UNITED STATES
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): MARCH 29, 2018
Mattersight Corporation
(Exact Name of Registrant as Specified in Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
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0-27975 |
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36-4304577 |
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(Commission File Number) |
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(IRS Employer Identification No.) |
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200 W. Madison Street, Suite 3100, Chicago, Illinois |
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60606 |
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(Address of Principal Executive Offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (877) 235-6925
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:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
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 1.01 Entry into a Material Definitive Agreement.
On June 29, 2017, Mattersight Corporation (the “Company”) entered into a Loan and Security Agreement with The PrivateBank and Trust Company, an entity now known as CIBC Bank USA (the “Lender”) (the “Loan Agreement”). The Loan Agreement provides for a $20,000,000 revolving line of credit maturing in 2020 (the “Credit Facility”) and is secured by a security interest in the Company’s accounts receivable, equipment, inventory, cash, deposit accounts, securities, and all other investment property, supporting obligations, financial assets, other personal property, intellectual property rights and other personal property. The Company, subject to certain limits and restrictions, may from time to time request the issuance of letters of credit under the Loan Agreement.
On March 29, 2018, the Company and the Lender entered into an Amendment to Loan and Security Agreement (the “Amendment”), whereby certain material provisions of the Loan Agreement were amended and restated. Those material amendments are outlined now.
Under the Loan Agreement, the principal amount outstanding accrues interest at: (a.) 1, 2 or 3 month LIBOR (as selected by the Company) plus a margin (the “Applicable Margin”) of 4.50%; or, (b.) a base rate plus an Applicable Margin of 1.75%. The Amendment increases the Applicable Margin for loans bearing interest at LIBOR from 4.50% to 5.50% and for loans bearing interest at the base rate from 1.75% to 2.75%. The Amendment also provides the Lender with the ability to impose discretionary reserves against the borrowing base.
The Loan Agreement requires the Company to comply with EBITDA (as adjusted in accordance with the Loan Agreement) and total revenue targets. The Amendment adjusts the minimum EBITDA thresholds for the second, third, and fourth quarters of 2018 from: ($200,000) to ($500,000); $1,250,000 to $500,000; and $3,000,000 to $2,500,000; respectively. The Amendment also increases the Company’s minimum total revenue thresholds for the first and second quarter of 2018 by an average of approximately 3% each quarter and reduces the applicable total revenue thresholds for each of the third and fourth quarters of 2018 by an average of approximately 6% each quarter.
The Amendment deletes in full the default that would otherwise occur should any of the Borrower’s customers identified as “key accounts” cancel or not renew their subscription agreements at any point during the pendency of the Loan Agreement.
The description of the Amendment contained herein does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference. Further, the description of the underlying Loan Agreement contained herein does not purport to be complete and is qualified in its entirety by reference to the full text of the Loan Agreement, which is incorporated by reference at Exhibit 10.1 to this Current Report on Form 8-K.
Item 2.03 Creation of a Direct Financial Obligation or an Obligat ion under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated into this Item 2.03 by reference.
Item 9.01. Financial Statements and Exhibits.
(a), (b), and (c) not applicable.
(d) Exhibits :
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10.1 |
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10.2 |
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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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MATTERSIGHT CORPORATION |
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Date: March 29, 2018 |
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By: |
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/s/ DAVID B. MULLEN |
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David B. Mullen |
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Senior Vice President and Chief Financial Officer |
EXECUTION COPY
Exhibit 10.2
AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “ Amendment ”) is entered into as of March __, 2018, by and between MATTERSIGHT CORPORATION, a Delaware corporation (“ Borrower ”), and CIBC BANK USA (formerly known as The PrivateBank and Trust Company, “ Lender ”), as Lender and Issuing Lender.
WHEREAS, Borrower and Lender are parties to that certain Loan and Security Agreement dated as of June 29, 2017 (as amended, supplemented or otherwise modified from time to time prior to the date hereof, the “ Loan Agreement ”); and
WHEREAS, Borrower has requested, and Lender has agreed, to amend the Loan Agreement subject to the terms and conditions of this Amendment.
NOW, THEREFORE, in consideration of the foregoing premises, and the mutual agreements herein contained, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS . Terms used in this Amendment (including in the recitals) which are defined in the Loan Agreement, as amended hereby, shall have the same meanings herein unless otherwise defined in this Amendment.
SECTION 2. AMENDMENT TO LOAN AGREEMENT .
2.1 Additional Defined Terms . The following defined terms are hereby added to Section 1.1 of the Loan Agreement in their alphabetically proper locations:
First Amendment to Loan Agreement means that certain Amendment to Loan and Security Agreement, dated as of the First Amendment Effective Date, by and between Borrower and Lender.
First Amendment Effective Date means March __, 2018.
Reserves means such reserves against the Revolving Loan Availability in amounts and with respect to such matters as Lender may, in its sole discretion, deem necessary or appropriate from time to time, upon written notice to Borrower.
2.2 Modification of Certain Defined Terms . The following defined terms set forth in Section 1.1 of the Loan Agreement are hereby amended and restated in their entirety as follows:
Applicable Margin means for (i) LIBOR Loans shall be five and one-half percent (5.50%) per annum (the “ LIBOR Margin ”), (ii) Base Rate Loans shall be two and three-quarters percent (2.75%) per annum (the “ Base Rate Margin ”).
Revolving Loan Availability means (a) the lesser of (i) the Revolving Commitment and (ii) the Borrowing Base, minus (b) the Reserves.
2.3 Modification of Mandatory Prepayment . Section 5.2.2 of the Loan Agreement is hereby amended and restated in its entirety as follows:
5.2.2 Mandatory Prepayment . If any of the following events occurs (a “ Mandatory Prepayment Event ”):
(a) If on any day the Revolving Outstandings exceeds the Revolving Loan Availability, Borrower shall immediately prepay Revolving Loans and/or Cash Collateralize the outstanding Letters of Credit, or do a combination of the foregoing, in an amount sufficient to eliminate such excess.
(b) If on any day on which the Revolving Commitment is reduced pursuant to Section 5.1 the Revolving Outstandings exceeds the Revolving Loan Availability, Borrower shall immediately prepay Revolving Loans and/or Cash Collateralize the outstanding Letters of Credit, or do a combination of the foregoing, in an amount sufficient to eliminate such excess.
2.4 Modification of Total Revenue Financial Covenant . Section 11.13.1 of the Loan Agreement is hereby amended and restated in its entirety as follows:
11.13.1 Total Revenue . Not permit Total Revenue as of the of last day of each Fiscal Quarter to be less than the amount set forth below for the period ending on such date:
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2.5 Modification of Adjusted EBITDA Financial Covenant . Section 11.13.2 of the Loan Agreement is hereby amended and restated in its entirety as follows:
11.13.2 Adjusted EBITDA . Not permit Adjusted EBITDA of the Borrower as of the of last day of each Fiscal Quarter to be less than the amount of set forth below for the period ending on such date:
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Four-Fiscal Quarter Period Ending |
Minimum Adjusted EBITDA |
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March 31, 2018 |
$250,000 |
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June 30, 2018 |
($500,000) |
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September 30, 2018 |
$500,000 |
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December 31, 2018 |
$2,500,000 |
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Last day of each Fiscal Quarter of each Fiscal Year thereafter |
An amount to be determined by the Lender after its receipt of the projections for such Fiscal Year delivered pursuant to and in accordance with Section 10.1.8 , which shall be set in a manner reasonably consistent as used to establish the covenant levels set forth above. |
2.6 Deletion of Event of Default for Key Accounts . Section 13.1.14 of the Loan Agreement is hereby amended and restated in its entirety as follows:
“13.1.14 [ Intentionally Omitted ]”.
2.7 Borrowing Base Certificate Exhibit . Exhibit C to the Loan Agreement is hereby amended and restated in its entirety in the form of Exhibit C attached hereto.
2.8 Lender Name . Any references in the Loan Agreement and any other Loan Document to “The PrivateBank and Trust Company” are hereby amended to refer to “CIBC Bank USA”.
SECTION 3. CONDITIONS PRECEDENT TO EFFECTIVENESS . The effectiveness of this Amendment is subject to satisfaction of the following conditions precedent:
3.1 Documents . Lender shall have received, in form and substance reasonably satisfactory to Lender, the following:
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(a) |
duly executed original signatures to this Amendment; and |
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(b) |
such other documents as Lender shall reasonably deem necessary or appropriate. |
3.2 Events of Default . No Default or Event of Default shall have occurred and be continuing.
3.3 Representations and Warranties . All representations and warranties of Borrower in the Loan Documents shall be true and correct in all material respects with the same effect as if made on, and as of, the date hereof made (except to the extent stated to relate to a specific earlier date, in
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which case such representations and warranties shall be true and correct in all material respects as of such earlier date).
3.4 Modification Fee . Borrower shall have paid to Bank in full a non-refundable fee of $100,000, which fee shall be deemed fully earned, due and payable upon the effectiveness of this Amendment.
SECTION 4. MISCELLANEOUS .
4.1 Absence of Defaults; Representations and Warranties . In order to induce Lender to enter into this Amendment, Borrower hereby represents and warrants to Lender that (a) no Default or Event of Default has occurred and is continuing and (b) all representations and warranties of Borrower in the Loan Agreement and other Loan Documents are true and correct in all material respects on and as of this date (except to the extent stated to relate to a specific earlier date, in which case such representations and warranties are true and correct in all material respects as of such earlier date). All representations and warranties contained in this Amendment shall survive the execution and delivery of this Amendment.
4.2 Confirmation of Obligations; Release .
(a) Borrower hereby confirms that Borrower is indebted to Lender for the Obligations, as set forth in the Loan Agreement and the other Loan Documents. Borrower further acknowledges and agrees that as of the date hereof it has no claim, defense or set-off right against Lender of any nature whatsoever, whether sounding in tort, contract or otherwise, and has no claim, defense or set-off of any nature whatsoever to the enforcement by Lender of the full amount of the Loans and other Obligations of Borrower under the Loan Agreement and the other Loan Documents.
(b) Notwithstanding the foregoing, to the extent that any claim, cause of action, defense or set-off against Lender or the enforcement of the Loan Agreement or any other Loan Document, of any nature whatsoever, known or unknown, fixed or contingent, does nonetheless exist or may exist on the date hereof, in consideration of Lender entering into this Amendment, Borrower irrevocably and unconditionally waives and releases fully each and every such claim, cause of action, defense and set-off which exists or may exist on the date hereof.
4.3 Governing Law . This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of Illinois applicable to contracts made and to be performed entirely within such State, without regard to conflict of laws principles.
4.4 Counterparts . This Amendment may be executed in any number of separate counterparts, each of which shall, collectively and separately, constitute one agreement. Delivery of an executed counterpart of a signature page of this Amendment by telecopy or electronically (such as PDF) shall be effective as delivery of a manually executed counterpart of this Amendment. The words “execution,” “signed,” “signature” and words of like import in this Amendment shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity and enforceability as a manually executed signature or the use of a paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act.
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4.5 Reference to Loan Agreement . Except as herein amended, the Loan Agreement shall remain in full force and effect and is hereby ratified in all respects. On and after the effective date hereof, each reference in the Loan Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of like import shall mean and be a reference to the Loan Agreement, as amended by this Amendment.
4.6 Successors . This Amendment shall be binding upon Borrower and Lender and their respective successors and assigns, and shall inure to the benefit of Borrower and Lender, and their respective successors and assigns.
4.7 Costs and Expenses . Borrower hereby agrees to pay on demand, all expenses of Lender incurred in connection with the negotiation, execution and delivery of this Amendment, including reasonable fees, costs and expenses of counsel to Lender related thereto.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date first above written.
BORROWER :
MATTERSIGHT CORPORATION
By: __________________________________________
Name: ____________________________________
Title: _____________________________________
LENDER :
CIBC BANK USA
By: __________________________________________
Name:
Title:
[Signature page to Amendment to Loan and Security Agreement]
FORM OF BORROWING BASE CERTIFICATE
To: CIBC Bank USA, as Lender
Please refer to the Loan and Security Agreement dated as of [_______ ___] , 2017 (as amended, restated, supplemented or otherwise modified from time to time, the “ Loan and Security Agreement ”) among Mattersight Corporation (“ Borrower ”), the other Loan Parties from time to time party thereto, and CIBC Bank USA (formerly known as The PrivateBank and Trust Company), as Lender. This certificate (this “ Certificate ”), together with supporting calculations attached hereto, is delivered to you pursuant to the terms of the Loan and Security Agreement. Capitalized terms used but not otherwise defined herein shall have the same meanings herein as in the Loan and Security Agreement.
Borrower hereby certifies and warrants to Lender that at the close of business on ______________, ____ (the “ Calculation Date ”), the Borrowing Base was $__________________, computed as set forth on the schedule attached hereto.
Borrower has caused this Certificate to be executed and delivered by its duly authorized officer on _________________, 20__.
MATTERSIGHT CORPORATION
By: ____________________________
Name: __________________________
Title: ___________________________
SCHEDULE TO BORROWING BASE CERTIFICATE
Dated as of [____________________]