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 22 , 2018
BRIDGELINE DIGITAL, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-33567 | 52-2263942 |
| (State or other | (Commission | (IRS Employer |
| jurisdiction of | File Number) | Identification No.) |
| incorporation) |
80 Blanchard Road
Burlington, MA 01803
(Address of principal executive offices, including zip code)
( 781) 376-5555
(Registrant’s telephone number, including area code)
(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:
[ ] Written communications pursuant to Rule 425 under the Securities Act
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Exchange Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 1. 0 1 . Entry into a Material Definitive Agreement
On October 22, 2018, Bridgeline Digital, Inc. (the “Company”) signed an amendment (the “Second Amendment”) to modify a certain Loan and Security Agreement (the “Agreement”) with Montage Capital II, L.P. (“Montage”). Included in the Second Amendment are modifications to financial covenants set forth in Sections 5.3(a) - (c) of the Agreement. The modification to Section 5.3(a) addresses the minimum asset coverage ratio and the modification to Section 5.3(b) addresses the Performance to Plan – Adjusted EBITDA metrics for the fiscal quarters ended September 30, 2018 and December 31, 2018. The modification to Section 6.9(c) addresses the minimum unrestricted cash requirements for the Company’s accounts at Heritage Bank of Commerce upon repayment of Subordinated Debt incurred by the Company pursuant to certain Term Notes issued by the Company on September 7, 2018 in the principal amount of $941,176.
Item 9.01 Financial Statements and Exhibits.
Explanatory Note Regarding Exhibits
Investors should not rely on or assume the accuracy of representations and warranties in negotiated agreements that have been publicly filed because such representations and warranties may be subject to exceptions and qualifications contained in separate disclosure schedules, because such representations may represent the parties’ risk allocation in the particular transaction, because such representations may be qualified by materiality standards that differ from what may be viewed as material for securities laws purposes or because such representations may no longer continue to be true a of any given date.
(d) Exhibits.
| Exhibit No. | Exhibit Description |
| 10.1 | Second Amendment to the Loan and Security Agreement between Bridgeline Digital, Inc. and Montage Capital II, L.P., dated October 22, 2018 |
SIGNATURES
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.
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BRIDGELINE DIGITAL , INC. |
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By: |
/s/ Carole Tyner |
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Carole Tyner |
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Chief Financial Officer |
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Date: October 24, 2018
EXHIBIT INDEX
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Exhibit No. |
Exhibit Description |
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10.1 |
Second Amendment to the Loan and Security Agreement between Bridgeline Digital, Inc. and Montage Capital II, L.P., dated October 22, 2018 |
Exhibit 10.1
SECOND AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
This Second Amendment to Loan and Security Agreement is entered into as of October 22, 2018 (the “Amendment”), by and between MONTAGE CAPITAL II, L.P. (“Lender”) and BRIDGELINE DIGITAL, INC. (“Borrower”).
RECITALS
Borrower and Lender are parties to that certain Loan and Security Agreement dated as of October 10, 2017 and as amended from time to time, including pursuant to that certain First Amendment to Loan and Security Agreement dated as of May 10, 2018 (collectively, the “Agreement”). The parties desire to amend the Agreement in accordance with the terms of this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. Section 5.3 of the Agreement is amended and restated in its entirety to read as follows:
5.3 Financial Covenants.
(a) Minimum Asset Coverage Ratio . Borrower shall maintain, at all times and measured as of the last day of each month, a ratio of (i) Eligible Accounts plus Eligible Foreign Accounts plus Borrower's unrestricted cash maintained in accounts that are subject to an account control agreement in favor of Lender to (ii) all outstanding Obligations owing to Lender, of no less than 1.40 : 1.00.
(b) Performance to Plan - Adjusted EBITDA . Borrower’s minimum quarterly Adjusted EBITDA for the fiscal quarters ended on September 30, 2018, and ending on December 31, 2018, shall be at least the amount set forth on Exhibit A attached hereto. Borrower and Bank shall mutually agree upon minimum quarterly Adjusted EBITDA amounts for subsequent fiscal quarters no later than October 31, 2018.
(c) Minimum Cash . Borrower shall maintain at all times at least $250,000 in unrestricted cash in its accounts that are subject to an account control agreement in favor of Lender. At all times on and after any repayment is made on the Subordinated Debt incurred by Borrower on or around September 7, 2018 pursuant to certain Term Notes issued by Borrower in the aggregate principal amount of $941,176, Borrower shall maintain at all times at least $500,000 in unrestricted cash in its accounts that are subject to an account control agreement in favor of Lender.
2. Exhibit A to the Agreement is replaced in its entirety with the Exhibit A attached hereto.
3. Exhibit B to the Agreement is deleted in its entirety.
4. Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. 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. Except as expressly set forth herein, 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 Lender under the Agreement, as in effect prior to the date hereof. Borrower ratifies and reaffirms the continuing effectiveness of all agreements entered into in connection with the Agreement.
5. 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. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original hereof.
6. As a condition to the effectiveness of this Amendment, Lender shall have received, in form and substance satisfactory to Lender, the following:
(a) payment of an amendment fee in the amount of $2,500 plus all Lender Expenses incurred through the date of this Amendment; and
(b) such other documents, and completion of such other matters, as Lender may reasonably deem necessary or appropriate.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.
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BRIDGELINE DIGITAL, INC.
By: /s/Carole Tyner
Name: Carole Tyner
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MONTAGE CAPITAL II, L.P.
By: /s/ Michel J. Rose
Name: Michael J. Rose
Title: Managing Director |
EXHIBIT A
COMPLIANCE CERTIFICATE
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BORROWER: |
Bridgeline Digital, Inc. |
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Note: Please send all required reporting to: |
Montage Capital II, L.P. |
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900 East Hamilton Avenue, Suite 100 Campbell, CA 95008 Fax: (408) 659-2318 Email: mrose @montagecapital.com |
The undersigned authorized officer of Bridgeline Digital, Inc. hereby certifies that in accordance with the terms and conditions of the Loan and Security Agreement between Borrower and Lender (the “Agreement”).
Borrower is in complete compliance for the period ending _______________ with all required covenants, except as noted below; and all representations and warranties of Borrower stated in the Agreement are true and correct in all material respects as of the date hereof.
Attached herewith are the required documents supporting the above certification. The authorized officer further certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied from one period to the next except as explained in an accompanying letter or footnotes.
Please indicate compliance status by circling Yes/No under “Complies” column.
Please attach any comments as additional pages.
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Bridgeline Digital, Inc. |
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