Item 1.01
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Entry into a Material Definitive Agreement.
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On March 22, 2019 (the
Closing Date
), Monotype Imaging Holdings Inc., a Delaware corporation (the
Company
), entered
into a new credit agreement (the
New Credit Agreement
) by and among the Company, Monotype Imaging Inc.,
a Delaware corporation
(the
Borrower
), and certain other of the Companys subsidiaries
which are party thereto, the financial institutions party thereto as Lenders (as defined therein) and Bank of America, N.A., as administrative agent (
Agent
). Pursuant to the New Credit Agreement, the Lenders have agreed to provide
the Borrower with a five-year, $200 million senior secured revolving credit facility (the
Credit Facility
) subject to the terms and conditions contained therein. The Credit Facility permits the Borrower to request that the
Lenders, at their election, increase the amount of the Credit Facility up to a maximum of $300 million.
The New Credit Agreement replaced the
Companys existing $150 million revolving credit facility (the
Original Credit Agreement
) by and between the Company, the other loan parties and lenders party thereto and Silicon Valley Bank, as agent. The Original
Credit Agreement was terminated effective on the Closing Date and was scheduled to mature on September 15, 2020.
Borrowings under the Credit
Facility bear interest at a variable rate per annum equal to LIBOR plus between 1.0% and 1.625%, or, at the Borrowers option, the Base Rate (as defined therein) plus between 0.0% and 0.625%, in each case, with the exact interest rate margin
determined based on the Consolidated Leverage Ratio (as defined therein).
The New Credit Agreement includes financial covenants which require the Company
to maintain (a) a Total Leverage Ratio (as defined therein) of no greater than 3.25 to 1.0 (or, upon a Qualified Acquisition (as defined therein), subject to certain conditions, 3.75 to 1 and (b) a minimum Consolidated Interest Coverage
Ratio (as defined therein) of 3.00 to 1.0. The New Credit Agreement also contains customary affirmative and negative covenants for transactions of this type and other affirmative and negative covenants agreed to by the parties, including, among
others, limits on the Company and its subsidiaries ability to incur debt or liens, engage in sale-leaseback transactions, make loans, investments and acquisitions, incur additional indebtedness, engage in mergers, enter into asset sales,
transact with affiliates and alter its business. The New Credit Agreement also provides for a number of customary events of default, including, among others, payment, bankruptcy, covenant, representation and warranty, change of control and judgment
defaults. Failure to comply with these covenants, or the occurrence of an event of default, could permit the Lenders under the New Credit Agreement to declare all amounts borrowed under the New Credit Agreement, together with accrued interest and
fees, to be immediately due and payable.
The obligations of the Borrower under the Credit Facilities are unconditionally guaranteed by the Company and
certain of its subsidiaries and secured by a lien on substantially all of the present and future property and assets of the Company and such subsidiaries, in each case, subject to limited exceptions and exclusions.
The above description of the New Credit Agreement is a summary and is qualified in its entirety by the New Credit Agreement itself, which is filed as Exhibit
10.1 to this Current Report on Form
8-K
and is incorporated herein by reference.