On January 15, 2021, Qumu Corporation and its wholly-owned subsidiary, Qumu, Inc. entered into and closed on that certain Loan and Security Agreement (the “Loan Agreement”) with Wells Fargo Bank, National Association providing for a revolving line of credit. Concurrently with the closing of the Loan Agreement, the Company received an advance of approximately $1,877,000 from the line of credit and used $1,832,888.27 to repay the face amount of that certain secured promissory note dated May 1, 2020 to ESW Holdings, Inc. (the “ESW Note”), which represented the deferred purchase price of the Company’s purchase and termination of the warrant to ESW Holdings, Inc. dated January 12, 2018 for 925,000 shares of the Company’s common stock. In connection with the repayment of the ESW Note, the related security agreement May 1, 2020 between the Company and ESW Holdings, Inc. was terminated. As provided in the ESW Note, the Company will be obligated to pay ESW Holdings, Inc. an additional $150,000 if a “Fundamental Transaction,” as defined in the ESW Note, occurs prior to April 1, 2021. Under the Loan Agreement, the revolving line has a maximum availability for borrowing of the lesser of $10 million or a defined borrowing base, less any outstanding letters of credit and the outstanding principal balance of any advances. The borrowing base is six times the prior quarter’s monthly average recurring revenue from eligible customer accounts. The revolving line has a January 15, 2023 maturity date and amounts borrowed bear interest at a floating per annum rate equal to 1.25% above the Lender’s prime rate, currently 3.25%. The Borrower will also be obligated to pay the Lender an unused revolving line facility fee quarterly in arrears of 0.25% per annum of the average unused portion of the Revolving Line during such quarterly period. The Loan Agreement contains customary affirmative and negative covenants and requirements relating to the Borrower and its operations. The affirmative covenants also require the Company to maintain at all times minimum quarterly recurring revenue and minimum liquidity. As of the last day of each fiscal quarter, commencing with the fiscal quarter ending March 31, 2021, Borrower’s recurring revenue may not less than the amounts reflected in a financial covenant side letter agreement entered into between Borrower and Lender on January 15, 2021 (the “Letter Agreement”). The Letter Agreement specifies minimum quarterly recurring revenue for the first, second, third and fourth quarters of 2021 of $5 million, $5 million, $6 million and $8 million, respectively. The Letter Agreement also specifies minimum quarterly recurring revenue of $8 million for all quarters of 2022. The Loan Agreement provides that Borrower’s liquidity, tested as of the last day of each fiscal quarter, of not less than $5 million, with liquidity generally defined as including the aggregate amount of unrestricted and unencumbered cash and cash equivalents held at such time by Borrower in accounts maintained with Lender or its affiliates in the United States, and the availability under the line of credit.