Classmates.com 2008 Annual Report Download - page 72

Table of Contents
Liquidity and Capital Resources
On August 26, 2008, we completed the acquisition of 100% of the capital stock of FTD Group, Inc. We paid a combination of (i) $10.15 in
cash and (ii) 0.4087 of a share of United Online common stock for each outstanding share of FTD common stock. The total merger consideration
was approximately $307 million in cash and approximately 12.3 million shares of United Online common stock, subject to the payment of cash
in lieu of fractional shares of United Online common stock.
The FTD acquisition was financed, in part, with the net proceeds from (i) a $60 million senior secured credit agreement with Silicon Valley
Bank (the "UOL Credit Agreement") and (ii) $425 million of term loan borrowings under senior secured credit facilities, including a $50 million
revolving line of credit, with Wells Fargo Bank, National Association (the "FTD Credit Agreement"). The remaining cash consideration in the
transaction was paid from United Online's and FTD's existing cash on hand.
The term loans under the UOL Credit Agreement bear interest at either LIBOR plus 3.50% per annum (with a LIBOR floor of 3.00%) or
the prime rate plus 2.00% per annum. The UOL Credit Agreement contains customary representations and warranties, events of default,
affirmative covenants and negative covenants (which impose restrictions and limitations on, among other things, dividends, investments, asset
sales, and the ability to incur additional debt and liens) that, among other things, impose the maintenance of a maximum consolidated leverage
ratio and the maintenance of a minimum consolidated fixed charge coverage ratio and minimum consolidated adjusted EBITDA.
The obligations under the UOL Credit Agreement are guaranteed by our domestic wholly-owned subsidiaries, other than UNOL
Intermediate, Inc. (a wholly-owned subsidiary of United Online and the direct parent of FTD Group, Inc.) and its subsidiaries. In addition, the
obligations under the UOL Credit Agreement are secured by a lien on substantially all of the assets of the guarantors, including a pledge of all of
the outstanding capital stock of the guarantors' direct subsidiaries (except with respect to foreign subsidiaries, in which case such pledge is
limited to 66% of the outstanding capital stock), excluding the capital stock of UNOL Intermediate, Inc.
The FTD Credit Agreement consists of (i) a term loan A facility of $75 million, (ii) a term loan B facility of $300 million, and (iii) a
revolving credit facility of $50 million. The interest rate set forth in the FTD Credit Agreement for loans made under the revolving credit facility
and term loan A facility is either the prime rate plus 2.50% per annum, or LIBOR plus 3.50% per annum (with a LIBOR floor of 3.00%), in each
case, with step-downs in the interest rate depending on FTD's leverage ratio. The interest rate set forth in the FTD Credit Agreement for loans
made under the term loan B facility is either the prime rate plus 3.50% per annum, or LIBOR plus 4.50% per annum (with a LIBOR floor of
3.00%), in each case, with step-downs in the interest rate depending on FTD's leverage ratio. In addition, there is a commitment fee equal to
0.50% per annum (with step-downs in the commitment fee depending on FTD's leverage ratio) on the unused portion of the revolving credit
facility. The FTD Credit Agreement is guaranteed by UNOL Intermediate, Inc. and substantially all of the domestic subsidiaries of FTD and is
secured by substantially all of the assets of FTD and such subsidiaries, including a pledge of all of the outstanding capital stock owned by FTD
and such guarantors (provided that no more than 66% of the capital stock of any foreign subsidiary is pledged or otherwise secures the FTD
Credit Agreement). The FTD Credit Agreement contains customary representations and warranties, events of default, affirmative covenants and
negative covenants that, among other things, require FTD not to exceed a maximum leverage ratio and to maintain a minimum fixed charge
coverage ratio and imposes restrictions and limitations on, among other things, capital expenditures, investments, dividends, asset sales, and the
incurrence of additional debt and liens. On the date of the FTD acquisition, term loan A and term loan B under the FTD Credit Agreement were
funded.
In connection with the closing of the FTD acquisition, all of the approximately $122.1 million of outstanding borrowings under FTD's
existing credit facilities were repaid. In addition, FTD, Inc.
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