ACCO(ACCO) - 2025 Q2 - Quarterly Results

Eighth Amendment to Third Amended and Restated Credit Agreement This section details the Eighth Amendment to the Credit Agreement, outlining its effective conditions, reaffirmations, and general provisions Introduction and Parties This document, dated July 29, 2025, constitutes the Eighth Amendment to the Credit Agreement, entered into by ACCO Brands Corporation and various lenders - The Eighth Amendment to the Credit Agreement is dated July 29, 2025[2] - The amendment is made with the consent of the Required Lenders to modify the existing Credit Agreement[2][4] Amendments to Loan Documents This section details that the Credit Agreement will be amended on the Closing Date as specified in Exhibit A, showing all textual changes - The Credit Agreement is amended as set forth in Exhibit A, which shows deletions and additions to the text[5] Conditions to Effectiveness The amendment's effectiveness on the "Eighth Amendment Closing Date" is contingent upon execution by all parties, receipt of corporate documents, and absence of defaults - The amendment's effectiveness is contingent upon its due execution by Holdings, the Borrowers, other Loan Parties, the Administrative Agent, and the Consenting Lenders[7] - Key deliverables to the Administrative Agent include organizational documents, resolutions, a solvency certificate, and a certificate of compliance with other conditions[8] - A critical condition is that no Default or Event of Default exists or would result from the amendment[12] - All accrued costs, fees, and expenses owed to the Administrative Agent must be paid[13] Representations and Warranties Loan Parties provide representations and warranties regarding their legal status, authorization, absence of conflicts, and reaffirm the accuracy of prior representations - Each Loan Party confirms its due organization, valid existence, and requisite power to execute the amendment and perform its obligations[15] - The execution of the amendment does not contravene the Loan Party's organizational documents, conflict with any material contracts, or violate any laws[15] - The representations and warranties contained in Article 5 of the Amended Credit Agreement are reaffirmed as true and correct[18] Acknowledgment and Reaffirmation Loan Parties and Guarantors acknowledge the amendment and reaffirm that their obligations and security interests under the original Loan Documents remain fully effective - Each Loan Party confirms that its pledges and grants of security interests under the existing Loan Documents are not impaired and continue in full force to secure all Obligations[16] - Each Guarantor consents to the amendment and confirms that their guarantees continue to cover all Obligations under the Amended Credit Agreement[17][19] Miscellaneous Provisions This section clarifies that the amendment is not a novation, designates it as a Loan Document, and specifies New York law as governing - The amendment is not a novation but an amendment of the pre-existing Credit Agreement[24] - The amendment and all related claims are governed by the law of the State of New York[23] - Except as specifically amended, the original Credit Agreement and other Loan Documents remain in full force and effect[22] Third Amended and Restated Credit Agreement (Conformed) This section presents the conformed Third Amended and Restated Credit Agreement, incorporating all subsequent amendments Article 1: Definitions and Accounting Terms This article defines key terms, including loan facilities, interest rates, financial ratios, and the "Covenant Relief Period" with its specific pricing grid - The "Covenant Relief Period" is defined as the period from the Eighth Amendment Closing Date (July 29, 2025) through and including December 31, 2026[142][182] Applicable Rate During Covenant Relief Period (Post-8th Amendment) | Rate Type | Margin/Fee | | :--- | :--- | | Term SOFR / Daily SOFR / Agreed Currency Rate / etc. | 2.25% | | Base Rate | 1.25% | | Letter of Credit Fees (financial) | 0.50% | | Letter of Credit Fees (commercial) | 1.125% | Applicable Rate Post-Covenant Relief Period | Pricing Level | Consolidated Leverage Ratio | Term SOFR, etc. Margin | Base Rate Margin | Commitment Fee Rate | | :--- | :--- | :--- | :--- | :--- | | 1 | > 4.25 to 1.00 | 2.25% | 1.25% | 0.375% | | 2 | ≤ 4.25 to 1.00 and > 3.50 to 1.00 | 2.00% | 1.00% | 0.350% | | 3 | ≤ 3.50 to 1.00 and > 2.50 to 1.00 | 1.75% | 0.75% | 0.300% | | 4 | ≤ 2.50 to 1.00 | 1.50% | 0.50% | 0.250% | Article 2: The Commitments and Credit Extensions This article details credit facilities, including Term A Loans and a Revolving Credit Facility, outlining borrowing procedures, prepayments, and a new mandatory Euro Term A Loan repayment Credit Facilities Overview (as of 7th/8th Amendments) | Facility | Amount | | :--- | :--- | | Multicurrency Revolving Credit Facility | $467,500,000 | | EUR Term Loan A Facility | €122,890,001.85 | | Australian Dollar Term A Loan | AUD $61,000,000 | | U.S. Dollar Term A Loan | $100,000,000 | - A new mandatory repayment for the Euro Term A Loans is added, requiring a payment of the Euro equivalent of $35,000,000 on or prior to September 30, 2025[566] - Mandatory prepayments are required from Net Cash Proceeds of certain asset dispositions (in excess of $12 million/year), incurrence of non-permitted Indebtedness, and Extraordinary Receipts (in excess of $10 million/year)[550][552][553] Article 3: Taxes, Yield Protection and Illegality This article addresses tax obligations, lender compensation for increased costs due to law changes, and fallback provisions for unavailable benchmark interest rates - Loan Parties are obligated to make payments free and clear of any tax deductions or withholdings and must indemnify the Lenders for any Indemnified Taxes[633][635] - If a change in law increases a Lender's cost of making or maintaining a loan, the Borrowers must pay additional amounts to compensate the Lender for such increased costs[662][664] - The agreement includes detailed fallback provisions for determining interest rates if a benchmark rate like SOFR or EURIBOR becomes unavailable, allowing the Administrative Agent to implement a successor rate[650][653][657] Article 4: Conditions Precedent This article specifies that credit extensions are contingent upon the accuracy of Loan Party representations and the absence of any Default or Event of Default - The obligation of each Lender to honor any Request for Credit Extension is subject to the condition that all representations and warranties of the Loan Parties are true and correct in all material respects[679] - A further condition for any credit extension is that no Default or Event of Default exists or would result from the proposed credit extension[680] Article 5: Representations and Warranties This article details comprehensive representations and warranties by Loan Parties covering legal status, financial condition, compliance with laws, and collateral validity - Loan Parties represent they are in compliance with all applicable laws, including sanctions (OFAC), the Foreign Corrupt Practices Act (FCPA), and other anti-corruption laws[724][725][727] - The company represents that it is Solvent and that its financial statements fairly present its financial condition in accordance with GAAP[691][721] - It is represented that the Collateral Documents create a valid and enforceable first-priority lien on the Collateral, subject to Permitted Liens[722] Article 6: Affirmative Covenants This article outlines affirmative covenants requiring Borrowers to deliver financial statements, compliance certificates, and promptly notify the Agent of defaults or adverse events - The company must deliver annual audited financial statements within 90 days of fiscal year-end and quarterly unaudited financial statements within 45 days of each quarter-end[730] - A compliance certificate must be delivered concurrently with financial statements[733] - The company must promptly notify the Administrative Agent of any Default, Material Adverse Effect, or ERISA Event[737] Article 7: Negative Covenants This article imposes negative covenants restricting liens, indebtedness, investments, asset sales, and restricted payments, including financial ratios with temporary relief from the Eighth Amendment Financial Covenants | Covenant | Requirement | | :--- | :--- | | Consolidated Interest Coverage Ratio | ≥ 3.00 to 1.00 | | Consolidated Leverage Ratio | Varies by quarter, with specific higher levels permitted during the Covenant Relief Period (e.g., up to 4.75:1.00 for Q4 2025 - Q2 2026) | - The Eighth Amendment adjusts the Maximum Consolidated Leverage Ratio for fiscal quarters ending between September 30, 2025, and December 31, 2026, providing covenant relief[788] - Restrictions are placed on creating liens, incurring indebtedness, making investments, and making restricted payments, subject to specific baskets and exceptions[762][765][768][780] Article 8: Events of Default and Remedies This article defines Events of Default, such as non-payment or covenant violations, and outlines remedies including commitment termination and loan acceleration - Events of Default include failure to pay principal or interest, breach of covenants (with specified grace periods), and material misrepresentations[799] - A cross-default is triggered if the company defaults on other indebtedness exceeding an aggregate principal amount of $40 million[799][439] - Upon an Event of Default, remedies include the termination of commitments and the acceleration of all outstanding Obligations, making them immediately due and payable[802] Article 9: Administrative Agent This article appoints Bank of America, N.A. as the Administrative Agent, defining its administrative role, exculpatory protections, and succession procedures - Bank of America, N.A. is appointed as the Administrative Agent and Collateral Agent to act on behalf of the Lenders[806][807] - The Agent is protected by exculpatory provisions and is not liable for actions taken without gross negligence or willful misconduct[809][810] - The Agent is authorized to release collateral or guarantors in connection with permitted transactions, such as asset sales, or upon the full repayment of all obligations[823] Article 10: Debt Allocation Mechanism This article describes the Debt Allocation Mechanism (DAM), which ensures pro-rata sharing of loan interests among lenders upon major default events - Upon a "DAM Exchange Date" (e.g., bankruptcy or acceleration), Lenders' interests in the various loan facilities are automatically exchanged[836] - The exchange results in each Lender holding a pro-rata interest (its "DAM Percentage") in the entire portfolio of Term Loans and Revolving Loans, ensuring shared risk and recovery[836][837] Article 11: Miscellaneous This article covers standard provisions including amendment procedures, governing law (New York), jurisdiction, waiver of jury trial, and confidentiality - Amendments to the agreement generally require the consent of the Required Lenders, but fundamental changes like postponing payment dates or reducing principal require the consent of each affected Lender[848] - The agreement and all related disputes are governed by the laws of the State of New York, and all parties submit to the exclusive jurisdiction of New York courts[909][910] - All parties irrevocably waive their right to a trial by jury in any legal proceeding related to the Loan Documents[913]