Item
2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On
June 5, 2019 (the “Closing Date”), the Company, through its subsidiary, HPIH, entered into a Credit Agreement (the
“Credit Agreement”) among HPIH, as the Borrower, the Company, and certain of the Company’s affiliates as guarantors
(the “Guarantors”), Bank of America, N.A., as Administrative Agent, Swingline Lender and L/C Issuer (the “Administrative
Agent”), SunTrust Bank, as Syndication Agent, Royal Bank of Canada, as Co-Documentation Agent and the other parties identified
therein as Lenders (the “Lenders”). The Credit Agreement provides for an aggregate principal amount of up to $215
million, which consists of: (i) a $65 million, three-year revolving credit facility (the “Revolving Credit Facility”),
which includes a $10 million sublimit for the issuance of standby letters of credit (each, a “Letter of Credit”) and
a $5 million sublimit for swingline loans (each, a “Swingline Loan”), and (ii) a $150 million term loan facility,
all of which will be drawn on the Closing Date (the “Term Loan Facility” and, together with the Revolving Credit Facility,
the “Senior Credit Facility”).
The
proceeds of the Senior Credit Facility shall be used for: (i) general corporate purposes, including to fund ongoing working capital
needs, capital expenditures and other lawful corporate purposes, (ii) to refinance that certain Credit Agreement, dated as of
July 17, 2017, by and among HPIH, the Company, the guarantors party thereto and SunTrust Bank, as lender (as amended or otherwise
modified from time to time, the “Existing Credit Agreement”), and (iii) to finance permitted acquisitions. On June
5, 2019, the Company used approximately $65 million of the proceeds to refinance the prior credit facility with SunTrust and approximately
$50 million to fund the cash portion of the purchase price under the above-described Purchase Agreement.
The
Revolving Credit Facility matures on the third anniversary of the Closing Date, June 5, 2022 (the “Maturity Date”),
and the Term Loan Facility is subject to quarterly amortization of principal, with 5% of the initial aggregate term loan to be
payable in the first year, 7.5% of the initial aggregate term loan to be payable in the second year, 10% of the initial aggregate
term loan to be payable in the final year, and final payment of all amounts outstanding, plus accrued interest, due on the Maturity
Date.
Borrowings
under the Senior Credit Facility (other than in respect of Swingline Loans) can either be, at HPIH’s election: (i) at the
Base Rate (which is the highest of the Bank of America prime rate, the federal funds rate plus 0.50%, and LIBOR index rate plus
1.00%) plus the Applicable Margin or (ii) at LIBOR (as defined in the Credit Agreement) plus the Applicable Margin. The “Applicable
Margin” as defined under the Credit Agreement means, (a) until receipt by the Administrative Agent of the compliance certificate
for the fiscal quarter ending September 30, 2019, 2.00% per annum, in the case of LIBOR loans, and 1.00% per annum, in the case
of Base Rate loans, and (b) thereafter, a percentage determined based upon HPIH’s Consolidated Total Leverage Ratio (as
defined in the Credit Agreement) ranging from 1.50% to 2.00%, in the case of LIBOR loans, and .50% to 1.00%, in the case of Base
Rate loans. Interest accrued on each Base Rate Loan (as defined in the Credit Agreement) is payable in arrears on the last day
of each calendar quarter and on the Maturity Date. Interest accrued on each Eurodollar Loan (as defined in the Credit Agreement)
is payable on the last day of the applicable interest period, or every three months, whichever comes sooner, and on the Maturity
Date.
The
Credit Facility is secured by a valid and perfected first priority lien and security interest in each of the following: (i) all
present and future shares of capital stock of (or other ownership or profits interests in) each of HPIHs’ present and future
subsidiaries (subject to certain exceptions), (ii) all present and future intercompany debt of HPIH and each Guarantor, (iii)
all of the present and future personal property and assets of HPIH and each Guarantor and (iv) all proceeds and products of the
property and assets described in clauses (i), (ii) and (iii) above.
The
Credit Agreement contains customary covenants, including, but not limited to, (i) a minimum consolidated interest coverage ratio
and a maximum consolidated leverage ratio and (ii) restrictions on the incurrence of debt, investments, fundamental changes, sale
and leaseback transactions, transactions with affiliates, hedging transactions, restrictive agreements, mergers, consolidations
and sales of assets. The Credit Agreement also includes customary representations and warranties and events of default, substantially
similar to those in the Existing Credit Agreement.
The
foregoing description of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to
the Credit Agreement filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated into this Item 2.03 by reference.