UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
September 15, 2015
Date of Report (Date of earliest event reported)
MONOTYPE IMAGING HOLDINGS INC.
(Exact name of registrant as specified in its charter)
Delaware | 001-33612 | 20-3289482 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File No.) |
(IRS Employer Identification No.) |
600 Unicorn Park Drive
Woburn, Massachusetts 01801
(Address of Principal Executive Offices, including Zip Code)
Registrants telephone number, including area code: (781) 970-6000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 | Entry into a Material Definitive Agreement. |
On September 15, 2015, Monotype Imaging Holdings Inc., a Delaware corporation (the Company), entered into a new credit agreement (the New Credit Agreement) by and among the Company, the Companys subsidiary, Monotype Imaging Inc., any financial institution that becomes a Lender (as defined therein) and Silicon Valley Bank (SVB), as agent. Pursuant to the New Credit Agreement, the Lenders have agreed to provide the Company with a five-year $150 million secured revolving credit facility (the Credit Facility). The Credit Facility permits the Company to request that the Lenders, at their election, increase the secured credit facility to a maximum of $200 million. The Credit Facility provides more attractive interest rates and a lower commitment fee than those under the Original Credit Agreement, as defined below.
The New Credit Agreement replaces the Companys existing $120 million revolving credit facilitiy (the Original Credit Agreement) by and between the Company and Wells Fargo Capital Finance, LLC. The Original Credit Agreement was terminated effective September 15, 2015 and was scheduled to expire on July 13, 2016.
Borrowings under the Credit Facility bear interest through September 15, 2020 at a variable rate not less than zero based upon, at the Companys option, either LIBOR or the higher of (i) the prime rate as published in the Wall Street Journal and (ii) 0.5% plus the overnight federal funds rate, plus in each case, an applicable margin. The applicable margin for LIBOR loans, based on the applicable leverage ratio, is 1.25%, 1.50% or 1.75% per annum, and the applicable margin for base rate loans, based on the applicable leverage ratio, is either 0.25%, 0.50% or 0.75%% per annum. The Company is required to pay a commitment fee, based on the applicable leverage ratio, equal to 0.20%, 0.25% or 0.30% per annum on the undrawn portion available under the revolving credit facility and variable per annum fees in respect of outstanding letters of credit.
In addition to other covenants, the New Credit Agreement places limits on the Company and its subsidiaries ability to incur debt or liens and engage in sale-leaseback transactions, make loans and investments, incur additional indebtedness, engage in mergers, acquisitions and asset sales, transact with affiliates and alter its business. The New Credit Agreement also contains events of default, and affirmative covenants, including financial maintenance covenants which include (i) a maximum ratio of consolidated total debt to consolidated adjusted EBITDA of 3.00 to 1 and (ii) a minimum consolidated fixed charge coverage ratio of 1.25 to 1. 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.
Pursuant to a guaranty amd collateral agreement (the Guaranty and Collateral Agreement), dated as of September 15, 2015, by and among the Guarantors (as defined therein) and SVB, the Companys obligations under the Credit Facility are guaranteed by certain of the Companys direct and indirect domestic subsidiaries and the obligations under the Credit Facility and the guarantees are secured by a lien on substantially all of the Companys and its domestic subsidiaries tangible and intangible property by a pledge of all of the equity interests of the Companys direct and indirect domestic subsidiaries and by a pledge by the Companys domestic subsidiaries of 65% of the equity of their direct foreign subsidiaries, subject to limited exceptions.
The above description of the New Credit Agreement and the Guarantee and Collateral Agreement is a summary and is qualified in its entirety by the New Credit Agreement and the Guarantee and Collateral Agreement themselves, which are filed as Exhibits 10.1 and 10.2 , respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Item 1.02 | Termination of a Material Definitive Agreement |
Effective September 15, 2015, the Original Credit Agreement was terminated. At termination, the Original Credit Agreement carried no outstanding principal balance, $8.36 in unpaid interest and $17,498.71 in unpaid unused line fees, all of which were paid with Company funds without any borrowing under the New Credit Agreement.
Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The disclosure in Item 1.01 above is incorporated herein by reference in its entirety.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
10.1 | Credit Agreement by and among Monotype Imaging Holdings Inc., as Guarantor, Monotype Imaging Inc., as Borrower, the Lenders (as defined therein) and Silicon Valley Bank, as Agent, dated as of September 15, 2015. | |
10.2 | Guarantee and Collateral Agreement by and among the Guarantors (as defined therein) and Silicon Valley Bank, dated as of September 15, 2015. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
MONOTYPE IMAGING HOLDINGS INC. | ||||||
September 18, 2015 | By: | /s/ Douglas Shaw | ||||
Douglas Shaw | ||||||
Chief Executive Officer |
EXHIBIT INDEX
Exhibit Number |
Description | |
10.1 | Credit Agreement by and among Monotype Imaging Holdings Inc., as Guarantor, Monotype Imaging Inc., as Borrower, the Lenders (as defined therein) and Silicon Valley Bank, as Agent, dated as of September 15, 2015. | |
10.2 | Guarantee and Collateral Agreement by and among the Guarantors (as defined therein) and Silicon Valley Bank, dated as of September 15, 2015. |