ZNGA Zynga Inc

Item 1.01Entry into a Material Definitive Agreement.

On December 11, 2020, Zynga Inc. (the “Company”) entered into a Credit Agreement (the “Credit Agreement”), by and among the Company, as borrower, certain financial institutions, as lenders, and Bank of America, N.A., as administrative agent for the lenders (the “Agent”).  The Credit Agreement provides for a three-year secured revolving loan facility in an aggregate principal amount of up to $425 million.  The revolving loans available under the revolving loan facility were undrawn on the date hereof.  The proceeds of the revolving loans may be used for general corporate purposes.

At the Company’s option, revolving loans accrue interest at a per annum rate based on either (i) the base rate plus a margin ranging from 0.50% to 1.00%, determined based on the Company’s consolidated leverage ratio or (ii) the LIBOR rate (for interest periods of 1, 2, 3 or 6 months) plus a margin ranging from 1.50% to 2.00%, determined based on the Company’s consolidated leverage ratio.  The base rate is defined as the highest of (i) the federal funds rate, plus 0.50%, (ii) Bank of America, N.A.’s prime rate and (iii) the LIBOR rate for a 1-month interest period plus 1.00%.  The Company is also obligated to pay other customary closing fees, commitment fees and letter of credit fees for a credit facility of this size and type.

The Company may borrow, repay and reborrow funds under the revolving loan facility until December 31, 2023, at which time the revolving loan facility will terminate, and all outstanding revolving loans, together with all accrued and unpaid interest, must be repaid.  

The Company’s obligations under the Credit Agreement are required to be guaranteed by certain of its domestic subsidiaries meeting materiality thresholds set forth in the Credit Agreement.  Such obligations, including the guarantees, are secured by substantially all of the personal property of the Company and the Company’s subsidiary guarantors.  As of the closing date, there were no subsidiary guarantors.

The Credit Agreement contains customary affirmative and negative covenants, including covenants limiting the ability of the Company and its restricted subsidiaries to, among other things, incur debt, grant liens, undergo certain fundamental changes, make investments, make certain restricted payments, dispose of assets, enter into transactions with affiliates, and enter into burdensome agreements, in each case, subject to limitations and exceptions set forth in the Credit Agreement.  The Company is also required to maintain compliance with a consolidated leverage ratio and a consolidated interest coverage ratio, in each case, determined in accordance with the terms of the Credit Agreement.

The Credit Agreement also contains customary events of default that include, among other things, certain payment defaults, cross defaults to other indebtedness, inaccuracy of representations and warranties, covenant defaults, change of control defaults, judgment defaults, and bankruptcy and insolvency defaults.  If an event of default exists, the Agent on behalf of the lenders may require immediate payment of all obligations under the Credit Agreement and may exercise certain other rights and remedies provided for under the Credit Agreement, the other loan documents and applicable law.  Under certain circumstances, a default interest rate will apply on all obligations during the existence of an event of default under the Credit Agreement at a per annum rate equal to 2.00% above the applicable interest rate.

The foregoing description of the Credit Agreement is a summary and is qualified in its entirety by the terms and conditions of the Credit Agreement, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.