Cricut, Inc. 10-Q

ITEM 5. OTHER INFORMATION Entry into New Credit Agreement; Termination of Previous Credit Agreement On August 4, 2022, the Company entered into a Credit Agreement (the “New Credit Agreement”) with JPMorgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto. The New Credit Agreement refinances and replaces the Company’s prior asset-based Credit Agreement, dated as of September 4, 2020, with JPMorgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto, as amended. The New Credit Agreement makes available to the Company a five-year, senior secured revolving Credit Facility (the “Credit Facility”) with an aggregate commitment of $300 million and an accordion feature whereby the Company may request, subject to certain agent or lender consent rights, increases in the aggregate commitment amount up to an additional $150 million (for a maximum aggregate commitment of up to $450 million). As of August 9, 2022, the Company had no borrowings on the Credit Facility, leaving $300 million available to be drawn. Subject to the satisfaction of customary conditions to borrowing, the Company may use the Credit Facility to finance its working capital needs and for general corporate purposes, including acquisitions and share repurchases permitted under the New Credit Agreement. The New Credit Agreement permits the usage of a portion of the Credit Facility for the issuance of letters of credit in an aggregate amount not to exceed $20 million. The New Credit Agreement also permits the Company to borrow revolving loans denominated in Australian Dollars, Canadian Dollars, New Zealand Dollars and Pounds Sterling, plus any additional currencies determined after the effective date with the consent of the agent and certain lenders. The Credit Facility matures on August 4, 2027. The Company may prepay revolving loans without premium payment or penalty except for customary breakage fees if revolving loans bearing interest according to term benchmark rates are prepaid on a date other than the end of the applicable interest period. The New Credit Agreement is collateralized by substantially all of the Company’s assets, including its capital stock or other equity interests in its foreign subsidiaries, and contains affirmative and negative covenants, representations and warranties, events of default and other terms customary for credit facilities of this type. Among other covenants, the New Credit Agreement requires the Company to maintain (a) a “Leverage Ratio”—defined as the ratio of Consolidated Total Indebtedness to Consolidated EBITDA (each as defined therein)—of not less than 3.00 to 1.00 (provided that following a permitted acquisition for which aggregate consideration in respect thereof equals or exceeds $100 million, the Company may elect to increase the Leverage Ratio to 3.50 to 1.00 for a period of four consecutive fiscal quarters (commencing with the fiscal quarter in which such acquisition occurs) and (b) an Interest Coverage Ratio—defined as the ratio of Consolidated EBITDA to Consolidated Interest Expense (each as defined therein)—of not less than 3.00 to 1.00. Failure to comply with the financial or other covenants set forth in the New Credit Agreement or related loan documents would entitle the lenders party to the New Credit Agreement to terminate their lending commitments and to accelerate the maturity of all amounts outstanding under the loan documents. Under the terms of the New Credit Agreement and related loan documents, the Company has paid and/or will pay arrangement fees, agent fees, upfront fees, letter of credit fees and commitment fees. U.S. dollar-denominated borrowings under the New Credit Agreement bear interest at a rate based upon either (a) the term secured overnight financing rate plus 0.10% (the “Adjusted Term SOFR Rate”) or (b) the Alternate Base Rate (as defined therein), plus, in each case, the Applicable Margin, which varies from 1.25% to 2.25% (for Adjusted Term SOFR Rate loans) or 0.25% to 1.25% (for Alternate Base Rate loans) based on the Company’s Leverage Ratio. Revolving loans denominated in Australian Dollars, Canadian Dollars, New Zealand Dollars or Pounds Sterling bear interest at a rate based on the Adjusted AUD Rate, the Adjusted CDOR Rate, the Adjusted NZD Rate or the Adjusted Daily Simple SONIA Rate, respectively, each as defined in the New Credit Agreement plus, in each case, the Applicable Margin, which varies from 1.25% to 2.25% for such foreign currency-denominated loans based on the Company’s Leverage Ratio. 81 The foregoing description of the New Credit Agreement is only a summary, does not purport to be complete and is qualified in its entirety by reference to the full text of the New Credit Agreement, a copy of which is filed as Exhibit 10.1 hereto and is hereby incorporated by reference herein. 82 ITEM 6. EXHIBITS The documents listed below are incorporated by reference or are filed with this Quarterly Report on Form 10-Q, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K). EXHIBIT INDEX Exhibit Number Description 10.1* Credit Agreement, dated August 4, 2022, by and among the Company, JPMorgan Chase Bank, N.A, as Administrative Agent, and other lenders party thereto. 31.1* Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* † Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. 32.2* † Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. 101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH* Inline XBRL Taxonomy Extension Schema Document. 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104* Cover Page Interactive Data File - the cover page interactive data is embedded within the Inline XBRL document or included within the Exhibit 101 attachments * Filed herewith + Indicates management contract or compensatory plan. † The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed "filed" for purposes of Section 18 or the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference. 83 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: August 9, 2022 By: /s/ Ashish Arora Name: Ashish Arora Title: Chief Executive Officer ( Principal Executive Officer ) Date: August 9, 2022 By: /s/ Kimball Shill Name: Kimball Shill Title: Chief Financial Officer ( Principal Financial Officer ) Date: August 9, 2022 By: /s/ Ryan Harmer Name: Ryan Harmer Title: VP of Accounting, Corporate Controller (Principal Accounting Officer) 84