SOFO Sonic Foundry Inc (CE)

Sonic Foundry, Inc. (the “Company”) and its wholly-owned subsidiary, Sonic Foundry Media Systems, Inc. (“SFMS”) entered into a Revolving Credit Agreement (the “Credit Agreement”) with U.S. Bank National Association (the “Bank”) on July 28, 2021. Under the Credit Agreement the Company may borrow the lesser of $3,000,000 or the applicable Borrowing Base comprised of (1) 80% of Qualified Accounts Receivable; (2) 50% of Qualified Inventory; and (3) an available over-advance of $500,000.

The Credit Agreement matures on July 28, 2022, is secured by all assets of the Company and accrues an interest rate equal to the one-month LIBOR rate plus 1.35% per annum, paid monthly (currently 1.44%). The Credit Agreement requires compliance with typical warranties and covenants including financial covenants of (1) Fixed Charge Coverage Ratio of at least 1.20:1 at the end of each quarter equal to the numerical ratio between (A) consolidated EBITDA, plus lease and rental expense, less 50% of depreciation, less Restricted Payments, less tax payments and (B) consolidated interest expense, plus scheduled principal payments (excluding payments made by Mediasite K.K., a Japanese corporation in satisfaction of the Term Note in favor of Sumitomo Mitsui Banking Corp dated January 30, 2020 in the original principal amount of $460,000, and payments made by Borrower in satisfaction of the Term Note in favor of Partners for Growth V, L.P. dated May 11, 2018 and in the original principal amount of $2,500,000); and (2) Senior Cash Flow Coverage Ratio of no more than 3.00:1 for each fiscal quarter equal to the ratio between Consolidated Senior Debt and Consolidated Adjusted EBITDA, each reported on a cumulative trailing four quarter basis.

A copy of the Credit Agreement is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference. The summary above is qualified by reference to the entire document.