SEVENTH ADDENDUM TO LOAN AGREEMENT
SEVENTH ADDENDUM TO LOAN
AGREEMENT
THIS SEVENTH ADDENDUM TO LOAN
AGREEMENT (this "Addendum"), dated as of February 11, 2010, is made by
SOUTHPEAK INTERACTIVE, L.L.C., a Virginia limited liability company
("SouthPeak-LLC"), SOUTHPEAK INTERACTIVE LIMITED, a United Kingdom limited
company ("SouthPeak-UK") and SOUTHPEAK INTERACTIVE CORPORATION, a Delaware
corporation ("SouthPeak-Corp"), jointly and severally (SouthPeak, SouthPeak-UK
and SouthPeak-Corp shall be referred to
herein collectively or individually, whether one or more in number, as
"Borrower"), and SUNTRUST BANK ("Lender"), and provides as follows:
RECITALS:
A.
Borrower and Lender are parties to that certain Loan Agreement dated December
16, 2005 pursuant to which Lender agreed to provide a Revolving Loan to Borrower
(as the same may have been amended from time to time, the "Loan
Agreement").
B. Lender
has agreed to renew and extend the Revolving Loan on the terms and conditions
set forth herein.
C. As
a condition to renewing and extending the Revolving Loan, Lender has required
Borrower to modify the Loan Agreement as set forth herein, and Borrower executes
this Addendum to amend the Loan Agreement as set forth below.
NOW,
THEREFORE, in consideration of the foregoing recitals, which are incorporated
herein by reference, of the mutual covenants and agreements contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto covenant and agree as
follows:
AGREEMENT:
1. Defined Terms. This
Addendum amends and supplements the Loan Agreement in certain respects. All
capitalized words and terms used in this Addendum which are defined in the Loan
Agreement shall have their defined meanings unless otherwise defined herein,
which meanings shall be equally applicable to the singular and the plural forms
of the words and terms defined.
2. Amendments to
Definitions. The Loan Agreement is hereby amended as
follows:
a. The
definition of "Revolving Loan" set forth in Section 1.1 of the Loan Agreement is
hereby deleted in its entirety and replaced with the following:
"Revolving Loan"
shall mean that certain extension of credit from Lender to Borrower for general
corporate and working capital purposes, in the maximum principal amount of Eight
Million and No/100 Dollars ($8,000,000.00), evidenced by the Revolving Note, all
as more particularly described in
the Loan Documents.
b. The
definition of "Revolving Note" set forth in Section 1.1 of the Loan Agreement is
hereby deleted in its entirety and replaced with the following:
"Revolving Note"
shall mean the promissory note, dated of even date herewith, as amended or
supplemented from time to time, in the original principal amount of Eight
Million and No/100 Dollars ($8,000,000.00), evidencing Borrower's obligation to
repay to Lender the Revolving Loan, together with interest together with any
renewals, modifications or extensions thereof, in whole or in part.
c. The
definition of "Termination Date" set forth in Section 1.1 of the Loan Agreement
is hereby deleted in its entirety and replaced with the following:
"Termination Date"
shall mean, with respect to the Revolving Loan, the earliest to occur of the
following dates: (i) that date on which, pursuant to Section 7, Lender
terminates the Revolving Loan (or the Revolving Loan is deemed automatically
terminated) subsequent to the occurrence of an Event of Default; or (ii)
November 30, 2010, or such later date as to which Lender may agree in writing
from time to time hereafter."
d. The
definition of "Applicable Rate" set forth in Section 1.1 of the Loan Agreement
is hereby deleted in its entirety and replaced with the following:
"Applicable Rate"
shall mean the Prime Rate plus one and one-half percent (1.5%) per
annum."
e. Section
1.1 of the Loan Agreement is hereby amended by adding thereto the following new
terms with the following meanings:
""Consolidated"
means, when used with reference to financial statements or financial statement
items of Borrower and its Consolidated Subsidiaries, such statements or items on
a consolidated basis in accordance with applicable principals of consolidation
under GAAP.
"EBIT" means, for any
period, the sum of the following determined on a Consolidated basis, without
duplication, for Borrower in accordance with GAAP: (a) Net Income for such
period plus (b)
the sum of the following to the extent deducted in determining Net Income: (i)
income and franchise taxes, if any and (ii) Interest Expense, less (b) interest income.
"Interest Expense"
means, with respect to Borrower for any period, the gross interest expense
(including, without limitation, interest expense attributable to Capital Leases
and all net payment obligations pursuant to Interest Rate Contracts of
Borrower), all determined for such period in accordance with GAAP.
"Interest Rate
Contract" shall mean any interest rate swap agreement, interest rate cap
agreement, interest rate floor agreement, interest rate collar
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agreement,
interest rate option or any other agreement regarding the hedging of interest
rate risk exposure executed in connection with hedging the interest rate
exposure of any Person and any confirming letter executed pursuant to such
agreement, all as the same may have been amended, restated, supplemented or
otherwise modified from time to
time.
"Net Income" means,
with respect to Borrower, for any period of determination, the Consolidated net
income of Borrower and its Consolidated Subsidiaries, as determined in
accordance with GAAP.
"Tangible Net Worth"
means shareholders' equity reduced by goodwill and other intangible assets
including, without limitation, goodwill, franchises, licenses, patents,
trademarks, trade names, copyrights, service marks, and brand
names.
"Total Liabilities"
means all liabilities of Borrower, including Debt and other deferred sums appearing on the liabilities side of a
balance sheet, all in accordance with generally accepted accounting principles
applied on a consistent basis."
3. Restriction on
Dividends. The Loan Agreement is hereby amended by deleting Section 5.4
of the Loan Agreement in its entirety and replacing it with the
following:
"5.4
Dividends:
Distributions. Declare or pay any dividends on, or make any distribution
with respect to, its equity interests."
4. Cash Flow Coverage
Covenant. The Loan Agreement is hereby amended by adding the following as
a new Section 4.19 of the Loan Agreement:
"4.19
Cash Flow Coverage
Ratio. Tested quarterly and beginning with the calendar quarter ending on
December 31, 2009, maintain a Cash Flow Coverage Ratio as of the testing date of
at least 1.5 to 1, calculated as follows:
|
Calendar
Quarter Ending
|
Period
for Cash Flow Coverage Ratio Calculations
|
|
|
|
|
December
31, 2009
|
July 1, 2009 through December 31, 2009 |
|
March
31, 2010
|
July 1, 2009 through March 31, 2010 |
|
June
30, 2010
|
July 1, 2009 through June 30, 2010 |
| September 30, 2010, and for each calendar quarter thereafter |
For
each calendar quarter, the previous four calendar quarters
then
ending
|
The Cash
Flow Coverage Ratio shall be defined as (A) EBIT divided by (B)
Interest Expense.
5. Tangible Net Worth
Covenant. The Loan Agreement is hereby amended by adding the following as
a new Section 4.20 of the Loan Agreement:
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"4.20
Tangible Net
Worth. Tested quarterly and beginning with the calendar quarter ending on
December 31, 2009, maintain a Tangible Net Worth of greater than
($5,423,000)."
6. Additional Capital.
The Loan Agreement is hereby amended by adding the following as a new Section
4.21 of the Loan Agreement:
"4.21
Additional
Capital. Not later than June 30, 2010, Borrower shall implement a plan
(the "Capital Plan") to raise additional capital for Borrower (the "Additional
Capital") that will result in the ratio of Borrower's Total Liabilities to
Tangible Net Worth being less than 7.0 to 1. Such Capital Plan shall be
satisfactory in all respects to Lender in Lender's sole discretion. Borrower
must complete the actual raising of the Additional Capital, and must have
achieved a ratio of Borrower's Total Liabilities to Tangible Net Worth of less
than 7.0 to 1, not later than November 30, 2010."
7. Event of Default. The
Loan Agreement is hereby amended by adding the following as a new Section 7.17
of the Loan Agreement:
"7.17
Capitol Distributing
Repayment. Capitol Distributing, LLC, a Virginia limited liability
company, shall fail to repay all Debt of Capitol Distributing, LLC to Lender in
full by June 30, 2010."
8. Reimbursement.
Pursuant to Section 9.6 of the Loan Agreement, Borrower shall pay to Lender on
demand all out-of-pocket costs and expenses that Lender pays or actually incurs
in connection with this Addendum.
9. Ratification. Except
as modified by this Addendum, the Loan Agreement is hereby ratified and
reaffirmed in its entirety.
[Remainder
of page intentionally left blank. Signature pages follow.]
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IN WITNESS WHEREOF, the
parties have caused this Addendum to be duly executed as of the date first
written above.
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LENDER:
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SUNTRUST BANK
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By:
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Name:
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Title:
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BORROWER:
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SOUTHPEAK
INTERACTIVE, L.L.C.,
a
Virginia limited liability company
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By:
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Xxxxx
X. Xxxxxxxx, Manager
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SOUTHPEAK
INTERACTIVE LIMITED,
a
United Kingdom limited company
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By:
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Xxxxx
X. Xxxxxxxx, Director
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By:
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Xxxxxxx
X. Xxxxxxxx, Director
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SOUTHPEAK
INTERACTIVE CORPORATION
a
Delaware corporation
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By:
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Xxxxx
X. Xxxxxxxx, Chairman
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