EVERQUOTE, INC. : Entering into a Material Definitive Agreement, Creating a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant (Form 8-K)

Section 1.01 Entering into a Material Definitive Agreement.

On July 15, 2022, EverQuote, Inc. (the “Company”) has entered into a loan modification and security agreement (the “Amended Loan Agreement”) with Western Alliance Bank (the “Lender”), which provides a revolving line of credit of
$35,000,000replacing the Company’s former revolving line of credit with the Lender of $25,000,000which otherwise would have expired in August 2022. In addition, the Amended Loan Agreement provides the Company with access to a term loan of up to $10,000,000 who is available to start borrowing by
December 31, 2023and which has a fixed maturity of June 30, 2027.

Under the amended loan agreement, borrowings under the revolving line of credit may not exceed 85% of eligible debtor balances and bear interest at the greater of 4.25% or prime rate. In addition, the term loan will bear interest at the prime rate plus 0.25%. In the event of default, as defined in the amended loan agreement, and until such event no longer occurs, the interest rate to be charged would be the rate otherwise applicable to borrowings under the modified loan plus 5.00%.

Borrowings under the Revolving Line of Credit under the Amended Loan Agreement are repayable in interest-only monthly installments until the Loan Maturity Date, which is July 15, 2025. The Company may prepay any revolving line of credit without penalty or premium. Borrowings under the Term Loan of the Amended Loan Agreement are repayable in monthly installments of interest only by December 31, 2023. Starting the January 1, 2024, the term loan is repayable in forty-two (42) equal monthly installments of the then unpaid principal and accrued interest. The Company may prepay all, but not less than all, of any unpaid principal in respect of advances made under the Term Loan, provided that such unpaid principal is paid in full, together with any interest accrued but unpaid to date, plus certain fees payable under the term loan. Modified loan agreement.

Borrowings are secured by substantially all of the Company’s assets and property. Under the Amended Loan Agreement, the Company has agreed to positive and negative covenants to which the Company will remain subject until maturity. Covenants include limits on the Company’s ability to incur additional debt and engage in certain fundamental business transactions, such as mergers or acquisitions of other businesses. In addition, under the Amended Loan Agreement and by December 31, 2023, the Company is required to maintain a minimum asset coverage ratio of 1.5 to 1 calculated as the sum of unrestricted cash and qualifying accounts receivable divided by all borrowings outstanding under the Amended Loan Agreement . Moreover, after
December 31, 2023, the company is required to maintain and test on a quarterly basis a fixed charge coverage ratio and a leverage ratio. the fixed charge coverage ratio is measured as the company’s ratio of (i) year-over-year “EBITDA” (as defined in the Amended Loan Agreement) less capital expenditures, less cash taxes , on (ii) interest and principal over twelve months payments to the lender, of at least 1.25 to 1.00. Leverage ratio is measured as the ratio of the Company’s (i) outstanding obligations due to the lender, to (ii) trailing twelve month EBITDA, not exceeding 3.00 to 1.00.

The Company’s obligations under the Amended Loan Agreement are subject to acceleration upon the occurrence of specified events of default, including payment defaults, insolvency events, breach of covenants and material adverse events relating to, among other things, the business, operations, assets or condition.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under a

Off-balance sheet arrangement of a registrant.

The information set forth in Section 1.01 of this Current Report on Form 8-K regarding the Amended Loan Agreement is incorporated by reference into this Section 2.03.

© Edgar Online, source Previews