| | On November 15, 2017, WD-40 Company (the “Company”) entered into a Note Purchase and Private Shelf Agreement (the “Note Agreement”) by and among the Company, PGIM, Inc. (“Prudential”), and certain affiliates and managed accounts of Prudential (the “Note Purchasers”), pursuant to which the Company agreed to sell $20.0 million aggregate principal amount of senior notes (the “Series A Notes”) to certain of the Note Purchasers. The Series A Notes will bear interest at 3.39% per annum and will mature on November 15, 2032, unless earlier paid by the Company. Principal payments are required semi-annually beginning on May 15, 2018 in equal installments of $0.4 million through May 15, 2032, and the remaining outstanding principal of the Series A Notes in the amount of $8.4 million will become due on November 15, 2032. Interest is also payable semi-annually beginning on May 15, 2018. The Company expects to use the proceeds to pay down short-term borrowings under the Company’s existing $175.0 million unsecured Credit Agreement dated June 17, 2011 (as amended, the “Credit Agreement”) with Bank of America, N.A. (“Bank of America”). $20.0 million of short term borrowings under the Credit Agreement were drawn primarily to fund the purchase and build out of the Company’s new San Diego, California office building, purchased in September 2016 and completed for occupancy in August 2017. Capitalized terms not otherwise defined in this report have the meaning given to such terms in the Note Agreement. Pursuant to the Note Agreement, the Company may from time to time offer for sale to Prudential Affiliates, in one or a series of transactions, additional senior notes of the Company (the “Shelf Notes”) in an aggregate principal amount of up to $105.0 million. The Shelf Notes will have a maturity date of no more than 15½ years after the date of original issuance and may be issued no later than November 15, 2020. The Shelf Notes, if any, would bear interest at a rate per annum, and would have such other particular terms, as would be set forth in a confirmation of acceptance executed by the parties prior to the closing of each purchase and sale transaction. Pursuant to the Note Agreement, the Series A Notes and any Shelf Notes (collectively, the "Notes") can be prepaid at the Company’s sole discretion, in whole at any time or in part from time to time, at 100% of the principal amount of the Notes being prepaid, together with accrued and unpaid interest thereon and any Make Whole Amount with respect to such Notes. The Note Agreement contains representations, warranties, events of default and remedies, as well as affirmative, negative and other financial covenants customary for this type of agreement and generally consistent with similar provisions of the Credit Agreement. These covenants include, among other things, certain limitations on the ability of the Company and its subsidiaries to incur indebtedness, create liens, dispose of assets, make investments, repurchase shares of the Company’s capital stock and enter into certain merger or consolidation transactions. The Note Agreement also includes a most favored lender provision which requires that any time any lender or other provider under any Principal Credit Agreement has the benefit of one or more financial or operational covenants that is different than, or similar to, but more restrictive than those contained in the Note Agreement, those covenants shall be immediately and automatically incorporated by reference in the Note Agreement (the “Most Favored Provision”). The Note Agreement requires the Company to adhere to the same financial covenants governing the Company’s existing Credit Agreement, as follows: |
