Exhibit
10.1
MASTER CONSENT, SECOND AMENDMENT TO
AMENDED AND RESTATED LOAN AGREEMENT, SECOND AMENDMENT TO AMENDED
AND RESTATED REVOLVING CREDIT PROMISSORY NOTE AND FIRST AMENDMENT
TO AMENDED AND RESTATED TERM PROMISSORY NOTE
MASTER CONSENT,
SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT, SECOND
AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT PROMISSORY NOTE
AND FIRST AMENDMENT TO AMENDED AND RESTATED TERM PROMISSORY NOTE
(the “Amendment”), dated as of March __, 2009, among
Kowabunga! Inc. (formerly known as Think Partnership Inc.), a
Nevada corporation (“Borrower”), each of the Guarantors
signatory hereto (the “Guarantors”) and Wachovia Bank,
National Association (“Bank”).
W I T N E S S E T
H:
WHEREAS, Bank has
made available to Borrower a secured credit facility pursuant to
the terms and conditions of the following: (i) that certain
Amended and Restated Loan Agreement, dated as of February 27, 2008,
between Borrower and Bank, as amended by Master Consent to Loan
Documents and First Amendment to Loan Agreement and Amended and
Restated Revolving Credit Promissory Note dated as of June 25, 2008
and as amended, restated, supplemented or modified from time to
time (the “Loan Agreement”); (ii) that certain Amended
and Restated Guaranty Agreement, dated as of February 27, 2008,
between Borrower, the Guarantors and Bank, as amended, restated,
supplemented or modified from time to time (the “Guaranty
Agreement”); (iii) that certain Amended and Restated Security
Agreement, dated as of February 27, 2008, between Borrower, the
Guarantors and Bank, as amended, restated, supplemented or modified
from time to time (the “Security Agreement”); (iv) that
certain Amended and Restated Revolving Credit Promissory Note in
the original principal amount of $15,000,000 dated as of February
27, 2008, executed by Borrower payable to the order of Bank, as
amended by Master Consent to Loan documents and First Amendment to
Loan Agreement and Amended and Restated Revolving Credit promissory
Note dated as of June 25, 2008 and as amended, restated,
supplemented or modified from time to time (the “Revolving
Credit Note”); (v) that certain Amended and Restated Term
Promissory Note in the original principal amount of $5,000,000
dated as of February 27, 2008, executed by Borrower payable to the
order of Bank, as amended, restated, supplemented or modified from
time to time (the “Term Note”); (vi) that certain
Letter of Credit dated September 26, 2007 in the amount of $725,000
(reference number SM227727) (“Letter of Credit
#SM227727”); and (vii) all other documents executed in
connection therewith, as amended, restated, supplemented or
modified from time to time (collectively with the Loan Agreement,
the Guaranty Agreement, the Security Agreement, the Revolving
Credit Note, the Term Note and Letter of Credit #SM227727, the
“Loan Documents”);
WHEREAS, Borrower
and Bank entered into that certain ISDA Master Agreement and the
Schedule thereto dated as of January 24, 2008 (the “Master
Agreement”), and pursuant to the Master Agreement, Borrower
and Bank have entered into an interest rate swap
transaction
evidenced by that certain Confirmation
dated February 28, 2008 (the “Confirmation” and
together with the Master Agreement, collectively, the “Swap
Agreements”); and
WHEREAS, Borrower
and Guarantors have requested that the Bank agree to (i) amend the
Loan Agreement, the Revolving Credit Note and the Term Note as
further set forth below; and (ii) consent to the potential sale by
Borrower of MarketSmart Advertising, Inc. and certain other
segments of the business of the Borrower (each, a “Segment
Sale”, collectively, the “Segment
Sales”).
NOW, THEREFORE, in
consideration of the premises and agreements contained herein, the
parties hereto hereby agree as follows:
1.
Definitions . All capitalized terms used herein and not
otherwise defined shall have the respective meanings provided to
such terms in the Loan Documents, as amended hereby. In
addition to the terms defined in the Loan Documents, the following
term shall have the following meaning for the purposes of this
Amendment:
“Swap
Agreement Early Termination Amount” shall mean, at any date
of determination with respect to a Swap Agreement, the amount
determined pursuant to the terms of the Swap Agreements as being
payable in respect of an early termination of such Swap Agreement
if such Swap Agreement were being terminated as of such date as a
result of an event of default or termination event for which
Borrower were the defaulting party or sole Affected Party (as such
term is defined in the Swap Agreements) (it being understood such
amount is based on market conditions and any such amount will be
subject to market conditions at the time of the
determination).
2.
Amendments .
(a)
Amendments to the Loan
Agreement .
(i)
The “Letters of Credit”
paragraph of the Loan Agreement is hereby amended by inserting the
following at the end of such paragraph:
Notwithstanding
the foregoing, from and after March __, 2009 (a) Bank shall have no
further obligation to issue any Letters of Credit nor honor any
requests for issuance of Letters of Credit by Borrower, (b)
Borrower shall arrange for the return, cancellation, termination or
replacement of all outstanding Letters of Credit on or before
August 21, 2009, and (c) Bank shall give beneficiaries of
outstanding Letters of Credit notices of non-renewal for such
outstanding Letters of Credit in accordance with Bank’s
customary practices. Borrower remains obligated to reimburse
Bank immediately for any draw on any Letter of Credit.
(ii)
The “Affirmative Covenants”
paragraph of the Loan Agreement is hereby amended as
follows:
(1)
by adding the following section at the
end of such paragraph:
2
Field Exams, Appraisals and other
Assessments of Collateral .
Bank may obtain, at Borrower’s expense, such appraisals and
field exams and other assessments of Collateral as Bank may
reasonably request.
(2)
by deleting the “Other Financial
Information” section in its entirety and substituting, in
lieu thereof, the following:
Other Financial
Information . Deliver promptly
(i) commencing with the month ending February 28, 2009, a monthly
listing of Borrower’s and the Guarantors’ accounts
receivables and a detailed aging report (on an aged-by-invoice
basis), all in form and substance reasonably satisfactory to Bank
and (ii) such other information regarding the operation, business
affairs, and financial condition of Borrower and the Guarantors
which Bank may reasonably request.
(iii)
The “Negative Covenants”
paragraph of the Loan Agreement is hereby amended as
follows:
(1)
by inserting the following at the end of
the “Permitted Acquisitions” section of such
paragraph:
Notwithstanding
the foregoing, from and after March __, 2009, purchase, own, invest
in or otherwise acquire, directly or indirectly, any capital stock,
interests in any partnership, limited liability company or joint
venture, or otherwise obtain any equity ownership of any other
person or entity unless approved by Bank in its sole
discretion.
(2)
by inserting the following at the end of
the “Other Investments” section of such
paragraph:
Notwithstanding
the foregoing, from and after March __, 2009, purchase any stock,
securities, or evidence of indebtedness of any other person or
entity (including government securities and commercial bank
certificates of deposit), unless approved by Bank in its sole
discretion.
(iv)
The “Monthly and Quarterly
Compliance Certificate” paragraph of the Loan Agreement is
hereby deleted in its entirety and the following is substituted in
lieu thereof:
COMPLIANCE
CERTIFICATE . Borrower
agrees to deliver a Compliance Certificate (each a
“Compliance Certificate”) to Bank: (a) as soon as
available but in any event within 45 days after the end of each
fiscal quarter, a quarterly Compliance Certificate demonstrating
pro forma compliance (including calculations) by
Borrower and the Guarantors with each covenant contained in the
Financial Covenants paragraph, (b) as soon as available but in any
event within 20 days after the end of each month, a monthly
Compliance Certificate demonstrating compliance with and the
calculations for the determination of the Maximum Availability in
accordance with the Availability paragraph in the Revolving Credit
Note and (c) at such other times as Bank shall
reasonably
3
request, in each case, in form and
substance reasonably satisfactory to Bank.
(v)
The “Financial Covenants”
paragraph of the Loan Agreement is hereby amended as
follows:
(1)
by deleting the “Capital
Expenditures” section in its entirety and substituting, in
lieu thereof, the following:
Capital
Expenditures. Borrower
and Guarantors shall not, during any fiscal year, expend on gross
fixed assets (excluding the pro forma impact of Permitted
Acquisitions consummated during such fiscal year, but including
gross leases to be capitalized under generally accepted accounting
principles and leasehold improvements), through and including
fiscal year ended December 31, 2009, $2,000,000.00 in the aggregate
and, $500,000.00 in the aggregate thereafter.
(2)
by inserting the following at the end of
the “Limitation on Debt” section of such
paragraph:
Notwithstanding
the foregoing, from and after March __, 2009, Borrower and
Guarantors shall not, directly or indirectly, create, incur, assume
or become liable for any additional indebtedness, whether
contingent or direct (other than warrants and employee stock
options or employee buy-back programs of the Borrower and
Guarantors existing as of February 27, 2008, and disclosed in
Borrower’s Form 10-Q filed for the period ended September 30,
2007), unless approved by Bank in its sole discretion.
(3)
by inserting the following at the end of
the “Dividends and Distributions” section of such
paragraph:
Notwithstanding
the foregoing, from and after March __, 2009, Borrower shall not
declare or pay dividends or make other similar distributions to its
shareholders, unless approved by Bank in its sole
discretion.”;
(4)
by inserting the following at the end of
the “Stock Repurchases” section of such
paragraph:
Notwithstanding
the foregoing, from and after March __, 2009, Borrower shall not
make any Equity Repurchases unless approved by Bank in its sole
discretion.
(5)
by inserting the following at the end of
the “Calculation of EBITDA” section of such
paragraph:
Notwithstanding
the foregoing, for periods commencing January 2009, EBITDA shall be
further adjusted to include the specific add backs set forth on
Exhibit A attached hereto. For clarification purposes,
the add backs set forth under the heading “One-Time
Expense” may be added back only in the amounts and during the
months set forth on Exhibit A . For further
clarification purposes, the add
4
backs set forth under the heading
“Addbacks for Segments to be Sold” may be added back
only to the extent that the corresponding Subsidiaries are not yet
sold (as permitted under this Agreement) and only in the amounts
and during the months set forth on Exhibit A .”.
(vi)
The Loan Agreement is hereby amended by
adding the following new “Exhibit A” attached hereto as
Exhibit A .
(b)
Amendments to the Revolving Credit
Note .
(i)
The “Availability” paragraph
of the Revolving Credit Note is hereby amended by deleting the
first sentence of such paragraph and replacing such sentence with
the following:
The aggregate
principal of Advances under this Note shall not exceed (the
“Maximum Availability”): (A) for the period commencing
on the date of this Note and concluding March __, 2009, the lesser
(x) of $15,000,000 and (y) 1.75 times the 12 month trailing EBITDA
of Borrower, as calculated quarterly by Bank for the preceding
Calculation Period (as defined in the Loan Agreement) minus the
aggregate outstanding amount under the Term Note; (B) for the
period commencing March __, 2009 and concluding on the earlier of
(a) the closing date of the sale of MarketSmart Advertising, Inc.
or (b) September 30, 2009, the aggregate principal of Advances
under this Note shall not exceed the lesser of : (x)
$8,000,000 or (y) 2.00 times the 12 month trailing EBITDA of
Borrower, as calculated monthly by Bank for the preceding 12 month
period minus the aggregate outstanding amount under the Term
Note minus the aggregate undrawn and unexpired amount of the
then outstanding Letters of Credit minus the aggregate amount of
unreimbursed drawings under all Letters of Credit
outstanding at such time; and (C) for the period commencing
from the earlier of (a) the closing date of the sale of MarketSmart
Advertising, Inc. or (b) October 1, 2009, the aggregate principal
of Advances under this Note shall not exceed the lesser of :
(x) $8,000,000 ( provided, however, as of October 1, 2009, such
amount shall be reduced to $6,000,000) or (y) 1.50 times the 12
month trailing EBITDA of Borrower, as calculated monthly by Bank
for the preceding 12 month period minus the aggregate
outstanding amount under the Term Note minus the aggregate
undrawn and unexpired amount of the then outstanding Letters of
Credit minus the aggregate amount of unreimbursed drawings under
all Letters of Credit outstanding at such time .
(ii)
The “Interest Rate” paragraph
of the Revolving Credit Note is hereby amended by inserting,
immediately preceding the parenthetical “(the “Interest
Rate”), the following:
, provided
, that (x) from March __, 2009 through September 30, 2009, the
Applicable Margin shall be 4.00% and (y) from and after October 1,
2009 the Applicable Margin shall be 7.00%, provided
further , that the Interest Rate during the period from and
after January 1, 2009 shall in no event be less than
7.00%
5
(iii)
The “Repayment Terms”
paragraph of the Revolving Credit Note is hereby amended by
deleting “February 27, 2011” and substituting, in lieu
thereof, “March 31, 2010”.
(iv)
The Revolving Credit Note is hereby
amended by adding the following new “Mandatory
Repayment” paragraph after the “Repayment Terms”
paragraph:
MANDATORY
REPAYMENT . Upon the
sale or liquidation, outside of the ordinary course of business, of
a Material (defined below) amount of any Collateral, any Subsidiary
or other asset, Borrower shall apply Net Cash Proceeds (defined
below) first , to immediately prepay outstanding loans under
the Term Note and second , to the extent there
