ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN
OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
On November 23, 2020, the Company and the
Guarantors entered into the Credit Agreement. The Credit Agreement provides for a term loan facility (“Term
Loan”) of $75.0 million and a revolving credit facility (“Revolving
Loan”) of up to $10.0 million (the “Revolving Committed
Amount”). The Credit Agreement also provides that the Company has the right from time to time during the term of
the Credit Agreement to request the Lenders (although they are under no obligation to make any such loans) or other potential
lenders for incremental term loan borrowing increases of up to $37.5 million in the aggregate, subject to, among other items,
compliance with a Total Leverage Ratio not to exceed 2.50 to 1.00 and other terms specified in the Credit Agreement. The
Credit Agreement matures on November 23, 2025. The Company borrowed $75.0 million in Term Loan borrowings, subject to an
original issue discount, on the Effective Date. The Company used and will use Term Loan borrowings under the Credit Agreement
(i) to repay outstanding revolving credit borrowings and accrued interest under the Prior Credit Agreement, (ii) to pay
related fees and expenses in connection with the Credit Agreement and the refinancing of the Prior Credit Agreement and (iii)
for working capital and general corporate purposes. The Company will use Revolving Loan borrowings under the Credit Agreement
for working capital and general corporate purposes. Capitalized terms not defined herein shall have the meanings set forth in
the Credit Agreement.
Term Loan and Revolving Loan borrowings
under the Credit Agreement will bear interest at a rate per annum, at the Company’s option, of (a) for Base Rate Loans, the
Base Rate plus the Applicable Margin of 6.75% or (b) for LIBOR Loans, LIBOR plus the Applicable Margin of 7.75%. The Company will
be subject to a commitment fee of 0.50% per annum on the daily amount of the undrawn portion of the Revolving Committed Amount.
The Credit Agreement provides that the Company
must maintain minimum Liquidity of $20 million beginning on the Effective Date and until January 3, 2022 (the “Liquidity
Threshold”). The Credit Agreement also provides that the Company is required to be in compliance with a Total Leverage
Ratio of (x) not to exceed 3.50 to 1.00 beginning on the date that is the earlier of (i) January 3, 2022 or (ii) the date on which
Liquidity is less than the Liquidity Threshold and (y) not to exceed 3.00 to 1.00 from and after July 3, 2023. Under the Credit
Agreement, the Company will be permitted to exercise equity cure rights (“Specified
Equity Contribution”) with respect to compliance with the Total Leverage Ratio during the ten Business Day period
following the date that financial statements for a fiscal quarter are required to be delivered under the Credit Agreement by the
Company for such fiscal quarter provided that, among other items, (i) the equity raised is from the issuance of common or preferred
Equity Interests of the Company, (ii) no Lender shall be required to make any extension of credit during the ten Business Day period
referred to above unless the Company has received the proceeds of such Specified Equity Contribution or all such Defaults and Potential
Defaults shall have been waived in accordance with the terms of the Credit Agreement, (iii) (a) in each consecutive four fiscal
quarter period there will be at least two fiscal quarters in which no Specified Equity Contribution is made, (b) Specified Equity
Contributions may not be made in consecutive fiscal quarters, and (c) there shall be no more than four Specified Equity Contributions
made in the aggregate after the Effective Date, (iv) the amount of any Specified Equity Contribution will be no greater than the
amount required to cause the Company and its Subsidiaries to be in compliance with the Total Leverage Ratio and (v) all Specified
Equity Contributions (a) will be disregarded for all other purposes, including the calculation of EBITDA for the purpose of calculating
basket levels, pricing and other items governed by reference to EBITDA and (b) will be in readily available funds.
The outstanding Revolving Loan
borrowings under the Credit Agreement are voluntarily prepayable by the Company without penalty or premium (other than
customary breakage costs). The outstanding Term Loan borrowings under the Credit Agreement are voluntarily prepayable by the
Company, provided, that each of the following shall require a mandatory prepayment of outstanding Term Loan borrowings by the
Company as follows: (i) 100% of any cash Net Proceeds in excess of $2 million individually or in the aggregate over the term
of the Credit Agreement in respect of any Casualty Event affecting Collateral provided that the Company shall be permitted to
reinvest such Net Proceeds in accordance with the Credit Agreement, (ii) 100% of any Net Proceeds of a Specified Equity
Contribution, (iii) 100% of any cash Net Proceeds from the issuance of Debt issued by the Company or its Subsidiaries other
than Permitted Debt, (iv) 100% of any Net Proceeds from the Disposition of certain assets individually, or in the aggregate,
in excess of $2 million in any fiscal year provided that the Company shall be permitted to reinvest such Net Proceeds in
accordance with the Credit Agreement and (v) beginning with the fiscal year ending January 2, 2022, an amount equal to the
Excess Cash Flow in accordance with the Credit Agreement. Voluntary prepayments of Term Loan borrowings, mandatory
prepayments of Term Loan borrowings pursuant to items (i)-(iv) above and certain other events specified in the Credit
Agreement are subject to payment of an Applicable Premium as follows (i) during the period from the Effective Date up to and
including the date that is the first anniversary of the Effective Date, three percent (3%) of the Term Loan principal amount
prepaid, (ii) during the period from the date immediately following the first anniversary of Effective Date up to and
including the date that is the second anniversary of the Effective Date, two percent (2%) of the Term Loan principal amount
prepaid, (iii) during the period from the date immediately following the second anniversary of Effective Date up to and
including the date that is the third anniversary of the Effective Date, one percent (1%) of the Term Loan principal amount
prepaid (iv) following the third anniversary of the Effective Date, zero percent (0%) of the Term Loan principal amount
prepaid.
The Credit Agreement contains certain covenants,
including, without limitation, those limiting Company’s and the Guarantors’ ability to, among other things, incur indebtedness,
incur liens, sell or acquire assets or businesses, change the character of its business in any material respects, engage in transactions
with related parties, make certain investments, make certain restricted payments or pay dividends.
The Company’s obligations under the Credit
Agreement are secured by all of the assets of the Company and the Guarantors (including a pledge of all of the capital stock and
equity interests of the Guarantors) pursuant to the Security Agreement.
Under the Credit Agreement, the Lenders
may terminate their obligation to advance and may declare the unpaid balance of borrowings, or any part thereof, immediately due
and payable upon the occurrence and during the continuance of customary defaults which include, without limitation, payment default,
covenant defaults, bankruptcy type defaults, defaults on other indebtedness, certain judgments or upon the occurrence of a change
of control (as specified therein).
The foregoing description does not purport
to be complete and is qualified in its entirety by reference to the Credit Agreement, the Security Agreement and the Guarantee
Agreement, which are attached hereto as Exhibit 10.1, Exhibit 10.2 and Exhibit 10.3, respectively, and are incorporated by reference
herein.