Shutterfly 2013 Annual Report Download - page 40

Provisions in the indenture for the notes may deter or prevent a business combination that may be favorable to
holders of the notes.
If a fundamental change occurs prior to the maturity date of the notes, holders of the notes will have
the right, at their option, to require us to repurchase all or a portion of their notes. In addition, if a
make-whole fundamental change occurs prior to the maturity date of the notes, we will in some cases be
required to increase the conversion rate for a holder that elects to convert its notes in connection with such
fundamental change. Furthermore, the indenture for the notes prohibits us from engaging in certain
mergers or acquisitions unless, among other things, the surviving entity assumes our obligations under the
notes. These and other provisions in the indenture could deter or prevent a third party from acquiring us
even when the acquisition may be favorable to holders of the notes.
Some significant restructuring transactions may not constitute a fundamental change, in which case we would not
be obligated to offer to repurchase the notes.
Upon the occurrence of a fundamental change, holders have the right to require us to repurchase their
notes. However, the fundamental change provisions will not afford protection to holders of notes in the
event of other transactions that could adversely affect the notes. For example, transactions such as
leveraged recapitalizations, refinancings, restructurings, or acquisitions initiated by us may not constitute a
fundamental change requiring us to repurchase the notes. In the event of any such transaction, the holders
would not have the right to require us to repurchase the notes, even though each of these transactions
could increase the amount of our indebtedness, or otherwise adversely affect our capital structure or any
credit ratings, thereby adversely affecting the holders of notes.
We have not registered the notes or the common stock issuable upon conversion, if any, which will limit holders’
ability to resell them.
The notes and the shares of common stock issuable upon conversion of the notes, if any, have not been
registered under the Securities Act of 1933, as amended, or the Securities Act, or any state securities laws.
Unless the notes and any shares of common stock issuable upon conversion of the notes have been
registered, they may not be transferred or resold except in a transaction exempt from or not subject to the
registration requirements of the Securities Act and applicable state securities laws. We do not intend to
file a registration statement for the resale of the notes and the common stock, if any, into which the notes
are convertible.
An active trading market may not develop for the notes.
Prior to our issuance of the notes, there had been no trading market for the notes. We do not intend to
apply to list the notes on any securities exchange or to arrange for quotation on any automated dealer
quotation system. The liquidity of the trading market in the notes, and the market price quoted for the
notes, may be adversely affected by changes in the overall market for this type of security and by changes in
our financial performance or prospects or in the prospects for companies in our industry generally. As a
result, we cannot assure holders that an active trading market will develop for the notes. If an active
trading market does not develop or is not maintained, the market price and liquidity of the notes may be
adversely affected. In that case holders may not be able to sell their notes at a particular time or holders
may not be able to sell their notes at a favorable price.
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