Item 1.01 Entry into a Material Definitive Agreement.
On July 18, 2022, Cryo-Cell International, Inc. (the “Company”) entered into a Credit Agreement (“Agreement”) with Susser Bank, a Texas state bank, as administrative agent (“Susser”) on behalf of itself and the other lenders (collectively, the “Lenders”) for (i) a revolving credit facility in an aggregate principal amount of up to $10,000,000 (the “RCF”); and (ii) a term loan facility in an original principal amount of $8,960,000 (the “Term Loan” and together with the RCF collectively, the “Loans”). In connection with the RCF the Company entered into a Revolving Credit Note, in favor of Susser, in the stated principal amount of $10,000,000 (the “RCF Note”), and in connection with the Term Loan the Company entered into a Term Note, in favor of Susser, in the stated principal amount of $8,960,000 (the “Term Note” and together with RCF Note, collectively, the “Notes”).
The proceeds of the Term Loan were used by the Company to purchase a commercial office building and associated property in Durham, North Carolina, as previously disclosed by the Company on its Current Report on Form 8-K filed with the SEC on March 16, 2022. The proceeds of the RCF, if drawn down, will be used by the Company for general working capital needs and possibly a Special Dividend and/or share repurchases.
The Loans bear interest at the Company’s option at: (a) the Base Rate, which is the highest of (i) the rate of interest published by The Wall Street Journal, from time to time, as the “U.S. Prime Rate”, (ii) the federal funds rate plus 0.5% and (iii) the Monthly SOFR rate plus 1.0% (subject in each case to a floor of 5.5%), plus 4.25% or (b) the Monthly SOFR plus 3.25% (subject to a floor of 4.5%). The RCF Note matures on July 18, 2025 and the Term Note matures on July 18, 2032.
The Company is required to pay a commitment fee equal to 0.5% times the daily average unused portion of the RCF.
The Agreement requires the Company to maintain a Leverage Ratio, determined as of the last day of each quarter for the four-fiscal quarter period ending on the date of determination, of no more than 3.50 to 1.00. The Agreement also requires the Company to maintain a Debt Service Coverage Ratio of no less than 1.25 to 1.00 determined as of the last day of each quarter for the four-fiscal quarter period ending on the date of determination.
Other than with respect to the Special Dividend (as defined in the Agreement), the Agreement restricts the Company’s ability to make dividends to stockholders if a default or an event of default (as defined in the Agreement) exists or would result from such distribution and if the Company is not in pro forma compliance with the financial covenants. In addition, the Agreement contains various covenants that may limit, among other things, the Company’s ability to incur indebtedness, grant liens, make investments, repay or amend the terms of certain other indebtedness, merge or consolidate, sell assets, and engage in transactions with affiliates.
The foregoing summary of the Agreement and the Notes is qualified in its entirety by the Agreement and Notes, which will be filed with the Company’s next quarterly report on Form 10-Q.