EXECUTION VERSION

Exhibit 10.16.7

 

 

SEVENTH Amendment Agreement

 

This Seventh Amendment Agreement (this “Amendment”) is entered into this 29th
day of March 2018, by and among BENEFITFOCUS, INC., a Delaware corporation (the
“Parent”), BENEFITFOCUS.COM, INC., a South Carolina corporation
(“Benefitfocus.com”), and BENEFITSTORE, INC., a South Carolina corporation
(“BenefitStore”, and together with the Parent and Benefitfocus.com, each
individually, a “Borrower”, and collectively, the “Borrowers”), the several
banks and other financial institutions or entities party hereto (each a “Lender”
and, collectively, the “Lenders”), and SILICON VALLEY BANK, as administrative
agent and collateral agent for the Lenders (in such capacity, the
“Administrative Agent”).

Recitals

A.     The Borrowers, the Lenders and the Administrative Agent have entered into
that certain Credit Agreement dated as of February 20, 2015, as amended pursuant
to that certain First Amendment Agreement dated June 16, 2015, pursuant to that
certain Second Amendment Agreement dated December 18, 2015, pursuant to that
certain Third Amendment Agreement dated March 24, 2016, pursuant to that certain
Fourth Amendment Agreement dated October 28, 2016, pursuant to that certain
Fifth Amendment Agreement dated December 12, 2016 and pursuant to that certain
Sixth Amendment Agreement dated April 26, 2017 (as amended and as the same may
from time to time be further amended, modified, supplemented or restated, the
“Credit Agreement”), pursuant to which the Lenders have extended credit to the
Borrowers for the purposes permitted in the Credit Agreement.

B.     The Borrowers have requested and the Required Lenders and the
Administrative Agent agree to modify and amend certain terms and conditions of
the Credit Agreement to account for Borrowers’ adoption of ASC 606.

Agreement

     Now, Therefore, in consideration of the foregoing recitals and other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

1.     Definitions.  Capitalized terms used but not defined in this Amendment
shall have the meanings given to them in the Credit Agreement.

2.     Amendments to Loan Documents.

2.1     Amendments to Credit Agreement.

2.1.1.     Section 1.1 (Defined Terms). 

(a)     The definition of “Consolidated EBITDA” is amended and restated in its
entirety as follows:

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““Consolidated EBITDA”:  with respect to the Parent and its consolidated
Subsidiaries for any trailing twelve month period for which a calculation is to
be made under this Agreement, (a) the sum, without duplication, of the amounts
for such period of (i) Consolidated Net Income, plus (ii) Consolidated Interest
Expense, plus (iii) provisions for taxes based on income, plus (iv) total
depreciation expense, plus (v) total amortization expense, plus (vi) non-cash
compensation expense, plus (vii) the fees, costs and expenses incurred in
connection with this Agreement and the other Loan Documents and the transactions
hereunder and thereunder, plus (viii) reasonable one-time fees, costs and
expenses incurred in connection with a Permitted Acquisition or a successful
offering or issuance of Capital Stock, in each case to the extent approved in
writing by the Administrative Agent as an ‘add-back’ to Consolidated EBITDA,
plus (ix) other non‑cash items reducing Consolidated Net Income (excluding any
such non‑cash item to the extent that it represents an accrual or reserve for
potential cash items in any future period or amortization of a prepaid cash item
that was paid in a prior period) approved by the Administrative Agent in writing
as an ‘add back’ to Consolidated EBITDA, plus (x) any extraordinary or
non-recurring losses, expenses or charges in connection with the transition to
ASC 606 or otherwise not to exceed $2,000,000 in the aggregate for such trailing
twelve month period (or such higher amounts as may be approved by the Required
Lenders as an ‘add-back’ to Consolidated EBITDA), minus (b) the sum, without
duplication of the amounts for such period of (i) other non‑cash items
increasing Consolidated Net Income for such period (excluding any such non‑cash
item to the extent it represents the reversal of an accrual or reserve for
potential cash item in any prior period), plus (ii) interest income.”

(b)     The definition of “Recurring Revenue” is amended and restated in its
entirety as follows:

 

“Recurring Revenue”: the Borrowers’ software services revenue and professional
services revenue related to the Benefit Service Center business line as
currently classified and presented in the Parent’s consolidated GAAP financial
statements (e.g. monthly managed services, testing services, maintenance,
license fees, video, voluntary benefits) that in each case meets all of the
Borrowers’ representations and warranties set forth in the Loan Documents.
Monthly revenue from the Benefitstore business line shall be calculated based on
the average trailing twelve months period.

 

(c)     The following definitions are added in their appropriate alphabetical
position:

 

“ASC 606”:  Accounting Standards Codification (ASC) Topic 606: Revenue from
Contracts with Customers issued by the Financial Accounting Standards Board.

 

“Seventh Amendment”:  the Seventh Amendment Agreement by and among the
Borrowers, the Lenders and the Administrative Agent, dated as of March 29, 2018.

 

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“Seventh Amendment Effective Date”: as defined in the Seventh Amendment.

 

(d)     Section 7.1(b) of the Credit Agreement (Minimum Consolidated EBITDA) is
hereby amended and restated as follows:

“Minimum Consolidated EBITDA.  Permit Consolidated EBITDA for any quarter
specified below, as calculated on a trailing twelve (12) months basis, to be
less than the correlative amount specified below:

 

Quarter Ending

Minimum Consolidated EBITDA for Applicable Trailing Twelve Month Period

 

March 31, 2018

$(15,100,000)

June 30, 2018

$(14,700,000)

September 30, 2018

$(10,300,000)

December 31, 2018

$(2,200,000)

March 31, 2019

$1,800,000

June 30, 2019

$5,200,000

September 30, 2019

$9,000,000

December 31, 2019

$13,100,000”

 

2.1.3.     Exhibit B (Form of Compliance Certificate).  Exhibit B to the Credit
Agreement is hereby deleted in its entirety and the Exhibit A attached hereto is
substituted in its stead.

3.     [Reserved].

4.     Conditions Precedent to Effectiveness.  This Amendment shall not be
effective until each of the following conditions precedent have been fulfilled
to the satisfaction of (and in form and substance satisfactory to, as
applicable) the Administrative Agent (such date, the “Seventh Amendment
Effective Date”):

4.1     This Amendment shall have been duly executed and delivered by the
respective parties hereto.  The Administrative Agent shall have received a fully
executed copy hereof.

4.2     All necessary consents and approvals to this Amendment shall have been
obtained by the Loan Parties.

4.3     After giving effect to this Amendment and subject to the qualifications
set forth in Section 6.1, each of the representations and warranties herein and
in the Credit Agreement and the other Loan Documents (i) that is qualified by
materiality shall be true and correct, and (ii)

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that is not qualified by materiality, shall be true and correct in all material
respects, in each case, on and as of the Seventh Amendment Effective Date as if
made on and as of such date, except to the extent any such representation and
warranty expressly relates to an earlier date, in which case such representation
and warranty shall have been true and correct in all material respects as of
such earlier date.

4.4     The payment by the Borrower to the Administrative Agent, for the ratable
benefit of each Lender party to this amendment based on such Lender’s Revolving
Percentage, an amendment fee equal to .10% of the Revolving Commitment of each
Lender party hereto.

For purposes of determining compliance with the conditions specified in this
Section 4, each Lender that has executed this Amendment shall be deemed to have
consented to, approved or accepted or to be satisfied with, each document or
other matter either sent (or made available) by the Administrative Agent to such
Lender for consent, approval, acceptance or satisfaction, or required thereunder
to be consented to or approved by or acceptable or satisfactory to such Lender,
unless an officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lender
prior to the Seventh Amendment Effective Date specifying such Lender’s objection
thereto and such objection shall not have been withdrawn by notice to the
Administrative Agent to that effect on or prior to the Seventh Amendment
Effective Date.

5.     Limitation of Amendment.

5.1     The amendments set forth in Section 2, above, are effective for the
purposes set forth herein and shall be limited precisely as written and shall
not be deemed to (a) be a consent to any amendment, waiver or modification of
any other term or condition of any Loan Document, or (b) otherwise prejudice any
right or remedy which the Administrative Agent or the Lenders may now have or
may have in the future under or in connection with any Loan Document.

5.2     This Amendment shall be construed in connection with and as part of the
Loan Documents and all terms, conditions, representations, warranties, covenants
and agreements set forth in the Loan Documents, except as herein amended, are
hereby ratified and confirmed and shall remain in full force and effect.

6.     Representations and Warranties.  To induce the Administrative Agent and
the Required Lenders to enter into this Amendment, the Borrowers hereby
represent and warrant as follows:

6.1     Immediately after giving effect to this Amendment (a) the
representations and warranties contained in the Loan Documents are true,
accurate and complete in all material respects as of the date hereof (except to
the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date), it being understood and
agreed that: (i) the Borrowers are not required to update Schedules to the Loan
Documents except to reflect material changes in the information contained
therein since the date on which such Schedules were most recently updated, and
(ii) the financial information provided by the Borrowers to the Administrative
Agent and the Lenders in connection with this Amendment and reflecting changes
in financial results due to the Borrowers’ adoption of ASC 606 constitutes the
Borrowers’ good faith estimate thereof, it being recognized by the
Administrative Agent and the

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Lenders that such estimated financial results, once audited, may differ
materially from the financial results provided to the Administrative Agent and
the Lenders in connection with this Amendment; and (b) no Event of Default has
occurred and is continuing;

6.2     Each Borrower has the power and authority to execute and deliver this
Amendment and to perform its obligations under the Credit Agreement, as amended
by this Amendment;

6.3     The execution and delivery by each Borrower of this Amendment and the
performance by such Borrower of its obligations under the Credit Agreement, as
amended by this Amendment, have been duly authorized;

6.4     The execution and delivery by each Borrower of this Amendment and the
performance by each Borrower of its obligations under the Credit Agreement, as
amended by this Amendment, do not and will not contravene (a) any law or
regulation binding on or affecting such Borrower, (b) any contractual
restriction with a Person binding on such Borrower, (c) any order, judgment or
decree of any court or other governmental or public body or authority, or
subdivision thereof, binding on such Borrower, or (d) the organizational
documents of such Borrower;

6.5     The execution and delivery by each Borrower of this Amendment and the
performance by such Borrower of its obligations under the Credit Agreement, as
amended by this Amendment, do not require any order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by any governmental or public body or authority, or subdivision
thereof, binding on such Borrower, except as already has been obtained or made;
and

6.6     This Amendment has been duly executed and delivered by each Borrower and
is the binding obligation of such Borrower, enforceable against such Borrower in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws of general application and equitable principles relating to or affecting
creditors’ rights.

7.     No Defenses of Borrowers.  Each Borrower hereby acknowledges and agrees
that such Borrower has no offsets, defenses, claims, or counterclaims against
the Administrative Agent or any Lender with respect to the Obligations, or
otherwise, and that if such Borrower now has, or ever did have, any offsets,
defenses, claims, or counterclaims against the Administrative Agent or any
Lender, whether known or unknown, at law or in equity, all of them are hereby
expressly WAIVED and such Borrower hereby RELEASES the Administrative Agent and
each Lender from any liability thereunder.

8.     Integration.  This Amendment and the Loan Documents represent the entire
agreement about this subject matter and supersede prior negotiations or
agreements.  All prior agreements, understandings, representations, warranties,
and negotiations between the parties about the subject matter of this Amendment
and the Loan Documents merge into this Amendment and the Loan Documents.

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9.     Counterparts.  This Amendment may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.

10.     Effect on Loan Documents.

10.1     The amendments set forth herein shall be limited precisely as written
and shall not be deemed (a) to be a forbearance, waiver, or modification of any
other term or condition of the Credit Agreement or of any Loan Documents or to
prejudice any right or remedy which the Administrative Agent may now have or may
have in the future under or in connection with the Loan Documents; (b) to be a
consent to any future consent or modification, forbearance, or waiver to the
Credit Agreement or any other Loan Document, or to any waiver of any of the
provisions thereof; or (c) to limit or impair the Administrative Agent’s right
to demand strict performance of all terms and covenants as of any date.  The
Borrowers, on behalf of each Loan Party, hereby ratify and reaffirm the
Borrowers’ obligations under the Credit Agreement and each Loan Party’s
obligations under each other Loan Document to which it is a party and agrees
that none of the amendments or modifications to the Credit Agreement set forth
in this Amendment shall impair any Loan Party’s obligations under the Loan
Documents or the Administrative Agent’s rights under the Loan Documents.  The
Borrowers, on behalf of each Loan Party, hereby further ratify and reaffirm the
validity and enforceability of all of the Liens heretofore granted, pursuant to
and in connection with the Guarantee and Collateral Agreement or any other Loan
Document to the Administrative Agent on behalf and for the benefit of the
Secured Parties, as collateral security for the obligations under the Loan
Documents, in accordance with their respective terms, and acknowledge that all
of such Liens, and all collateral heretofore pledged as security for such
obligations, continues to be and remain collateral for such obligations (as
amended hereby) from and after the date hereof.  The Borrowers, on behalf of
each Loan Party, acknowledge and agree that the Credit Agreement and each other
Loan Document is still in full force and effect and acknowledge as of the date
hereof that no Loan Party has any defenses to enforcement of the Loan
Documents.  The Borrowers, on behalf of each Loan Party, waive any and all
defenses to enforcement of the Credit Agreement as amended hereby and each other
Loan Document that might otherwise be available as a result of this Amendment. 
To the extent any terms or provisions of this Amendment conflict with those of
the Credit Agreement or other Loan Documents, the terms and provisions of this
Amendment shall control.

10.2     To the extent that any terms and conditions in any of the Loan
Documents shall contradict or be in conflict with any terms or conditions of the
Credit Agreement, after giving effect to this Amendment, such terms and
conditions are hereby deemed modified or amended accordingly to reflect the
terms and conditions of the Credit Agreement as modified or amended hereby.

10.3     This Amendment is a Loan Document.

11.     Severability.  The provisions of this Amendment are severable, and if
any clause or provision shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision in this Amendment in any jurisdiction.

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12.     Choice of Law. Section 10.13 and Section 10.14 of the Credit Agreement
are hereby incorporated by reference in their entity mutatis mutandis.

 [Signature page follows.]

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In Witness Whereof, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.

 

BORROWERS:

BENEFITFOCUS.COM, INC.

 

By: /s/ Jonathon E. Dussault              
Name: Jonathon E. Dussault              
Title: Chief Financial Officer             

 

BENEFITFOCUS, INC.

 

By: /s/ Jonathon E. Dussault              
Name: Jonathon E. Dussault              
Title: Chief Financial Officer             

 

 

BENEFITSTORE, INC.

 

By: /s/ Jonathon E. Dussault                
Name: Jonathon E. Dussault                
Title: Chief Financial Officer               

 

 

 

 

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SILICON VALLEY BANK, as Administrative Agent and as a Lender

 

By: /s/ Dipika Solanki__________________
Name: Dipika Solanki__________________
Title: Vice President____________________

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COMERICA BANK, as a Lender

 

By_/s/ John Benetti____________________
Name: John Benetti____________________
itle: SVP____________________________

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PACIFIC WESTERN BANK, as a Lender

 

By_/s/ Stephen J. Pievers_________________
Name:_Stephen J. Pievers________________
Title: SVP_____________________________

 

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GOLDMAN SACHS LENDING PARTNERS LLC, as a Lender

 

By_/s/ Chris Lam_____________________
Name: Chris Lam_____________________
Title: Authorized Signatory_____________

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EXHIBIT B

FORM OF COMPLIANCE CERTIFICATE

BENEFITFOCUS, INC.
BENEFITFOCUS.COM, INC.
BENEFITSTORE, INC.

 

Date:  ___________ ____, 20____

 

1.     This Compliance Certificate is delivered pursuant to Section 6.2(b) of
that certain Credit Agreement, dated as of February 20, 2015, by and among
BENEFITFOCUS, INC., a Delaware corporation (“Parent”), BENEFITFOCUS.COM, INC., a
South Carolina corporation (“Benefitfocus.com”), and BENEFITSTORE, INC., a South
Carolina corporation (“BenefitStore”, and together with Parent and
Benefitfocus.com, each individually, a “Borrower”, and collectively, the
“Borrowers”), the several banks and other financial institutions or entities
from time to time parties thereto (each a “Lender” and, collectively, the
“Lenders”), SILICON VALLEY BANK, as the Issuing Lender and the Swingline Lender,
Silicon Valley Bank (“SVB”), as administrative agent and collateral agent for
the Lenders (in such capacity, the “Administrative Agent”) and COMERICA BANK, as
documentation agent (in such capacity, the “Documentation Agent”) (as amended,
restated, amended and restated, supplemented, restructured or otherwise modified
from time to time, the “Credit Agreement”).  Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.

2.     The undersigned, a duly authorized and acting Responsible Officer of
Parent, hereby certifies, in his/her capacity as an officer of Parent, and not
in any personal capacity, as follows:

3.     I have reviewed and am familiar with the contents of this Compliance
Certificate.

4.     I have reviewed the terms of the Credit Agreement and the other Loan
Documents and have made, or caused to be made under my supervision, a review in
reasonable detail of the transactions and condition of Parent and its
Subsidiaries during the accounting period covered by the financial statements
attached hereto as Attachment 1 (the “Financial Statements”).  Except as set
forth on Attachment 2, such review did not disclose the existence during or at
the end of the accounting period covered by the Financial Statements, and I have
no knowledge of the existence as of the date of this Compliance Certificate, of
any condition or event which constitutes a Default or an Event of Default.

5.     Attached hereto as Attachment 3 are the computations showing compliance
with the covenants set forth in Section 7.1 of the Credit Agreement.

6.     [To the extent not previously disclosed to the Administrative Agent, a
description of any change in the jurisdiction of organization of any Loan
Party.]

7.     [To the extent not previously disclosed to the Administrative Agent, a
list of any material patents, registered trademarks or registered copyrights
issued to or acquired by any Loan Party since [the Closing Date][the date of the
most recent report delivered].]

[Remainder of page intentionally left blank; signature page follows]

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IN WITNESS WHEREOF, I have executed this Compliance Certificate as of the date
first written above.

PARENT, for itself and on behalf of each other Borrower:

 

BENEFITFOCUS, INC.

 

By:                                                                         

Name:                                                                     

Title:                                                                       

 

 

 

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Attachment 1
to Compliance Certificate

[Attach Financial Statements]

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Attachment 2
to Compliance Certificate

Except as set forth below, no Default or Event of Default has occurred.  [If a
Default or Event of Default has occurred, the following describes the nature of
the Default or Event of Default in reasonable detail and the steps, if any,
being taken or contemplated by the Borrowers to be taken on account thereof.]

 

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Attachment 3
to Compliance Certificate

Preliminary Note to Compliance Certificate Calculations

The information described herein is as of [____________], [____] (the “Statement
Date”), and pertains to the subject period described below.

 

(a)     Minimum Liquidity.

 

Required: Not permit Liquidity at any time, as tested on the last day of each
month, to be less than $40,000,000; provided that at least $25,000,000 must
consist of unrestricted cash and Cash Equivalents (including short term
marketable securities) satisfying the requirements of clause (i) of the
definition of Liquidity.

 

Actual:

 

A.

The Available Revolving Commitment as of the Statement Date

 

$                        

B.

The aggregate amount of unrestricted cash and Cash Equivalents (including short
term marketable securities) held by the Borrowers and the Guarantors in Deposit
Accounts or Securities Accounts maintained with SVB or SVB’s Affiliates or
another Lender or an Affiliate thereof, or with National Bank of South Carolina
(“NBSC”, provided that the aggregate amounts held in deposit accounts with NBSC
shall not exceed $6,500,000 at any time), and in each case subject to a first
priority lien in favor of the Administrative Agent, including, without
limitation, pursuant to a Deposit Account Control Agreement with respect to each
such Deposit Account or Securities Account Control Agreement with respect to
each such Securities Account; provided that, in connection with any calculation
of Liquidity required hereunder, at least $25,000,000 must consist of
unrestricted cash and Cash Equivalents (including short term marketable
securities) satisfying the requirements of clause (i) of the definition of
Liquidity.

 

$                        

C.

MINIMUM LIQUIDITY (the sum of line A plus line B)

$                        

 

Does line C consist of not less than $25,000,000 of unrestricted cash and Cash
Equivalents (including short term marketable securities) satisfying the
requirements of clause (i) of the definition of Liquidity?

 

                No, not in
Compliance                                                                  Yes,
in Compliance

 

Is line C equal to or greater than $40,000,000?

 

 

                No, not in
Compliance                                                                  Yes,
in Compliance

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(b)     Minimum Consolidated EBITDA. 

 

Required: Permit Consolidated EBITDA for any quarter specified below, as
calculated on a trailing twelve (12) months basis, to be less than the
correlative amount specified below:

 

Quarter Ending

Minimum Consolidated EBITDA for Applicable Trailing Twelve Month Period

 

March 31, 2018

$(15,100,000)

June 30, 2018

$(14,700,000)

September 30, 2018

$(10,300,000)

December 31, 2018

$(2,200,000)

March 31, 2019

$1,800,000

June 30, 2019

$5,200,000

September 30, 2019

$9,000,000

December 31, 2019

$13,100,000

 

 Actual: All amounts measured on a trailing twelve month basis:

 

 

A.

Consolidated Net Income

 

$                        

B.

Consolidated Interest Expense

 

$                        

C.

Provisions for taxes based on income

 

$                        

D.

 

Total depreciation and amortization expense

$                        

E.

 

Non-cash compensation expense

$                        

F.

 

The fees, costs and expenses incurred in connection with the Credit Agreement
and the other Loan Documents and the transactions thereunder

 

$                        

G.

 

Reasonable one-time fees, costs and expenses incurred in connection with a
Permitted Acquisition or a successful offering or issuance of Capital Stock, in
each case to the extent approved in writing by the Administrative Agent as an
‘add-back’ to Consolidated EBITDA

 

$$                        

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H.

 

Other non‑cash items reducing Consolidated Net Income (excluding any such
non‑cash item to the extent that it represents an accrual or reserve for
potential cash items in any future period or amortization of a prepaid cash item
that was paid in a prior period) approved by the

Administrative Agent in writing as an ‘add back’ to Consolidated EBITDA

 

$                        

I.

any extraordinary or non-recurring losses, expenses or charges in connection
with the transition to ASC 606 or otherwise not to exceed $2,000,000 in the
aggregate for such trailing twelve month period (or such higher amounts as may
be approved by the Required Lenders as an ‘add-back’ to Consolidated EBITDA)

 

 

 

$                        

J.

The Sum of lines A through I

 

$                        

K.

 

Other non‑cash items increasing Consolidated Net Income for such period
(excluding any such non‑cash item to the extent it represents the reversal of an
accrual or reserve for potential cash item in any prior period)

 

$                        

L.

 

Interest Income

$                        

M.

 

The Sum of lines K and L

$                        

N.

 

CONSOLIDATED EBITDA (line J minus line M)

$                        

 

Is Line N equal to or greater than
$[                                                ]?

 

 

             No, not in
Compliance                                                               Yes, in
Compliance

 

2279533.6