Item 1.01
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Entry Into Material Definitive Agreements
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On April 2, 2018 (the Closing Date),
Shutterfly, Inc. (the Company) entered into an Incremental Term Loan Amendment (the Incremental Term Loan Amendment), by and among the Company, the guarantors party thereto, the incremental term loan lenders party thereto,
and Morgan Stanley Senior Funding, Inc., as administrative agent (the Administrative Agent) and collateral agent (the Collateral Agent). The Incremental Term Loan Amendment amends the Credit Agreement, dated as of
August 17, 2017, by and among the Company, the lenders and issuing banks from time to time party thereto, the Administrative Agent and the Collateral Agent (as amended, restated, amended and restated, supplemented or otherwise modified from
time to time, including by the Incremental Term Loan Amendment, the Credit Agreement).
The Incremental Term Loan Amendment provides for the
incurrence by the Company of an incremental term loan in an aggregate principal amount of $825,000,000 (the Incremental Term Loan). The incurrence of such Incremental Term Loan is permitted as an incremental loan under the Credit
Agreement and is subject to the terms of the Credit Agreement and to additional terms set forth in the Incremental Term Loan Amendment. The Incremental Term Loan was fully funded on the Closing Date and matures on August 17, 2024 (the
Maturity Date).
The Incremental Term Loan amortizes in quarterly installments in an amount equal to 0.25% of the original principal amount of
the Incremental Term Loan payable on the last day of each fiscal quarter of the Company beginning with the first full fiscal quarter of the Companys after the Closing Date and continuing for each fiscal quarter of the Company thereafter. The
remaining principal amount of the Incremental Term Loan is due on the Maturity Date.
The proceeds of the loans were used to finance the acquisition of
Lifetouch Inc. (Lifetouch). On the Closing Date, Lifetouch and certain of its domestic subsidiaries will provide a secured guarantee of the Companys obligations under the Credit Agreement.
The Incremental Term Loan will initially bear interest, at the election of the Company, at either (a) the base rate (the Base Rate), which is
defined as a fluctuating rate per annum equal to the greatest of (A) the prime rate then in effect, (B) the federal funds rate then in effect, plus 0.50%, and (C) an adjusted LIBOR rate determined on the basis of a
one-month
interest period, plus 1.0% or (b) an adjusted LIBOR Rate, subject to a floor of 0.0% (the LIBOR Rate), in each case, plus an applicable margin of 1.75% per annum in the case of Base Rate
Loans and 2.75% per annum in the case of LIBOR Rate loans. Following the Companys delivery of financial statements for the first full fiscal quarter following the Closing Date, the Incremental Term Loan shall bear interest, at the election of
the Company, at (i) the Base Rate plus an applicable margin of either 1.50% or 1.75%, or (ii) the LIBOR Rate plus an applicable margin of either 2.50% or 2.75%, with the applicable margin in each case determined based on the Companys
consolidated secured net leverage ratio, measured as of the end of the most recently ended fiscal quarter. The Company is also required to pay other customary fees and costs.
Certain of the lenders under the Credit Agreement and their affiliates have engaged in, and may in the future engage in, investment banking and other
commercial dealings in the ordinary course of business with the Company or the Companys affiliates. The lenders and their affiliates have received, or may in the future receive, customary fees and commissions for these transactions.
The foregoing description of the Incremental Term Loan Amendment does not purport to be complete and is qualified in its entirety by reference to (a) the
Incremental Term Loan Amendment, which is filed as Exhibit 99.1 hereto and incorporated by reference herein and (b) the Credit Agreement, which was filed as Exhibit 10.1 to the Current Report on Form
8-K
filed by the Company with the Securities and Exchange Commission on August 17, 2017, and is incorporated herein by reference.