ZBRA Zebra Technologies Corp

Item 1.01 Entry into a Material Definitive Agreement.

On December 1, 2017, (1) Zebra Technologies International, LLC (“ZTI”) and Zebra Technologies RSC, LLC (“ZTRSC”), both of which are wholly-owned subsidiaries of Zebra Technologies Corporation (the “Company”), entered into a Receivables Purchase Agreement (“Purchase Agreement”) pursuant to which ZTRSC will purchase certain receivables of ZTI (the “Receivables”); and (2) ZTI, as originator and servicer of the Receivables, ZTRSC, as borrower, PNC Bank, National Association (“PNC”), as administrative agent, PNC Capital Markets LLC (“PNCCM”), as structuring agent, and additional persons from time to time party thereto as lenders and group agents (“Lenders”) entered into a Receivables Financing Agreement (“Financing Agreement”) to finance ZTRSC’s purchase of the Receivables from ZTI under the Purchase Agreement.

The Financing Agreement and the Purchase Agreement establish a revolving U.S. trade receivables securitization facility (the “A/R Facility”) that provides for up to $180 million in funding based on the availability of eligible receivables and other customary factors, and the satisfaction of certain conditions. The A/R Facility has an initial scheduled termination date of November 29, 2019, unless earlier terminated in accordance with its terms, and may be extended by agreement of the parties.

Under the A/R Facility, ZTI will sell or contribute certain of its U.S. trade receivables to ZTRSC. ZTRSC has pledged those trade receivables to PNC, as administrative agent, for the benefit of the Lenders, to secure ZTRSC’s obligations to repay advances that it obtains from the Lenders under the Financing Agreement. Substantially all of the net proceeds of the advances are expected to be applied towards the purchase of trade receivables by ZTRSC from ZTI.

The assets of ZTRSC are restricted collateral for the payment of its obligations under the A/R Facility. ZTRSC’s assets and credit are not available to satisfy the debts and obligations owed to the creditors of ZTI. ZTI is independently liable for its own customary representations, warranties, covenants and indemnities as the originator and as the servicer of the receivables. The Company will include ZTRSC’s assets, liabilities and results of operations in its consolidated financial statements.

Advances by any Lender under the A/R Facility will accrue interest at LIBOR, adjusted for changes in Eurocurrency reserve requirements, which is payable monthly on the monthly settlement date. In addition, ZTRSC paid certain structuring fees to PNCCM and will pay other customary fees to the Lenders. ZTRSC may prepay any advances with two business days’ notice, and may also reduce the facility limit or terminate the facility with 45 business days’ prior notice.

The A/R Facility contains various customary covenants and default and termination provisions that provide for the acceleration of the advances under the A/R Facility in circumstances including, but not limited to, failure to pay interest or principal when due, breach of representation, warranty or covenant, certain insolvency events or failure to maintain the security interest in the trade receivables, and defaults under other material indebtedness. The Company has guaranteed ZTI’s performance of its obligations as servicer and originator under the A/R Facility. If ZTI fails in any manner to perform its obligations under the A/R Facility, then the Company is required to perform (or cause to be performed) those obligations as required under the A/R Facility.

The foregoing description of the A/R Facility does not purport to be complete and is qualified in its entirety by reference to the full text of each of the Purchase Agreement and Finance Agreement, copies of which will be filed with the Company’s 10-K.