Item 1.01.
Entry into a Material Definitive Agreement
On May 16, 2016, Staples, Inc. (Staples) entered into amendments (collectively, the Amendment) to the Credit Agreement, dated as of May 31, 2013, by and among Staples, the lenders named therein, and Bank of America, N.A. (Bank of America), as administrative agent for the lenders (the Credit Agreement). The Amendment amends the Credit Agreement to modify the definition of Consolidated EBIT to (i) reset the $100,000,000 extraordinary and nonrecurring cash charge cumulative basket from the effective date of the Amendment, and (ii) add back transaction costs of up to $300,000,000 in connection with the termination of the proposed acquisition of Office Depot, Inc. (Office Depot) by Staples. The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, attached hereto as Exhibit 10.1 and Exhibit 10.2, and incorporated by reference herein.
The disclosure set forth below under Item 1.02 of this Current Report on Form 8-K is incorporated by reference herein.
Item 1.02.
Termination of a Material Definitive Agreement
Termination of Merger Agreement
As previously disclosed, on February 4, 2015, Staples entered into that certain Agreement and Plan of Merger (the Merger Agreement) with Office Depot and Staples AMS, Inc. (Merger Sub), providing for the acquisition of Office Depot by Staples (the Merger). On May 16, 2016, Staples, Merger Sub and Office Depot entered into a mutual Termination Agreement (the Termination Agreement), under which the parties agreed that the Merger Agreement, including all schedules and exhibits thereto, and all ancillary agreements contemplated thereby or entered pursuant thereto (collectively the Transaction Documents), were terminated, effective immediately as of May 16, 2016. Under the Termination Agreement, Staples agreed to pay Office Depot the Regulatory Fee (as defined in the Merger Agreement) of $250 million in cash on or before May 19, 2016. The Parties also agreed to release each other from any and all liability, claims, rights, actions, causes of action, suits, liens, obligations, accounts, debts, demands, agreements, promises, liabilities, controversies, costs, charges, damages, expenses and fees, however arising, in connection with, arising out of or related to the Transaction Documents or the transactions contemplated therein or thereby. The foregoing descriptions of the Merger Agreement and the Termination Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Merger Agreement, which was filed as an exhibit to Staples Current Report on Form 8-K filed on February 4, 2015, and the Termination Agreement, which is attached hereto as Exhibit 10.3, each of which is incorporated by reference herein.
Prepayment of Term Loan and Termination of Escrow Agreement
On May 11, 2016, Staples and Staples Escrow, LLC (Staples Escrow), a wholly owned subsidiary of Staples, provided notice of its intent to prepay the term loan under the Term Loan Credit Agreement (the Term Loan Agreement), dated as of February 2, 2016, by and among Staples, Staples Escrow, Barclays Bank PLC (Barclays), as administrative agent and collateral agent, and the lenders party thereto (the Lenders). On May 13, 2016, Staples and Staples Escrow paid to the Lenders approximately $2,522,968,750, consisting of the then outstanding principal balance due of $2,500,000,000, plus accrued but unpaid interest and other lender fees and expenses, and certain remaining fees and expenses are expected to be paid on May 19, 2016. Following such prepayment, the Term Loan Agreement will be terminated.
As previously disclosed, in connection with the Term Loan Agreement, on February 2, 2016, Staples Escrow entered into an Escrow Agreement (the Escrow Agreement) with JPMorgan Chase Bank, N.A. (JPMorgan), as escrow agent, securities intermediary and depositary bank, and Barclays, as administrative agent and collateral agent, pursuant to which the proceeds from the term loan under the Term Loan Agreement were deposited into escrow. In connection with the prepayment of the Term Loan Agreement on May 13, 2016, the funds in the escrow account were released to Barclays and used for the prepayment of the term loans described above. Once all funds are disbursed from the escrow account, the Escrow Agreement will terminate in accordance with its terms.
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