Honest Company, Inc. entered into a First Amendment to Credit Agreement and First Amendment to Pledge and Security Agreement (the Amendment), among the Company, as borrower, the lenders party thereto (the Lenders) and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, together with any successors and assigns, the Administrative Agent) for the Lenders. The Amendment amended the terms of that certain Credit Agreement, dated as of January 25, 2023 (as amended prior to the effectiveness of the Amendment, the Original Credit Agreement and, as amended by the Amendment, the Amended Credit Agreement), among the Company, as borrower, the Lenders and the Administrative Agent, to, among other things, extend the maturity date of the senior secured revolving credit facility (the Credit Facility), modify the borrowing formula and modify the interest rate. The Amendment also amended the terms of that certain Pledge and Security Agreement, dated as of January 25, 2023, between the Company and the Administrative Agent.
The Amended Credit Agreement provides a revolving credit facility in an aggregate principal amount of up to $35.0 million (the Commitment Amount) and includes a subfacility that provides for the issuance of letters of credit in an amount of up to $15.0 million at any time outstanding, of which the Company has $1.5 million in existing letters of credit outstanding as of March 31, 2026. If more than 50% of the Commitment Amount is outstanding, availability of the Credit Facility will be based upon a borrowing base formula and periodic borrowing base certifications valuing certain of the Company's accounts receivable and inventory as reduced by certain reserves, if any. The Credit Facility includes an uncommitted accordion feature that allows for increases in the Commitment Amount to as much as an additional $35.0 million, for up to $70.0 million in potential revolving commitments.
The Credit Facility is subject to customary fees for loan facilities of this type, including a commitment fee based on the average daily undrawn portion of the Credit Facility. The Company has not borrowed under the Credit Facility as of March 31, 2026. The interest rate applicable to the Credit Facility will be, at the Company's option, either (a) the Adjusted Term SOFR Rate (subject to a 0.00% floor), plus a margin ranging from 1.75% to 2.25% or (b) the CB floating rate, (i) plus a margin of 0% or 0.25% or (ii) minus a margin of 0.25%.
The margin will be based upon the Company's leverage ratio. The CB floating rate is the highest of (a) the Wall Street Journal prime rate and (b) 2.50%. The Credit Facility will terminate and borrowings thereunder, if any, will be due in full on March 31, 2029.
Debt under the Credit Facility will be guaranteed by substantially all of the Company's material domestic subsidiaries and will be secured by substantially all of the Company's and such subsidiaries' assets.
