The Term Loan Amendment amends certain mandatory prepayment events, requires the payment of certain fees to the term loan lenders and the engagement of a chief restructuring officer, includes additional budget and variance reporting, and waives certain events of default, in each case, as set forth in the Term Loan Amendment.
The foregoing description of the Term Loan Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Term Loan Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Amendment to Revolving Credit Agreement
On August 13, 2024, the Company entered into an amendment (the “Revolver Amendment”) to the Amended and Restated Revolving Credit and Security Agreement, dated as of December 27, 2018 (as the same has been and may further be amended, modified, supplemented, renewed, restated or replaced from time to time, the “Revolving Credit Agreement”), among the Company, Quantum LTO, the other borrowers and guarantors from time to time party thereto, the lenders from time to time party thereto, and PNC Bank, National Association, as administrative agent and collateral agent for such lenders.
The Revolver Amendment amends the interest rate on the loans thereunder (the “Revolving Loans”) such that the interest rate margin on the Revolving Loans is (x) 4.75% per annum for Term SOFR Rate Loans and (y) 3.75% per annum for Domestic Rate Loans. The Revolver Amendment amends the unused line fee so that the unused line fee applicable to the revolving loan facility is 0.50% per annum.
The Revolver Amendment also (i) amends the maximum total net leverage ratio covenant so that such covenant is not tested until June 30, 2025 at the revised levels set forth in the Revolver Amendment, (ii) includes a new minimum EBITDA covenant to be tested on December 31, 2024 and March 31, 2025, at the levels set forth in the Revolver Amendment, (iii) waives the testing of the fixed charge coverage ratio for the quarters ending June 30, 2024 and September 30, 2024, and (iv) amends the minimum daily liquidity covenant to the revised levels set forth in the Revolver Amendment.
The Revolver Amendment amends certain mandatory prepayment events, requires the payment of certain fees to the revolving lenders, includes additional budget and variance reporting, and waives certain events of default, in each case, as set forth in the Revolver Amendment.
The foregoing description of the Revolver Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Revolver Amendment, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.
Warrants to Purchase Stock
In connection with the Term Loan Amendment, on August 13, 2024, the Company issued to the lenders of the term loan under the Term Loan Credit Agreement (the “Term Loan Lenders”) warrants (the “August 2024 Term Loan Warrants”) to purchase an aggregate of 7,606,169 shares of the Company’s common stock (the “Common Stock”), at an exercise price of $0.31 per share, the closing price of the Common Stock on the date immediately preceding the signing of the warrant agreements. The exercise price and the number of shares underlying the August 2024 Term Loan Warrants are subject to adjustment in the event of specified events, including dilutive issuances at a price lower than the exercise price of the August 2024 Term Loan Warrants, a subdivision or combination of the Common Stock, a reclassification of the Common Stock or specified dividend payments, subject to certain limitations as set forth in the August 2024 Term Loan Warrants. Upon exercise, the aggregate exercise price may be paid, at each warrant holder’s election, in cash or on a net issuance basis, based upon the fair market value of the Common Stock at the time of exercise.
The issuance of the August 2024 Term Loan Warrants and any shares of Common Stock issuable thereunder are exempt from registration pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) the Securities Act of 1933, as amended (the “Securities Act”), and Regulation D under the Securities Act. The August 2024 Term Loan Warrants and any shares of Common Stock issuable thereunder, were not registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from the registration requirements.
The foregoing description of the August 2024 Term Loan Warrants does not purport to be complete and is qualified in its entirety by reference to the full text of the August 2024 Term Loan Warrants, copies of which are filed as Exhibits 4.1 and 4.2 to this Current Report on Form 8-K and are incorporated herein by reference.
