Company: ZRCN
Filing Date: 2025-07-21
Form Type: 8-K
Source: 0001641172-25-020310
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Company: ZRCN Inc.
Filing Date: 2025-07-21
Form: 8-K
Item: Item 1.01
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Item
1.01 Entry Into a Material Definitive Agreement

On
July 15, 2025, ZRCN, Inc. (the “ Company”), and its wholly owned subsidiary, Zircon Corporation (“ Zircon”), and
its affiliates, Zircon de Mexico, S. A. de C. V. and Zircon Corporation Ltd. (collectively the “ Affiliates”), entered into
a forbearance agreement and first amendment to Credit Agreement (the “ Forbearance Agreement”) with FGI Worldwide LLC, as
Agent for the lender (“ FGI”) amending, modifying and other wise affecting that certain Revolving Credit Agreement, dated
May 31, 2024 (the “ Credit Agreement”). As previously reported on a Current Report on Form 8-K, the Company is in default
of certain of its obligations under the Credit Agreement, which defaults include non-compliance with its Fixed Cost Coverage Ratio covenant
(as defined in the Credit Agreement) and one additional non-financial covenant.

Pursuant
to the Forbearance Agreement, the Agent has agreed to forbear from exercising any of its rights and remedies arising under the Credit
Agreement and applicable law as a result of the occurrence and continuance of certain specified existing events of default until the
earlier of (a) February 28, 2026 and (b) the date on which any Termination Event (as defined in the Forbearance Agreement) occurs (the
“ Forbearance Period”). The Forbearance Agreement, among other things: (i) permits the Company to not comply with its Fixed
Cost Coverage Ratio covenant until the end of the Forbearance Period, (ii) increases the Revolving Interest Rate (as defined in the Credit
Agreement) from 3.0% to 3.3%, (iii) increases the Management Fee (as defined in the Credit Agreement) from 0.2% to 0.3%, (iv) requires
the Company to prepare and deliver to Agent a budget on a weekly basis, (v) requires the Company to enter into a payment plan with its
Key Supplier (as defined in the Forbearance Agreement), (vi) requires the Company to maintain certain minimum consolidated EBITDA through
the Forbearance Period, (vii) requires the Company to use commercially reasonable efforts to contribute $2,000,000 to the capital of
Zircon on or prior to February 28, 2026, which