| Item 1.01. | Entry into a Material Definitive Agreement. |
In connection with the Acquisition (as defined below), on January 3, 2019 (the “Closing Date”), Forrester Research, Inc., a Delaware corporation (“Forrester”), entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders referred to therein (collectively, the “Lenders”). Pursuant to the Credit Agreement, the Lenders have provided Forrester with $125 million in senior secured term loans (the “Term Loans”) and a $75 million senior secured revolving credit facility (the “Revolving Credit Facility” and, together with the Term Loans, the “Credit Facilities”). On the Closing Date, all of the proceeds of the Term Loans and $50.0 million of proceeds of the loans borrowed under the Revolving Credit Facility were used to pay a portion of the cash consideration for the Acquisition and to pay certain fees, costs and expenses incurred in connection with the Acquisition. Following the Closing Date, the Revolving Credit Facility may be used for working capital and general corporate purposes, and up to $5 million of the Revolving Credit Facility may be used to obtain letters of credit. Each of the Term Loans and the Revolving Credit Facility are scheduled to mature on January 3, 2024.
The loans under each of the Credit Facilities bear interest, at Forrester’s option, at a rate per annum equal to either (i) the London Interbank Offering Rate (“LIBOR”) for the applicable interest period plus a margin that is between 1.75% and 2.50%, based on Forrester’s consolidated total leverage ratio or (ii) the applicable base rate plus a margin that is between 0.75% and 1.50%, based on Forrester’s consolidated total leverage ratio. A commitment fee, at a rate of between 0.25% to 0.35% per annum, based on Forrester’s consolidated total leverage ratio, is payable on the unused portion of the Revolving Credit Facility quarterly, in arrears, and on the date of termination or expiration of the Revolving Credit Facility.
The outstanding principal balance of the Term Loans will be subject to quarterly amortization payments, beginning on March 31, 2019, in an amount ranging from $1,562,500 to $3,906,000 per quarter, with the balance being due on January 3, 2024. No interim amortization payments are required with respect to the Revolving Credit Facility.
The Credit Agreement provides that, subject to customary conditions, including obtaining commitments, Forrester may elect to increase the commitments under the Revolving Credit Facility and/or to borrow additional term loans in the aggregate principal amount not to exceed $50 million.
Forrester may voluntarily prepay borrowings under the Credit Facilities at any time and from time to time, without premium or penalty, other than customary breakage reimbursement requirements for LIBOR-based loans. The Term Loans must be prepaid with net cash proceeds of (i) certain debt incurred or issued by Forrester and its restricted subsidiaries and (ii) certain asset sales and condemnation or casualty events, subject to certain reinvestment rights.
All obligations of Forrester under the Credit Facilities are unconditionally guaranteed by all of its material wholly-owned domestic subsidiaries (the “Guarantors”), other than certain excluded subsidiaries. Subject to certain customary limitations, the obligations under the Credit Facilities are also secured by a first priority lien on substantially all of the assets of Forrester and the Guarantors.
The Credit Agreement contains representations and warranties and affirmative and negative covenants, including financial covenants, that are customary for similar financings. The negative covenants limit, subject to various exceptions, the ability of Forrester and its subsidiaries to, among other things, incur indebtedness; create liens on assets; engage in certain fundamental changes; make investments; sell or otherwise dispose of assets; engage in certain affiliate transactions; and pay dividends. The financial covenants in the Credit Agreement require Forrester to have (i) a ratio of Consolidated Funded Debt (as defined in the Credit Agreement) to Consolidated EBITDA (as defined in the Credit Agreement) of no more than 4.00:1.00 as of the last day of each fiscal quarter and (ii) a Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of equal to or greater than 1.25:1.00 as of the last day of each fiscal quarter.
