| Item 1.01 | Entry into a Material Definitive Agreement. |
Amendment to Term Loan Credit Agreement
On July 11, 2024, Quantum Corporation (the “Company”) entered into an amendment (the “Term Loan Amendment”) to the Term Loan Credit and Security Agreement, dated as of August 5, 2021 (as the same has been and may further be amended, modified, supplemented, renewed, restated or replaced from time to time, the “Term Loan Credit Agreement”), among the Company, Quantum LTO Holdings, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“Quantum LTO”), the other borrowers and guarantors from time to time party thereto, the lenders from time to time party thereto, and Blue Torch Finance LLC, as disbursing agent and collateral agent for such lenders.
The Term Loan Amendment, among other things, (i) amends the Term Loan Credit Agreement such that the total net leverage ratio financial covenant is not tested for the fiscal quarter ended June 30, 2024 until July 31, 2024, and (ii) provides for the Company to pay certain fees and expenses to the administrative agent for the benefit of the lenders.
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 July 11, 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, among other things, (i) extends the date by which the Company is required to enter into a subsequent amendment to the Revolving Credit Agreement until July 31, 2024 and (ii) provides for the Company to pay certain fees and expenses to the administrative agent for the benefit of the lenders.
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 July 11, 2024, the Company issued to the lenders of the term loan under the Term Loan Credit Agreement warrants (the “2024 Term Loan Warrants”) to purchase an aggregate of 1,000,000 shares of the Company’s common stock, at an agreed purchase price (the “Common Stock”). The exercise price and the number of shares underlying the 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 2024 Term Loan Warrants, a subdivision or combination of the Common Stock, a reclassification of the Common Stock or specified dividend payments. 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 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 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.
