Credit Facility and Capital Leases

Revolving Credit Facility

On July 5, 2012, the Company, entered into a three-year credit agreement which provides for a secured revolving line of credit based on eligible accounts receivable of up to $25.0 million on and before July 5, 2013 and up to $30.0 million thereafter, in each case with a $2.0 million letter of credit sublimit. On June 18, 2013, the Company elected to maintain the revolving commitment at $25.0 million. Proceeds available under the credit agreement may be used for working capital and other general corporate purposes. The Company may prepay borrowing under the agreement in whole or in part at any time without premium or penalty. The Company may terminate the commitments under the credit agreement in whole at any time. Effective June 30, 2013, the quarterly commitment fee, payable in arrears, based on the available commitments is 0.30% per annum.

On August 6, 2013, the Company entered into a second amendment (“Amendment No. 2”) to the credit agreement. Amendment No. 2, among other things, allowed the Company to issue certain unsecured convertible notes and enter into related agreements.

On January 21, 2014, the Company entered into a third amendment to the credit agreement which amended the financial covenants to allow the Company to acquire Scout.

On May 5, 2014, the Company entered into a fourth amendment to the credit agreement which reduced the secured revolving line of credit from $25.0 million to $10.0 million. The amendment also increased the consideration the Company may pay in connection with an acquisition before it is required to seek prior lender approval under the credit agreement.

Amounts outstanding on the facility at September 30, 2014 consisted of a letter of credit for $575,000 required under an operating lease agreement for office space at the Company’s San Francisco headquarters. Any outstanding loans bear interest, at the Company’s option, at a base rate determined in accordance with the credit agreement, minus 0.5%, or at a LIBOR rate plus 2.0%. Principal, together with all accrued and unpaid interest, is due and payable on July 5, 2015, the maturity date. At September 30, 2014, the interest rate for borrowings under the facility was 2.2%.

The credit agreement contains customary affirmative and negative covenants, as well as financial covenants. Affirmative covenants include, among others, delivery of financial statements, compliance certificates and notices of specified events, maintenance of properties and insurance, preservation of existence, and compliance with applicable laws and regulations. Negative covenants include, among others, limitations on the ability of the Company to grant liens, incur indebtedness, engage in mergers, consolidations, sales of assets and affiliate transactions. The credit agreement requires the Company to maintain a maximum leverage ratio and a minimum liquidity amount, each as defined in the credit agreement.

The credit agreement also contains customary events of default including, among other things, payment defaults, breaches of covenants or representations and warranties, cross-defaults with certain other indebtedness, bankruptcy and insolvency events and a change in control of the Company, subject to grace periods in certain instances. Upon an event of default, the lender may declare the outstanding obligations of the Company under the credit agreement to be immediately due and payable and exercise other rights and remedies provided for under the credit agreement.

On August 1, 2014 and October 29, 2014, the Company entered into a waiver under the Credit Agreement that waived its failure to comply with the consolidated funded debt to EBITDA ratio for the quarter ended June 30, 2014 and September 30, 2014 respectively.

On November 1, 2014, the Company entered into a fifth amendment to the credit agreement where the parties agreed to remove a financial covenant requiring a certain level of consolidated funded debt to EBITDA ratio for the previous four quarters. The Company agreed to a new financial covenant requiring the Company to have an EBITDA loss not exceeding a specified target.

The Company’s obligations under the credit agreement are guaranteed by its subsidiary, ServiceSource Delaware, Inc. (the “Guarantor”) and are collateralized by substantially all of the assets of the Company and the Guarantor.

Capital Leases

The Company has capital lease agreements that are collateralized by the underlying property and equipment and expire through September 2019. The weighted-average imputed interest rates for the capital lease agreements were 5.8% and 2.6% at September 30, 2014 and 2013, respectively.

Future minimum annual payments under capital lease obligations as of September 30, 2014 were as follows (in thousands):



	September 30, 2014
Years Ending December 31,
2014 (remaining three months)	$	197
2015	408
2016	342
2017	76
2018	79
Thereafter	59
Total	$	1,161