SYNCHRONOSS TECHNOLOGIES,INC. (NASDAQ:SNCR) Files An 8-K Entry into a Material Definitive Agreement

SYNCHRONOSS TECHNOLOGIES,INC. (NASDAQ:SNCR) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement

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As previously disclosed, Synchronoss Technologies,Inc. (the “Company”) requested an amendment to its Senior Secured Credit Agreement dated January19, 2017 with the lending institutions from time to time parties thereto (the “Lenders”) and Goldman Sachs Bank USA (the “Administrative Agent”), as administrative agent, collateral agent, swingline lender and a letter of credit issuer (the “Credit Agreement”) for additional time to deliver its first quarter 2017 financial statements, as required under the Credit Agreement.

On June30, 2017, the Company, the guarantors party thereto (the “Guarantors”), the consenting Lenders party thereto and the Administrative Agent entered into a Limited Waiver to Credit Agreement (the “First Waiver”) to which the Lenders agreed, subject to the limitations contained in the First Waiver, to waive until 11:59 p.m.(New York City time) on July13, 2017 (the “Limited Waiver”) the anticipated event of default (the “Anticipated Event of Default”) resulting from the Company’s failure to deliver its first quarter 2017 financial statements, together with related items required under the 2017 Credit Agreement on or prior to June30, 2017. In the absence of the Limited Waiver, after the occurrence of the Anticipated Event of Default the Lenders would have been permitted to exercise their rights and remedies available to them under the 2017 Credit Agreement with respect to an event of default.

On July13, 2017, the Company, the Guarantors, the consenting Lenders party thereto and the Administrative Agent entered into a Second Limited Waiver to Credit Agreement (the “Second Waiver”) to which the Lenders agreed, subject to the limitations contained in the Second Waiver, to extend the Limited Waiver until 11:59 p.m.(New York City time) on July17, 2017.

On July17, 2017, the Company, the Guarantors, the consenting Lenders party thereto and the Administrative Agent entered into a Third Limited Waiver to Credit Agreement (the “Third Waiver”) to which the Lenders agreed, subject to the limitations contained in the Third Waiver, to extend the Limited Waiver until 11:59 p.m.(New York City time) on July19, 2017.

On July19, 2017, the Company, the Guarantors, the consenting Lenders party thereto and the Administrative Agent entered into a First Amendment and Limited Waiver to Credit Agreement (the “Amendment”). to the Amendment, the Lenders and Administrative Agent agreed to extend the time period for delivery by the Company of its quarterly financial statements for the quarters ended March31, 2017 and June30, 2017 (the “2017 Quarterly Financial Statements”) and to waive the default and event of default arising from the Company’s failure to deliver the 2017 Quarterly Financial Statements within the timeframe originally required by the Credit Agreement.

The delay in delivering the 2017 Quarterly Financial Statements relates to the Company’s previously disclosed conclusion to restate its financial statements for the fiscal years ended December31, 2016 and 2015 (and the respective quarterly periods) (the “Relevant Periods”) to correct certain identified accounting errors and certain other immaterial prior period errors. to the Amendment, the Company has agreed to deliver the 2017 Quarterly Financial Statements and the restated financial statements for the Relevant Periods (the “Restated Financial Statements”) by October17, 2017 (or, at the Company’s election, November16, 2017, if prior to October17, 2017 the Company pays a fee to the Lenders equal to 25 basis points on the aggregate principal amount of revolving commitments and terms loans outstanding).

The Amendment effected various other changes to the terms of the Credit Agreement (as amended by the Amendment, the “Amended Credit Agreement”), including reducing revolving credit commitments from $200 million to $100 million (with a sublimit on usage of $50 million until the earliest date by which the Company has delivered the 2017 Quarterly Financial Statements, the Restated Financial Statements and certain information with respect to disclosing and remedying any material weaknesses in the Company’s internal control structure related to financial reporting (the “Finalization Date”)).

Under the Amended Credit Agreement, the Company must maintain a first lien secured net leverage ratio of no more than (x)5.50 to 1 for any period ending from September30, 2017 through March31, 2019; (y)5.00 to 1 for any period ending June30, 2019 through December31, 2019; and (z)4.25 to 1 for any period ending March31, 2020 and thereafter. The Company must also maintain a minimum interest coverage ratio of no less than 2.00 to 1.

Until the earlier of (A)the later of (i)December15, 2017 and (ii)in the event that, prior to December15, 2017, the Company has publicly announced a strategic transaction, or merger, business combination, acquisition or divestiture that would result in a change of control or a requirement to prepay the loans and terminate commitments under the Amended Credit Agreement, the date on which such transaction is consummated or abandoned (the “Initial Period End Date”) and (B)June15, 2018, term loans under the Amended Credit Agreement bear interest at a rate equal to, at the Company’s option, the adjusted LIBOR rate for an applicable interest period or an alternate base rate (subject to a floor of 1.00% and 2.00%, respectively), in each case, plus an applicable margin of 4.50% or 3.50%, respectively. Thereafter, the applicable margins increase to 5.75% and 4.75%, respectively, if the Company’s first lien secured net leverage ratio is less than or equal to 5.00 to 1, and to 6.75% and 5.75%, respectively, if the

Company’s first lien secured net leverage ratio is greater than 5.00 to 1. The foregoing applicable margins are subject to a retroactive increase of 0.25% each if the Restated Financial Statements show an amount of net revenue for any fiscal year ended December31, 2015, December31, 2016 and, if applicable, December31, 2014 that varies by greater than 15% of the net revenue set forth on consolidated balance sheets and related consolidated income statements of the Company for such fiscal year that had originally been filed with the Securities and Exchange Commission.

Until the Initial Period End Date, revolving loans under the Amended Credit Agreement bear interest at a rate equal to, at Company’s option, the adjusted LIBOR rate or an alternate base rate (subject to a floor of 1.00% and 2.00%, respectively), in each case, plus an applicable margin of 4.50% or 3.50%, respectively. Thereafter, the applicable margins will be subject to step-downs based on the Company’s first lien secured net leverage ratio.

Until the Initial Period End Date, term loans under the Amended Credit Agreement are subject to a prepayment premium of 1.00% solely if prepaid with proceeds of a repricing transaction. Thereafter, the term loans will be subject to (x)a 2.00% prepayment premium for any voluntary prepayments (including upon a change of control) made through the one-year anniversary of the Initial Period End Date and (y)a 1.00% prepayment premium for any voluntary prepayments (including upon a change of control) made after the one-year anniversary of the Initial Period End Date and prior to the second anniversary thereof.

The Amendment also effected various other changes to the baskets and exceptions under the negative covenants of the Credit Agreement.

Certain of the Lenders under the Credit Agreement and the Amended Credit Agreement, or their affiliates, have provided, and may in the future from time to time provide, certain commercial and investment banking, financial advisory and other services in the ordinary course of business for the registrant and its affiliates, for which they have in the past and may in the future receive customary fees and commissions.

The foregoing descriptions of the Credit Agreement, the First Waiver, the Second Waiver, the Third Waiver and the Amendment do not purport to be complete and are qualified in their entirety by the full text of the Credit Agreement, the First Waiver, the Second Waiver, the Third Waiver and the Amendment, copies of which are attached hereto as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5, respectively, and are incorporated herein by reference.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information disclosed in Item 1.01 above is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

ExhibitNo.

Description

10.1

Senior Secured Credit Agreement dated January19, 2017 by and among Synchronoss Technologies,Inc., the lending institutions from time to time parties thereto and Goldman Sachs Bank USA, as administrative agent, collateral agent, swingline lender and a letter of credit issuer.

10.2

Limited Waiver to Credit Agreement dated June30, 2017 by and among Synchronoss Technologies,Inc., guarantors party thereto, the consenting lending institutions party thereto and Goldman Sachs Bank USA, as administrative agent, collateral agent, swingline lender and a letter of credit issuer.

10.3

Second Limited Waiver to Credit Agreement dated July13, 2017 by and among Synchronoss Technologies,Inc., the guarantors party thereto, the consenting lending institutions party thereto and Goldman Sachs Bank USA, as administrative agent, collateral agent, swingline lender and a letter of credit issuer.

10.4

Third Limited Waiver to Credit Agreement dated July13, 2017 by and among Synchronoss Technologies,Inc., the guarantors party thereto, the consenting lending institutions party thereto and Goldman Sachs Bank USA, as administrative agent, collateral agent, swingline lender and a letter of credit issuer.

10.5

First Amendment and Limited Waiver to Credit Agreement dated July19, 2017 by and among Synchronoss Technologies,Inc., the guarantors party thereto, the consenting lending institutions party thereto and Goldman Sachs Bank USA, as administrative agent, collateral agent, swingline lender and a letter of credit issuer.


SYNCHRONOSS TECHNOLOGIES INC Exhibit
EX-10.1 2 a17-17989_2ex10d1.htm EX-10.1   Exhibit 10.1   EXECUTION VERSION   CREDIT AGREEMENT   dated as of January 19,…
To view the full exhibit click here

About SYNCHRONOSS TECHNOLOGIES,INC. (NASDAQ:SNCR)

Synchronoss Technologies, Inc. (Synchronoss) offers cloud solutions and software-based activation for mobile carriers, enterprises, retailers and original equipment manufacturers (OEMs). The Company operates in providing cloud solutions and software-based activation for connected devices segment. Its software provides consumer and enterprise solutions for transactions on a range of connected devices across the world’s networks. The Company’s solutions include activation and provisioning software for devices and services, cloud-based sync, backup, storage and content engagement capabilities, broadband connectivity solutions, analytics, identity/access management and secure mobility management that enable communications service providers (CSPs), cable operators/multi-services operators (MSOs) and OEMs with embedded connectivity, multi-channel retailers, medium and large enterprises and their consumers, as well as other customers for secure and broadband networks, and connected devices.

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