delivered to the Term Loan Administrative Agent granting a Lien on any property of any Person to secure the obligations and liabilities of any Loan Party under any Term Loan Document.
“Term Loans”: loans outstanding under the Term Loan Credit Agreement.
“Term SOFR Administrator’s Website”: the CME Term SOFR Administrator’s website, currently at https://www.cmegroup.com/market-data/cme-group-benchmark-administration/term-sofr.html, or any successor source for the term Secured Overnight Financing Rate (SOFR) identified as such by the CME Term SOFR Administrator from time to time.
“Term SOFR Determination Day”: as defined in the definition of Term SOFR Reference Rate.
“Term SOFR Rate”: with respect to any Term Benchmark Borrowing and for any tenor comparable to the applicable Interest Period, the Term SOFR Reference Rate at approximately 5:00 a.m., Chicago time, two U.S. Government Securities Business Days prior to the commencement of such tenor comparable to the applicable Interest Period, as such rate is published by the CME Term SOFR Administrator on the Term SOFR Administrator’s Website.
“Term SOFR Reference Rate”: for any day and time (such day, the “Term SOFR Determination Day”), with respect to any Term Benchmark Borrowing denominated in Dollars and for any tenor comparable to the applicable Interest Period, the rate per annum published by the CME Term SOFR Administrator and identified by the Administrative Agent as the forward-looking term rate based on SOFR. If by 5:00 pm (New York City time) on such Term SOFR Determination Day, the “Term SOFR Reference Rate” for the applicable tenor has not been published by the CME Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Rate has not occurred, then, so long as such day is otherwise a U.S. Government Securities Business Day, the Term SOFR Reference Rate for such Term SOFR Determination Day will be the Term SOFR Reference Rate as published in respect of the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate was published by the CME Term SOFR Administrator, so long as such first preceding U.S. Government Securities Business Day is not more than five (5) U.S. Government Securities Business Days prior to such Term SOFR Determination Day.
“Title Endorsements” as defined in Section 5.1(k).
“Total Commitments”: at any time, the aggregate amount of the Commitments then in effect.
“Total Revolving Extensions of Credit”: at any time, the aggregate amount of the Revolving Extensions of Credit of the Revolving Lenders outstanding at such time.
“Transactions”: collectively, (a) the execution, delivery and performance by the Borrower and the other Loan Parties of this Agreement, the borrowing of Loans hereunder and the use of proceeds thereof and (b) the execution, delivery and performance by the Borrower and the other Loan Parties of the Term Loan Credit Agreement, the borrowing of Term Loans thereunder and the use of proceeds thereof.
“Transferee”: any Assignee or Participant.
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“Type”: when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted Term SOFR Rate, ABR or the Adjusted Daily Simple SOFR.
“UK Financial Institutions”: any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority”: the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
“Unfinanced Capital Expenditures”: for any period, to the extent paid in cash, the aggregate amount of Capital Expenditures made by the Borrower and its Restricted Subsidiaries during such period (other than Capital Expenditures to the extent financed with the proceeds of any incurrence of Indebtedness (other than the incurrence of any revolving Indebtedness), proceeds from Dispositions or proceeds from the issuance of Capital Stock).
“United States”: the United States of America.
“Unrestricted Cash”: unrestricted cash and Cash Equivalents owned by any Group Member and not controlled by or subject to any Lien or other preferential arrangement in favor of any creditor (other than Liens created under the Security Documents or the Term Loan Security Documents and Liens of the type referred to in Section 7.3(u) or Section 7.3(x)).
“Unrestricted Subsidiary”: (a) any Subsidiary of the Borrower that is designated as an Unrestricted Subsidiary by the Borrower pursuant to Section 6.11 subsequent to the Closing Date and (b) any Subsidiary of an Unrestricted Subsidiary.
“U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) 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.
“U.S. Person”: a “United States person” within the meaning of Section 7701(a)(30) of the Code.
“U.S. Special Resolution Regime”: as defined in Section 10.20.
“U.S. Tax Compliance Certificate”: as defined in Section 2.19(f)(ii)(B).
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“Voluntary Prepayment Amount”: as of any date, an amount equal to (a) the sum of (i) the aggregate principal amount of all optional prepayments of Term Loans and Incremental Equivalent Indebtedness, in each case incurred in reliance on the Incremental Cap, made after the Closing Date and prior to such date (excluding prepayments made with the proceeds of long-term Indebtedness) less (b) the aggregate principal amount of Incremental Equivalent Indebtedness established prior to such date in reliance on the Voluntary Prepayment Amount.
“Wholly Owned Subsidiary”: as to any Person, any other Person all of the Capital Stock of which (other than directors’ qualifying shares required by law) is owned by such Person directly and/or through other Wholly Owned Subsidiaries.
“Withdrawal Liability”: any liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are used in sections 4203 and 4205, respectively, of ERISA.
“Write-Down and Conversion Powers”: (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
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then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone, telecopy or electronic mail as promptly as practicable thereafter and, until (x) the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist with respect to the relevant Benchmark and (y) the Borrower delivers a new Interest Election Request in accordance with the terms of Section 2.12 or a new Borrowing Request in accordance with the terms of Section 2.2, (1) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Term Benchmark Borrowing and any Borrowing Request that requests a Term Benchmark Borrowing shall instead be deemed to be an Interest Election Request or a Borrowing Request, as applicable, for (x) an RFR Borrowing so long as the Adjusted Daily Simple SOFR is not also the subject of Section 2.16(a)(i) or (ii) above or (y) an ABR Borrowing if the Adjusted Daily Simple SOFR also is the subject of Section 2.16(a)(i) or (ii) above and (2) any Borrowing Request that requests an RFR Borrowing shall instead be deemed to be a Borrowing Request, as applicable, for an ABR Borrowing; provided that if the circumstances giving rise to such notice affect only one Type of Borrowings, then all other Types of Borrowings shall be permitted. Furthermore, if any Term Benchmark Loan or RFR Loan is outstanding on the date of the Borrower’s receipt of the notice from the Administrative Agent referred to in this Section 2.16(a) with respect to a Relevant Rate applicable to such Term Benchmark Loan or RFR Loan, then until (x) the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist with respect to the relevant Benchmark and (y) the Borrower delivers a new Interest Election Request in accordance with the terms of Section 2.12 or a new Borrowing Request in accordance with the terms of Section 2.2, (1) any Term Benchmark Loan shall on the last day of the Interest Period applicable to such Loan, be converted by the Administrative Agent to, and shall constitute, (x) an RFR Borrowing so long as the Adjusted Daily Simple SOFR is not also the subject of Section 2.16(a)(i) or (ii) above or (y) an ABR Loan if the Adjusted Daily Simple SOFR also is the subject of Section 2.16(a)(i) or (ii) above, on such day, and (2) any RFR Loan shall on and from such day be converted by the Administrative Agent to, and shall constitute an ABR Loan.
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and the result of any of the foregoing is to increase the cost to such Lender or such other Credit Party, by an amount that such Lender or other Credit Party deems to be material, of making, converting into, continuing or maintaining Loans or issuing or participating in Letters of Credit, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender or such other Credit Party, upon its demand, any additional amounts necessary to compensate such Lender or such other Credit Party for such increased cost or reduced amount receivable.
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If any Lender or such other Credit Party becomes entitled to claim any additional amounts pursuant to this paragraph, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled.
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Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
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If (i) a Bankruptcy Event with respect to a Lender Parent of any Lender shall occur following the Closing Date and for so long as such event shall continue or (ii) the Issuing Lender has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, the Issuing Lender shall not be required to issue, amend or increase any Letter of Credit, unless the Issuing Lender, as the case may be, shall have entered into arrangements with the Borrower or such Lender, satisfactory to the Issuing Lender, as the case may be, to defease any risk to it in respect of such Lender hereunder.
In the event that the Administrative Agent, the Borrower and the Issuing Lender each agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the L/C Exposure and Protective Advance Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Revolving Percentage.
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To induce the Administrative Agent and the Lenders to enter into this Agreement and to make the Loans and issue or participate in the Letters of Credit, the Borrower hereby represents and warrants to the Administrative Agent and each Lender that:
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Notwithstanding anything to the contrary contained in this Section 5.1(k) (other than with respect to Section 5.1(k)(vi)), if the Loan Parties have used commercially reasonable efforts (without undue burden and expense) to satisfy the requirements set forth in this Section 5.1(k) and such requirements are not satisfied as of the Closing Date, the satisfaction of such requirements shall not be a condition to the agreement of each Lender to make the initial extension of credit requested to be made by it (but shall be required to be satisfied within 90 days of the Closing Date (or such later date as the Administrative Agent may agree in its reasonable discretion)); provided that Section 5.1(k)(vi) shall be satisfied as of the Closing Date.
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For the purpose of determining compliance with the conditions specified in this Section 5.1, each Lender that has signed this Agreement shall be deemed to have accepted, and to be satisfied with, each document or other matter required under this Section 5.1 unless the Administrative Agent shall have received written notice from such Lender prior to the proposed Closing Date specifying its objection thereto.
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Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower hereunder (other than (i) the initial extensions of credit on the Closing Date or otherwise (ii) with respect to a Protective Advance) shall constitute a representation and warranty by the Borrower as of the date of such extension of credit that the conditions contained in this Section 5.2 have been satisfied.
The Borrower hereby agrees that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding or any Loan or other amount is owing to any Lender or the Administrative Agent hereunder, the Borrower shall and, in the case of Sections 6.3 through 6.8, 6.10, and 6.13, shall cause each of its Restricted Subsidiaries to and, in the case of Section 6.12, shall cause each of its Domestic Subsidiaries to:
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All such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied (except as approved by such accountants or officer, as the case may be, and disclosed in reasonable detail therein) consistently throughout the periods reflected therein and with prior periods.
Documents required to be delivered pursuant to Section 6.1(a), (b), (c) or (d) or Section 6.2(c) or (d) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which (i) such documents are posted on the Borrower’s behalf on IntraLinks/IntraAgency or another relevant Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent) or (ii) such documents are filed of record with the SEC; provided that, upon written request by the Administrative Agent, the Borrower shall deliver paper copies of such documents to the Administrative Agent for further distribution to each Lender until a written request to cease delivering paper copies is given by the Administrative Agent. The Administrative Agent shall have no obligation to request the delivery of or to maintain or deliver to Lenders paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery, and each Lender shall be solely responsible for timely accessing posted documents or requesting delivery of paper copies of such documents from the Administrative Agent and maintaining its copies of such documents.
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Each notice pursuant to this Section 6.7 shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the relevant Group Member proposes to take with respect thereto.
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The designation of any Restricted Subsidiary as an Unrestricted Subsidiary shall constitute an Investment by the Borrower in such Subsidiary on the date of designation in an amount equal to the fair market value of the Borrower’s Investment therein (as determined reasonably and in good faith by a Responsible Officer). The designation of any Unrestricted Subsidiary as a Restricted Subsidiary shall constitute the incurrence at the time of designation of any Investment, Indebtedness or Liens of such Subsidiary existing at such time.
The Borrower hereby agrees that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding or any Loan or other amount is owing to any Lender or the Administrative Agent hereunder, the Borrower shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly:
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provided that notwithstanding anything to the contrary in this Section 7.2, no Loan Party shall have any Guarantee Obligations in respect of Indebtedness of a Restricted Subsidiary incurred pursuant to Section 7.2(s).
For purposes of determining compliance with this Section 7.2, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Indebtedness described in clauses (a) through (x) above, the Borrower may, in its sole discretion, divide or classify or later divide, classify or reclassify all or a portion of such item of Indebtedness in a manner that complies with this Section 7.2 and will only be required to include the amount and type of such Indebtedness in one or more of the above clauses; provided that all Indebtedness outstanding under the Loan Documents will at all times be deemed to be outstanding in reliance only on the exception in Section 7.2(a).
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For purposes of determining compliance with this Section 7.3, in the event that a Lien securing an item of Indebtedness (or any portion thereof) meets the criteria for more than one of the categories of Liens described in clauses (a) through (z) above, the Borrower may, in its sole discretion, divide or classify or later divide, classify or reclassify all or a portion of such Lien in a manner that complies with this Section 7.3 and will only be required to include the amount and type of such Lien in one or more of the above clauses; provided that all Liens securing Indebtedness outstanding under the Loan Documents and the Term Loan Credit Agreement, and, in each case, any Permitted Refinancing thereof, will at all times be deemed to be outstanding in reliance only on the exception in Section 7.3(h).
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For purposes of determining compliance with this Section 7.6, in the event that a Restricted Payment meets the criteria of more than one of the categories of Restricted Payments described in clauses (a) through (h) above, the Borrower may, in its sole discretion, divide or classify or later divide, classify or reclassify all or a portion of such Restricted Payment in a manner that complies with this Section 7.6 and will only be required to include the amount and type of such Restricted Payment in one or more of the above clauses.
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For purposes of determining compliance with this Section 7.7, in the event that an Investment meets the criteria of more than one of the categories of Investments described in clauses (a) through (t) above, the Borrower may, in its sole discretion, divide or classify or later divide, classify or reclassify all or a portion of such Investment in a manner that complies with this Section 7.7 and will only be required to include the amount and type of such Investment in one or more of the above clauses.
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Notwithstanding anything to the contrary contained in this Section 7.8(a), in no event shall any payment in respect of Subordinated Indebtedness be permitted if such payment is in violation of the subordination provisions of such Subordinated Indebtedness.
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If any of the following events shall occur and be continuing:
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then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) above with respect to the Borrower, automatically the Commitments shall immediately terminate and the Loans (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower declare the Commitments to be terminated forthwith, whereupon the Commitments shall immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Loans (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) to be due and payable forthwith, whereupon the same shall immediately become due and payable.
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With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to this paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay other obligations of the Borrower hereunder and under the other Loan Documents. After all such Letters of Credit shall have expired or been fully drawn upon, all Reimbursement Obligations shall have been satisfied and all other obligations of the Borrower hereunder and under the other Loan Documents shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrower (or such other Person as may be lawfully entitled thereto). Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived by the Borrower.
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Notwithstanding the foregoing, this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and the Borrower (a) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share in the benefits of this Agreement and the other Loan Documents with the Revolving Extensions of Credit and the accrued interest and fees in respect thereof and (b) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders.
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Furthermore, notwithstanding the foregoing, (i) the Administrative Agent, with the consent of the Borrower, may amend, modify or supplement any Loan Document without the consent of any Lender or the Required Lenders in order to correct, amend or cure any ambiguity, inconsistency or defect or correct any typographical error or other manifest error in any Loan Document and (ii) the Loan Documents may be amended in accordance with Section 2.24.
Borrower: |
TTM Technologies, Inc. 200 East Sandpointe, Suite 400 Santa Ana, California 92707 |
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Attention: Todd Schull |
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Facsimile: (714) 784-3712 E-mail: todd.schull@ttmtech.com |
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with a copy to:
Polsinelli PC 100 S. Fourth Street, Suite 1000 St. Louis, Missouri 63102 Attention: Ruben Chuquimia Facsimile: (314) 231-1776 E-mail: rchuquimia@Polsinelli.com
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Administrative Agent: |
JPMorgan Chase Bank, N.A. 10 S. Dearborn St. Chicago, IL, 60603-5506 Attention: Kevin Podwika E-mail: kevin.m.podwika@jpmorgan.com
with a copy to:
JPMorgan Chase Bank, N.A. 131 S. Dearborn St, Floor 04 Chicago, IL, 60603-5506 |
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Attention: Loan and Agency Servicing |
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E-mail: jpm.agency.cri@jpmorgan.com
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Agency Withholding Tax Inquiries: |
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Email: agency.tax.reporting@jpmorgan.com |
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Agency Compliance/ Financials/ Virtual Data rooms: |
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Email: covenant.compliance@jpmchase.com |
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Issuing Lender: |
JPMorgan Chase Bank, N.A. 131 S Dearborn St, Floor 04 Chicago, IL, 60603-5506 Attention: LC Agency Team Tel: 800-364-1969 Fax: 856-294-5267 Email: chicago.lc.agency.activity.team@jpmchase.com
with a copy to:
JPMorgan Chase Bank, N.A. 131 S Dearborn St, Floor 04 Chicago, IL, 60603-5506 Attention: Loan and Agency Servicing Email: jpm.agency.cri@jpmorgan.com
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provided that any notice, request or demand to or upon the Administrative Agent or the Lenders shall not be effective until received.
Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Section 2 unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.
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For the purposes of this Section 10.6, “Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and 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.
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Each Lender acknowledges that information furnished to it pursuant to this Agreement or the other Loan Documents may include material non-public information concerning the Borrower and its Affiliates and their related parties or their respective securities, and confirms that it has developed compliance procedures regarding the use of material non-public information and that it will handle such material non-public information in accordance with those procedures and applicable law, including Federal and state securities laws.
All information, including requests for waivers and amendments, furnished by the Borrower or the Administrative Agent pursuant to, or in the course of administering, this Agreement or the other Loan Documents will be syndicate-level information, which may contain material non-public information about the Borrower and its Affiliates and their related parties or their respective securities. Accordingly, each Lender represents to the Borrower and the Administrative Agent that it has identified in its administrative questionnaire a credit contact who may receive information that may contain material non-public information in accordance with its compliance procedures and applicable law, including Federal and state securities laws.
The Borrower represents and warrants that it and its Subsidiaries either (i) have no registered or publicly traded securities outstanding, or (ii) files its financial statements with the SEC and/or makes its financial statements available to potential holders of its 144A securities, and, accordingly, the Borrower hereby (i) authorizes the Administrative Agent to make the financial statements to be provided under Section 6.1(a) and (b), along with the Loan Documents, available to Public-Siders and (ii) agrees that at the time such financial statements are provided hereunder, they shall already have been made available to holders of its securities. The Borrower will not request that any other material be posted to Public-Siders without expressly representing and warranting to the Administrative Agent in writing that such materials do not constitute material non-public information within the meaning of the federal securities laws or that the Borrower and its Subsidiaries have no outstanding publicly traded securities, including 144A securities. For the avoidance of doubt, the Projections and monthly financial statements provided pursuant to Section 6.1(c) shall not be posted to Public-Siders.
The Borrower hereby acknowledges that (a) the Administrative Agent will make available to the Lenders materials and/or information provided by or on behalf of the Loan Parties hereunder (collectively, the “Borrower Materials”) by posting the Borrower Materials on IntraLinks/IntraAgency or another similar electronic system (the “Platform”) and (b) certain of the Lenders may be Public-Siders. If any Borrower Materials are designated by the Loan Parties as “PRIVATE”, such Borrower Materials will not be made available to that portion of the Platform designated “Public Investor,” which is intended to contain only information that is either publicly available or not material information (though it may be sensitive and proprietary) with respect to Borrower, its Subsidiaries or their securities for purposes of federal and state securities laws. The Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PRIVATE” or “CONFIDENTIAL” as not containing any material non-public information with respect to the Borrower, its Subsidiaries or their securities for purposes of federal and state securities laws.
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In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
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[Signature Pages Follow]
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Exhibit 10.2
Execution Version
FIRST AMENDMENT
FIRST AMENDMENT, dated as of August 1, 2024 (this “Amendment”), to the Amended and Restated Term Loan Credit Agreement, dated as of May 30, 2023 (as amended, supplemented or otherwise modified from time to time prior to the date hereof, the “Credit Agreement”), among TTM TECHNOLOGIES, INC. (the “Borrower”), the several banks and other financial institutions or entities from time to time parties thereto (the “Lenders”) and JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity, the “Administrative Agent”).
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make, and have made, certain loans and other extensions of credit to the Borrower;
WHEREAS, the Borrower has requested that (i) all of the outstanding Term Loans (the “Existing Term Loans”, and the Lenders of such Existing Term Loans, collectively, the “Existing Term Lenders”) be refinanced and/or replaced with Replacement Term Loans in accordance with Section 10.1 of the Credit Agreement by obtaining New Term Loan Commitments (as defined in Section 2 of this Amendment) and (ii) the Credit Agreement be amended in the form attached hereto as Exhibit C (the “Amended Credit Agreement”);
WHEREAS, Section 10.1 of the Credit Agreement permits the Borrower to amend the Credit Agreement, with the written consent of the Administrative Agent and the Lenders providing Replacement Term Loans, to refinance the Existing Term Loans with the proceeds of the Replacement Term Loans;
WHEREAS, upon the occurrence of the First Amendment Effective Date (as defined in Section 3 of this Amendment), the Replacement Term Loans (such Replacement Term Loans comprising the Continued Term Loans and the Additional Term Loans (each as defined below), collectively, the “New Term Loans”) will replace and refinance the Existing Term Loans;
WHEREAS, upon the occurrence of the First Amendment Effective Date, the Credit Agreement will be deemed amended in the form of the Amended Credit Agreement;
WHEREAS, each Existing Term Lender that executes and delivers a signature page to this Amendment (a “Lender Addendum”) and in connection therewith agrees (x) to continue all of its Existing Term Loans as New Term Loans and (y) to the terms of the Amended Credit Agreement will thereby agree (i) to the terms of this Amendment and the Amended Credit Agreement and (ii) to continue all of its Existing Term Loans outstanding on the First Amendment Effective Date as New Term Loans in a principal amount equal to the aggregate principal amount of such outstanding Existing Term Loans (or such lesser amount as notified to such Lender by JPMorgan Chase Bank, N.A., in its capacity as sole lead arranger and bookrunner for the New Term Loans (in such capacity, the “Lead Arranger”) prior to the First Amendment Effective Date) (such continued Term Loans, the “Continued Term Loans”, and such Lenders, collectively, the “Continuing Term Lenders”); WHEREAS, subject to the preceding recitals, each Person (other than a Continuing Term Lender in its capacity as such) that executes and delivers a Lender Addendum and agrees in connection therewith (x) to make New Term Loans and (y) to the terms of the Amended Credit Agreement will thereby (i) agree to the terms of this Amendment and the Amended Credit Agreement and (ii) commit to make Additional Term Loans to the Borrower on the First Amendment Effective Date as New Term Loans in a principal amount (not in excess of any such commitment) as is determined by the Lead Arranger and notified to such Additional Term Lender (such New Term Loans, the “Additional Term Loans”, and the Lenders of such Additional Term Loans, collectively, the “Additional Term Lenders”);
WHEREAS, upon the occurrence of the First Amendment Effective Date, the proceeds of the Additional Term Loans will be used by the Borrower to repay in full the outstanding principal amount of the Existing Term Loans that are not continued as New Term Loans by Existing Term Lenders;
WHEREAS, the Continuing Term Lenders and the Additional Term Lenders (collectively, the “New Term Lenders”) are severally willing to continue their Existing Term Loans as New Term Loans and/or to make New Term Loans, as the case may be; and
WHEREAS, the Borrower, the Guarantors, the Administrative Agent and the New Term Lenders are willing to agree to this Amendment and the Amended Credit Agreement on the terms set forth herein.
NOW THEREFORE, in consideration of the premises and mutual covenants hereinafter set forth, the parties hereto agree as follows:
SECTION 1. Definitions. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
SECTION 2. New Term Loans.
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SECTION 3. First Amendment Effective Date. This Amendment, and the obligation of each New Term Lender to make or acquire by continuation New Term Loans, shall become effective as of the date (the “First Amendment Effective Date”) on which the following conditions precedent have been satisfied:
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SECTION 4. Representations and Warranties. Each Loan Party represents and warrants to each of the New Term Lenders and the Administrative Agent that, as of the First Amendment Effective Date, (i) such Loan Party has taken all necessary corporate action to authorize (x) the execution and delivery of this Amendment, (y) the performance of this Amendment and the Amended Credit Agreement and (z) the extensions of credit on the terms and conditions of this Amendment and the Amended Credit Agreement, (ii) this Amendment has been duly executed and delivered on its behalf, (iii) this Amendment and the Amended Credit Agreement constitute its valid and binding obligations, enforceable against it in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law) and (iv) since the Closing Date, no Liens have been created, incurred or assumed upon any of the Mortgaged Properties other than (x) non-consensual Liens permitted by Section 7.3 of the Credit Agreement and (y) Liens created pursuant to the Security Documents and the ABL Security Documents.
SECTION 5. Amendment to Credit Agreement. Effective as of the First Amendment Effective Date, immediately following the replacement and refinancing of the Existing Term Loans as provided in Section 2, the Credit Agreement is hereby amended to delete the stricken text (indicated textually in the same manner as the following example: ) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in the pages of the Credit Agreement attached as Exhibit C hereto.
All schedules and exhibits to the Credit Agreement, in the forms thereof immediately prior to the First Amendment Effective Date, will continue to be schedules and exhibits to the Amended Credit Agreement.
SECTION 6. [Reserved].
SECTION 7. Effect of Amendment.
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SECTION 8. General.
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SECTION 9. Post-Closing Obligations. Within 90 days after the First Amendment Effective Date (or such later time as the Administrative Agent shall agree to in its sole discretion), the Administrative Agent shall have received with respect to each Mortgaged Property, in each case in form and substance reasonably acceptable to the Administrative Agent, either:
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective duly authorized officers as of the day and year first above written.
TTM TECHNOLOGIES, INC., as Borrower |
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By: |
/s/ Daniel L. Boehle |
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Name: |
Daniel L. Boehle |
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Title: |
Executive Vice President and Chief Financial Officer |
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TTM TECHNOLOGIES NORTH AMERICA, LLC, as a Guarantor |
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By: |
/s/ Daniel L. Boehle |
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Name: |
Daniel L. Boehle |
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Title: |
Chief Financial Officer |
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TTM PRINTED CIRCUIT GROUP, LLC, as a Guarantor |
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By: |
/s/ Daniel L. Boehle |
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Name: |
Daniel L. Boehle |
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Title: |
Chief Financial Officer |
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ANAREN CERAMICS, INC., as a Guarantor |
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By: |
/s/ Daniel L. Boehle |
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Name: |
Daniel L. Boehle |
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Title: |
Chief Financial Officer |
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ANAREN, LLC, as a Guarantor |
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By: |
/s/ Daniel L. Boehle |
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Name: |
Daniel L. Boehle |
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Title: |
Chief Financial Officer |
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ANAREN GP, INC., as a Guarantor |
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[Signature Page to the First Amendment to Term Loan Credit Agreement]
TTM Technologies, Inc.
By: |
/s/ Daniel L. Boehle |
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Name: |
Daniel L. Boehle |
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Title: |
Chief Financial Officer |
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ANAREN MICROWAVE, INC., as a Guarantor |
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By: |
/s/ Daniel L. Boehle |
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Name: |
Daniel L. Boehle |
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Title: |
Chief Financial Officer |
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UNICIRCUIT, INC., as a Guarantor |
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By: |
/s/ Daniel L. Boehle |
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Name: |
Daniel L. Boehle |
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Title: |
Chief Financial Officer |
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TELEPHONICS CORPORATION, as a Guarantor |
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By: |
/s/ Daniel L. Boehle |
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Name: |
Daniel L. Boehle |
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Title: |
Chief Financial Officer |
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ISC FARMINGDALE CORP., as a Guarantor |
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By: |
/s/ Daniel L. Boehle |
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Name: |
Daniel L. Boehle |
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Title: |
Chief Financial Officer |
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TTM RF & SPECIALTY COMPONENTS, LLC, as a Guarantor |
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By: |
/s/ Daniel L. Boehle |
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Name: |
Daniel L. Boehle |
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Title: |
Chief Financial Officer |
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[Signature Page to the First Amendment to Term Loan Credit Agreement]
TTM Technologies, Inc.
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JPMORGAN CHASE BANK, N.A., as Administrative Agent |
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By: |
/s/ Kristin Jang |
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Name: |
Kristin Jang |
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Title: |
Vice President |
[Signature Page to the First Amendment to Term Loan Credit Agreement]
TTM Technologies, Inc.
EXHIBIT A
CONTINUING TERM
LENDER ADDENDUM
This Lender Addendum (this “Lender Addendum”) is referred to in, and is a signature page to, the First Amendment (the “Amendment”) to the Amended and Restated Term Loan Credit Agreement, dated as of May 30, 2023 (the “Credit Agreement”), among TTM TECHNOLOGIES, INC. (the “Borrower”), the several banks and other financial institutions or entities from time to time parties thereto (the “Lenders”) and JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity, the “Administrative Agent”). Capitalized terms used but not defined in this Lender Addendum have the meanings assigned to such terms in the Amendment or the Credit Agreement, as applicable.
By executing this Lender Addendum as a Continuing Term Lender, the undersigned institution agrees (A) to the terms of the Amendment and the Amended Credit Agreement, (B) on the terms and subject to the conditions set forth in the Amendment and the Amended Credit Agreement, to continue its Existing Term Loans as New Term Loans on the First Amendment Effective Date in the amount of its New Term Loan Commitment and (C) that on the First Amendment Effective Date, it is subject to, and bound by, the terms and conditions of the Amended Credit Agreement and other Loan Documents as a Lender thereunder and its New Term Loans will be “Term B Loans” and “Term Loans” under the Amended Credit Agreement.
Name of Institution: |
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Name of Fund Manager (if any): |
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Executing as a Continuing Term Lender: |
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By: |
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Name: |
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Title: |
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For any institution requiring a second signature line: |
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By: |
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Name: |
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Title: |
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[ ] CHECK HERE IF LENDER ELECTS A CASHLESS ROLL OF ITS TERM LOANS |
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EXHIBIT B
ADDITIONAL TERM
LENDER ADDENDUM
This Lender Addendum (this “Lender Addendum”) is referred to in, and is a signature page to, the First Amendment (the “Amendment”) to the Amended and Restated Term Loan Credit Agreement, dated as of May 30, 2023 (the “Credit Agreement”), among TTM TECHNOLOGIES, INC. (the “Borrower”), the several banks and other financial institutions or entities from time to time parties thereto (the “Lenders”), and JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity, the “Administrative Agent”). Capitalized terms used but not defined in this Lender Addendum have the meanings assigned to such terms in the Amendment or the Credit Agreement, as applicable.
By executing this Lender Addendum as an Additional Term Lender, the undersigned institution agrees (A) to the terms of the Amendment and the Amended Credit Agreement, (B) on the terms and subject to the conditions set forth in the Amendment and the Amended Credit Agreement, to make and fund New Term Loans on the First Amendment Effective Date in the amount of such Additional Term Lender’s New Term Loan Commitment and (C) that on the First Amendment Effective Date, it is subject to, and bound by, the terms and conditions of the Amended Credit Agreement and other Loan Documents as a Lender thereunder and its New Term Loans will be “Term B Loans” and “Term Loans” under the Amended Credit Agreement.
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Executing as an Additional Term Lender: |
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By: |
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Name: |
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Title: |
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For any institution requiring a second signature line: |
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By: |
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Name: |
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Title: |
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EXHIBIT C
AMENDED CREDIT AGREEMENT
See attached.
EXHIBIT C
AMENDED AND RESTATED TERM LOAN CREDIT AGREEMENT
among
TTM TECHNOLOGIES, INC.
as Borrower,
The Several Lenders from Time to Time Parties Hereto,
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent,
Dated as of May 30, 2023,
as amended by the First Amendment, dated as of August 1, 2024
JPMORGAN CHASE BANK, N.A.,
BARCLAYS BANK PLC,
BOFA SECURITIES, INC,
HSBC SECURITIES (USA) INC.
TRUIST SECURITIES, INC.
as Joint Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
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Page |
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SECTION 1. DEFINITIONS |
1 |
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1.1 |
Defined Terms |
1 |
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1.2 |
Other Definitional Provisions |
43 |
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1.3 |
Limited Condition Acquisitions |
44 |
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1.4 |
Interest Rates; Benchmark Notification |
45 |
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1.5 |
Divisions |
45 |
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SECTION 2. AMOUNT AND TERMS OF COMMITMENTS |
45 |
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2.1 |
Term B Commitments |
45 |
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2.2 |
Procedure for Term Loan Borrowing |
45 |
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2.3 |
Repayment of Term Loans |
46 |
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2.4 |
[Reserved] |
47 |
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2.5 |
[Reserved] |
47 |
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2.6 |
[Reserved] |
47 |
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2.7 |
[Reserved] |
47 |
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2.8 |
Fees, etc |
47 |
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2.9 |
[Reserved] |
47 |
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2.10 |
Optional Prepayments |
47 |
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2.11 |
Mandatory Prepayments and Commitment Reductions |
48 |
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2.12 |
Conversion and Continuation Options |
50 |
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2.13 |
Limitations on Term Benchmark Borrowings |
50 |
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2.14 |
Interest Rates and Payment Dates |
50 |
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2.15 |
Computation of Interest and Fees |
51 |
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2.16 |
Inability to Determine Interest Rate |
51 |
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2.17 |
Pro Rata Treatment and Payments |
54 |
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2.18 |
Requirements of Law |
55 |
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2.19 |
Taxes |
56 |
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2.20 |
Break Funding Payments |
60 |
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2.21 |
Change of Lending Office |
60 |
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2.22 |
Replacement of Lenders |
60 |
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2.23 |
[Reserved] |
61 |
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2.24 |
Incremental Facilities |
61 |
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2.25 |
Loan Purchases |
62 |
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2.26 |
Loan Modification Offers |
64 |
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SECTION 3. [RESERVED] |
65 |
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SECTION 4. REPRESENTATIONS AND WARRANTIES |
65 |
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4.1 |
Financial Condition |
65 |
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4.2 |
No Change |
65 |
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4.3 |
Existence; Compliance with Law |
66 |
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4.4 |
Power; Authorization; Enforceable Obligations |
66 |
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4.5 |
No Legal Bar |
66 |
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4.6 |
Litigation |
66 |
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4.7 |
No Default |
66 |
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4.8 |
Ownership of Property; Liens |
67 |
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4.9 |
Intellectual Property |
67 |
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4.10 |
Taxes |
67 |
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4.11 |
Federal Regulations |
67 |
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4.12 |
Labor Matters |
67 |
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4.13 |
ERISA |
67 |
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4.14 |
Investment Company Act; Other Regulations |
68 |
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4.15 |
Subsidiaries; Capital Stock |
68 |
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4.16 |
Use of Proceeds |
68 |
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4.17 |
Environmental Matters |
69 |
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4.18 |
Accuracy of Information, etc |
69 |
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4.19 |
Security Documents |
70 |
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4.20 |
Solvency |
70 |
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4.21 |
Senior Indebtedness |
70 |
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4.22 |
Regulation H |
71 |
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4.23 |
Anti-Corruption Laws and Sanctions |
71 |
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4.24 |
Affected Financial Institutions |
71 |
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4.25 |
Plan Asset Matters |
71 |
SECTION 5. CONDITIONS PRECEDENT |
71 |
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5.1 |
Conditions to Amendment and Restatement of Existing Credit Agreement and Initial Extension of Credit |
71 |
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5.2 |
Conditions to Each Extension of Credit |
74 |
SECTION 6. AFFIRMATIVE COVENANTS |
75 |
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6.1 |
Financial Statements |
75 |
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6.2 |
Certificates; Other Information |
76 |
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6.3 |
Payment of Obligations |
77 |
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6.4 |
Maintenance of Existence; Compliance |
77 |
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6.5 |
Maintenance of Property; Insurance |
77 |
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6.6 |
Inspection of Property; Books and Records; Discussions |
77 |
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6.7 |
Notices |
78 |
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6.8 |
Environmental Laws |
79 |
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6.9 |
[Reserved] |
79 |
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6.10 |
Additional Collateral, etc |
79 |
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6.11 |
Designation of Subsidiaries |
80 |
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6.12 |
Maintenance of Ratings |
81 |
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6.13 |
Post-Closing Covenants |
81 |
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6.14 |
Deposit Account Control Agreements |
81 |
SECTION 7. NEGATIVE COVENANTS |
81 |
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7.1 |
[Reserved] |
81 |
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7.2 |
Indebtedness |
82 |
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7.3 |
Liens |
86 |
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7.4 |
Fundamental Changes |
88 |
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7.5 |
Disposition of Property |
89 |
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7.6 |
Restricted Payments |
90 |
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7.7 |
Investments |
92 |
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7.8 |
Optional Payments and Modifications of Certain Debt Instruments |
94 |
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7.9 |
Transactions with Affiliates |
95 |
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7.10 |
Sales and Leasebacks |
96 |
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7.11 |
Swap Agreements |
96 |
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7.12 |
Changes in Fiscal Periods |
96 |
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7.13 |
Negative Pledge Clauses |
96 |
ii
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7.14 |
Clauses Restricting Subsidiary Distributions |
97 |
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7.15 |
Lines of Business |
97 |
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7.16 |
Use of Proceeds |
97 |
SECTION 8. EVENTS OF DEFAULT |
98 |
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SECTION 9. THE AGENTS |
101 |
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9.1 |
Appointment |
101 |
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9.2 |
Delegation of Duties |
101 |
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9.3 |
Exculpatory Provisions |
101 |
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9.4 |
Reliance by Administrative Agent |
101 |
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9.5 |
Notice of Default |
102 |
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9.6 |
Non-Reliance on Agents and Other Lenders |
102 |
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9.7 |
Indemnification |
102 |
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9.8 |
Agent in Its Individual Capacity |
103 |
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9.9 |
Successor Administrative Agent |
103 |
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9.10 |
Arranger, Syndication Agent and Documentation Agents |
103 |
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9.11 |
Certain ERISA Matters |
103 |
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9.12 |
Acknowledgements of Lenders |
104 |
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9.13 |
Credit Bidding |
106 |
SECTION 10. MISCELLANEOUS |
107 |
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10.1 |
Amendments and Waivers |
107 |
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10.2 |
Notices |
109 |
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10.3 |
No Waiver; Cumulative Remedies |
110 |
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10.4 |
Survival of Representations and Warranties |
110 |
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10.5 |
Payment of Expenses and Taxes; Indemnity; Limitation of Liability |
110 |
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10.6 |
Successors and Assigns; Participations and Assignments |
112 |
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10.7 |
Adjustments; Set-off |
116 |
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10.8 |
Counterparts; Electronic Execution |
117 |
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10.9 |
Severability |
118 |
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10.10 |
Integration |
118 |
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10.11 |
GOVERNING LAW |
118 |
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10.12 |
Submission To Jurisdiction; Waivers |
118 |
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10.13 |
Acknowledgements |
119 |
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10.14 |
Releases of Guarantees and Liens |
119 |
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10.15 |
Confidentiality |
120 |
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10.16 |
WAIVERS OF JURY TRIAL |
121 |
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10.17 |
USA Patriot Act |
121 |
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10.18 |
Intercreditor Agreement |
121 |
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10.19 |
Acknowledgement and Consent to Bail-In of Affected Financial Institutions |
122 |
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10.20 |
Amendment and Restatement; No Novation; Existing LIBOR Loans |
122 |
iii
SCHEDULES:
1.1A |
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Term B Commitments |
1.1B |
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Mortgaged Property |
4.13 |
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Pension Plans |
4.15 |
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Subsidiaries |
4.19(a) |
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UCC Filing Jurisdictions |
5.1(k) |
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Existing Mortgages |
7.2(e) |
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Existing Indebtedness |
7.3(f) |
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Existing Liens |
7.5(l) |
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Scheduled Dispositions |
7.7(k) |
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Existing Investments |
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EXHIBITS: |
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A |
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Form of Guarantee and Collateral Agreement |
B |
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Form of Compliance Certificate |
C |
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Form of Closing Certificate |
D |
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[Reserved] |
E |
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Form of Assignment and Assumption |
F |
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[Reserved] |
G |
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[Reserved] |
H |
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Form of U.S. Tax Compliance Certificate |
I-1 |
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Form of Incremental Term Loan Activation Notice |
I-2 |
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Form of New Lender Supplement |
J |
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Auction Procedures |
K |
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Form of Intercreditor Agreement |
L |
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Form of Solvency Certificate |
iv
AMENDED AND RESTATED TERM LOAN CREDIT AGREEMENT (as amended, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”), dated as of May 30, 2023, among TTM Technologies, Inc., a Delaware corporation (the “Borrower”), the several banks and other financial institutions or entities from time to time parties to this Agreement (the “Lenders”), JPMorgan Chase Bank, N.A., as administrative agent, and the other agents from time to time parties hereto.
WHEREAS, the Borrower has Existing Term B Loans (as defined below) outstanding under the Term Loan Credit Agreement dated as of May 31, 2015 (as amended from time to time prior to the Closing Date (as defined below), the “Existing Credit Agreement”), among the Borrower, the several banks and other financial institutions or entities from time to time parties thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents parties thereto;
WHEREAS, the Borrower desires to replace the Existing Term B Loans with Replacement Term Loans (as defined in the Existing Credit Agreement) and desires, in accordance with Section 10.1 of the Existing Credit Agreement, to amend the Existing Credit Agreement in connection with the extension of the Replacement Term Loans hereunder;
WHEREAS, the Borrower, the Lenders and the Administrative Agent agree that the Term Loans provided hereunder shall initially constitute Replacement Term Loans under the Existing Credit Agreement and that in connection therewith, the Existing Credit Agreement shall be amended and restated in its entirety and the Term Loans shall thereafter have the terms as set forth herein; and
WHEREAS, the Borrower, the Lenders and the Administrative Agent agree that the Existing Term B Loans not refinanced with the Initial Term B Loans shall be prepaid on the Closing Date;
NOW THEREFORE, the parties hereto hereby agree that the Existing Credit Agreement shall be amended and restated in its entirety, as of the Closing Date (as defined below), as follows:
“2029 Senior Notes”: the Borrower’s 4.000% senior notes due 2029 issued pursuant to the 2029 Senior Notes Indenture.
“2029 Senior Notes Indenture”: the Senior Notes Indenture, dated as of March 10, 2021, among the Borrower, as issuer, the guarantors party thereto and Wilmington Trust, National Association, as trustee.
“ABL Administrative Agent”: JPMorgan Chase Bank, N.A., as administrative agent under the ABL Loan Documents, and its successors and assigns.
“ABL Commitments”: the “Commitments” as defined in the ABL Credit Agreement.
“ABL Credit Agreement”: the Amended and Restated ABL Credit Agreement, dated as of the Closing Date, among the Borrower, the lenders and agents party thereto and the ABL Administrative Agent.
“ABL Loan Documents”: collectively (a) the ABL Credit Agreement, (b) the ABL Security Documents, (c) the Intercreditor Agreement, (d) any promissory note evidencing loans under the ABL Credit Agreement and (e) any amendment, waiver, supplement or other modification to any of the documents described in clauses (a) through (d).
“ABL Loans”: loans outstanding under the ABL Credit Agreement.
“ABL Obligations Payment Date”: as defined in the Intercreditor Agreement.
“ABL Priority Collateral”: as defined in the Intercreditor Agreement.
“ABL Representative”: as defined in the Intercreditor Agreement.
“ABL Security Documents”: the collective reference to the Guarantee and Collateral Agreement (as defined in the ABL Credit Agreement), the Mortgages (as defined in the ABL Credit Agreement) and all other security documents delivered to the ABL Administrative Agent granting a Lien on any property of any Person to secure the obligations and liabilities of any Loan Party under any ABL Loan Document.
“ABR”: for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus ½ of 1% and (c) the Term SOFR Rate for a one month Interest Period as published two U.S. Government Securities Business Days prior to such day (or if such day is not a U.S. Government Securities Business Day, the immediately preceding U.S. Government Securities Business Day) plus 1.0%; provided that for the purpose of this definition, the Term SOFR Rate for any day shall be based on the Term SOFR Reference Rate at approximately 5:00 a.m. Chicago time on such day (or any amended publication time for the Term SOFR Reference Rate, as specified by the CME Term SOFR Administrator in the Term SOFR Reference Rate methodology). Any change in ABR due to a change in the Prime Rate, the NYFRB Rate or the Term SOFR Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the Term SOFR Rate, respectively. If ABR is being used as an alternate rate of interest pursuant to Section 2.16 (for the avoidance of doubt, only until the Benchmark Replacement has been determined pursuant to Section 2.16(b)), then ABR shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above. For the avoidance of doubt, if ABR as determined pursuant to the foregoing would be less than 1.0%, such rate shall be deemed to be 1.0% for purposes of this Agreement.
“ABR Loans”: Loans the rate of interest applicable to which is based upon the ABR.
“Accepting Lenders”: as defined in Section 2.26(a).
“Additional Permitted Amount”: as defined in the definition of “Permitted Refinancing Indebtedness”.
“Additional Term Lender”: as defined in the First Amendment.
“Administrative Agent”: JPMorgan Chase Bank, N.A., together with its affiliates, as the administrative agent for the Lenders under this Agreement and the other Loan Documents, together with any of its successors.
“Affected Facility”: as defined in Section 2.26(a).
2
“Affected Financial Institution”: (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate”: as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.
“Agents”: the collective reference to the Administrative Agent and any other agent identified on the cover page of this Agreement.
“Agent Indemnitee”: as defined in Section 9.7.
“Aggregate Exposure”: with respect to any Lender at any time, an amount equal to (a) until the Closing Date, the aggregate amount of such Lender’s Initial Term B Commitments at such time and (b) thereafter, the aggregate then unpaid principal amount of such Lender’s Loans.
“Aggregate Exposure Percentage”: with respect to any Lender at any time, the ratio (expressed as a percentage) of such Lender’s Aggregate Exposure at such time to the Aggregate Exposure of all Lenders at such time.
“Agreement”: as defined in the preamble hereto.
“Ancillary Document”: as defined in Section 10.8(b).
“Anti-Corruption Laws”: all laws, rules and regulations of any jurisdiction applicable to the Borrower or its Subsidiaries from time to time concerning or relating to bribery or corruption, including the U.S. Foreign Corrupt Practices Act of 1977, as amended.
“Applicable Margin”: (a) with respect to Term B Loans constituting ABR Loans, 1.25% per annum, and (b) with respect to Term B Loans constituting Term Benchmark Loans (or if applicable pursuant to Section 2.16, RFR Loans), 2.25% per annum; and
“Applicable Reference Period”: as at any date of determination, the most recently ended Reference Period for which financial statements with respect to each fiscal quarter included in such Reference Period have been delivered pursuant to Section 6.1(a) or 6.1(b) (or, prior to the delivery of any such financial statements, the Reference Period ended April 3, 2023).
“Approved Fund”: as defined in Section 10.6(b).
“Arrangers”: collectively, (x) the Initial Arrangers and (y) the First Amendment Arrangers.
3
“Asia Facility”: the “Asia Facility” (as defined under the Existing Credit Agreement) until such agreement is amended, amended and restated, refinanced or otherwise modified after the Closing Date pursuant to a facility agreement, loan agreement or credit agreement (or other similar agreement for borrowed money), to be entered into by TTM Technologies China Limited and TTM Technologies Trading (Asia) Company Limited, each as a borrower, TTM Technologies China Limited, TTM Technologies Trading (Asia) Company Limited, TTM Technologies (Hong Kong) Company Limited, Oriental Printed Circuits Limited, OPC Manufacturing Limited, and TTM Technologies (Asia Pacific) Limited each as original guarantors, and The Hongkong and Shanghai Banking Corporation Limited, as arranger, original lender, facility agent, security trustee and issuing bank (as amended, modified or replaced from time to time in a manner not prohibited by this Agreement) (it being understood that Restricted Subsidiaries of TTM Technologies (Asia Pacific) Limited may be added as co-borrowers or guarantors of the Asia Facility).
“Asset Sale”: any Disposition of property or series of related Dispositions of property (excluding any such Disposition permitted by clause (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l) or (m) of Section 7.5) that yields gross proceeds to any Group Member (valued at the initial principal amount thereof in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair market value in the case of other non-cash proceeds) in excess of $15,000,000.
“Assignee”: as defined in Section 10.6(b).
“Assignment and Assumption”: an Assignment and Assumption, substantially in the form of Exhibit E.
“Attributable Indebtedness”: in respect of any sale and leaseback transaction, as at the time of determination, the present value (discounted at the implied interest rate in such transaction compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such sale and leaseback transaction (including any period for which such lease has been extended or may, at the option of the lessor, be extended).
“Auction Manager”: as defined in Section 2.25(a).
“Auction Notice”: an auction notice given by the Borrower in accordance with the Auction Procedures with respect to an Auction Purchase Offer.
“Auction Procedures”: the auction procedures with respect to Auction Purchase Offers set forth in Exhibit J hereto.
“Auction Purchase Offer”: an offer by the Borrower to purchase Term Loans of one or more Facilities pursuant to modified Dutch auctions conducted in accordance with the Auction Procedures and otherwise in accordance with Section 2.25.
“Available Amount”: at any time, the excess if any, of:
4
“Available Tenor”: as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark (or component thereof) or payment period for interest calculated with reference to such Benchmark (or component thereof), as applicable, that is or may be used for determining the length of an Interest Period for any term rate or otherwise, for determining any frequency of making payments of interest calculated pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to clause (e) of Section 2.16.
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“Bail-In Action”: 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”: (a) 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, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Bankruptcy Code”: Title 11 of the United States Code (11 U.S.C. § 101 et seq.).
“Bankruptcy Plan”: a reorganization or plan of liquidation pursuant to any Debtor Relief Laws.
“Base Incremental Amount”: as of any date, an amount equal to (a) the greater of (x) $350,000,000 and (y) 100% of Consolidated EBITDA for the most recently ended Reference Period less (b) the aggregate principal amount of Incremental Term Loans and Incremental Equivalent Indebtedness established prior to such date in reliance on the Base Incremental Amount.
“Benchmark”: initially, with respect to any (i) RFR Loan, the Daily Simple SOFR or (ii) Term Benchmark Loan, the Term SOFR Rate; provided that if a Benchmark Transition Event, and the related Benchmark Replacement Date have occurred with respect to the Daily Simple SOFR or Term SOFR Rate, as applicable, or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (b) of Section 2.16.
“Benchmark Replacement”: 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:
If the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
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“Benchmark Replacement Adjustment”: with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement, 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 for the applicable Corresponding Tenor giving due consideration to (i) 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 on the applicable Benchmark Replacement Date and/or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for dollar-denominated syndicated credit facilities at such time.
“Benchmark Replacement Conforming Changes”: with respect to any Benchmark Replacement and/or any Term Benchmark Loan, any technical, administrative or operational changes (including changes to the definition of “ABR,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent reasonably decides may be appropriate to reflect the adoption and implementation of such Benchmark and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent reasonably decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent reasonably determines that no market practice for the administration of such Benchmark exists, in such other manner of administration as the Administrative Agent reasonably decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
“Benchmark Replacement Date”: with respect to any Benchmark, the earliest to occur of the following events with respect to such then-current Benchmark:
For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
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“Benchmark Transition Event”: with respect to any Benchmark, the occurrence of one or more of the following events with respect to such then-current Benchmark:
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period”: with respect to any Benchmark, the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.16 and (y) ending at the time that a Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.16.
“Beneficial Ownership Certification”: a certification regarding beneficial ownership or control as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation”: 31 C.F.R. § 1010.230.
“Benefit Plan”: any (a) “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) “plan” as defined in and subject to Section 4975 of the Code, or (c) Person whose assets include (for purposes of Section 3(42) of ERISA or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan.”
“Benefitted Lender”: as defined in Section 10.7(a).
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“BHC Act Affiliate”: of a party means an “affiliate’ (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Board”: the Board of Governors of the Federal Reserve System of the United States (or any successor).
“Borrower”: as defined in the preamble hereto.
“Borrowing” means Loans of the same Type, made, converted or continued on the same date and, in the case of Term Benchmark Loans, as to which a single Interest Period is in effect.
“Borrowing Date”: any Business Day specified by the Borrower as a date on which the Borrower requests the relevant Lenders to make Loans hereunder.
“Borrowing Request” means a request by the Borrower for a Borrowing in accordance with Section 2.2, which shall be in a form approved by the Administrative Agent.
“Business”: as defined in Section 4.17(b).
“Business Day”: any day (other than a Saturday or a Sunday) on which banks are open for business in New York City; provided that, in addition to the foregoing, a Business Day shall be (a) in relation to RFR Loans and any interest rate settings, fundings, disbursements, settlements or payments of any such RFR Loan, or any other dealings of such RFR Loan and (b) in relation to Loans referencing the Term SOFR Rate and any interest rate settings, fundings, disbursements, settlements or payments of any such Loans referencing the Term SOFR Rate or any other dealings of such Loans referencing the Term SOFR Rate, any such day that is a U.S. Government Securities Business Day.
“Capital Expenditures”: for any period, with respect to any Person, the aggregate of all expenditures by such Person and its Restricted Subsidiaries for the acquisition or leasing (pursuant to a capital lease) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) that is required to be capitalized under GAAP on a consolidated balance sheet of such Person and its Restricted Subsidiaries.
“Capital Lease Obligations”: as to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases or financing leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.
“Capital Stock”: any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing, but excluding any debt securities convertible into any of the foregoing.
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“Cash Equivalents”: (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within two years from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of six months or less from the date of acquisition issued by any Lender or by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $250,000,000; (c) commercial paper of an issuer rated at least A-2 by Standard & Poor’s Ratings Services (“S&P”) or P-2 by Moody’s Investors Service, Inc. (“Moody’s”), or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within nine months from the date of acquisition; (d) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days, with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of two years or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s; (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this definition; (g) money market mutual or similar funds that invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition; or (h) money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as amended, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $1,000,000,000.
“CFC”: (a) each Person that is a “controlled foreign corporation” for purposes of the Code and (b) any Subsidiary owned directly or indirectly by such Person.
“CFC Holding Company”: means a Subsidiary substantially all the assets of which consist of Equity Interests in Foreign Subsidiaries that each constitute a CFC and/or Indebtedness or accounts receivable owed by Foreign Subsidiaries that each constitute a CFC or are treated as owed by any such Foreign Subsidiaries for U.S. federal income tax purposes.
“Change of Control”: (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Exchange Act and the rules of the SEC thereunder) of Capital Stock of the Borrower representing more than 35% of either the aggregate ordinary voting power or the aggregate equity value represented by the issued and outstanding Capital Stock of the Borrower; (b) persons who were (i) directors of the Borrower on the Closing Date, (ii) nominated by the board of directors of the Borrower or (iii) appointed by directors who were directors of the Borrower on the Closing Date or were nominated as provided in clause (ii) above ceasing to occupy a majority of the seats (excluding vacant seats) on the board of directors of the Borrower; or (c) the occurrence of any “change in control” (or similar event, however denominated) with respect to the Borrower under and as defined in any indenture or other agreement or instrument evidencing or governing the rights of the holders of any Material Indebtedness of the Borrower or any of its Restricted Subsidiaries.
“Closing Date”: May 30, 2023.
“CME Term SOFR Administrator”: CME Group Benchmark Administration Limited as administrator of the forward-looking term Secured Overnight Financing Rate (SOFR) (or a successor administrator).
“Code”: the Internal Revenue Code of 1986, as amended and the rules and regulations promulgated thereunder.
“Collateral”: all property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Document.
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“Compliance Certificate”: a certificate duly executed by a Responsible Officer substantially in the form of Exhibit B.
“Connection Income Taxes”: Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Consolidated Cash Taxes”: for any period, with respect to the Borrower and its Restricted Subsidiaries on a consolidated basis, the aggregate amount of all income and similar Taxes, to the extent the same are payable in cash with respect to such period.
“Consolidated Coverage Ratio”: as of the last day of any Reference Period, the ratio of (x) Consolidated EBITDA for such period to (y) Consolidated Interest Expense for such period.
“Consolidated Current Assets”: at any date, all amounts (other than cash and Cash Equivalents) that would, in conformity with GAAP, be reflected in “total current assets” (or any like caption) on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries at such date.
“Consolidated Current Liabilities”: at any date, all amounts that would, in conformity with GAAP, be reflected in “total current liabilities” (or any like caption) on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries at such date, but excluding (a) the current portion of any Funded Debt of the Borrower and its Restricted Subsidiaries and (b) without duplication of clause (a) above, all Indebtedness consisting of ABL Loans to the extent otherwise included therein.
“Consolidated EBITDA”: for any period, Consolidated Net Income for such period plus, without duplication and to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (a) income tax expense, (b) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness (including the Loans and the ABL Loans), (c) depreciation and amortization expense, (d) [reserved], (e) amortization of intangibles (including, but not limited to, impairment of goodwill) and organization costs, (f) any extraordinary, unusual or non-recurring expenses or losses, (g) [reserved], (h) cash charges in respect of strategic market reviews, stay or sign-on bonuses, integration-related bonuses, restructuring, consolidation, severance or discontinuance of any portion of operations, employees and/or management, (i) the amount of “run-rate” cost savings, operating expense reductions, operating improvements and synergies that are reasonably identifiable, factually supportable and projected by the Borrower in good faith to be realized as a result of mergers and other business combinations, Permitted Acquisitions, divestitures, insourcing initiatives, cost savings initiatives, plant consolidations, openings and closings, product rationalization and other similar initiatives after the Closing Date, in each case to the extent not prohibited by this Agreement (collectively, “Initiatives”) (calculated on a pro forma basis as though such cost savings, operating expense reductions, operating improvements and synergies had been realized on the first day of the relevant Reference Period), net of the amount of actual benefits realized in respect thereof; provided that (i) actions in respect of such cost-savings, operating expense reductions, operating improvements and synergies have been, or will be, taken within 24 months of the applicable Initiative, (ii) no cost savings, operating expense reductions, operating improvements or synergies shall be added pursuant to this clause (i) to the extent duplicative of any expenses or charges otherwise added to (or excluded from) Consolidated EBITDA, whether through a pro forma adjustment or otherwise, for such period, (iii) projected amounts (and not yet realized) may no longer be added in calculating Consolidated EBITDA pursuant to this clause (i) to the extent occurring more than eight fiscal quarters after the applicable Initiative, (iv) the Borrower must deliver to the Administrative Agent (A) a certificate of a Responsible Officer setting forth such estimated cost-savings, operating expense reductions, operating improvements and synergies and (B) information and calculations supporting in reasonable detail such estimated cost savings, operating expense reductions, operating improvements and synergies and (v)
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[reserved] and (j) non-recurring cash expenses recognized for restructuring costs, integration costs and business optimization expenses in connection with any Initiative, and minus, to the extent included in the statement of such Consolidated Net Income for such period, the sum of (i) any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, gains on the sales of assets outside of the ordinary course of business), (iii) income tax credits (to the extent not netted from income tax expense) and (iii) any other non-cash income (other than normal accruals in the ordinary course of business for non-cash income that represents an accrual for cash income in a future period). For the purposes of calculating Consolidated EBITDA for any Reference Period pursuant to any determination of the Consolidated Leverage Ratio or Consolidated Secured Leverage Ratio, (i) if at any time during such Reference Period the Borrower or any Restricted Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period and (ii) if during such Reference Period the Borrower or any Restricted Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period.
“Consolidated First Lien Debt”: at any date, Consolidated Total Debt at such date that is secured by Liens on the Collateral that do not rank junior to the Liens on the Collateral securing the Term Loans (it being understood that the ABL Loans and any other Consolidated Total Debt that is secured by Liens on all or a portion of the Collateral that are senior to, or pari passu with, the Liens on such Collateral securing the Term Loans shall be considered Consolidated First Lien Debt).
“Consolidated First Lien Leverage Ratio”: as at the last day of any Reference Period, the ratio of (a)(i) Consolidated First Lien Debt on such day less (ii) the aggregate Unrestricted Cash of the Group Members on such day to (b) Consolidated EBITDA for such period.
“Consolidated Interest Expense”: for any period, with respect to the Borrower and its Restricted Subsidiaries, the sum, without duplication, of the aggregate cash interest expense of the Borrower and its Restricted Subsidiaries for such period, calculated on a consolidated basis, to the extent such expense was deducted (and not added back) in computing Consolidated Net Income (including pay in kind interest payments, amortization of original issue discount, the interest components of Capital Lease Obligations, receivable fees and net payments and receipts (if any) pursuant to interest rate Swap Obligations (other than in connection with the early termination thereof) but excluding any non-cash interest expense attributable to the movement in the mark-to-market valuation of Indebtedness, Swap Obligations or other derivative instruments, all amortization and write-offs of deferred financing fees, debt issuance costs, commissions, discounts, fees and expenses and expensing of any bridge, commitment or other financing fees, costs of surety bonds, charges owed with respect to letters of credit, bankers’ acceptances or similar facilities and all discounts, commissions, fees and other charges associated with any Indebtedness).
“Consolidated Leverage Ratio”: as at the last day of any Reference Period, the ratio of (a)(i) Consolidated Total Debt on such day less (ii) the aggregate Unrestricted Cash of the Group Members on such day to (b) Consolidated EBITDA for such period.
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“Consolidated Net Income”: for any period, the consolidated net income (or loss) of the Borrower and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded:
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“Consolidated Secured Debt”: at any date, Consolidated Total Debt at such date that is secured by a Lien on any property of any Group Member.
“Consolidated Secured Leverage Ratio”: as at the last day of any Reference Period, the ratio of (a)(i) Consolidated Secured Debt on such day less (ii) the aggregate Unrestricted Cash of the Group Members on such day to (b) Consolidated EBITDA for such period.
“Consolidated Total Debt”: at any date (without duplication), all Capital Lease Obligations, purchase money Indebtedness, Indebtedness for borrowed money and letters of credit (but only to the extent drawn and not reimbursed), in each case of the Borrower and its Restricted Subsidiaries at such date, determined on a consolidated basis in accordance with GAAP.
“Consolidated Working Capital”: at any date, the excess of Consolidated Current Assets on such date over Consolidated Current Liabilities on such date.
“Continuing Term Lender”: as defined in the First Amendment.
“Contract Consideration”: as defined in the definition of “Excess Cash Flow”.
“Contractual Obligation”: as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
“Convertible Indebtedness” means debt securities, the terms of which provide for conversion into, or exchange for, Capital Stock (other than Disqualified Capital Stock) of the issuer, cash (in an amount determined by reference to the price of such Capital Stock) or a combination of Capital Stock (other than Disqualified Capital Stock) and/or cash (in an amount determined by reference to the price of such Capital Stock).
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
“Credit Party”: the Administrative Agent or any other Lender and, for the purposes of Section 10.13 only, any other Agent and any Arranger.
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“Cumulative Consolidated Net Income”: at any date of determination, an amount (which may not be less than zero) equal to the aggregate cumulative sum of Consolidated Net Income for each fiscal quarter of the Borrower for which financial statements have been delivered pursuant to Section 6.1(a) or (b), as applicable, beginning with the first full fiscal quarter after the Closing Date.
“Daily Simple SOFR”: for any day (a “SOFR Rate Day”), a rate per annum equal SOFR for the day (such day “SOFR Determination Date”) that is five (5) U.S. Government Securities Business Day prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website; provided that if the Daily Simple SOFR as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower.
“Debtor Relief Laws”: the Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect.
“Declined Amount”: as defined in Section 2.11(e).
“Default”: any of the events specified in Section 8, whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied.
“Deposit Account Control Agreement”: individually and collectively, each “Deposit Account Control Agreement” referred to in the Guarantee and Collateral Agreement.
“Designated Non-Cash Consideration”: the fair market value of non-cash consideration received by the Borrower or one of its Restricted Subsidiaries in connection with a Disposition that is so designated as Designated Non-Cash Consideration pursuant to a certificate of a Responsible Officer, setting forth the basis of such valuation, less the amount of cash and Cash Equivalents received in connection with a subsequent sale of such Designated Non-Cash Consideration within 180 days of receipt thereof.
“Disposition”: with respect to any property, any sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition (in one transaction or in a series of transactions and whether effected pursuant to a division or otherwise) thereof. The terms “Dispose” and “Disposed of” shall have correlative meanings.
“Disqualified Capital Stock”: with respect to any Person, any Capital Stock of such Person that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, either mandatorily or at the option of the holder thereof), or upon the happening of any event or condition:
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“Disqualified Lenders”: (a) certain banks, financial institutions, other institutional lenders and other Persons that have been specified in writing to the Administrative Agent by the Borrower prior to the Closing Date and (b) competitors of the Borrower and its Restricted Subsidiaries that are specified in writing to the Administrative Agent by the Borrower from time to time that are reasonably acceptable to the Administrative Agent (provided that any such written specification of a competitor by the Borrower to the Administrative Agent occurring on or after the Closing Date shall be deemed not delivered and not effective unless delivered by the Borrower to the Administrative Agent by email to JPMDQ_Contact@jpmorgan.com and shall only become effective three Business Days after such delivery). For the avoidance of doubt, with respect to any assignee that becomes a Disqualified Lender after the applicable Trade Date (including as a result of the delivery of a notice pursuant to, and/or the expiration of the notice period referred to in, this definition), (x) such assignee shall not retroactively be disqualified from becoming a Lender and (y) the execution by the Borrower of an Assignment and Assumption with respect to such assignee will not by itself result in such assignee no longer being considered a Disqualified Lender.
“Dollars” and “$”: dollars in lawful currency of the United States.
“Domestic Subsidiary”: any Restricted Subsidiary of the Borrower organized under the laws of any jurisdiction within the United States.
“ECF Percentage”: 50%; provided, that (a) the ECF Percentage shall be reduced to 25% if the Consolidated First Lien Leverage Ratio as of the last day of the relevant fiscal year is less than or equal to 2.50 to 1.00 but greater than 2.00 to 1.00 and (b) the ECF Percentage shall be reduced to 0% if the Consolidated First Lien Leverage Ratio as of the last day of the relevant fiscal year is less than or equal to 2.00 to 1.00.
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“EEA Financial Institution”: (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country”: any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority”: any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Electronic Signature”: an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.
“Eligible Assignee”: (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund, (d) any commercial bank and (e) any other financial institution or investment fund engaged as a primary activity in the ordinary course of its business in making or investing in commercial loans or debt securities, other than, in each case, (i) a natural person or (ii) except to the extent permitted under Sections 2.25 and 10.6(e), the Borrower, any Subsidiary or any other Affiliate of the Borrower; provided that solely for purposes of an assignment pursuant to Section 10.6(b), “Eligible Assignee” shall not include any Person that is a Disqualified Lender at the time of such assignment.
“Environmental Laws”: any and all foreign, Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or other Requirements of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time hereafter be in effect.
“ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder.
“ERISA Affiliate”: (a) any entity, whether or not incorporated, that is under common control with a Group Member within the meaning of Section 4001(a)(14) of ERISA; (b) any corporation that is a member of a controlled group of corporations within the meaning of Section 414(b) of the Code of which a Group Member is a member; (c) any trade or business (whether or not incorporated) that is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Code of which a Group Member is a member; and (d) with respect to any Group Member, any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Code of which any corporation described in clause (b) above or any trade or business described in clause (c) above is a member. Any former ERISA Affiliate of any Group Member shall continue to be considered an ERISA Affiliate of the Group Member within the meaning of this definition with respect to the period such entity was an ERISA Affiliate of the Group Member and with respect to liabilities arising after such period for which the Group Member could be liable under the Code or ERISA.
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“ERISA Event”: (a) the failure of any Plan to comply with any material provisions of ERISA and/or the Code or with the material terms of such Plan; (b) the existence with respect to any Plan of a non-exempt Prohibited Transaction; (c) any Reportable Event; (d) the failure of any Group Member or ERISA Affiliate to make by its due date a required installment under Section 430(j) of the Code with respect to any Pension Plan or any failure by any Pension Plan to satisfy the minimum funding standards (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Pension Plan, whether or not waived in accordance with Section 412(c) of the Code or Section 302(c) of ERISA; (e) a determination that any Pension Plan is, or is expected to be, in “at risk” status (within the meaning of Section 430 of the Code or Section 303 of ERISA); (f) the filing pursuant to Section 412 of the Code or Section 302 of ERISA of an application for a waiver of the minimum funding standard with respect to any Pension Plan; (g) the occurrence of any event or condition which could reasonably be expected to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or the incurrence by any Group Member or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Pension Plan, including but not limited to the imposition of any Lien in favor of the PBGC or any Pension Plan; (h) the receipt by any Group Member or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Pension Plan or to appoint a trustee to administer any Pension Plan under Section 4042 of ERISA; (i) the failure by any Group Member or any ERISA Affiliate to make any required contribution to a Multiemployer Plan pursuant to Sections 431 or 432 of the Code; (j) the incurrence by any Group Member or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Pension Plan or Multiemployer Plan; (k) the receipt by any Group Member or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from a Group Member or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, Insolvent, in “endangered” or “critical” status (within the meaning of Sections 431 or 432 of the Code or Sections 304 or 305 of ERISA), or terminated (within the meaning of Section 4041A of ERISA) or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (l) the failure by any Group Member or any ERISA Affiliate to pay when due (after expiration of any applicable grace period) any installment payment with respect to Withdrawal Liability under Section 4201 of ERISA; (m) the withdrawal by any Group Member or any ERISA Affiliate from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability to any Group Member or any ERISA Affiliate pursuant to Section 4063 or 4064 of ERISA; (n) the imposition of liability on any Group Member or any ERISA Affiliate pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (o) the occurrence of an act or omission which could give rise to the imposition on any Group Member or any ERISA Affiliate of fines, penalties, taxes or related charges under Chapter 43 of the Code or under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any Plan; (p) the assertion of a material claim (other than routine claims for benefits) against any Plan other than a Multiemployer Plan or the assets thereof, or against any Group Member or any ERISA Affiliate in connection with any Plan; (q) receipt from the IRS of notice of the failure of any Pension Plan (or any other Plan intended to be qualified under Section 401(a) of the Code) to qualify under Section 401(a) of the Code, or the failure of any trust forming part of any Pension Plan (or any other Plan) to qualify for exemption from taxation under Section 501(a) of the Code; or (r) the imposition of a Lien pursuant to Section 430(k) of the Code or pursuant to Section 303(k) or 4068 of ERISA with respect to any Pension Plan.
“EU Bail-In Legislation Schedule”: the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.
“Event of Default”: any of the events specified in Section 8, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.
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“Excess Cash Flow”: for any fiscal year of the Borrower, the excess, if any, of:
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“Excess Cash Flow Application Date”: as defined in Section 2.11(c).
“Exchange Act”: the Securities Exchange Act of 1934, as amended.
“Excluded Taxes”: any of the following Taxes imposed on or with respect to a Credit Party or required to be withheld or deducted from a payment to a Credit Party, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of a Credit Party being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. Federal withholding Taxes imposed on amounts payable to or for the account of a Lender with respect to an applicable interest in a Loan or Term B Commitment pursuant to a law in effect on the date on which (i) a Lender acquires such interest in the Loan or Term B Commitment (other than pursuant to an assignment request by the Borrower under Section 2.22) or (ii) a Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.19, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender acquired the applicable interest in a Loan or Term B Commitment or to such Lender immediately before it changed its lending office, (c) Taxes attributable to a Credit Party’s failure to comply with Section 2.19(f) and (d) any U.S. Federal withholding Taxes imposed under FATCA.
“Existing Credit Agreement”: the Term Loan Credit Agreement, dated as of May 31, 2015, among the Borrower, the several banks and other financial institutions or entities from time to time parties thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents parties thereto, as in effect prior to the Closing Date.
“Existing LIBOR Loans”: as defined in Section 10.20(b).
“Existing Mortgages”: the Mortgages existing on the Closing Date and identified on Schedule 5.1(k), as amended by the Mortgage Amendments as and when delivered in accordance with this Agreement.
“Existing Term B Lender”: a Term B Lender (as defined in the Existing Credit Agreement) immediately prior to giving effect to this Agreement on the Closing Date.
“Existing Term B Loans”: all Term B Loans (as defined in the Existing Credit Agreement) outstanding immediately prior to giving effect to this Agreement on the Closing Date.
“Facility”: each of (a) the Term B Commitments and the Term B Loans made thereunder (the “Term B Facility”) and (b) the Incremental Term Loans (the “Incremental Term Facility”). Additional Facilities may be established pursuant to Section 2.26.
“FATCA”: Sections 1471 through 1474 of the Code, as of the Closing Date (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, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules, or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.
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“Federal Funds Effective Rate”: for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depositary institutions, as determined in such manner as shall be set forth on the NYFRB’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as the effective federal funds rate; provided that if the Federal Funds Effective Rate as so determined would be less than 0.0%, such rate shall be deemed to be 0.0% for the purposes of this Agreement.
“Federal Reserve Board”: the Board of Governors of the Federal Reserve System of the United States of America.
“First Amendment”: the First Amendment, dated as of August 1, 2024, among the Borrower, each other Loan Party party thereto, the Lenders party thereto and the Administrative Agent.
“First Amendment Arrangers”: JPMorgan Chase Bank, N.A., Barclays Bank Plc, BofA Securities, Inc., HSBC Securities (USA) Inc. and Truist Securities, Inc. in their capacities as joint lead arrangers and joint bookrunners of the First Amendment.
“First Amendment Effective Date”: as defined in the First Amendment.
“Flood Laws”: collectively, (i) the National Flood Insurance Reform Act of 1994 (which comprehensively revised the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973) as now or hereafter in effect or any successor statute thereto, (ii) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto and (iii) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.
“Floor”: the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the Term SOFR Rate or the Daily Simple SOFR, as applicable. For the avoidance of doubt the initial Floor for each of Term SOFR Rate or the Daily Simple SOFR shall be 0.0%.
“Foreign Benefit Arrangement”: any employee benefit arrangement mandated by non-U.S. law that is maintained or contributed to by any Group Member, any ERISA Affiliate or any other entity related to a Group Member on a controlled group basis.
“Foreign Plan”: each employee benefit plan (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA) that is not subject to US law and is maintained or contributed to by any Group Member, or ERISA Affiliate or any other entity related to a Group Member on a controlled group basis.
“Foreign Plan Event”: with respect to any Foreign Benefit Arrangement or Foreign Plan, (a) the failure to make or, if applicable, accrue in accordance with normal accounting practices, any employer or employee contributions required by applicable law or by the terms of such Foreign Benefit Arrangement or Foreign Plan; (b) the failure to register or loss of good standing with applicable regulatory authorities of any such Foreign Benefit Arrangement or Foreign Plan required to be registered; or (c) the failure of any Foreign Benefit Arrangement or Foreign Plan to comply with any material provisions of applicable law and regulations or with the material terms of such Foreign Benefit Arrangement or Foreign Plan.
“Foreign Subsidiary”: any Restricted Subsidiary of the Borrower that is not a Domestic Subsidiary.
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“Funded Debt”: as to any Person, all Indebtedness of such Person that matures more than one year from the date of its creation or matures within one year from such date but is renewable or extendible, at the option of such Person, to a date more than one year from such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date, including all current maturities and current sinking fund payments in respect of such Indebtedness whether or not required to be paid within one year from the date of its creation and, in the case of the Borrower, Indebtedness in respect of the Loans and the ABL Loans; provided that premiums on Indebtedness not due, unfunded letters of credit and operating leases shall be excluded.
“Funding Office”: the office of the Administrative Agent specified in Section 10.2 or such other office as may be specified from time to time by the Administrative Agent as its funding office by written notice to the Borrower and the Lenders.
“GAAP”: generally accepted accounting principles in the United States as in effect from time to time. In the event that any “Accounting Change” (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then the Borrower and the Administrative Agent agree to enter into negotiations to promptly amend such provisions of this Agreement so as to reflect equitably such Accounting Changes with the desired result that the criteria for evaluating the Borrower’s results of operations and/or financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made. Until such time as such an amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred. “Accounting Changes” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC.
“Governmental Authority”: any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization (including the National Association of Insurance Commissioners).
“Group Members”: the collective reference to the Borrower and its Restricted Subsidiaries.
“Guarantee and Collateral Agreement”: the Amended and Restated Term Loan Guarantee and Collateral Agreement, dated as of the Closing Date, executed and delivered by the Borrower and each Subsidiary Guarantor, substantially in the form of Exhibit A.
“Guarantee Obligation”: as to any Person (the “guaranteeing person”), any obligation, including a reimbursement, counterindemnity or similar obligation, of the guaranteeing Person that guarantees or in effect guarantees, or which is given to induce the creation of a separate obligation by another Person (including any bank under any letter of credit) that guarantees or in effect guarantees, any Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business.
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The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith.
“Immaterial Subsidiary”: Wirekraft Industries, LLC; provided that if, at any time, any such Subsidiary shall have revenues, assets or operations, such Subsidiary shall cease to be an Immaterial Subsidiary.
“Incremental Acquisition Term Facility”: an Incremental Term Facility designated as an “Incremental Acquisition Term Facility” by the Borrower, the Administrative Agent and the applicable Incremental Term Lenders in the applicable Incremental Term Loan Activation Notice, the making of which is conditioned upon the consummation of, and the proceeds of which will be used to finance, a Permitted Acquisition or other acquisition or Investment permitted hereunder (including the refinancing of Indebtedness in connection therewith (to the extent required in connection with such Permitted Acquisition, acquisition or Investment) and the payment of related fees and expenses).
“Incremental Cap”: at any time, (a) an amount equal to the Base Incremental Amount on such date, (b) an additional amount equal to the Voluntary Prepayment Amount on such date and (c) an additional amount subject to the Maximum Incremental Amount as of such date (it being understood that (i) the Borrower shall be deemed to have utilized amounts under clause (c) above prior to utilization of amounts under clauses (a) or (b) above and (ii) the proceeds from any incurrence under such clauses may be utilized in a single transaction by first calculating the incurrence under clause (c) above and then calculating the incurrence under clauses (i) and/or (ii) above); provided that (x) in no event shall any Incremental Term Loans or Incremental Equivalent Indebtedness consisting of Permitted Additional Pari Passu Indebtedness be incurred as a result of any Voluntary Prepayment Amount attributable to prepayments of Permitted Additional Junior Lien Indebtedness or Permitted Unsecured Indebtedness and (y) in no event shall any Incremental Equivalent Indebtedness consisting of Permitted Additional Junior Lien Indebtedness be incurred as a result of any Voluntary Prepayment Amount attributable to prepayments of Permitted Unsecured Indebtedness.
“Incremental Equivalent Indebtedness”: Indebtedness incurred or issued by a Loan Party consisting of Permitted Additional Pari Passu Indebtedness, Permitted Additional Junior Lien Indebtedness or Permitted Unsecured Indebtedness; provided subject to Section 1.3, the aggregate amount of all Incremental Term Loans and Incremental Equivalent Indebtedness incurred on any date shall not exceed the Incremental Cap.
“Incremental Term Facility”: as defined in the definition of “Facility”.
“Incremental Term Lenders”: (a) on any Incremental Term Loan Activation Date relating to Incremental Term Loans, the Lenders signatory to the relevant Incremental Term Loan Activation Notice and (b) thereafter, each Lender that is a holder of an Incremental Term Loan.
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“Incremental Term Loan Activation Date”: any Business Day on which any Lender shall execute and deliver to the Administrative Agent an Incremental Term Loan Activation Notice pursuant to Section 2.24(a).
“Incremental Term Loan Activation Notice”: a notice substantially in the form of Exhibit I-1 or in such other form as is reasonably acceptable to the Administrative Agent; provided that if such Incremental Term Loan Activation Notice is (i) in respect of an Incremental Term Facility to be designated as an “Incremental Acquisition Term Facility” or (ii) is to effect amendments to this Agreement or the other Loan Documents as contemplated by Section 2.24(d), the Administrative Agent shall, in each case, have executed such Incremental Term Loan Activation Notice.
“Incremental Term Loan Closing Date”: any Business Day designated as such in an Incremental Term Loan Activation Notice.
“Incremental Term Loan Maturity Date”: with respect to the Incremental Term Loans to be made pursuant to any Incremental Term Loan Activation Notice, the maturity date specified in such Incremental Term Loan Activation Notice, which date shall not be earlier than the final maturity of the Term B Loans.
“Incremental Term Loans”: any term loans made pursuant to Section 2.24(a).
“Indebtedness”: of any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than (i) trade payables incurred in the ordinary course of such Person’s business and not overdue more than 90 days, (ii) deferred compensation payable to directors, officers or employees of any Group Member and (iii) any purchase price adjustment or earnout obligation until such adjustment or obligation becomes a liability on the balance sheet of such Person in accordance with GAAP), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under or in respect of acceptances, letters of credit, surety bonds or similar arrangements, (g) the liquidation value of all redeemable preferred Disqualified Capital Stock of such Person, (h) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (g) above, (i) all obligations of the kind referred to in clauses (a) through (h) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation (but only to the extent of the lesser of (i) the amount of such Indebtedness and (ii) the fair market value of such property), and (j) for the purposes of Section 8(e) only, all obligations of such Person in respect of Swap Agreements. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor.
“Indemnified Taxes”: (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a) above, Other Taxes.
“Indemnitee”: as defined in Section 10.5(b).
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“Initial Arrangers”: collectively, the Joint Lead Arrangers and Joint Bookrunners identified on the cover page of this Agreement.
“Initial Continuing Lender”: as defined in Section 2.2(b)(i).
“Initial Term B Commitment”: as to any Lender, the obligation of such Lender, if any, to make an Initial Term B Loan to the Borrower in a principal amount equal to the amount set forth under the heading “Term B Commitment” opposite such Lender’s name on Schedule 1.1A. The original aggregate amount of the Initial Term B Commitments was $350,000,000.
“Initial Term B Loan”: as defined in Section 2.1.
“Initial Term B Lender”: a Lender holding Initial Term B Commitments or Initial Term B Loans.
“Insolvent”: with respect to any Multiemployer Plan, the condition that such plan is insolvent within the meaning of Section 4245 of ERISA.
“Intellectual Property”: as defined in the Guarantee and Collateral Agreement.
“Intercreditor Agreement”: the Amended and Restated ABL/Term Loan Intercreditor Agreement, dated as of the Closing Date, among the Borrower, the Subsidiary Guarantors, the Administrative Agent and the ABL Administrative Agent, substantially in the form of Exhibit K.
“Interest Election Request” means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.12, which shall be in a form approved by the Administrative Agent.
“Interest Payment Date”: (a) as to any ABR Loan, the first day of each January, April, July and October to occur while such Loan is outstanding and the final maturity date of such Loan, (b) as to any Term Benchmark Loan, the last day of each Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Term Benchmark Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period, and the final maturity date of such Loan, (c) as to any RFR Loan, (1) each date that is on the numerically corresponding day in each calendar month that is one month after the Borrowing of such Loan (or, if there is no such numerically corresponding day in such month, then the last day of such month) and (2) the final maturity date of such Loan and (d) as to any Loan (other than any Loan that is an ABR Loan), the date of any repayment or prepayment made in respect thereof.
“Interest Period”: as to any Term Benchmark Loan, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, three or six months thereafter (in each case, subject to the availability for the Benchmark applicable to the relevant Loan), as the Borrower may elect (or such other date as agreed by the Borrower and the Administrative Agent); provided that, all of the foregoing provisions relating to Interest Periods are subject to the following:
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“Investments”: as defined in Section 7.7.
“IRS”: the United States Internal Revenue Service.
“Joint Venture”: a joint venture, partnership or other similar arrangement entered into by the Borrower or any Restricted Subsidiary, whether in corporate, partnership or other legal form; provided that in no event shall any Subsidiary be considered to be a Joint Venture.
“Junior Indebtedness”: (a) any Subordinated Indebtedness, (b) any Indebtedness (other than ABL Loans and any Permitted Refinancing Indebtedness in respect thereof) of any Group Member that is secured by a Lien on the Collateral that is junior to the Lien on the Collateral securing the Obligations and (c) any Material Unsecured Indebtedness of any Group Member.
“Latest Maturity Date”: at any date of determination, the latest scheduled maturity date applicable to any Loan hereunder at such time, including in respect of any Incremental Term Facility.
“LCA Test Date”: as defined in Section 1.3.
“Lender-Related Person”: as defined in Section 10.5(c).
“Lenders”: as defined in the preamble hereto.
“Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having substantially the same economic effect as any of the foregoing).
“Limited Condition Acquisition”: any Permitted Acquisition or similar acquisition by the Parent or one or more of its Subsidiaries permitted pursuant to the Loan Documents whose consummation is not conditioned on the availability of, or on obtaining, third party financing.
“Loan”: any loan made by any Lender pursuant to this Agreement, including pursuant to the First Amendment.
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“Loan Documents”: this Agreement, the Security Documents, the First Amendment, the Intercreditor Agreement, the Notes and any amendment, waiver, supplement or other modification to any of the foregoing.
“Loan Modification Agreement”: a Loan Modification Agreement, in form and substance reasonably satisfactory to the Administrative Agent and the Borrower, among the Borrower, the Administrative Agent and one or more Accepting Lenders, effecting one or more Permitted Amendments and such other amendments hereto and to the other Loan Documents as are contemplated by Section 2.26.
“Loan Modification Offer”: as defined in Section 2.26(a).
“Loan Parties”: the Borrower and the Subsidiary Guarantors.
“Majority Facility Lenders”: with respect to any Facility, the holders of more than 50% of the aggregate unpaid principal amount of the Term Loans outstanding under such Facility.
“Market Capitalization”: an amount equal to (i) the total number of issued and outstanding shares of common stock of the Borrower on the date of the declaration of a Restricted Payment multiplied by (ii) the arithmetic mean of the closing prices per share of such common stock on the principal securities exchange on which such common stock is traded for the 20 consecutive trading days immediately preceding the date of declaration of such Restricted Payment.
“Material Acquisition”: any acquisition of property or series of related acquisitions of property that (a) constitutes assets comprising all or substantially all of an operating unit of a business or constitutes all or substantially all of the common stock of a Person and (b) involves the payment of consideration by the Group Members in excess of $35,000,000.
“Material Adverse Effect”: a material adverse effect on (a) the business, property, operations or financial condition of the Borrower and its Restricted Subsidiaries taken as a whole or (b) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder.
“Material Disposition”: any Disposition of property or series of related Dispositions of property that yields gross proceeds to the Group Members in excess of $35,000,000.
“Material Indebtedness”: Indebtedness (other than the Loans) or Swap Obligations of any one or more of the Borrower and the Restricted Subsidiaries in an aggregate principal amount of $50,000,000 or more; provided that any Indebtedness outstanding under the ABL Credit Agreement and any Indebtedness outstanding under the Asia Facility shall, in each case, be deemed to be Material Indebtedness. For purposes of determining Material Indebtedness, the “principal amount” of any Swap Obligation at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower and/or any applicable Restricted Subsidiary would be required to pay if the applicable Swap Agreement were terminated at such time.
“Material Unsecured Indebtedness”: any Indebtedness in an aggregate principal amount of $25,000,000 or more that is not secured by a Lien on any property of any Group Member.
“Materials of Environmental Concern”: any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including asbestos, polychlorinated biphenyls, per- and polyfluoroalkyl substances and urea-formaldehyde insulation.
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“Maturity Date”: May 30, 2030.
“Maximum Incremental Amount”: an amount represented by Incremental Term Loans to be established pursuant to Section 2.24 and Incremental Equivalent Indebtedness to be incurred that would not, immediately after giving effect to the establishment thereof (excluding from Unrestricted Cash in making such pro forma calculation the Net Cash Proceeds of such Indebtedness), cause (i) with respect to Incremental Term Loans or Incremental Equivalent Indebtedness consisting of Permitted Additional Pari Passu Indebtedness, the Consolidated First Lien Leverage Ratio for the Applicable Reference Period, calculated on a Pro Forma Basis as of the date of incurrence of such Indebtedness, to exceed 3.25:1.00 (or if such Indebtedness is incurred in connection with an Investment permitted hereunder, such Consolidated First Lien Leverage Ratio to exceed the Consolidated First Lien Leverage Ratio immediately prior to such transaction), (ii) with respect to Incremental Equivalent Indebtedness consisting of Permitted Additional Junior Lien Indebtedness, the Consolidated Secured Leverage Ratio for the Applicable Reference Period, calculated on a Pro Forma Basis as of the date of incurrence of such Indebtedness, to exceed 3.75 to 1.00 (or if such Indebtedness is incurred in connection with an Investment permitted hereunder, such Consolidated Secured Leverage Ratio to exceed the Consolidated Secured Leverage Ratio immediately prior to such transaction) or (iii) with respect to Incremental Equivalent Indebtedness consisting of Permitted Unsecured Indebtedness, (1) the Consolidated Leverage Ratio for the Applicable Reference Period, calculated on a Pro Forma Basis as of the date of incurrence thereof (but excluding from Unrestricted Cash in making such pro forma calculation the Net Cash Proceeds of such Indebtedness), to exceed 4.25 to 1.00 (or if such Indebtedness is incurred in connection with an Investment permitted hereunder, such Consolidated Leverage Ratio to exceed the Consolidated Leverage Ratio immediately prior to such transaction) or (2) the Consolidated Coverage Ratio for the Applicable Reference Period, calculated on a Pro Forma Basis as of the date of incurrence thereof, to be less than 2.00:1.00.
“Minimum Extension Condition”: as defined in Section 2.26(a).
“Mortgage Amendment” as defined in Section 5.1(k).
“Mortgaged Properties”: the real properties listed on Schedule 1.1B and any real property that becomes subject to a Mortgage pursuant to this Agreement, in each case as to which the Administrative Agent for the benefit of the Secured Parties shall be granted a Lien pursuant to the Mortgages.
“Mortgages”: each of the mortgages, deeds of trust and/or deeds to secure debt made by any Loan Party in favor of, or for the benefit of, the Administrative Agent for the benefit of the Secured Parties (with such changes thereto as shall be advisable under the law of the jurisdiction in which such mortgage, deed of trust or deed to secure debt is to be recorded), including any Mortgages executed and delivered pursuant to Sections 5.1(k), 6.10(b) and 6.13.
“Multiemployer Plan”: a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which any Group Member or any ERISA Affiliate (i) makes or is obligated to make contributions, (ii) during the preceding five plan years, has made or been obligated to make contributions or (iii) has any actual or contingent liability.
“Multiple Employer Plan”: a Plan which has two or more contributing sponsors (including any Group Member or any ERISA Affiliate) at least two of whom are not under common control, as such a Plan is described in Section 4064 of ERISA.
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“Net Cash Proceeds”: (a) in connection with any Disposition or any Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents (including any such proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received), net of attorneys’ fees, accountants’ fees, investment banking fees, amounts required to be applied to the repayment of Indebtedness secured by a Lien expressly permitted hereunder on any asset that is the subject of such Disposition or Recovery Event (other than any Lien pursuant to a Security Document) and other customary fees and expenses actually incurred in connection therewith and net of taxes paid or reasonably estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements) and (b) in connection with any issuance or sale of Capital Stock or any incurrence of Indebtedness, the cash proceeds received from such issuance or incurrence, net of attorneys’ fees, investment banking fees, accountants’ fees, underwriting discounts and commissions and other customary fees and expenses actually incurred in connection therewith.
“New Lender”: as defined in Section 2.24(b).
“New Lender Supplement”: as defined in Section 2.24(b).
“New Term Loan Commitments”: as defined in the First Amendment.
“New Term Loans”: as defined in the First Amendment.
“Non-Guarantor Debt Basket”: an amount equal to the greater of $150,000,000 and 45.0% of Consolidated EBITDA for the most recently ended Reference Period.
“Non-U.S. Lender”: a Lender that is not a U.S. Person.
“No Undisclosed Information Representation”: with respect to any Person, a representation that such Person is not in possession of any material non-public information with respect to the Borrower or any of its Subsidiaries that has not been disclosed to the Lenders generally (other than those Lenders who have elected to not receive any non-public information with respect to the Borrower or any of its Subsidiaries) and if so disclosed could reasonably be expected to have a material effect upon, or otherwise be material to, the market price of the applicable Loan, or the decision of an assigning Lender to sell, or of an assignee to purchase, such Loan.
“Not Otherwise Applied”: in respect of any amount, such amount has not previously been (and is not currently being) applied to any other use or transaction.
“Notes”: the collective reference to any promissory note evidencing Loans.
“NYFRB”: the Federal Reserve Bank of New York.
“NYFRB Rate”: for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a federal funds transaction quoted at 11:00 a.m. on such day received by the Administrative Agent from a federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates as so determined be less than 0.0%, such rate shall be deemed to be 0.0% for purposes of this Agreement.
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“NYFRB’s Website”: the website of the NYFRB at http://www.newyorkfed.org, or any successor source.
“Obligations”: the unpaid principal of and interest on (including interest accruing after the maturity of the Loans and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities of the Borrower to the Administrative Agent or to any Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which arise under, out of, or in connection with, this Agreement, any other Loan Document or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including all fees, charges and disbursements of counsel to the Administrative Agent or to any Lender that are required to be paid by the Borrower pursuant hereto) or otherwise.
“Other Applicable Indebtedness”: outstanding Indebtedness that is secured by Liens on the Collateral that are pari passu to the Liens on the Collateral securing the Term Loans, which Indebtedness was incurred as (a) Incremental Equivalent Indebtedness consisting of Permitted Additional Pari Passu Indebtedness or (b) Term Loan Refinancing Indebtedness.
“Other Connection Taxes”: with respect to any Credit Party, Taxes imposed as a result of a present or former connection between such Credit Party and the jurisdiction imposing such Tax (other than connections arising from such Credit Party having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to, or enforced, any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes”: all present or future stamp, court, or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.22).
“Overnight Bank Funding Rate”: for any day, the rate comprised of both overnight federal funds and overnight eurodollar transactions denominated in Dollars by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on the NYFRB’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate.
“Participant”: as defined in Section 10.6(c).
“Participant Register”: as defined in Section 10.6(c).
“Patriot Act”: as defined in Section 10.17.
“Payment”: as defined in Section 9.12(c)(i).
“Payment Notice” as defined in Section 9.12(c)(2).
“PBGC”: the Pension Benefit Guaranty Corporation established under Section 4002 of ERISA and any successor entity performing similar functions.
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“Pension Plan”: any employee benefit plan (including a Multiple Employer Plan, but not including a Multiemployer Plan) that is subject to Title IV of ERISA, Section 412 of the Code or Section 302 of ERISA (i) which is or was sponsored, maintained or contributed to by, or required to be contributed to by, any Group Member or any ERISA Affiliate or (ii) with respect to which any Group Member or any ERISA Affiliate has any actual or contingent liability.
“Permitted Acquisition”: (subject to the application of Section 1.3 in the case of a Limited Condition Acquisition) the purchase or other acquisition by the Borrower or any Restricted Subsidiary of all or a majority of the Capital Stock of, or all or substantially all of the property of, any Person, or of any business or division of any Person; provided that with respect to each purchase or other acquisition (i) after giving effect thereto, the Borrower and its Restricted Subsidiaries are in compliance with Section 7.15, (ii) immediately before and immediately after giving effect on a pro forma basis to any such purchase or other acquisition, no Event of Default under clauses (a) or (f) of Section 8 shall have occurred and be continuing and (iii) any such newly created or acquired Subsidiary shall, to the extent required by Section 6.10, comply with the requirements of Section 6.10.
“Permitted Additional Junior Lien Indebtedness”: Indebtedness of any Loan Party (other than ABL Loans and any Permitted Refinancing Indebtedness in respect thereof) (a) that is (and Guarantees by any Loan Party that are) secured by a Lien on the Collateral that is junior to the Lien on the Collateral securing the Obligations on terms reasonably satisfactory to the Administrative Agent and that is not secured by any other property or assets of the Borrower or any of its Restricted Subsidiaries, (b) that does not mature earlier than the date that is 91 days after the Latest Maturity Date then in effect at the time of incurrence thereof and has a weighted average life to maturity no shorter than the Facility of Term Loans with the Latest Maturity Date in effect at the time of incurrence of such Indebtedness, (c) that does not provide for any amortization, mandatory prepayment, redemption or repurchase (other than upon a change of control, fundamental change, customary asset sale or event of loss mandatory offers to purchase and customary acceleration rights after an event of default and, for the avoidance of doubt, rights to convert or exchange into Capital Stock of the Borrower in the case of convertible or exchangeable Indebtedness) prior to the date that is 91 days after the Latest Maturity Date then in effect at the time of incurrence thereof, (d) that contains covenants, events of default, guarantees and other terms that are customary for similar Indebtedness in light of then-prevailing market conditions (it being understood and agreed that such Indebtedness shall include financial maintenance covenants only to the extent any such financial maintenance covenant is (i) applicable only to periods after the Latest Maturity Date then in effect at the time of incurrence thereof or (ii) included in or added to the Loan Documents for the benefit of the Lenders) and, when taken as a whole (other than interest rates, rate floors, fees and optional prepayment or redemption terms), are not more favorable to the lenders or investors providing such Permitted Additional Junior Lien Indebtedness, as the case may be, than those set forth in the Loan Documents are with respect to the Lenders (other than covenants or other provisions applicable only to periods after the Latest Maturity Date then in effect at the time of incurrence thereof); provided that a certificate of a Responsible Officer delivered to the Administrative Agent at least five Business Days prior to the incurrence of such Indebtedness or the modification, refinancing, refunding, renewal or extension thereof (or such shorter period of time as may reasonably be agreed by the Administrative Agent), together with a reasonably detailed description of the material terms and conditions of such resulting Indebtedness or drafts of the material definitive documentation relating thereto, stating that the Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirements shall be conclusive, and (e) that is not guaranteed by any Person other than by the Borrower and/or Restricted Subsidiaries that are Loan Parties.
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“Permitted Additional Pari Passu Indebtedness”: Indebtedness of any Loan Party (other than ABL Loans and any Permitted Refinancing Indebtedness in respect thereof) (a) that is (and Guarantees by any Loan Party that are) secured by a Lien on the Collateral that is pari passu to the Lien on the Collateral securing the Obligations on terms reasonably satisfactory to the Administrative Agent and that is not secured by any other property or assets of the Borrower or any of its Restricted Subsidiaries, (b) that does not mature earlier than the Latest Maturity Date then in effect at the time of incurrence thereof and has a weighted average life to maturity no shorter than the Facility of Term Loans with the Latest Maturity Date in effect at the time of incurrence of such Indebtedness; provided, the foregoing limitations in this clause (b) shall not apply to, nor prohibit the Loan Parties from entering into, bridge financings or other similar short term debt facilities that, subject to customary conditions (as determined by the Borrower in good faith), provide for an automatic extension of the maturity thereof to a date that satisfies this clause (b) or require such loans to be converted into or exchanged for permanent financing with a maturity date and weighted average life to maturity that would satisfy this clause (b), (c) that does not provide for any mandatory prepayment thereof prior to the Latest Maturity Date then in effect at the time of incurrence thereof (other than (i) upon a change of control, fundamental change and customary acceleration rights after an event of default and (ii) mandatory prepayments that require such prepayment be applied ratably (or greater than ratably) to the Loans); provided, the foregoing limitations in this clause (c) shall not apply to, nor prohibit the Loan Parties from entering into, bridge financings or other similar short term debt facilities that require mandatory prepayment from the incurrence of a permanent financing to replace such bridge financing or short term debt, (d) that contains covenants, events of default, guarantees and other terms that are customary for similar Indebtedness in light of then-prevailing market conditions (it being understood and agreed that such Indebtedness shall include financial maintenance covenants only to the extent any such financial maintenance covenant is (i) applicable only to periods after the Latest Maturity Date then in effect at the time of incurrence thereof or (ii) included in or added to the Loan Documents for the benefit of the Lenders) and, when taken as a whole (other than interest rates, rate floors, fees and optional prepayment or redemption terms), are not more favorable to the lenders or investors providing such Permitted Additional Pari Passu Indebtedness, as the case may be, than those set forth in the Loan Documents are with respect to the Lenders (other than covenants or other provisions applicable only to periods after the Latest Maturity Date then in effect at the time of incurrence thereof); provided that a certificate of a Responsible Officer delivered to the Administrative Agent at least five Business Days prior to the incurrence of such Indebtedness or the modification, refinancing, refunding, renewal or extension thereof (or such shorter period of time as may reasonably be agreed by the Administrative Agent), together with a reasonably detailed description of the material terms and conditions of such resulting Indebtedness or drafts of the material definitive documentation relating thereto, stating that the Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirements shall be conclusive, (e) for which the all-in-yield (whether in the form of interest rate margins, original issue discount, upfront fees or interest rate floors) and (subject to clause (b) above) amortization schedule applicable to such Permitted Additional Pari Passu Indebtedness shall be determined by the Borrower and the Persons providing such Indebtedness, provided that, in the event that the all-in-yield for any Permitted Additional Pari Passu Indebtedness in the form of senior secured term loans incurred on or prior to the six month anniversary of the Closing Date shall be more than 50 basis points higher than the corresponding all-in-yield for any then existing Term B Loans as determined by the Administrative Agent in accordance with standard market practices (after giving effect to interest rate margins, original issue discount, upfront fees or interest rate floors), then the all-in-yield with respect to the outstanding Term B Loans shall be increased to the amount necessary so that the difference between the all-in-yield with respect to such Permitted Additional Pari Passu Indebtedness and the all-in-yield on the outstanding Term B Loans is equal to 50 basis points and (f) that is not guaranteed by any Person other than by the Borrower and/or Restricted Subsidiaries that are Loan Parties.
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“Permitted Amendment”: an amendment to this Agreement and/or the other Loan Documents, effected in connection with a Loan Modification Offer pursuant to Section 2.26, providing for an extension of the scheduled maturity date and/or amortization applicable to the Loans of the Accepting Lenders of a relevant Facility and, in connection therewith, which may also provide for (a)(i) a change in the Applicable Margin with respect to the Loans of the Accepting Lenders subject to such Permitted Amendment and/or (ii) a change in the fees payable to, or the inclusion of new fees to be payable to, the Accepting Lenders in respect of such Loans, (b) changes to any prepayment premiums with respect to the applicable Loans of a relevant Facility, (c) such amendments to this Agreement and the other Loan Documents as shall be appropriate, in the reasonable judgment of the Administrative Agent, to provide the rights and benefits of this Agreement and other Loan Documents to each new Facility of Loans and/or commitments resulting therefrom and (d) additional amendments to the terms of this Agreement and/or the other Loan Documents applicable to the applicable Loans of the Accepting Lenders that are less favorable to such Accepting Lenders than the terms of this Agreement and/or the other Loan Documents, as applicable, prior to giving effect to such Permitted Amendments and that are reasonably acceptable to the Administrative Agent.
“Permitted Convertible Indebtedness”: Convertible Indebtedness that is not guaranteed by any Person.
“Permitted Liens”: Liens permitted pursuant to Section 7.3.
“Permitted Receivables Facility”: any Receivables Facility; provided that the aggregate outstanding and uncollected amount of accounts receivable pledged, sold, conveyed or otherwise transferred in connection with all such Receivables Facilities shall not exceed $30,000,000 at any time.
“Permitted Refinancing Indebtedness”: with respect to any Indebtedness of any Person (the “Original Indebtedness”), any modification, refinancing, refunding, replacement, renewal or extension of such Indebtedness, in whole or in part; provided, that (i) no Person that is not an obligor with respect to the Original Indebtedness shall be an obligor with respect to such Permitted Refinancing Indebtedness, (ii) the final maturity and weighted average life to maturity of such Indebtedness shall not be shortened as a result of such modification, refinancing, refunding, replacement, renewal or extension, (iii) in the case of any modification, refinancing, refunding, replacement, renewal or extension of Indebtedness incurred pursuant Section 7.2(b), the other material terms and conditions of such Indebtedness after giving effect to such modification, refinancing, refunding, replacement, renewal or extension, taken as a whole (other than interest rates, rate floors, fees and optional prepayment or redemption terms), shall not be materially more restrictive as determined by the Borrower in good faith, (iv) (x) in the case of any Original Indebtedness consisting of a revolving credit facility, the committed amount (in the case of a revolving credit facility) or principal of such Permitted Refinancing Indebtedness does not exceed the committed amount in respect of the Original Indebtedness and (y) otherwise, the principal amount (or accreted value or committed amount, if applicable) thereof does not exceed the principal amount (or accreted value or committed amount, if applicable) of the Original Indebtedness, except in each case by an amount (such amount, the “Additional Permitted Amount”) equal to unpaid accrued interest and premium thereon at such time plus reasonable fees and expenses incurred in connection with such modification, refinancing, refunding, replacement, renewal or extension, (v) for the avoidance of doubt, the Original Indebtedness is paid down (or commitments in respect thereof are reduced) on a dollar-for-dollar basis by such Permitted Refinancing Indebtedness (other than by the Additional Permitted Amount), (vi) if the Original Indebtedness shall have been subordinated to the Obligations, such Permitted Refinancing Indebtedness shall also be subordinated to the Obligations on terms not less favorable in any material respect to the Lenders and (vii) such Permitted Refinancing Indebtedness shall not be secured by any Lien on any asset other than the assets that secured such Original Indebtedness (or would have been required to secure such Original Indebtedness pursuant to the terms thereof) or, in the event Liens securing such Original Indebtedness shall have been contractually subordinated to any Lien securing the Obligations, by any Lien that shall not have been contractually subordinated to at least the same extent.
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“Permitted Unsecured Indebtedness”: Indebtedness of any Loan Party (a) that is not (and any Guarantees thereof by any Loan Party are not) secured by any collateral (including the Collateral), (b) that does not mature earlier than the date that is 91 days after the Latest Maturity Date then in effect at the time of incurrence thereof and has a weighted average life to maturity no shorter than the Facility of Term Loans with the Latest Maturity Date in effect at the time of incurrence of such Indebtedness, (c) that does not provide for any amortization, mandatory prepayment, redemption or repurchase (other than upon a change of control, fundamental change, customary asset sale or event of loss mandatory offers to purchase and customary acceleration rights after an event of default and, for the avoidance of doubt, rights to convert or exchange into Capital Stock of the Borrower in the case of convertible or exchangeable Indebtedness) prior to the date that is 91 days after the Latest Maturity Date then in effect at the time of incurrence thereof, (d) that contains covenants, events of default, guarantees and other terms that are customary for similar Indebtedness in light of then-prevailing market conditions (it being understood and agreed that such Indebtedness shall not include any financial maintenance covenants and that applicable negative covenants shall be incurrence-based to the extent customary for similar Indebtedness) and, when taken as a whole (other than interest rates, rate floors, fees and optional prepayment or redemption terms), are not more favorable to the lenders or investors providing such Permitted Unsecured Indebtedness, as the case may be, than those set forth in the Loan Documents are with respect to the Lenders (other than covenants or other provisions applicable only to periods after the Latest Maturity Date then in effect at the time of incurrence thereof); provided that a certificate of a Responsible Officer delivered to the Administrative Agent at least five Business Days prior to the incurrence of such Indebtedness or the modification, refinancing, refunding, renewal or extension thereof (or such shorter period of time as may reasonably be agreed by the Administrative Agent), together with a reasonably detailed description of the material terms and conditions of such resulting Indebtedness or drafts of the material definitive documentation relating thereto, stating that the Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirements shall be conclusive, and (e) that is not guaranteed by any Person other than on an unsecured basis by the Borrower and/or Restricted Subsidiaries that are Loan Parties.
“Person”: an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.
“Plan”: any employee benefit plan as defined in Section 3(3) of ERISA, including any employee welfare benefit plan (as defined in Section 3(1) of ERISA), any employee pension benefit plan (as defined in Section 3(2) of ERISA but excluding any Multiemployer Plan), and any plan which is both an employee welfare benefit plan and an employee pension benefit plan, and in respect of which any Group Member or any ERISA Affiliate is (or, if such Plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in section 3(5) of ERISA.
“Planned Expenditures”: as defined in the definition of “Excess Cash Flow”.
“Prime Rate”: the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as reasonably determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as reasonably determined by the Administrative Agent). Each change in the Prime Rate shall be effective from and including the date such change is publicly announced or quoted as being effective.
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“Pro Forma Basis”: with respect to the calculation of any test or covenant hereunder, such test or covenant being calculated after giving effect to (a) any designation of a Restricted Subsidiary as an Unrestricted Subsidiary, (b) any designation of an Unrestricted Subsidiary as a Restricted Subsidiary, (c) any Material Acquisition, (d) any Material Disposition, and (e) any assumption, incurrence, repayment or other Disposition of Indebtedness (all of the foregoing, “Applicable Transactions”) using, for purposes of determining such compliance, the historical financial statements of all entities or assets so designated, acquired or sold (to the extent available) and the consolidated financial statements of the Borrower and its Restricted Subsidiaries, which shall be reformulated as if all Applicable Transactions during the Applicable Reference Period, or subsequent to the Applicable Reference Period and on or prior to the date of such calculation, had been consummated at the beginning of such period (and shall include, with respect to any Material Acquisition or Material Disposition, any adjustments calculated in accordance with (and subject to the requirements and limitations of) clause (i) of the definition of “Consolidated EBITDA”); provided that with respect to any assumption, incurrence, repayment or other Disposition of Indebtedness (i) if such Indebtedness has a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the date of calculation had been the applicable rate for the entire period (taking into account any Swap Obligations applicable to such Indebtedness if such Swap Obligation has a remaining term as at the date of calculation in excess of 12 months), (ii) interest on Capital Lease Obligations shall be deemed to accrue at an interest rate reasonably determined by a Responsible Officer to be the rate of interest implicit in such Capital Lease Obligation in accordance with GAAP, (iii) interest on any Indebtedness under a revolving credit facility shall be based upon the average daily balance of such Indebtedness during the applicable period and (iv) interest on Indebtedness that may be optionally determined at an interest rate based upon a factor of a prime or similar rate, an applicable interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate as the Borrower may designate. For the avoidance of doubt, in calculating interest expense, (x) the interest expense attributable to any Indebtedness assumed or incurred during the Applicable Reference Period or subsequent to the Applicable Reference Period and on or prior to the date of such calculation shall be included and (y) the interest expense attributable to any Indebtedness repaid (other than Indebtedness incurred under a revolving facility unless such Indebtedness has been permanently repaid and the related commitment terminated and not replaced) or otherwise Disposed of during the Applicable Reference Period or subsequent to the Applicable Reference Period and on or prior to the date of such calculation shall be excluded. To the extent any leverage ratio is being tested on a Pro Forma Basis in connection with the incurrence of any revolving Indebtedness, such leverage ratio shall be calculated assuming such revolving Indebtedness is fully drawn.
“Prohibited Transaction”: as defined in Section 406 of ERISA and Section 4975(c) of the Code.
“Projections”: as defined in Section 6.2(c).
“Properties”: as defined in Section 4.17(a).
“PTE”: a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“Public-Sider”: a Lender whose representatives may trade in securities of the Borrower or any of its Subsidiaries while in possession of the financial statements provided by the Borrower under the terms of this Agreement.
“Purchasing Borrower Party”: any of the Borrower or any Restricted Subsidiary.
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“Qualified Capital Stock”: Capital Stock of the Borrower other than Disqualified Capital Stock.
“Receivables Facility”: the collective reference to any Receivables Purchase Facility or Receivables Securitization Facility.
“Receivables Purchase Facility”: any one or more receivables purchase or financing facilities entered into in connection with any continuing accounts receivables discounting, factoring or financing arrangement with terms and conditions reasonably satisfactory to the Administrative Agent and pursuant to which the Borrower or any Restricted Subsidiary may pledge, sell, convey or otherwise transfer its accounts receivable to any Person (other than the Borrower or a Restricted Subsidiary) in exchange for cash (including, in the case of any pledge of accounts receivables, cash proceeds of loans made by such Person that are secured by such pledged accounts receivables) in an amount equal to or greater than the fair market value (as determined in good faith by the Borrower and taking into account customary discount fees or customary discount factors) of the accounts receivables so pledged, sold, conveyed or transferred.
“Receivables Securitization Facility”: any one or more receivables financing facilities the obligations of which are non-recourse (except for customary representations, warranties, covenants and indemnities made in connection with such facilities) to the Borrower and its Restricted Subsidiaries (other than a Receivables Subsidiary) pursuant to which the Borrower or any Restricted Subsidiary sells its accounts receivable to either (a) a Person that is not a Restricted Subsidiary or (b) a Receivables Subsidiary that in turn funds such purchase by purporting to sell the accounts receivable to a Person that is not a Restricted Subsidiary or by borrowing from such a Person or from another Receivables Subsidiary that in turn funds itself by borrowing from such a Person.
“Receivables Subsidiary”: any Subsidiary of the Borrower formed for the purpose of facilitating or entering into one or more Receivables Facilities, and in each case engages only in activities reasonably related or incidental thereto; provided that each Receivables Subsidiary shall at all times be 100% owned by a Loan Party.
“Recovery Event”: any settlement of or payment in respect of any property or casualty insurance claim or any condemnation proceeding relating to any asset of any Group Member (other than assets that constitute ABL Priority Collateral) that yields gross cash proceeds to any Group Member in excess of $15,000,000.
“Reference Period”: each period of four consecutive fiscal quarters of the Borrower.
“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is the Term SOFR Rate, 5:00 a.m. (Chicago time) on the day that is two U.S. Government Securities Business Days preceding the date of such setting, (2) if the RFR for such Benchmark is Daily Simple SOFR, then four Business Days prior to such setting or (3) if such Benchmark is none of the Term SOFR Rate or Daily Simple SOFR, the time determined by the Administrative Agent in its reasonable discretion.
“Register”: as defined in Section 10.6(b)(iv).
“Regulation U”: Regulation U of the Board as in effect from time to time.
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“Reinvestment Deferred Amount”: with respect to any Reinvestment Event, the aggregate Net Cash Proceeds received by any Group Member in connection therewith that are not applied to prepay the Term Loans pursuant to Section 2.11(b) as a result of the delivery of a Reinvestment Notice.
“Reinvestment Event”: any Asset Sale or Recovery Event in respect of which the Borrower has delivered a Reinvestment Notice.
“Reinvestment Notice”: a written notice executed by a Responsible Officer stating that no Event of Default has occurred and is continuing and that the Borrower (directly or indirectly through a Restricted Subsidiary) intends and expects to use all or a specified portion of the Net Cash Proceeds of an Asset Sale or Recovery Event to acquire or repair assets useful in its business.
“Reinvestment Prepayment Amount”: with respect to any Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any amount expended prior to the relevant Reinvestment Prepayment Date to acquire or repair assets useful in the Borrower’s business.
“Reinvestment Prepayment Date”: with respect to any Reinvestment Event, the earlier of (a) the date occurring 18 months after such Reinvestment Event (or if the Borrower or the relevant Restricted Subsidiary, as applicable, has contractually committed within 18 months after such Reinvestment Event to reinvest such Reinvestment Deferred Amount, the date occurring 24 months after such Reinvestment Event) and (b) the date on which the Borrower shall have determined not to, or shall have otherwise ceased to, acquire or repair assets useful in the Borrower’s business with all or any portion of the relevant Reinvestment Deferred Amount.
“Related Parties”: with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.
“Relevant Governmental Body”: the Federal Reserve Board and/or the NYFRB, or a committee officially endorsed or convened by the Federal Reserve Board and/or the NYFRB or, in each case, any successor thereto.
“Relevant Rate”: (i) with respect to any Term Benchmark Borrowing, the Term SOFR Rate or (ii) with respect to any RFR Borrowing, the Daily Simple SOFR, as applicable.
“Replaced Term Loans”: as defined in Section 10.1.
“Replacement Term Loans”: as defined in Section 10.1.
“Reportable Event”: any of the events set forth in Section 4043(c) of ERISA, with respect to a Pension Plan, other than those events as to which notice is waived pursuant to DOL Reg. Section 4043 as in effect on the Closing Date (no matter how such notice requirement may be changed in the future).
“Repricing Transaction”: (a) any prepayment of Term B Loans with the proceeds of a substantially concurrent incurrence of Indebtedness by any Group Member (other than any such incurrence in connection with a Transformative Acquisition) in respect of which the all-in yield is, on the date of such prepayment, lower than the all-in yield on such Term B Loans (with the all-in yield calculated by the Administrative Agent in accordance with standard market practice, taking into account, in each case, any interest rate floors, the Applicable Margin hereunder and the interest rate spreads under such Indebtedness, and any original issue discount and upfront fees applicable to or payable in respect of such Term Loans and such Indebtedness with the original issue discount and upfront fees being equated to interest rate assuming a four-year life to maturity of such Indebtedness (but excluding arrangement, structuring, underwriting, commitment, amendment or other fees regardless of whether paid in whole or in part to any or all lenders of such Indebtedness and any other fees that are not paid generally to all lenders of such Indebtedness)) and (b) any amendment, amendment and restatement or other modification to this Agreement that reduces the all-in yield (calculated as set forth in clause (a) above) of the Term B Loans (other than any such amendment, amendment and restatement or other modification effected in connection with a Transformative Acquisition).
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“Required Lenders”: at any time, the holders of more than 50% of (a) until the Closing Date, the Term B Commitments then in effect and (b) after the Closing Date, the aggregate unpaid principal amount of the Term Loans then outstanding.
“Requirement of Law”: as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Resolution Authority”: an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer”: the chief executive officer, president or chief financial officer of the Borrower, but in any event, with respect to financial matters, the chief financial officer of the Borrower.
“Restricted Debt Payment”: as defined in Section 7.8(a).
“Restricted Payments”: as defined in Section 7.6.
“Restricted Subsidiary”: any Subsidiary of the Borrower other than an Unrestricted Subsidiary.
“RFR Borrowing”: as to any Borrowing, the RFR Loans comprising such Borrowing.
“RFR Loan”: a Loan that bears interest at a rate based on the Daily Simple SOFR.
“Sanctioned Country”: at any time, a country, region or territory which is itself, or whose government is, the subject or target of any Sanctions (at the time of the Closing Date, Crimea, Kherson, so-called Donetsk People’s Republic, so-called Luhansk People’s Republic, and Zaporizhzhia regions of Ukraine, Cuba, Iran, North Korea and Syria).
“Sanctioned Person”: at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State or by the United Nations Security Council, the European Union, any European Union member state or HM’s Treasury of the United Kingdom, (b) any Person operating, organized or resident in a Sanctioned Country; (c) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b); or (d) any Person otherwise the subject or target of Sanctions.
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“Sanctions”: economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State or (b) the United Nations Security Council, the European Union, any European Union member state or HM’s Treasury of the United Kingdom.
“SEC”: the Securities and Exchange Commission, any successor thereto and any analogous Governmental Authority.
“Secured Parties”: as defined in the Guarantee and Collateral Agreement.
“Security Documents”: the collective reference to the Guarantee and Collateral Agreement, the Mortgages and all other security documents (including intellectual property security agreements) hereafter delivered to the Administrative Agent granting a Lien on any property of any Person to secure the obligations and liabilities of any Loan Party under any Loan Document.
“SOFR”: a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
“SOFR Administrator”: the NYFRB (or a successor administrator of the secured overnight financing rate).
“SOFR Administrator’s Website”: the NYFRB’s website, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“SOFR Determination Date”: as defined in the definition of “Daily Simple SOFR”.
“SOFR Rate Day”: as defined in the definition of “Daily Simple SOFR”.
“Solvent”: when used with respect to any Person, means that, as of any date of determination, (a) the fair value of the assets of such Person, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise, (b) the present fair saleable value of the assets of such Person will be greater than the amount that will be required to pay the probable liabilities on its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured, (c) such Person will be able to pay its debts and liabilities, subordinated, continent or otherwise, as such debts and liabilities become absolute and matured and (d) such Person will not have an unreasonably small capital with which to conduct the business in which it is engaged as such business is conducted as of such date of determination and proposed to be conducted following such date.
“Specified Acquisition Agreement Representations”: with respect to any acquisition contemplated by the Borrower or any Restricted Subsidiary, the representations made by or on behalf of the proposed target of such acquisition in the documentation governing such acquisition (the “Subject Acquisition Agreement”) that are material to the interests of the Lenders, but only to the extent that accuracy of any such representation is a condition to the obligations of the Borrower (or any affiliate thereof) to close under the Subject Acquisition Agreement or the Borrower (or an affiliate thereof) has the right (without regard to any notice requirement but giving effect to any applicable cure provisions) to terminate its obligations under the Subject Acquisition Agreement as a result of a breach of such representations in the Subject Acquisition Agreement.
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“Specified Representations”: the representations and warranties of the Borrower and the Subsidiary Guarantors set forth in Sections 4.3(a) and (c), 4.4(a), 4.5 (solely with respect to organizational or governing documents and agreements governing Material Indebtedness), 4.11, 4.14, 4.16, 4.19, 4.20 and 4.24.
“Subject Indebtedness”: as defined in Section 10.1.
“Subordinated Indebtedness”: any Indebtedness of any Group Member that is expressly subordinated in right of payment to the Obligations; provided that, for the avoidance of doubt, Indebtedness under the ABL Credit Agreement shall not be considered Subordinated Indebtedness.
“Subsidiary”: as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
“Subsidiary Guarantor”: (i) each Restricted Subsidiary of the Borrower that is a Domestic Subsidiary (other than any Immaterial Subsidiary, any CFC Holding Company or any Subsidiary of a Foreign Subsidiary or a CFC Holding Company) and (ii) each other Restricted Subsidiary that is an obligor under or guarantor in respect of the ABL Loans or any Permitted Refinancing in respect thereof.
“Swap Agreement”: any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or any of its Subsidiaries shall be a “Swap Agreement”.
“Swap Obligation”: with respect to any Person, any obligation to pay or perform under any Swap Agreement.
“Taxes”: all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Term B Commitment”: (x) prior to the First Amendment Effective Date, the Initial Term B Commitments and (y) on and after the First Amendment Effective Date, the New Term Loan Commitments.
“Term B Facility”: as defined in the definition of “Facility”.
“Term B Lender”: each Lender that holds a Term B Commitment or that holds a Term B Loan.
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“Term B Loan”: (x) prior to the First Amendment Effective Date, the Initial Term B Loans and (y) on and after the First Amendment Effective Date, the New Term Loans.
“Term B Percentage”: as to any Term B Lender at any time, the percentage which such Lender’s Term B Commitment then constitutes of the aggregate Term B Commitments (or, at any time after the Closing Date, the percentage which the aggregate principal amount of such Lender’s Term B Loans then outstanding constitutes of the aggregate principal amount of the Term B Loans then outstanding).
“Term Benchmark”: when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Term SOFR Rate.
“Term Lenders”: the collective reference to the Term B Lenders and the Incremental Term Lenders.
“Term Loan Refinancing Indebtedness”: as defined in Section 7.2(a).
“Term Loans”: the collective reference to the Term B Loans and the Incremental Term Loans.
“Term SOFR Administrator’s Website”: the CME Term SOFR Administrator’s website, currently at https://www.cmegroup.com/market-data/cme-group-benchmark-administration/term-sofr.html, or any successor source for the term Secured Overnight Financing Rate (SOFR) identified as such by the CME Term SOFR Administrator from time to time.
“Term SOFR Determination Day”: as defined in the definition of Term SOFR Reference Rate.
“Term SOFR Rate”: with respect to any Term Benchmark Borrowing and for any tenor comparable to the applicable Interest Period, the Term SOFR Reference Rate at approximately 5:00 a.m., Chicago time, two U.S. Government Securities Business Days prior to the commencement of such tenor comparable to the applicable Interest Period, as such rate is published by the CME Term SOFR Administrator on the Term SOFR Administrator’s Website; provided that if the Term SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.
“Term SOFR Reference Rate”: for any day and time (such day, the “Term SOFR Determination Day”), with respect to any Term Benchmark Borrowing denominated in Dollars and for any tenor comparable to the applicable Interest Period, the rate per annum published by the CME Term SOFR Administrator and identified by the Administrative Agent as the forward-looking term rate based on SOFR. If by 5:00 pm (New York City time) on such Term SOFR Determination Day, the “Term SOFR Reference Rate” for the applicable tenor has not been published by the CME Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Rate has not occurred, then, so long as such day is otherwise a U.S. Government Securities Business Day, the Term SOFR Reference Rate for such Term SOFR Determination Day will be the Term SOFR Reference Rate as published in respect of the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate was published by the CME Term SOFR Administrator, so long as such first preceding U.S. Government Securities Business Day is not more than five (5) U.S. Government Securities Business Days prior to such Term SOFR Determination Day.
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“Title Endorsements” as defined in Section 5.1(k).
“Trade Date”: with respect to any sale or assignment of rights by a Lender under this Agreement, the date on which such Lender entered into a binding agreement to sell or assign all or a portion of its rights under this Agreement.
“Transactions”: collectively, (a) the execution, delivery and performance by the Borrower and the other Loan Parties of this Agreement, the borrowing of Loans hereunder and the use of proceeds thereof and (b) the execution, delivery and performance by the Borrower and the other Loan Parties of the ABL Credit Agreement, the borrowing of ABL Loans thereunder and the use of proceeds thereof.
“Transferee”: any Assignee or Participant.
“Transformative Acquisition”: any acquisition or Investment by the Borrower or any Restricted Subsidiary that is either (a) not permitted by the terms of this Agreement immediately prior to the consummation of such acquisition or Investment or (b) if permitted by the terms of this Agreement immediately prior to the consummation of such acquisition or Investment, would not provide the Borrower and its Restricted Subsidiaries with adequate flexibility under this Agreement for the continuation and/or expansion of their combined operations following such consummation (as determined by the Borrower acting in good faith).
“Type”: when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Term SOFR Rate, ABR or the Daily Simple SOFR.
“UK Financial Institutions”: any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority”: the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
“United States”: the United States of America.
“Unrestricted Cash”: unrestricted cash and Cash Equivalents owned by any Group Member and not controlled by or subject to any Lien or other preferential arrangement in favor of any creditor (other than Liens created under the Security Documents or the ABL Security Documents and Liens of the type referred to in Section 7.3(u) or Section 7.3(x)).
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“Unrestricted Subsidiary”: (a) any Subsidiary of the Borrower that is designated as an Unrestricted Subsidiary by the Borrower pursuant to Section 6.11 subsequent to the Closing Date and (b) any Subsidiary of an Unrestricted Subsidiary.
“U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) 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.
“U.S. Person”: a “United States person” within the meaning of Section 7701(a)(30) of the Code.
“U.S. Tax Compliance Certificate”: as defined in Section 2.19(f)(ii)(B).
“Voluntary Prepayment Amount”: as of any date, an amount equal to (a) the aggregate principal amount of all optional prepayments of Term Loans, Incremental Term Loans and Incremental Equivalent Indebtedness, in each case, made after the Closing Date and prior to such date (excluding prepayments made with the proceeds of long-term Indebtedness) less (b) the aggregate principal amount of Incremental Term Loans and Incremental Equivalent Indebtedness established prior to such date in reliance on the Voluntary Prepayment Amount.
“Wholly Owned Subsidiary”: as to any Person, any other Person all of the Capital Stock of which (other than directors’ qualifying shares required by law) is owned by such Person directly and/or through other Wholly Owned Subsidiaries.
“Withdrawal Liability”: any liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are used in sections 4203 and 4205, respectively, of ERISA.
“Write-Down and Conversion Powers”: (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
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and the result of any of the foregoing is to increase the cost to such Lender or such other Credit Party, by an amount that such Lender or other Credit Party deems to be material, of making, converting into, continuing or maintaining Loans, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender or such other Credit Party, upon its demand, any additional amounts necessary to compensate such Lender or such other Credit Party for such increased cost or reduced amount receivable. If any Lender or such other Credit Party becomes entitled to claim any additional amounts pursuant to this paragraph, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled.
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Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
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The Administrative Agent and the Lenders hereby consent to the Auction Purchase Offers and the other transactions effected pursuant to and in accordance with the terms of this Section 2.25 (provided that no Lender shall have an obligation to participate in any such Auction Purchase Offer). For the avoidance of doubt, it is understood and agreed that the provisions of Section 2.17 will not apply to the purchases of Term Loans pursuant to and in accordance with the provisions of this Section 2.25. The Auction Manager acting in its capacity as such hereunder shall be entitled to the benefits of the provisions of Article VIII and Article IX to the same extent as if each reference therein to the “Administrative Agent” were a reference to the Auction Manager, and the Administrative Agent shall cooperate with the Auction Manager as reasonably requested by the Auction Manager in order to enable it to perform its responsibilities and duties in connection with each Auction Purchase Offer.
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SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this Agreement and to make the Loans, the Borrower hereby represents and warrants to the Administrative Agent and each Lender that:
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SECTION 5. CONDITIONS PRECEDENT
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Notwithstanding anything to the contrary contained in this Section 5.1(k) (other than with respect to Section 5.1(k)(vi)), if the Loan Parties have used commercially reasonable efforts (without undue burden and expense) to satisfy the requirements set forth in this Section 5.1(k) and such requirements are not satisfied as of the Closing Date, the satisfaction of such requirements shall not be a condition to the agreement of each Lender to make the initial extension of credit requested to be made by it (but shall be required to be satisfied within 90 days of the Closing Date (or such later date as the Administrative Agent may agree in its reasonable discretion)); provided that Section 5.1(k)(vi) shall be satisfied as of the Closing Date.
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For the purpose of determining compliance with the conditions specified in this Section 5.1, each Lender that has signed this Agreement shall be deemed to have accepted, and to be satisfied with, each document or other matter required under this Section 5.1 unless the Administrative Agent shall have received written notice from such Lender prior to the proposed Closing Date specifying its objection thereto.
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Each borrowing by the Borrower hereunder (other than the initial extensions of credit on the Closing Date) shall constitute a representation and warranty by the Borrower as of the date of such extension of credit that the conditions contained in this Section 5.2 have been satisfied. For the avoidance of doubt, the foregoing conditions set forth in this Section 5.2 shall be subject to the limitations set forth in Sections 1.3 and 2.24 to the extent the proceeds of any Incremental Term Facility are being used to finance a Limited Condition Acquisition.
The Borrower hereby agrees that, so long as the Term B Commitments remain in effect or any Loan or other amount is owing to any Lender or the Administrative Agent hereunder, the Borrower shall and, in the case of Sections 6.3 through 6.8, 6.10 and 6.13, shall cause each of its Restricted Subsidiaries to and, in the case of Section 6.14, shall cause each of its Domestic Subsidiaries to:
All such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied (except as approved by such accountants or officer, as the case may be, and disclosed in reasonable detail therein) consistently throughout the periods reflected therein and with prior periods.
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Documents required to be delivered pursuant to Section 6.1(a), (b) or (c) or Section 6.2(c) or (d) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which (i) such documents are posted on the Borrower’s behalf on IntraLinks/IntraAgency or another relevant Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent) or (ii) such documents are filed of record with the SEC; provided that, upon written request by the Administrative Agent, the Borrower shall deliver paper copies of such documents to the Administrative Agent for further distribution to each Lender until a written request to cease delivering paper copies is given by the Administrative Agent. The Administrative Agent shall have no obligation to request the delivery of or to maintain or deliver to Lenders paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery, and each Lender shall be solely responsible for timely accessing posted documents or requesting delivery of paper copies of such documents from the Administrative Agent and maintaining its copies of such documents.
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Each notice pursuant to this Section 6.7 shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the relevant Group Member proposes to take with respect thereto.
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The designation of any Restricted Subsidiary as an Unrestricted Subsidiary shall constitute an Investment by the Borrower in such Subsidiary on the date of designation in an amount equal to the fair market value of the Borrower’s Investment therein (as determined reasonably and in good faith by a Responsible Officer). The designation of any Unrestricted Subsidiary as a Restricted Subsidiary shall constitute the incurrence at the time of designation of any Investment, Indebtedness or Liens of such Subsidiary existing at such time.
The Borrower hereby agrees that, so long as the Term B Commitments remain in effect or any Loan or other amount is owing to any Lender or the Administrative Agent hereunder, the Borrower shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly:
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provided that notwithstanding anything to the contrary in this Section 7.2, no Loan Party shall have any Guarantee Obligations in respect of Indebtedness of a Restricted Subsidiary incurred pursuant to Section 7.2(s).
For purposes of determining compliance with this Section 7.2, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Indebtedness described in clauses (a) through (z) above, the Borrower may, in its sole discretion, divide or classify or later divide, classify or reclassify all or a portion of such item of Indebtedness in a manner that complies with this Section 7.2 and will only be required to include the amount and type of such Indebtedness in one or more of the above clauses; provided that all Indebtedness outstanding under the Loan Documents and the ABL Credit Agreement and, in each case, any Permitted Refinancing thereof, will at all times be deemed to be outstanding in reliance only on the exception in Section 7.2(a) and Section 7.2(b), respectively.
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For purposes of determining compliance with this Section 7.3, in the event that a Lien securing an item of Indebtedness (or any portion thereof) meets the criteria for more than one of the categories of Liens described in clauses (a) through (aa) above, the Borrower may, in its sole discretion, divide or classify or later divide, classify or reclassify all or a portion of such Lien in a manner that complies with this Section 7.3 and will only be required to include the amount and type of such Lien in one or more of the above clauses; provided that all Liens securing Indebtedness outstanding under the Loan Documents and the ABL Credit Agreement, and, in each case, any Permitted Refinancing thereof, will at all times be deemed to be outstanding in reliance only on the exception in Section 7.3(h).
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For purposes of determining compliance with this Section 7.6, in the event that a Restricted Payment meets the criteria of more than one of the categories of Restricted Payments described in clauses (a) through (j) above, the Borrower may, in its sole discretion, divide or classify or later divide, classify or reclassify all or a portion of such Restricted Payment in a manner that complies with this Section 7.6 and will only be required to include the amount and type of such Restricted Payment in one or more of the above clauses.
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For purposes of determining compliance with this Section 7.7, in the event that an Investment meets the criteria of more than one of the categories of Investments described in clauses (a) through (w) above, the Borrower may, in its sole discretion, divide or classify or later divide, classify or reclassify all or a portion of such Investment in a manner that complies with this Section 7.7 and will only be required to include the amount and type of such Investment in one or more of the above clauses.
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For purposes of determining compliance with this Section 7.8(a), in the event that a Restricted Debt Payment meets the criteria of more than one of the categories of Restricted Debt Payments described in clauses (i) through (vii) above, the Borrower may, in its sole discretion, divide or classify or later divide, classify or reclassify all or a portion of such Restricted Debt Payment in a manner that complies with this Section 7.8(a) and will only be required to include the amount and type of such Restricted Debt Payment in one or more of the above clauses.
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SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
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Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived by the Borrower.
In addition to any other rights and remedies granted to the Administrative Agent and the Lenders in the Loan Documents, the Administrative Agent on behalf of the Lenders may exercise all rights and remedies of a secured party under the New York Uniform Commercial Code or any other applicable law. Without limiting the generality of the foregoing, the Administrative Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Loan Party or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, or consent to the use by the Loan Parties of any cash collateral arising in respect of the Collateral on such terms as the Administrative Agent deems reasonable, and/or may forthwith sell, lease, assign give an option or options to purchase or otherwise dispose of and deliver, or acquire by credit bid on behalf of the Lenders, the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of the Administrative Agent or any Lender or elsewhere, upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery, all without assumption of any credit risk. The Administrative Agent or any Lender shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in any Loan Party, which right or equity is hereby waived and released. The Borrower further agrees, at the Administrative Agent’s request, to assemble, or cause the applicable Loan Party to assemble, the Collateral and make it available to the Administrative Agent at places which the Administrative Agent shall reasonably select, whether at the Borrower’s or such Loan Party’s premises or elsewhere. The Administrative Agent shall apply the net proceeds of any action taken by it pursuant to this Section 8, after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Collateral or in any other way relating to the Collateral or the rights of the Administrative Agent and the Lenders hereunder, including reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the obligations of the Loan Parties under the Loan Documents, in such order as the Administrative Agent may elect, and only after such application and after the payment by the Administrative Agent of any other amount required by any provision of law, including Section 9-615(a)(3) of the New York UCC, need the Administrative Agent account for the surplus, if any, to any Loan Party.
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To the extent permitted by applicable law, the Borrower on behalf of itself and the other Loan Parties, waives all claims, damages and demands it or any other Loan Party may acquire against the Administrative Agent or any Lender arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition.
SECTION 9. THE AGENTS
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Notwithstanding the foregoing, this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and the Borrower (a) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share in the benefits of this Agreement and the other Loan Documents with the Term Loans and the accrued interest and fees in respect thereof and (b) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders and Majority Facility Lenders.
Notwithstanding the foregoing, this Agreement may be amended in form reasonably satisfactory to the Administrative Agent with the written consent of the Borrower and the Lenders (provided that if the consent of the Administrative Agent would be required for an assignment to any such Lender pursuant Section 10.6, such Lender must be satisfactory to the Administrative Agent) providing the relevant Replacement Term Loans (as defined below) to permit the refinancing, replacement or modification of all or any portion of the outstanding Term Loans (“Replaced Term Loans”) with a replacement term loan hereunder (“Replacement Term Loans”); provided, that (a) the aggregate principal amount of such Replacement Term Loans shall not exceed the aggregate principal amount of such Replaced Term Loans plus an amount equal to the unpaid accrued interest and premium thereon at such time plus reasonable fees and expenses (including original issue discount and upfront fees) incurred in connection with such replacement, (b) the terms of Replacement Term Loans (excluding pricing, fees, rate floors and optional prepayment or redemption terms) reflect market terms at the time of incurrence thereof as reasonably determined by the Borrower (but in no event shall any Replacement Term Loans have covenants and events of default, taken as a whole, materially more restrictive than those applicable to the Replaced Term Loans (other than any covenants or other provisions applicable only to periods after the Latest Maturity Date (as in effect on the date of incurrence of such Replacement Term Loans))), (c) the maturity date of such Replacement Term Loans shall not be earlier than the maturity date of the Replaced Term Loans, (d) the Applicable Margin for such Replacement Term Loans shall not be higher than the Applicable Margin for such Replaced Term Loans, (e) the weighted average life to maturity of such Replacement Term Loans shall not be shorter than the weighted average life to maturity of such Replaced Term Loans at the time of such refinancing and (f) such Replacement Term Loans shall share ratably or less than ratably with any prepayments or repayments of the Replaced Term Loans. Each of the parties hereto hereby agrees that this Agreement and the other Loan Documents may be amended to include Replacement Term Loans without the consent of any other Lenders, to the extent necessary to (i) reflect the terms of such Replacement Term Loans incurred pursuant to this paragraph and (ii) effect such other amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the provisions of this paragraph.
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Furthermore, notwithstanding the foregoing, (i) the Administrative Agent, with the consent of the Borrower, may amend, modify or supplement any Loan Document without the consent of any Lender or the Required Lenders in order to correct, amend or cure any ambiguity, inconsistency or defect or correct any typographical error or other manifest error in any Loan Document and (ii) the Loan Documents may be amended in accordance with Sections 2.24, 2.25 and 2.26.
Borrower: |
TTM Technologies, Inc. 200 East Sandpointe, Suite 400 Santa Ana, California 92707Attention: Todd Schull Facsimile: (714) 784-3712 E-mail: Dan.Boehle@ttmtech.com |
with a copy to: |
Baker McKenzie LLP Attention: Kevin Whittam Kevin.Whittam@bakermckenzie.com
|
Administrative Agent: |
JPMorgan Chase Bank, N.A. 131 S. Dearborn St, Floor 04 Chicago, IL, 60603-5506 Attention: Loan and Agency Servicing E-mail: jpm.agency.cri@jpmorgan.com
Agency Withholding Tax Inquiries: Email: agency.tax.reporting@jpmorgan.com
Agency Compliance/ Financials/ Virtual Data rooms: Email: covenant.compliance@jpmchase.com |
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provided that any notice, request or demand to or upon the Administrative Agent or the Lenders shall not be effective until received.
Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Section 2 unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.
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For the purposes of this Section 10.6, “Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and 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.
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(ii) Notwithstanding anything to the contrary contained in this Agreement, Disqualified Lenders (A) will not (x) have the right to receive information, reports or other materials provided to Lenders by the Borrower, the Administrative Agent or any other Lender, (y) attend or participate in meetings attended by the Lenders and the Administrative Agent, or (z) access any electronic site established for the Lenders or confidential communications from counsel to or financial advisors of the Administrative Agent or the Lenders and (B) (x) for purposes of any consent to any amendment, waiver or modification of, or any action under, and for the purpose of any direction to the Administrative Agent or any Lender to undertake any action (or refrain from taking any action) under this Agreement or any other Loan Document, each Disqualified Lender will be deemed to have consented in the same proportion as the Lenders that are not Disqualified Lender consented to such matter, and (y) for purposes of voting on any Bankruptcy Plan, each Disqualified Lender party hereto hereby agrees (1) not to vote on such Bankruptcy Plan, (2) if such Disqualified Lender does vote on such Bankruptcy Plan notwithstanding the restriction in the foregoing clause (1), such vote will be deemed not to be in good faith and shall be “designated” pursuant to Section 1126(e) of the Bankruptcy Code (or any similar provision in any other Debtor Relief Laws), and such vote shall not be counted in determining whether the applicable class has accepted or rejected such Bankruptcy Plan in accordance with Section 1126(c) of the Bankruptcy Code (or any similar provision in any other Debtor Relief Laws) and (3) not to contest any request by any party for a determination by the Bankruptcy Court (or other applicable court of competent jurisdiction) effectuating the foregoing clause (2).
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Each Lender acknowledges that information furnished to it pursuant to this Agreement or the other Loan Documents may include material non-public information concerning the Borrower and its Affiliates and their related parties or their respective securities, and confirms that it has developed compliance procedures regarding the use of material non-public information and that it will handle such material non-public information in accordance with those procedures and applicable law, including Federal and state securities laws.
All information, including requests for waivers and amendments, furnished by the Borrower or the Administrative Agent pursuant to, or in the course of administering, this Agreement or the other Loan Documents will be syndicate-level information, which may contain material non-public information about the Borrower and its Affiliates and their related parties or their respective securities. Accordingly, each Lender represents to the Borrower and the Administrative Agent that it has identified in its administrative questionnaire a credit contact who may receive information that may contain material non-public information in accordance with its compliance procedures and applicable law, including Federal and state securities laws.
The Borrower represents and warrants that it and its Subsidiaries either (i) have no registered or publicly traded securities outstanding, or (ii) files its financial statements with the SEC and/or makes its financial statements available to potential holders of its 144A securities, and, accordingly, the Borrower hereby (i) authorizes the Administrative Agent to make the financial statements to be provided under Section 6.1(a) and (b), along with the Loan Documents, available to Public-Siders and (ii) agrees that at the time such financial statements are provided hereunder, they shall already have been made available to holders of its securities. The Borrower will not request that any other material be posted to Public-Siders without expressly representing and warranting to the Administrative Agent in writing that such materials do not constitute material non-public information within the meaning of the federal securities laws or that the Borrower and its Subsidiaries have no outstanding publicly traded securities, including 144A securities.
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For the avoidance of doubt, the Projections shall not be posted to Public-Siders.
The Borrower hereby acknowledges that (a) the Administrative Agent will make available to the Lenders materials and/or information provided by or on behalf of the Loan Parties hereunder (collectively, the “Borrower Materials”) by posting the Borrower Materials on IntraLinks/IntraAgency or another similar electronic system (the “Platform”) and (b) certain of the Lenders may be Public-Siders. If any Borrower Materials are designated by the Loan Parties as “PRIVATE”, such Borrower Materials will not be made available to that portion of the Platform designated “Public Investor,” which is intended to contain only information that is either publicly available or not material information (though it may be sensitive and proprietary) with respect to Borrower, its Subsidiaries or their securities for purposes of federal and state securities laws. The Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PRIVATE” or “CONFIDENTIAL” as not containing any material non-public information with respect to the Borrower, its Subsidiaries or their securities for purposes of federal and state securities laws.
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Exhibit 31.1
CERTIFICATION
I, Thomas T. Edman, certify that:
1. I have reviewed this quarterly report on Form 10-Q of TTM Technologies, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ Thomas T. Edman |
|
Thomas T. Edman |
President and Chief Executive Officer |
(Principal Executive Officer) |
August 6, 2024
Exhibit 31.2
CERTIFICATION
I, Daniel L. Boehle, certify that:
1. I have reviewed this quarterly report on Form 10-Q of TTM Technologies, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ Daniel L. Boehle |
|
Daniel L. Boehle |
Executive Vice President and Chief Financial Officer |
(Principal Financial Officer and Principal |
August 6, 2024
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of TTM Technologies, Inc. (the “Company”) for the quarter ended July 1, 2024, as filed with the Securities and Exchange Commission (the “Report”), I, Thomas T. Edman, President and Chief Executive Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
By: |
|
/s/ Thomas T. Edman |
|
|
|
|
|
Thomas T. Edman |
|
|
President and Chief Executive Officer |
|
|
(Principal Executive Officer) |
August 6, 2024
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of TTM Technologies, Inc. (the “Company”) for the quarter ended July 1, 2024, as filed with the Securities and Exchange Commission (the “Report”), I, Daniel L. Boehle, Executive Vice President and Chief Financial Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
By: |
|
/s/ Daniel L. Boehle |
|
|
|
|
|
Daniel L. Boehle |
|
|
Executive Vice President and Chief Financial Officer |
|
|
(Principal Financial Officer and Principal |
August 6, 2024