Item 1.01. Entry into a Material Definitive Agreement.
On October 17, 2016, Resources Connection, Inc. (the Company), Resources Connection LLC and their domestic subsidiaries
entered into a Credit Agreement (the Credit Facility) with Bank of America, N.A. The Credit Facility provides for a $120.0 million secured revolving loan, consisting of a (i) $90,000,000 revolving facility, which includes a
$5,000,000 sublimit for the issuance of standby letters of credit, and (ii) a $30,000,000 reducing revolving facility, any amounts of which may not be reborrowed after being repaid. The proceeds of the Credit Facility may be used to fund the
Companys working capital, refinance certain indebtedness, fund potential acquisitions and finance the purchase by the Company of shares of its common stock in connection with the tender offer described in Item 8.01 below. The Credit
Facility is scheduled to mature on October 17, 2021.
The obligations under the Credit Facility are secured by substantially all
assets of the Company, Resources Connection LLC and their domestic subsidiaries pursuant to the Security and Pledge Agreement, dated October 17, 2016.
As of the date hereof, there are no borrowings outstanding under the Credit Facility, except for certain Letters of Credit of approximately
$1.5 million issued under a predecessor agreement. Borrowings under the Credit Facility will bear interest at a rate per annum of either, at the Companys election, (i) LIBO Rate (as defined in the Credit Facility) plus a margin of 1.25%
or 1.50% or (ii) the Base Rate (as defined in the Credit Facility), plus a margin of 0.25% or 0.50%, with the applicable margin depending on the Companys consolidated leverage ratio. The Company is also obligated to pay other customary
facility fees for a credit facility of this size and type.
The Credit Facility contains customary covenants, including covenants that
limit or restrict the Companys and its subsidiaries ability to incur liens, incur indebtedness, make certain restricted payments, merge or consolidate and make dispositions of assets. Upon the occurrence of an event of default under the
Credit Facility, the lender may cease making loans, terminate the Credit Facility and declare all amounts outstanding to be immediately due and payable. The Credit Facility specifies a number of events of default (some of which are subject to
applicable grace or cure periods), including, among other things, non-payment defaults, covenant defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency defaults and material judgment defaults.
The foregoing description of the Credit Facility and the Security and Pledge Agreement does not purport to be complete and is subject to, and
qualified in its entirety by, the full text of the Credit Facility, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference, and the full text of the Security and Pledge Agreement, which is attached hereto as Exhibit 10.2
and is incorporated herein by reference.