ADDENDUM TO REVOLVING CREDIT AGREEMENT
Exhibit 10.2
ADDENDUM TO REVOLVING CREDIT AGREEMENT
This
Addendum to Revolving Credit Agreement (this
“Addendum”) is entered into by and between PARK CITY
GROUP, INC., a Nevada corporation (“Borrower”) and
U.S. BANK NATIONAL ASSOCIATION (“Bank”). This
Addendum amends and is incorporated into and made a part of that
certain Revolving Credit Agreement, dated as of September 30, 2021,
between Borrower and Bank and any amendments, extensions,
modifications, or replacements thereto (the
“Agreement”).
Capitalized terms
used herein and not otherwise defined herein shall have the
meanings set forth in the Agreement.
1. Section 1.10 of the Agreement is hereby
amended and restated to read in its entirety as
follows:
“1.10 Paid-In-Full
Period. All advances under the Note must be paid in full for
two (2) separate periods of at least thirty (30) consecutive
days each during each fiscal year.”
2. The last paragraph
of Section 2.3 of the
Agreement is hereby amended and restated to read in its entirety as
follows:
“Upon the
occurrence of an Event of Default (or if an Event of Default would
arise from any redemption, purchase, or retirement of any capital
stock or other equity interests in Borrower or any dividend or
other payment or distribution of a similar type), Borrower may not
redeem, purchase, or retire any of the capital stock or other
equity interests in Borrower, or declare or a pay any dividends, or
make any other payments or distributions of a similar type or
nature including withdrawal distributions.”
3. Section 2.13 of the Agreement is hereby
amended by replacing the words “Not applicable.” with
the following paragraphs to read in their entirety as
follows:
“For
Borrower, together with Park City Group, Inc., a Delaware
corporation (TIN: 00-0000000):
Annual Financial Statements: Not later
than 120 days after the end of each fiscal year, annual financial
statements, audited by a certified public accounting firm
acceptable to Bank.”
Quarterly Financial Statements: Not
later than 45 days after the end of each of the first three fiscal
quarters of each fiscal year, quarterly financial statements,
compiled by a certified public accounting firm acceptable to Bank;
provided, that Borrower will be granted a 10-day extension to
provide to Bank such quarterly financial statements in the event
that Borrower has requested that the U.S. Securities and Exchange
Commission grant Borrower an extension to file an amended quarterly
report.”
4. ARTICLE V of the Agreement is hereby
amended and restated to read in its entirety as
follows:
“ARTICLE V. ADDITIONAL TERMS
The
warranties, covenants, conditions and other terms described in this
Section are incorporated into this Agreement.
5.1 Liquid
Assets. Borrower will maintain Liquid Assets at all times
having a value at least equal to the Loan Amount. Borrower shall
provide Bank with statements to confirm Borrower’s Liquid
Assets that are maintained with other financial institutions and
brokerage companies (if the Borrower is reliant on such funds to
comply with the foregoing covenant) on a quarterly basis within 45
days of each fiscal quarter end.
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“Liquid
Assets” shall mean the following assets owned by Borrower
free and clear of all claims, liens, encumbrances and security
interests except any security interest in favor of Bank, and such
of the following types of encumbered assets owned by Borrower, less
any additional amounts Bank deems appropriate in its sole
discretion:
●
savings accounts,
money market accounts or certificates of deposit, exchange traded
or mutual funds maintained with Bank that can be converted to cash
within three (3) business days;
●
cash deposited with
Bank and pledged to secure Bank loans; and
●
savings accounts,
money market accounts or certificates of deposit, exchange traded
or mutual funds maintained with financial institutions other than
Bank which are chartered and located within the United States which
savings accounts, money market accounts, certificates of deposit,
exchange trades or mutual funds can be converted to cash within
three (3) business days.
“Liquid
Assets” shall not include any such assets which are deemed by
Bank, in its sole discretion, to be unsatisfactory.
5.2 Senior
Funded Debt to EBITDA. Borrower will maintain a Senior
Funded Debt to EBITDA Ratio as of the tenth (10th) day following the
end of each fiscal quarter (each such date, a “Testing
Date”) of not more than 3.00:1.00.
“Current Test
Period” with respect to any Testing Date shall mean the
period of four (4) fiscal quarters ending on the final day of the
most recently completed fiscal quarter (i.e. ten (10) days prior to
such Testing Date).
“EBITDA”
with respect to any Testing Date shall mean (i) net income for the
Current Test Period (excluding (x) the expense of stock-based
compensation and (y) gain or loss on investments), plus (ii)
interest expense for the Current Test Period, plus (iii) income tax
expense for the Current Test Period, plus (iv) depreciation expense
for the Current Test Period, plus (v) amortization expense (except
for amortization of operating right of use asset) for the Current
Test Period.
“Senior
Funded Debt” with respect to any Testing Date shall mean sum
of indebtedness: (i) for borrowed money (other than the
indebtedness evidenced by the Note) as of the end of the Current
Test Period, (ii) evidenced by the Note as of such Testing Date,
(iii) for the deferred purchase price of property not purchased on
ordinary trade terms as of the end of the Current Test Period,
(iv) for capitalized leases as of the end of the Current Test
Period, and (v) for other liabilities evidenced by promissory notes
(other than the Note) or other instruments, but not including any
indebtedness that has been subordinated to the indebtedness
evidenced by the Note pursuant to a writing that has been accepted
by Bank, as of the end of the Current Test Period.
“Senior
Funded Debt to EBITDA Ratio” with respect to any Testing Date
shall mean the ratio of Senior Funded Debt for such Testing Date to
EBITDA for such Testing Date.”
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5.3 Yield
Protection; Capital Adequacy. If there shall occur any
Change in Law which shall have the effect of imposing on Bank (or
Bank’s holding company) any increase or expansion of or any
new: tax (excluding taxes on its overall income and franchise
taxes), charge, fee, assessment or deduction of any kind
whatsoever, or reserve, capital adequacy, special deposits or
similar requirements against credit extended by, assets of, or
deposits with or for the account of Bank or other conditions
affecting the extensions of credit under this Agreement; then
Borrower shall pay to Bank such additional amount as Bank deems
necessary to compensate Bank for any increased cost to Bank
attributable to the extension(s) of credit under this Agreement
and/or for any reduction in the rate of return on Bank’s
capital and/or Bank’s revenue attributable to such
extension(s) of credit. “Change in Law” means the
occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule,
regulation or treaty, (b) any change in any law, rule, regulation
or treaty or in the administration, interpretation, implementation
or application thereof by any governmental authority or (c) the
making or issuance of any request, rule, guideline or directive
(whether or not having the force of law) by any governmental
authority; provided that notwithstanding anything herein to the
contrary, (x) the Xxxx-Xxxxx Xxxx Street Reform and Consumer
Protection Act and all requests, rules, guidelines or directives
thereunder or issued in connection therewith and (y) all requests,
rules, guidelines or directives promulgated by the Bank for
International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United
States or foreign regulatory authorities, in each case pursuant to
Basel III, shall in each case be deemed to be a “Change in
Law,” regardless of the date enacted, adopted or issued.
Bank’s determination of the additional amount(s) due under
this paragraph shall be binding in the absence of manifest error,
and such amount(s) shall be payable within 10 days of demand and,
if recurring, as otherwise billed by Bank. Failure or delay on the
part of Bank to demand compensation pursuant to this Section shall
not constitute a waiver of the Lender’s right to demand such
compensation.”
5. Subsections (d) and (e) of Section 13 of
the Agreement are hereby amended and restated to read in their
entirety as follows:
“(d)
Default on Other Obligations. Borrower
or any Guarantor shall be in default under the terms of any loan
agreement, promissory note, lease, conditional sale contract or
other agreement, document or instrument evidencing, governing or
securing any indebtedness owing by Borrower or any Guarantor to
Bank or any indebtedness in excess of $100,000 owing by Borrower or
any Guarantor to any third party, and (i) the period of grace, if
any, to cure said default shall have passed; and (ii) such third
party has taken any action with respect to such
default.
(e)
Judgments. Any judgment shall be
obtained against Borrower or any Guarantor which, together with all
other outstanding unsatisfied judgments against Borrower (or such
Guarantor), shall exceed the sum of $100,000 and shall remain
unvacated, unbonded or unstayed for a period of 30 days following
the date of entry thereof.”
Dated
as of September 30, 2021.
PARK
CITY GROUP, INC.
a
Nevada corporation
By: /s/Xxxx
Xxxxxxx
Name: Xxxx Xxxxxxx
Title: Chief Financial
Officer
U.S.
BANK NATIONAL ASSOCIATION
By: /s/ Xxxxx
Xxxxx
Name: Xxxxx Xxxxx
Title: Officer
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