Vestis (US:VSTS)2025-05-06 20:12Amendment No. 2 to Credit Agreement This amendment, dated May 1, 2025, modifies the Credit Agreement from September 29, 2023, between VESTIS CORPORATION, its Canadian subsidiary, lenders, and JPMorgan Chase Bank, N.A., becoming effective upon specific conditions Introduction and Effectiveness This document, dated May 1, 2025, amends the Credit Agreement between VESTIS CORPORATION, its Canadian subsidiary, lenders, and JPMorgan Chase Bank, N.A., outlining terms and effectiveness conditions - The amendment, dated May 1, 2025, modifies the Credit Agreement originally established on September 29, 20231 - The parties include VESTIS CORPORATION (U.S. Borrower), CANADIAN LINEN AND UNIFORM SERVICE CORP. (Canadian Borrower), subsidiary guarantors, lenders, and JPMorgan Chase Bank, N.A. as agent1 - The amendment becomes effective upon satisfaction of conditions including execution by required parties, receipt of an Officers' Certificate, payment of fees, accurate representations, and absence of default345 - The amendment and Credit Agreement are governed by the laws of the State of New York9 Credit Agreement This agreement, dated September 29, 2023, establishes credit facilities for VESTIS CORPORATION and its Canadian subsidiary, detailing definitions, credit mechanics, representations, conditions, covenants, and default provisions Preamble The Credit Agreement, dated September 29, 2023, outlines initial credit facilities for VESTIS CORPORATION and its Canadian subsidiary, including Term A-1, Term A-2, and Revolving Commitments, with proceeds primarily for intercompany loan repayment and general corporate purposes Initial Credit Facilities | Facility | Borrower | Amount (USD) | | :--- | :--- | :--- | | Term A-1 Facility | U.S. Borrower | $800 million | | Term A-2 Facility | U.S. Borrower | $700 million | | Initial Revolving Commitments | Borrowers | $300 million | - Initial Term Loan proceeds funded a $1.486 billion intercompany loan to AUCA Group for repaying a note owed to Aramark Services, Inc., and covering related expenses68 - Initial Revolving Loan proceeds are designated for general corporate purposes68 ARTICLE I: DEFINITIONS This article defines all capitalized terms within the Credit Agreement, encompassing financial, legal, and operational terms, including loan types, key financial metrics, events, and interest rate benchmarks - A Change of Control is defined as the acquisition of 40% or more of the U.S. Borrower's Voting Stock by any person or group153 - EBITDA definition allows add-backs to Consolidated Net Income, including taxes, interest, D&A, restructuring charges, and projected cost savings up to 20% of EBITDA200201 - Key leverage ratios defined for covenants include Consolidated First Lien Net Leverage Ratio, Consolidated Secured Net Leverage Ratio, and Consolidated Total Net Leverage Ratio166170173 - The Maximum Incremental Amount for new facilities is the sum of a fixed basket (greater of $375 million or 100% of EBITDA), voluntary prepayments, and an unlimited amount subject to a pro forma Consolidated First Lien Net Leverage Ratio of 4.00 to 1.00296 ARTICLE II: THE CREDITS This article details credit facility mechanics, including lender commitments, borrowing procedures, repayment schedules for Term A-2 and Term B-1 loans, optional and mandatory prepayments, fees, interest calculations, and provisions for incremental facilities and defaulting lenders Term Loan Repayment Schedule | Loan Facility | Quarterly Amortization | Commencement | Final Maturity Date | | :--- | :--- | :--- | :--- | | Term A-2 Loans | 1.25% of original principal | December 2023 | September 29, 2028 | | Term B-1 Loans | 0.25% of original principal | June 2024 | February 22, 2031 | - Mandatory prepayments are required from a percentage of Excess Cash Flow (ECF), ranging from 0% to 50% based on the Consolidated Secured Net Leverage Ratio199533 - A prepayment premium of 1.0% applies to any Repricing Transaction involving Term B-1 Loans if within six months of Amendment No. 1 Effective Date530 - The agreement allows for New Term Commitments and New Revolving Commitments up to the Maximum Incremental Amount, subject to no existing default and pro forma compliance with financial covenants606 ARTICLE III: REPRESENTATIONS AND WARRANTIES This article details Loan Parties' representations and warranties, confirming legal and financial standing, including organization, authority, compliance with laws, solvency, validity of security interests, and absence of Material Adverse Effect since February 22, 2023 - The Loan Parties represent no Material Adverse Effect has occurred since February 22, 2023627 - The company represents it is solvent on a consolidated basis post-Transactions, with assets exceeding liabilities and ability to pay debts as they mature647 - The Loan Parties represent Collateral Documents create valid and perfected first-priority liens on the Collateral, securing obligations652 - The company represents policies are implemented to ensure compliance with Anti-Corruption Laws and Sanctions, prohibiting loan proceeds use in violation657 ARTICLE IV: CONDITIONS This article outlines conditions for credit agreement effectiveness and subsequent extensions, requiring executed loan documents, legal opinions, financial statements, fee payments, and continued accuracy of representations and warranties, plus absence of default - Initial effectiveness required Agent's receipt of executed Loan Documents, favorable legal opinions, financial statements, closing certificates, and all required fees661663664666 - A key effectiveness condition was evidence of Loan Parties' obligations and liens under the RemainCo Credit Agreement being released upon Intermediate Distributions670 - Each subsequent borrowing or letter of credit issuance requires all representations and warranties to be true and correct, and no continuing Default or Event of Default673 ARTICLE V: AFFIRMATIVE COVENANTS This article details Loan Parties' ongoing obligations, including timely delivery of financial statements and compliance certificates, notice of material events, maintaining corporate existence, paying taxes, legal compliance, permitted use of loan proceeds, and granting security interests in new assets and subsidiaries - The U.S. Borrower must deliver audited annual financial statements within 90 days of fiscal year-end (120 days for FY2024) and unaudited quarterly statements within 45 days of quarter-end677 - The U.S. Borrower must promptly notify the Agent of any Event of Default or Default683 - Loan proceeds must be used only for specified purposes, not violating margin regulations, anti-corruption laws, or sanctions691694 - The U.S. Borrower must cause new Domestic Subsidiaries (unless excluded) to become Loan Guarantors and grant liens on their property within 60 days of becoming a subsidiary697 ARTICLE VI: NEGATIVE COVENANTS This article imposes restrictions on Loan Parties, including limitations on indebtedness, liens, restricted payments, affiliate transactions, and asset disposals, and outlines amended financial covenants requiring a maximum Consolidated Total Net Leverage Ratio and minimum Interest Coverage Ratio - The company is generally prohibited from incurring additional debt unless its pro forma Consolidated Total Net Leverage Ratio is at or below 4.50 to 1.00, subject to exceptions710 - The company and subsidiary guarantors are prohibited from creating or incurring any liens on their assets, other than Permitted Liens725 - Restricted Payments (dividends, share repurchases, junior debt prepayments) are limited but permitted under various baskets, including one based on an Applicable Amount and another allowing unlimited payments if pro forma Consolidated Total Net Leverage Ratio is below 3.50 to 1.00735736737 Amended Financial Covenants (Section 6.10) | Covenant | Requirement | Test Period | | :--- | :--- | :--- | | Consolidated Total Net Leverage Ratio | ≤ 5.00 to 1.00 | Fiscal quarter ending July 3, 2026 | | Consolidated Total Net Leverage Ratio | ≤ 4.75 to 1.00 | Fiscal quarter ending October 2, 2026 | | Consolidated Total Net Leverage Ratio | ≤ 4.50 to 1.00 | Fiscal quarters ending on or after October 2, 2026 | | Interest Coverage Ratio | ≥ 2.00 to 1.00 | Each Test Period | ARTICLE VII: EVENTS OF DEFAULT This article defines events constituting a default, including payment failures, covenant violations, misrepresentation, cross-default on material indebtedness, bankruptcy, and change of control, granting lenders the right to accelerate loans upon occurrence - Events of Default include non-payment of principal or interest, breach of covenants, misrepresentation, cross-default on other Material Indebtedness, bankruptcy, and a Change of Control760761763 - A breach of financial covenants in Section 6.10 will not constitute an Event of Default for Term B-1 Loans until revolving and Term A-2 facility lenders exercise remedies760 - Upon an Event of Default, the Agent, at Required Lenders' request, may terminate commitments and declare all outstanding loans and obligations immediately due and payable765 ARTICLE VIII: THE AGENT This article outlines the role, powers, and protections of the Administrative Agent, JPMorgan Chase Bank, N.A., establishing its administrative authority, limiting its liability, and detailing its right to rely on information, resign, and appoint a successor - Lenders and Issuing Banks irrevocably appoint JPMorgan Chase Bank, N.A. as the administrative and collateral agent768 - The Agent's duties are primarily mechanical and administrative, not fiduciary, and it is protected from liability except for gross negligence, bad faith, or willful misconduct770771779 - The Agent may resign with 30 days' notice, allowing Required Lenders to appoint a successor, subject to U.S. Borrower's approval if no Event of Default exists783 ARTICLE IX: MISCELLANEOUS This article contains standard legal and operational clauses, including notice procedures, waiver and amendment rules, borrower indemnification obligations, loan assignment processes, New York governing law and jurisdiction, jury trial waiver, and confidentiality obligations - Amendments generally require Required Lenders' consent, but changes to fundamental economic terms require consent of each directly affected Lender812 - Borrowers must pay all reasonable out-of-pocket expenses of the Agent and indemnify Credit Parties against financing-related losses, except those from indemnitee's gross negligence or willful misconduct821823 - Lenders can assign loans to eligible institutions with U.S. Borrower's (unless default exists) and Agent's consent; U.S. Borrower and subsidiaries may purchase Term Loans via auctions or open market under specific conditions830842 - The agreement is governed by New York State law, and all parties waive their right to a jury trial in any Loan Document-related legal proceeding855862 ARTICLE X: LOAN GUARANTY This article establishes the joint and several, absolute, and unconditional guarantee by each Loan Guarantor of all Secured Obligations, including the U.S. Borrower's guarantee of Foreign Borrowers' obligations, detailing the nature of the guarantee and conditions for guarantor release - Each Loan Guarantor provides a joint and several, absolute, and unconditional guarantee for all Secured Obligations886 - The U.S. Borrower also acts as a guarantor for Foreign Borrowers' obligations887 - The guarantee is one of payment, not collection, and guarantors waive most defenses, including requiring the Agent to first pursue the primary borrower or collateral889893 - A Subsidiary Guarantor is automatically released upon ceasing to be a Domestic Subsidiary, being designated an Unrestricted Subsidiary, or becoming an Immaterial Subsidiary (subject to aggregate limits)902