Exhibit 10.1

 

[ex10-1img001.jpg] [ex10-1img002.jpg]

 

1st Amendment to Loan Agreement

 

Borrower:   Accelerize New Media Inc.

 

Date:           September 30, 2014

 

THIS FIRST AMENDMENT TO LOAN AGREEMENT is entered into between SQUARE 1 BANK
(“Lender”) and the borrower named above (“Borrower”).

 

The Parties agree to amend the Loan and Security Agreement between them, dated
March 17, 2014 (as amended, the “Loan Agreement”), as follows, effective as of
the date hereof. (Capitalized terms used but not defined in this Amendment shall
have the meanings set forth in the Loan Agreement.)

 

1.     Increased Credit Limit. That portion of Section 1 of the Schedule which
now reads as follows:

 

“An amount not to exceed the lesser of (a) and (b) below (the ‘Credit Limit’):

 

(a)

a total of $3,000,000 at any one time outstanding (the ‘Maximum Credit Limit’);
or

 

(b)

Three times (an ‘Advance Rate’) an amount equal to the average trailing
three-month Recurring Revenue of Borrower minus the average trailing three-month
Recurring Revenue Churn of Borrower.”

is hereby amended to read as follows:

 

“An amount not to exceed the lesser of (a) and (b) below (the ‘Credit Limit’):

 

(a)

a total of $6,000,000 at any one time outstanding (the ‘Maximum Credit Limit’);
or

 

(b)

Three times (an ‘Advance Rate’) an amount equal to the average trailing
three-month Recurring Revenue of Borrower minus the average trailing three-month
Recurring Revenue Churn of Borrower.”

 

 
 

--------------------------------------------------------------------------------

 

 

2.     Minimum Monthly Interest. Section 2 of the Schedule is hereby amended and
restated in its entirety to read as follows:

 

“2. INTEREST.

      Interest Rate (Section 1.2):

A rate equal to the Prime Rate in effect from time to time, plus 1.25% per
annum, provided that (i) the interest rate in effect on any day shall not be
less than 5.50% per annum, and (ii) in no event shall the accrued interest
payable hereunder with respect to any month be less than $10,000, and if it is,
Borrower shall pay the difference to Lender on the date the monthly interest
payment is due. Interest shall be calculated on the basis of a 360-day year for
the actual number of days elapsed. The interest rate applicable to the
Obligations shall change on each date there is a change in the Prime Rate.”

 

3.     Modification of Minimum Adjusted EBITDA Covenant. That portion of Section
5 of the Schedule which now reads as follows:

 

Period

Minimum Adjusted EBITDA

1 month ending Jan 31, 2014

($1,000,000)

2 months ending Feb 28, 2014

($1,000,000)

3 months ending Mar 31, 2014

($1,000,000)

4 months ending Apr 30, 2014

($1,000,000)

5 months ending May 31, 2014

($1,000,000)

6 months ending Jun 30, 2014

($1,000,000)

7 months ending Jul 31, 2014

($1,000,000)

8 months ending Aug 31, 2014

($1,000,000)

9 months ending Sep 30, 2014

($1,000,000)

10 months ending Oct 31, 2014

($1,000,000)

11 months ending Nov 30, 2014

($1,000,000)

12 months ending Dec 31, 2014

($1,000,000)

 

 
 

--------------------------------------------------------------------------------

 

 

is hereby amended to read as follows:

 

Period

Minimum Adjusted EBITDA

1 month ending Jan 31, 2014

($3,000,000)

2 months ending Feb 28, 2014

($3,000,000)

3 months ending Mar 31, 2014

($3,000,000)

4 months ending Apr 30, 2014

($3,000,000)

5 months ending May 31, 2014

($3,000,000)

6 months ending Jun 30, 2014

($3,000,000)

7 months ending Jul 31, 2014

($3,000,000)

8 months ending Aug 31, 2014

($3,000,000)

9 months ending Sep 30, 2014

($3,000,000)

10 months ending Oct 31, 2014

($3,000,000)

11 months ending Nov 30, 2014

($3,000,000)

12 months ending Dec 31, 2014

($3,000,000)

 

 

4.     Modification of Capital Expenditures Covenant. That portion of Section 5
of the Schedule which now reads as follows:

 

 

“Capital Expenditures:

Borrower shall not make total Capital Expenditures exceeding: (i) $750,000,
during the fiscal year ending December 31, 2014; or (ii) $800,000 during any
subsequent fiscal year.”

 

is hereby amended to read as follows:

 

 

“Capital Expenditures:

Borrower shall not make total Capital Expenditures exceeding $1,500,000 during
any fiscal year.”

 

5.     Addition of Minimum Liquidity Covenant. The following is hereby added to
Section 5 of the Schedule, immediately preceding the subsection entitled
“Definitions”:

 

 

“Minimum Liquidity:

Borrower shall maintain total Liquidity of no less than $1,000,000 at all
times.”

 

6.     Definition of Liquidity. The following is hereby added to the subsection
entitled “Definitions” in Section 5 of the Schedule, in its corresponding
alphabetical position:

 

“ ‘Liquidity’ means, on any day, (i) unrestricted cash in Borrower’s sole name
in Deposit Accounts maintained with Lender on such day, plus (ii) Loans
available to Borrower hereunder on such day.”

 

 
 

--------------------------------------------------------------------------------

 

 

7.     Limits on Transfers to Foreign Subs. Subsection (e) of Section 8 of the
Schedule is hereby amended and restated in its entirety to read as follows:

 

 

“(e)

Foreign Subsidiaries; Foreign Assets. Borrower represents and warrants that it
has no partially-owned or wholly-owned Subsidiaries, except for Subsidiaries
organized under the laws of a jurisdiction other than the United States or any
state or territory thereof or the District of Columbia (“Foreign Subs”).
Borrower may make Investments in Foreign Subs, in an aggregate amount not to
exceed the amount necessary to fund the current operating expenses of Foreign
Subs (taking into account their revenue from other sources); provided that (i)
the total of such investments and loans to all such Foreign Subs shall not
exceed $750,000 in any six month period and shall not exceed $1,500,000 in any
twelve month period, and (ii) the total assets of all Foreign Subs combined
shall not, at any time, exceed $500,000 in the aggregate. The foregoing shall
constitute “Permitted Investments” for purposes of the Loan Agreement. Borrower
covenants that (i) the total assets of all Foreign Subs combined (excluding
intercompany obligations due from the Borrower), plus the total assets of
Borrower located outside the United States (including without limitation
deposits in foreign bank accounts) combined shall not, at any time, exceed
$700,000 in the aggregate, and (ii) the total amount maintained by Borrower in
foreign bank accounts shall not, at any time, exceed $200,000. Borrower shall
not permit any of the assets of any Foreign Subs to be subject to any security
interest, lien or encumbrance, and Borrower shall not agree with any other
Person to restrict its ability to cause a Foreign Sub to grant any security
interest in, or lien or encumbrance on, its assets.”

 

8.     Additional Warrants. A new subsection (f) is hereby added to Section 8 of
the Schedule, which reads as follows:

 

 

“(f)

Additional Warrants. Upon the date that the amount of the monetary Obligations
outstanding under this Agreement first exceeds $3,000,000 (the “Warrant Trigger
Date”), Lender shall thereby earn, and Borrower shall issue to Lender, within 30
days following the Warrant Trigger Date, three-year warrants (the “Additional
Warrants”) to purchase the following number of shares of common stock of
Borrower, at the Additional Warrant Price: 90,000 divided by the Additional
Warrant Price. For the purposes hereof: the “Additional Warrant Price” shall be
equal to the price per share at which Borrower’s common stock was last traded on
the Warrant Trigger Date. The Additional Warrants shall be issued upon the terms
and conditions set forth in Lender’s standard form Warrant to Purchase Stock in
effect at such time.”

 

 
 

--------------------------------------------------------------------------------

 

 

9.     Fee. In consideration for Lender entering into this Amendment, Borrower
shall concurrently pay Lender a fee in the amount of $10,000, which shall be
non-refundable and in addition to all interest and other fees payable to Lender
under the Loan Documents. Lender is authorized to charge said fee to Borrower’s
loan account or any of Borrower’s deposit accounts with Lender.

 

10.     Representations True. Borrower represents and warrants to Lender that
all representations and warranties set forth in the Loan Agreement, as amended
hereby, are true and correct.

 

11.     General Release. In consideration for Lender entering into this
Amendment, Borrower hereby irrevocably releases and forever discharges Lender,
and its successors, assigns, agents, shareholders, directors, officers,
employees, agents, attorneys, parent corporations, subsidiary corporations,
affiliated corporations, affiliates, participants, and each of them
(collectively, the “Releasees”), from any and all claims, debts, liabilities,
demands, obligations, costs, expenses, actions and causes of action, of every
nature and description, known and unknown, which Borrower now has or at any time
may hold, by reason of any matter, cause or thing occurred, done, omitted or
suffered to be done prior to the date of this Amendment (collectively, the
“Released Claims”). Borrower hereby irrevocably waives the benefits of any and
all statutes and rules of law to the extent the same provide in substance that a
general release does not extend to claims which the creditor does not know or
suspect to exist in its favor at the time of executing the release, and, without
limiting the foregoing, and without limiting the stipulation to governing law in
Section 9.19 of the Loan Agreement, Borrower irrevocably waives any benefits it
may have under California Civil Code Section 1542 which provides: "A general
release does not extend to claims which the creditor does not know or suspect to
exist in his or her favor at the time of executing the release, which if known
by him or her must have materially affected his or her settlement with the
debtor.” Borrower represents and warrants that it has not assigned to any other
Person any Released Claim, and agrees to indemnify Lender against any and all
actions, demands, obligations, causes of action, decrees, awards, claims,
liabilities, losses and costs, including but not limited to reasonable
attorneys' fees of counsel of Lender’s choice and costs, which Lender may
sustain or incur as a result of a breach or purported breach of the foregoing
representation and warranty.

 

12.     No Waiver. Nothing herein constitutes a waiver of any default or Event
of Default under the Loan Agreement or any other Loan Documents, whether or not
known to Bank.

 

13.     Governing Law; Jurisdiction; Venue. This Amendment and all acts,
transactions, disputes and controversies arising hereunder or relating hereto,
and all rights and obligations of the parties shall be governed by, and
construed in accordance with, the internal laws (and not the conflict of laws
rules) of the State of California. All disputes, controversies, claims, actions
and other proceedings involving, directly or indirectly, any matter in any way
arising out of, related to, or connected with, this Amendment or the
relationship between Borrower and Lender, and any and all other claims of
Borrower against Lender of any kind, shall be brought only in a court located in
Los Angeles County, California, and each party consents to the jurisdiction of
any such court and the referee referred to in Section 9.20 of the Loan
Agreement, and waives any and all rights the party may have to object to the
jurisdiction of any such court, or to transfer or change the venue of any such
action or proceeding, including, without limitation, any objection to venue or
request for change in venue based on the doctrine of forum non conveniens;
provided that, notwithstanding the foregoing, nothing herein shall limit the
right of Lender to bring proceedings against Borrower in the courts of any other
jurisdiction. Borrower consents to service of process in any action or
proceeding brought against it by Lender, by personal delivery, or by mail
addressed as set forth in the Loan Agreement or by any other method permitted by
law.

 

 
 

--------------------------------------------------------------------------------

 

 

 

14.     Dispute Resolution. The provisions of Section 9.20 of the Loan Agreement
relating to dispute resolution shall apply to this Amendment, and the terms
thereof are incorporated herein by this reference.

 

15.     General Provisions. Borrower hereby ratifies and confirms the continuing
validity, enforceability and effectiveness of the Loan Agreement and all other
Loan Documents. This Amendment, the Loan Agreement, any prior written amendments
to the Loan Agreement signed by Lender and Borrower, and the other written
documents and agreements between Lender and Borrower set forth in full all of
the representations and agreements of the parties with respect to the subject
matter hereof and supersede all prior discussions, representations, agreements
and understandings between the parties with respect to the subject hereof.
Except as herein expressly amended, all of the terms and provisions of the Loan
Agreement, and all other documents and agreements between Lender and Borrower
shall continue in full force and effect and the same are hereby ratified and
confirmed. This Amendment may be executed in multiple counterparts, by different
parties signing separate counterparts, and all of the same taken together shall
constitute one and the same agreement.

 

16.     Mutual Waiver of Jury Trial. LENDER AND BORROWER EACH ACKNOWLEDGE THAT
THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL RIGHT, BUT THAT IT MAY BE WAIVED.
EACH OF THE PARTIES, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT,
WITH COUNSEL OF THEIR CHOICE, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING
OUT OF THIS AMENDMENT OR ANY RELATED INSTRUMENT OR LOAN DOCUMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS AMENDMENT OR ANY COURSE OF CONDUCT, DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN), ACTION OR INACTION OF ANY OF THEM. THESE
PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR
RELINQUISHED BY LENDER OR BORROWER, EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY
EACH OF THEM. IF FOR ANY REASON THE PROVISIONS OF THIS SECTION ARE VOID, INVALID
OR UNENFORCEABLE, THE SAME SHALL NOT AFFECT ANY OTHER TERM OR PROVISION OF THIS
AMENDMENT, AND ALL OTHER TERMS AND PROVISIONS OF THIS AMENDMENT SHALL BE
UNAFFECTED BY THE SAME AND CONTINUE IN FULL FORCE AND EFFECT.

 

[Signatures on Next Page]-3

 

 

 
 

--------------------------------------------------------------------------------

 

 

Borrower:

 

ACCELERIZE NEW MEDIA INC.

 

 

By /s/ Brian Ross

Title CEO

 

Bank:

 

SQUARE 1 BANK

 

 

By /s/ Jonathan Jarmul

Title Account Executive 

 

   

 

[Signature Page—First Amendment to Loan Agreement]