Exhibit 10.1
SEVENTH AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
This SEVENTH Amendment to Loan and Security Agreement (this “Amendment”), dated as of April 21, 2023, is executed and delivered by ZEROFOX, INC. (“Borrower”), ZEROFOX HOLDINGS, INC., ZEROFOX HOLDINGS, LLC, IDX FORWARD MERGER SUB, LLC, IDENTITY THEFT GUARD SOLUTIONS, INC., RBP FINANCIAL SERVICES, LLC, ZEROFOX CHILE HOLDINGS, LLC, ZEROFOX INDIA HOLDING, LLC, and VIGILANTEATI, INC. (each a “Guarantor” and, collectively, “Guarantors”; Borrower and Guarantors are each a “Loan Party” and, collectively, “Loan Parties”) and STIFEL BANK (“Bank”). Except where otherwise noted, capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to those terms in the Loan Agreement (as defined below).
RECITALS
NOW, THEREFORE, in consideration of the promises herein contained, and for other good and valuable consideration (the receipt, sufficiency and adequacy of which are hereby acknowledged), the parties hereto (intending to be legally bound) hereby agree as follows:
“Seventh Amendment Effective Date” means April 21, 2023.
“Aggregate Borrowing Limit” means Twenty-Two Million Five Hundred Thousand Dollars ($22,500,000).
“Formula Revolving Line” means one (1) or more credit extensions of up to an aggregate principal amount of Twenty-Two Million Five Hundred Thousand Dollars ($22,500,000).
“Formula Revolving Line Maturity Date” means June 30, 2025.
“Liquidity Ratio” means the ratio of (a) the sum of (i) Loan Parties’ unrestricted cash at Bank plus (ii) the product of (A) Loan Parties’ trade accounts receivable less any allowance for doubtful accounts, multiplied by (B) 0.50, to (b) Loan Parties’ aggregate Indebtedness to Bank (excluding Indebtedness secured by restricted cash collateral in a segregated account at Bank). The inputs in clauses (a)(i) and (b) above will be the amount of unrestricted cash at Bank or Indebtedness to Bank, as applicable, at the time of testing. The input in clause (a)(ii) above will be the net trade Accounts most recently reported with the financial statements required by Section 6.3.
(k) equipment lease obligations of Lookingglass Cyber Solutions, Inc. to MacQuarie Equipment Capital Inc. existing on the Seventh Amendment Effective Date in an aggregate amount of approximately $98,021;
(j) Investments by Borrower in (i) ZeroFox Chile SpA (either directly or indirectly through ZeroFox Chile Holdings LLC), in an aggregate amount not to exceed Two Million Five Hundred Thousand Dollars ($2,500,000) in the aggregate during any six-month period, (ii) ZeroFox UK Ltd in an aggregate amount not to exceed Four Million Five Hundred Thousand Dollars ($4,500,000) in the aggregate during any six-month period, (iii) ZeroFox India Private Limited (either directly or indirectly through ZeroFox India Holding, LLC), in an amount not to exceed Two Million Dollars ($2,000,000) in the aggregate during any six-month period, and (iv) Lookingglass Cyber Solutions Europe s.r.o. (either directly or through a Subsidiary) in an aggregate amount not to exceed Five Hundred Thousand Dollars ($500,000) in the aggregate during any six-month period; provided that, no Investment made by Borrower in any of the entities described in this subsection within any six-month period shall prevent Borrower from making an Investment not to exceed the amounts described in this subsection in any other six-month period, regardless of whether such Investment is made prior to the Closing Date;
6.7 Accounts. Each Loan Party and any Subsidiary thereof that maintains its primary accounts in the United States of America shall maintain its primary depository, operating, and investment accounts with Bank. Each Loan Party shall use commercially reasonable efforts to utilize and shall cause each of its Subsidiaries to use commercially reasonable efforts to utilize Bank’s International Banking Division for any international banking services required by such Loan Party, including, but not limited to, foreign currency wires, hedges, swaps, FX Contracts, and Letters of Credit. Notwithstanding the foregoing,
(a) Identity Theft Guard Solutions, Inc. may maintain accounts with Comerica Bank existing as of the Seventh Amendment Effective Date, so long as (i) as of the last day of each month, the aggregate balance in such accounts in excess of $250,000 has been transferred to an account at Bank, (ii) within forty-five (45) days after the Seventh Amendment Effective Date, Comerica Bank has entered into an account control agreement with Bank in form and substance satisfactory to Bank, and (iii) such accounts are closed no later than June 30, 2024;
(b) Loan Parties, other than Lookingglass Cyber Solutions, LLC, may maintain their existing accounts at Silicon Valley Bank or its successor-in-interest, so long as such accounts are closed no later than sixty (60) days after the Seventh Amendment Effective Date;
(c) Lookingglass Cyber Solutions, LLC may maintain its accounts existing as of the Seventh Amendment Effective Date, so long as (i) within forty-five (45) days after the Seventh Amendment Effective Date, each financial institution at which any such accounts are located has entered into an account control agreement with Bank in form and substance satisfactory to Bank, and (ii) such accounts are closed no later than one hundred forty (140) days after the Seventh Amendment Effective Date; and
(d) Borrower may maintain a domestic account at HSBC to support its foreign operations so long as the aggregate balance in such accounts does not exceed $50,000 at any time (provided, the balance may exceed such amount in connection with facilitating payment of payroll in the United Kingdom so long as the balance is reduced to less than $50,000 within three Business Days) and no account control agreement will be required.
6.8 Financial Covenants. Borrower shall maintain the financial covenants in Section 6.8(a) and Section 6.8(b) below at all times.
(a) Minimum Cash at Bank. Loan Parties shall maintain unrestricted cash at Bank of at least Seventeen Million Five Hundred Thousand Dollars ($17,500,000), tested on a continuous basis. Loan Parties acknowledge and agree that any request by a Loan Party or any other Person to pay or otherwise transfer funds that would cause Loan Parties’ balance of unrestricted cash at Bank to be less than the amount required by this Section 6.8(a) shall constitute an immediate Event of Default.
(b) Liquidity Ratio. Tested monthly as of the last day of each month, Loan Parties shall maintain a Liquidity Ratio of at least 1.50 to 1.00.
all as more particularly described in the LGCS Acquisition Agreement. As consideration for such transactions, Target Holdco’s stockholders will receive shares of common stock of Parent. In addition, Alsop Louie Capital 2, L.P., a holder of Indebtedness of the Company, will receive a cash payment of approximately $1,900,000 and a convertible promissory note issued by Borrower in the face amount of approximately $3,300,000 (such note, the “Seller Note”) (such transactions, collectively, the “LGCS Acquisition”).
Bank hereby consents to the LGCS Acquisition, subject to the satisfaction of the conditions set forth in Section 9 of this Amendment and the following express conditions:
(t) That the LGCS Acquisition is completed on substantially the terms stated in the LGCS Acquisition Agreement, and that all material conditions stated in the LGCS Acquisition Agreement have been satisfied and not waived without Bank’s prior written consent;
(u) That no Event of Default has occurred and is continuing at the time of the LGCS Acquisition or will result from the consummation of the LGCS Acquisition;
(v) That no Loan Party incurs or assumes any Indebtedness, other than Permitted Indebtedness, in connection with the LGCS Acquisition;
(w) That, at the time of the LGCS Acquisition, the assets of the Acquiror, the Company, and the Company’s subsidiaries (if any) are not subject to any Liens other than Permitted Liens;
(x) That Alsop Louie Capital 2, L.P. executes a subordination agreement, in form and substance satisfactory to Bank, with respect to the Seller Note; and
(y) That, within forty-five (45) days after the consummation of the LGCS Acquisition, each of Acquiror, the Company, and any subsidiary of the Company then existing joins the Loan Agreement as a “Borrower” or “Guarantor” thereunder by the execution of a joinder agreement in form and substance satisfactory to Bank (clause (y) above, the “Post-Closing Condition”). Bank and Loan Parties hereby agree that Loan Parties’ failure to cause the Post-Closing Condition to be achieved by the required date shall be an immediate Event of Default under the Loan Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be duly executed and delivered as of the date first above written.
BORROWER:
ZEROFOX, INC.
By: /s/ James C. Foster
Name: James C. Foster
Title: Chief Executive Officer
GUARANTORS:
ZEROFOX HOLDINGS, inc.
By: /s/ James C. Foster
Name: James C. Foster
Title: Chief Executive Officer and Chairman
ZEROFOX HOLDINGS, LLC
By: /s/ James C. Foster
Name: James C. Foster
Title: Chief Executive Officer and President
IDX FORWARD MERGER SUB, LLC
By: /s/ James C. Foster
Name: James C. Foster
Title: Chief Executive Officer and President
IDENTITY THEFT GUARD SOLUTIONS, inc.
By: /s/ James C. Foster
Name: James C. Foster
Title: Chief Executive Officer and President
RBP Financial Services, LLC
By: /s/ Timothy S. Bender
Name: Timothy S. Bender
Title: Manager
ZEROFOX CHILE HOLDINGS, LLC
By: /s/ Timothy S. Bender
Name: Timothy S. Bender
Title: Chief Financial Officer of ZeroFox, Inc., Manager
GUARANTORS (cont.):
ZeroFox India Holding, LLC
By: /s/ Timothy S. Bender
Name: Timothy S. Bender
Title: Chief Financial Officer of ZeroFox, Inc., Manager
vigilanteati, inc.
By: /s/ Timothy S. Bender
Name: Timothy S. Bender
Title: Chief Financial Officer
BANK:
STIFEL BANK
By: /s/ James C. Binz
Name: James C. Binz
Title: Executive Vice President