SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
October 31, 2014
Evolving Systems, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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001-34261
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84-1010843
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9777 Pyramid Court, Suite 100
Englewood, Colorado 80112
(Address of principal executive offices)
Registrant’s telephone number, including area code (303) 802-1000
N/A
Former Name or Former Address, if Changed Since Last Report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.03 Creation of a Direct Financial Obligation.
On October 31, 2014, Evolving Systems, Inc. (“Evolving Systems” or the “Company”) entered into an amendment to the Loan and Security Agreement with East West Bank extending the maturity date on its $5.0 million revolving credit facility to October 22, 2016 (the “Revolving Facility”). The Revolving Facility bears interest at the greater of 2.75% or the U.S. Prime Rate minus one half of one percent (0.5%). Prime Rate was 3.25% as of October 31, 2014. The Revolving Facility is secured by all assets of Evolving Systems, including a pledge, subject to certain limitations with respect to stock of foreign subsidiaries, of the stock of the existing and future direct subsidiaries of Evolving Systems. There is no mandated borrowing required against the Revolving Facility. To take an advance under the Revolving Facility, the Company must have a balance of $3.0 million in cash on deposit and have quarterly net income and a specified ratio of current assets to current liabilities, as defined in the Revolving Facility. The Revolving Facility requires the Company to pay an annual credit facility fee of $10,000. All accrued interest on outstanding borrowings under the Revolving Facility is paid monthly, with any outstanding balance due with a final maturity of October 22, 2016. As of the date of this report, there was no borrowing outstanding under this Revolving Facility.
The Revolving Facility includes Negative Covenants that place restrictions on the Company’s ability to, among other things: incur additional indebtedness; create liens or other encumbrances on assets; make loans, enter into letters of credit, guarantees, investments and acquisitions; sell or otherwise dispose of assets; cause or permit a change of control; merge or consolidate with another entity; make negative pledges; enter into affiliate transactions; and change the nature of its business materially.
Outstanding amounts under the Revolving Facility may be accelerated by notice from East West Bank upon the occurrence and continuance of certain events of default, including without limitation: payment defaults, breach of covenants beyond applicable grace periods, breach of representations and warranties, bankruptcy and insolvency defaults, and the occurrence of a material adverse effect (as defined). Acceleration is automatic upon the occurrence of certain bankruptcy and insolvency defaults.
Text of Agreements . The full text of the Amendment to the Revolving Facility is attached as Exhibit 10.1 to this Current Report on Form 8-K. The full text of the original Revolving Facility was attached as Exhibit 10.1(a) to the Company’s Current Report on Form 8-K filed with the SEC on October 25, 2012. The foregoing descriptions are qualified in their entirety by reference to such exhibit.
Item 9.01 Financial Statements and Exhibits.
d) Exhibits. The following exhibit is filed with this report.
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Exhibit
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Description |
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10.1 |
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Amendment to Loan and Security Agreement between Evolving Systems, Inc. and East West Bank |
SIGNATURE
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 hereunto duly authorized.
Dated: November 6, 2014.
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EVOLVING SYSTEMS, INC. |
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By: |
/s/ DANIEL J. MOORHEAD |
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Daniel J. Moorhead |
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Vice President of Finance & Administration |
EXHIBIT 10.1
AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Amendment to Loan and Security Agreement (the “Amendment”) is entered into as of October 22, 2014 by and among EAST WEST BANK (“Bank”) and EVOLVING SYSTEMS, INC. (“Borrower”).
RECITALS
Borrower and Bank are parties to that certain Loan and Security Agreement dated as of October 22, 2012, as amended from time to time (“Agreement”). The parties desire to amend the Agreement in accordance with the terms of this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. The following term defined in section 1.1 of the Agreement is amended to read as follows:
““Revolving Maturity Date” means October 22, 2016.”
2. Subsection (d) of section 7.6 of the Agreement is amended by restating subsection (d) in its entirety as follows:
“(d) Borrower may make cash distributions to its shareholders in the aggregate amount not to exceed $1,750,000 in any fiscal quarter, provided that (i) no Event of Default has occurred that is continuing or would exist after giving effect to such distribution, or (ii) if an Event of Default has occurred that is continuing or would exist after giving effect to such distribution, no Obligations are outstanding at the time of such distribution (and Borrower acknowledges that no Credit Extensions will be made until such Event of Default has been waived in writing by Bank).”
3. The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects. The execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof. Each Borrower ratifies and reaffirms the continuing effectiveness of all other instruments, documents and agreements entered into in connection with the Agreement.
4. Borrower represents and warrants that the representations and warranties contained in the Agreement are true and correct as of the date of this Amendment, and that no Event of Default has occurred and is continuing.
5. Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.
6. As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:
a) this Amendment, duly executed by Borrower;
b) on the date of this Agreement and on the first anniversary thereof, a Facility Fee equal to $10,000, for a total of $20,000, which shall be nonrefundable, plus an amount equal to Bank Expenses incurred in connection with this Amendment; and
c) such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date set forth above.
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EVOLVING SYSTEMS, INC. |
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By: |
/s/ Dan Moorhead |
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Title: |
Vice President, Finance & Administration |
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EAST WEST BANK |
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By: |
/s/ Nader Maghsoudnia |
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Title: |
Director |
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