VeriSign Inc.
12/08/2023 | Press release | Distributed by Public on 12/08/2023 15:04
Material Agreement - Form 8-K
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Item 1.01
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Entry into a Material Definitive Agreement.
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On December 6, 2023, VeriSign, Inc. (the "Company") entered into a Credit Agreement (the "New Credit Agreement") among the Company, any borrowing subsidiaries of the Company that are from time to time made party thereto, JPMorgan Chase Bank, N.A., as administrative agent (the "Administrative Agent"), and the lenders party thereto (the "Lenders").
The New Credit Agreement replaced the Credit Agreement, dated as of December 12, 2019, among the Company, the borrowing subsidiaries party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (the "Terminated Credit Agreement"), which is further discussed in Item 1.02 below.
The New Credit Agreement provides for a $200 million (the "Commitment Amount") committed unsecured revolving credit facility (the "New Facility"), under which the Company and certain designated subsidiaries may be borrowers (the "Borrowers"). Loans may be extended in US dollars and certain specified alternative currencies. The New Facility includes (1) a $35 million sublimit for the issuance of standby letters of credit for the account of any Borrower or any of its subsidiaries, (2) a $50 million sublimit for swingline loans to the Borrowers, and (3) a $50 million sublimit for loans in alternative currencies.
Loans under the New Facility will bear interest at a rate per annum equal to the following rates (capitalized terms have the meanings set forth in the New Credit Agreement): (i) for ABR loans, a rate equal to the greatest of (a) the Prime Rate, (b) the Federal Funds Effective Rate or the Overnight Bank Funding Rate, as applicable, plus 0.5%, and (c) the Adjusted Term SOFR rate for a one month interest period plus 1%, plus, in each case, a margin of between 0.00% and 0.625% depending on the Company's ratio of Consolidated Funded Adjusted Indebtedness to Consolidated EBITDA as calculated pursuant to the Facility (the "Leverage Ratio") and on Moody's, S&P and Fitch ratings of the Company's senior unsecured non-credit enhanced long-term indebtedness for borrowed money (the "Applicable Ratings"); (ii) for Term SOFR loans, the Adjusted Term SOFR rate plus a margin of between 1.00% and 1.625%, depending on the Leverage Ratio and the Applicable Ratings; and (iii) for EURIBOR loans, the Adjusted EURIBO rate plus a margin of between 1.00% and 1.625%, depending on the Leverage Ratio and the Applicable Ratings.
The full amount of the New Facility is undrawn as of the date hereof. Any borrowings under the New Facility may be used for working capital purposes, to finance acquisitions, stock repurchases, and capital expenditures, and other general corporate purposes. Letters of credit will be issued for general corporate purposes.
The Company is required to pay the Lenders under the New Credit Agreement an undrawn commitment fee at a rate per annum of between 0.090% and 0.225%, depending on the Leverage Ratio and the Applicable Ratings, payable quarterly in arrears. The Company is also required to pay, quarterly in arrears certain fees to the Lenders in connection with the letters of credit. The Company is further required to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Company and the Administrative Agent.
The New Facility has a maturity date of December 6, 2028 at which time outstanding borrowings under the New Facility will be due and the commitments under the New Facility will terminate. The Company may request up to two one-year extensions of the maturity date, with each such extension subject to the approval of the extending Lenders, which must represent greater than 50% of the sum of the revolving loans in the aggregate then outstanding and the unused commitments in the aggregate at such time under the New Facility, and the commitment of any Lender that does not consent to an extension of the maturity date will be terminated on the then-effective maturity date. The Company may optionally prepay loans in whole or in part under the New Credit Agreement at any time without penalty but subject to payment of any broken-funding costs of the Lenders. The Company may also, at any time, terminate the commitments or permanently reduce them from time to time.
The New Credit Agreement contains customary representations and warranties, as well as affirmative and negative covenants. Affirmative covenants include, among others, financial and other reporting requirements, provision of notices of material events, maintenance of existence, maintenance of intellectual property, payment of obligations, maintenance of properties, maintenance of insurance, maintenance of books and records and compliance with laws.
Negative covenants include, among others, limitations on the incurrence of additional indebtedness by subsidiaries that are not guarantors under the New Credit Agreement, limitations on the incurrence of liens, limitations on mergers and acquisitions, limitations on changing the business of the Company, any other Borrower or any subsidiary that is a borrower, limitations on sale/leaseback transactions, and limitations on the use of proceeds from borrowings under the New Facility.
The New Credit Agreement includes a financial covenant that the Company not permit the Leverage Ratio at any time to exceed 4.00 to 1.00, which may be increased (no more than twice over the term of the New Credit Agreement) to 4.50 to 1.00 for four quarters following consummation of an acquisition involving consideration of $500 million or more.
The New Credit Agreement contains customary events of default, including among others, non-payment of principal, interest or other amounts when due (subject to a grace period for payment of interest and certain other amounts), inaccuracy of representations and warranties, violation of covenants, cross-payment-defaults and cross-acceleration with respect to certain
other indebtedness, bankruptcy, insolvency or inability to pay debts, certain undischarged judgments, the occurrence of certain ERISA events, failure of any guarantee purported to be created under any Loan Document (as defined in the New Credit Agreement) to be in full force and effect, or a Change of Control (as defined in the New Credit Agreement). Upon the occurrence and during the continuance of an event of default under the New Credit Agreement, the Lenders may declare the loans and all other obligations under the New Credit Agreement immediately due and payable and may terminate the commitments. A bankruptcy event of default causes such obligations automatically to become immediately due and payable and the commitments automatically to terminate.
The Company may from time to time request Lenders to agree on a discretionary basis to increase the Commitment Amount by up to an aggregate of $150 million during the term of the New Facility.
Certain Lenders and/or their affiliates have, from time to time, performed, and may in the future perform, various financial advisory, commercial banking and investment banking services for the Company, for which they received or will receive customary fees and expenses. In addition, certain Lenders and/or their affiliates have, from time to time, purchased, and may in the future, purchase services from the Company for which they paid fees in the ordinary course. The Lenders party to the New Credit Agreement were also lenders under the Terminated Credit Agreement, which is further discussed in Item 1.02 below.
The foregoing description of the New Credit Agreement is qualified in its entirety by reference to that agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.