EXHIBIT 10.2
AMENDMENT TO LOAN AGREEMENT
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THIS AMENDMENT TO LOAN AGREEMENT (this "Amendment"), made and entered into
as of the 31st day of March, 2003, by and between KABLE NEWS COMPANY, INC., an
Illinois corporation ("Kable News"), KABLE FULFILLMENT SERVICES OF OHIO, INC., a
Delaware corporation ("Kable Fulfillment of Ohio"), KABLE DISTRIBUTION SERVICES,
INC., a Delaware corporation ("Kable Distribution," and collectively with Kable
News and Kable Fulfillment of Ohio, referred to herein as the "Existing
Borrowers"), and KABLE FULFILLMENT SERVICES, INC., a Delaware corporation
("Kable Fulfillment Services") (Kable Fulfillment Services shall be added as an
additional Borrower under the terms of this Amendment and together with the
Existing Borrowers shall be referred to hereinafter as the "Borrowers"), and U.
S. BANK NATIONAL ASSOCIATION, a national banking association ("Bank").
WITNESSETH:
WHEREAS, the Kable News, Kable Fulfillment of Ohio and Kable Distribution
heretofore executed and delivered to Bank a Revolving Credit Note dated April 4,
2002, in the principal amount of up to Twenty Million Dollars ($20,000,000.00),
payable to the order of Bank as therein set forth (the "Note"); and
WHEREAS, the Note is described in an Loan Agreement dated as of April 4,
2002 made by and among Kable News, Kable Fulfillment of Ohio, Kable Distribution
and Bank (as amended, the "Loan Agreement"); and
WHEREAS, Existing Borrowers have requested certain amendments to the Loan
Agreement to add Kable Fulfillment Services as a party thereto and as a
"Borrower" thereunder, which amendments Bank is willing to make on the terms and
conditions set forth herein; and
WHEREAS, Borrowers and Bank desire to amend and modify the Note and the
Loan Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual provisions
and agreements hereinafter set forth, the parties hereto do hereby mutually
promise and agree as follows:
1. The Existing Borrowers have advised the Bank that: (a) Kable News has
formed Kable Fulfillment Services as a new subsidiary for the purposes of
acquiring the subscription fulfillment services business of Electronic Data
Systems Corporation and its subsidiaries, EDS Resource Management Corporation
and EDS Information Services LLC (collectively, the "Sellers"), in an asset
acquisition (the "EDS Acquisition") pursuant to an Asset Purchase Agreement to
be made by and among Kable Fulfillment Services, as buyer, and such Sellers, a
draft of which (dated as of March 28, 2003) has been provided to the Bank (the
"Asset Purchase Agreement"), (b) as part of the EDS Acquisition, Kable
Fulfillment Services will sublease the Sellers' real property facilities located
in Louisville, Colorado pursuant to a Sublease Agreement (the "Sublease
Agreement") to be made by and between EDS Information Services LLC, as
sublandlord, and Kable Fulfillment Services, as subtenant, a draft of which
(dated as of March 31, 2003) has been provided to the Bank, and (c) as part of
the EDS Acquisition, Kable News will unconditionally guarantee to the Sellers
all obligations of Kable Fulfillment Services under the Asset Purchase Agreement
and under other agreements and instruments executed and delivered by Kable
Fulfillment Services in connection with the EDS Acquisition pursuant to a
Guaranty to be made by Kable News in favor of the Sellers, and Kable News will
unconditionally guarantee to EDS Information Services LLC all obligations of
Kable Fulfillment Services under the Sublease Agreement pursuant to a Guaranty
to be made by Kable News in favor of EDS Information Services LLC (collective,
the "Kable News Guaranty"), drafts of which (dated as of March 28, 2003 and
March 31, 2003, respectively) have been provided to the Bank, and you have
requested our consent to such EDS Acquisition and to the execution of the Asset
Purchase Agreement and the Sublease Agreement by Kable Fulfillment Services and
of the Kable News Guaranty by Kable News. Subject to the terms and conditions of
this Amendment, the Bank hereby consents to the EDS Acquisition on the terms set
forth in the Asset Purchase Agreement and to execution and delivery of the Asset
Purchase Agreement, the Sublease Agreement and the Kable News Guaranty in the
forms of such agreements delivered to the Bank for review, or with such
revisions as the Bank, in its sole discretion, deems immaterial. This consent
shall constitute a consent only with respect to the EDS Acquisition from Sellers
as described in the Asset Purchase Agreement, and shall not be deemed a consent
to or approval of any other or future Acquisitions or for any other investment,
transaction or purpose.
2. From and after the date of this Amendment, Kable Fulfillment Services
shall be added as a party to the Agreement (as amended by this Amendment), and
the term "Borrowers" used in the Loan Agreement or in any of the other
Transaction Documents (and other terms of similar reference to all of the
Borrowers in general) shall henceforth include Kable Fulfillment Services. Kable
Fulfillment Services, by its execution of this Amendment, hereby (i) represents
and warrants to Bank all of the representations and warranties made by Borrowers
under the Agreement, as amended in this Amendment, and (iii) agrees to all of
the covenants, terms and provisions applicable to the Borrowers under the Loan
Agreement, as amended by this Amendment, including, without limitation, not
granting any liens or other encumbrances on any of its Property except as
permitted under Section 5.02(b) of the Loan Agreement.
3. New definitions of "Amendment" and "EDS Acquisition" shall be added to
Exhibit A to the Loan Agreement in proper alphabetical order as follows:
Amendment shall mean that certain Amendment to Loan Agreement dated as
of March 31, 2003 made by and among the Borrowers and Bank.
EDS Acquisition shall mean the acquisition by Kable Fulfillment
Services of the subscription fulfillment services business of Electronic
Data Systems Corporation and its subsidiaries, EDS Resource Management
Corporation and EDS Information Services LLC (collectively, the "Sellers")
in an asset acquisition pursuant to a certain Asset Purchase Agreement
dated as of March 31, 2003.
4. The definition of "Borrowing Base" in Exhibit A to the Loan Agreement is
hereby deleted in its entirety, and in its place shall be substituted the
following:
Borrowing Base shall mean, as of the date of any determination
thereof, Seventy-Five Percent (75%) of the aggregate face amount of the
Eligible Accounts of each of the Borrowers as of such date (less maximum
discounts, credits and allowances which may be taken by or granted to
Account Debtors in connection therewith and/or adjustments for reserves and
allowances deemed appropriate by Lender in its good faith discretion based
upon Lender's customary business lending practices). Notwithstanding any
provision contained in this definition of "Borrowing Base" to the contrary,
Lender may at any time and from time to time, in its sole and absolute
discretion, loan to Borrowers more than the above stated percentage of
Eligible Accounts without notice to Borrowers; provided, however, that no
such overadvance shall establish a custom or course of dealing or entitle
any of the Borrowers to any subsequent overadvance under the same or
different circumstances. Lender reserves the right at any time and from
time to time in its good faith discretion based upon Lender's customary
business lending practices to increase or decrease the percentage advance
rate on Eligible Accounts specified in this definition of "Borrowing Base"
upon seven (7) days' prior written notice to Borrowers.
5. The Borrowing Base Certificate in the form of Exhibit B to the Loan
Agreement is hereby amended in its entirety to the form of Borrowing Base
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Certificate attached as Exhibit B to this Amendment, and all references in the
Loan Agreement and the other Transaction Documents to the form of Borrowing Base
Certificate shall henceforth be amended and deemed to refer to the form of
Borrowing Base Certificate attached as Exhibit B hereto.
6. The definition of "Lender's Revolving Credit Commitment" in Exhibit A to
the Loan Agreement is hereby deleted in its entirety, and in its place shall be
substituted the following:
Lender's Revolving Credit Commitment shall mean the sum of $30,000,000.00.
7. The $20,000,000.00 Revolving Credit Note dated April 4, 2002 made by the
Existing Borrowers payable to the order of Bank shall be amended and restated in
the form of that certain Revolving Credit Note dated of even date herewith in
the original principal amount of $30,000,000.00 made by all of the Borrowers
payable to the order of Bank attached hereto as Exhibit A. All references in the
Loan Agreement and the other Transaction Documents to the $20,000,000.00
Revolving Credit Note and any other references of similar import are hereby
amended and deemed to refer to such $30,000,000.00 amended and restated
Revolving Credit Note.
8. The definition of "Patent, Trademark and License Security Agreements" in
Exhibit A to the Loan Agreement is hereby deleted in its entirety, and in its
place shall be substituted the following:
Patent, Trademark and License Security Agreements shall mean that certain
Patent, Trademark and License Security Agreement dated as of April 4, 2002 and
executed by Kable News in favor of Lender, as the same may from time to time be
amended, modified, extended, renewed or restated, that certain Patent, Trademark
and License Security Agreement dated as of April 4, 2002 and executed by
Magazine Connection Inc. in favor of Lender, as the same may from time to time
be amended, modified, extended, renewed or restated, and that certain Patent,
Trademark and License Security Agreement dated as of the date of the Amendment
and executed by Kable Fulfillment Services, Inc. in favor of Lender, as the same
may from time to time be amended, modified, extended, renewed or restated.
All references in the Loan Agreement and the other Transaction Documents to the
Patent, Trademark and License Security Agreements and any other references of
similar import are hereby amended and deemed to include the
Patent, Trademark and License Security Agreement executed by Kable Fulfillment
Services on the date hereof.
9. Paragraph (i) in the definition of "Restricted Investment" in Exhibit A
to the Loan Agreement is hereby deleted in its entirety, and in its place shall
be substituted the following:
(i) Investments of equity in Permitted Joint Ventures and the making
by Borrowers and their subsidiaries of Permitted Acquisitions, provided
that no such Acquisition or Investment in a Permitted Joint Venture shall
exceed $500,000.00 and the total cost of all such Acquisitions and of all
such Investments in Permitted Joint Ventures in any fiscal year shall not
exceed $1,000,000.00 in the aggregate (but which shall not include the EDS
Acquisition for the fiscal year ending April 30, 2003.
10. The definition of "Security Agreements" in Exhibit A to the Loan
Agreement is hereby deleted in its entirety, and in its place shall be
substituted the following:
Security Agreements shall mean that certain Security Agreement dated
as of April 4, 2002 and executed by Kable News in favor of Lender, as the
same may from time to time be amended, modified, extended, renewed or
restated, that certain Security Agreement dated as of April 4, 2002 and
executed by Kable Fulfillment in favor of Lender, as the same may from time
to time be amended, modified, extended, renewed or restated, that certain
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Security Agreement dated as of April 4, 2002 and executed by Kable
Distribution in favor of Lender, as the same may from time to time be
amended, modified, extended, renewed or restated, and , that certain
Security Agreement dated as of the date of the Amendment and executed by
Kable Fulfillment Services, Inc. in favor of Lender, as the same may from
time to time be amended, modified, extended, renewed or restated, and
Security Agreement shall mean any of them.
All references in the Loan Agreement and the other Transaction Documents to
the Security Agreements and any other references of similar import are hereby
amended and deemed to include the Security Agreement executed by Kable
Fulfillment Services on the date hereof.
11. Section 2.02(a)(v) in the Loan Agreement is hereby deleted in its
entirety, and in its place shall be substituted the following:
(v) the sum of the aggregate undrawn face amount of all outstanding
Letters of Credit plus all unreimbursed drawings with respect thereto shall
not as of any date exceed the lesser of (A) the lesser of (1) the amount of
Lender's Revolving Credit Commitment as of such date or (2) the Borrowing
Base as of such date or (B) $500,000.00; and
12. Section 5.01(o)(iii) in the Loan Agreement is hereby deleted in its
entirety, and in its place shall be substituted the following:
(iii) Capital Expenditures and Capitalized Leases. Borrowers will not,
and they will not cause or permit any Subsidiary to, make any Capital
Expenditure or enter into any Capitalized Lease if the sum of (A) the
aggregate amount of all Capital Expenditures (including the Capital
Expenditure in question) made by Borrowers and all of their respective
Subsidiaries on a combined basis during any fiscal year of Borrowers plus
(B) the aggregate amount of all Capitalized Lease Obligations incurred by
Borrowers and all of their respective Subsidiaries on a combined basis
during such fiscal year of Borrowers would exceed $5,000,000.00 (excluding
any purchases or Capitalized Leases of imaging equipment during the fiscal
years ending April 30, 2003 and April 30, 2004, which purchases or
Capitalized Leases of imaging equipment shall not exceed $1,000,000.00 in
the aggregate).
13. The Compliance Certificate in the form of Exhibit G to the Loan
Agreement is hereby amended in its entirety to the form of Compliance
Certificate attached as Exhibit C to this Amendment, and all references in the
Loan Agreement and the other Transaction Documents to the form of Compliance
Certificate shall henceforth be amended and deemed to refer to the form of
Compliance Certificate attached as Exhibit C hereto.
14. Schedule 4.08 attached to the Loan Agreement is hereby deleted in its
entirety and in its place shall be substituted Schedule 4.08 attached at the end
of this Amendment. All references in the Loan Agreement to Schedule 4.08 and any
other references of similar import, whether in the Loan Agreement or in any of
the other Transaction Documents (as defined in the Loan Agreement), shall
henceforth mean Schedule 4.08 as attached to this Amendment. Schedules 4.05,
4.10, 4.12 and 4.16 attached to the Loan Agreement are hereby amended to add to
such schedules the additional disclosures set forth on Schedules 4.05, 4.10,
4.12 and 4.16 attached at the end of this Amendment. All references in the Loan
Agreement to Schedules 4.05, 4.10, 4.12 and 4.16 and any other references of
similar import, whether in the Loan Agreement or in any of the other Transaction
Documents, shall henceforth include the information set forth on Schedules 4.05,
4.10, 4.12 and 4.16, as the case may be, as attached to this Amendment.
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15. In consideration of Bank's agreements contained herein, Borrowers
jointly and severally agree to pay to Bank an amendment fee in the amount of
Fifty Thousand Dollars ($50,000.00), which amendment fee shall be fully earned
by Bank on the date hereof.
16. Bank's agreements hereunder, including, without limitation, its
consents to the EDS Acquisition and its agreement to add Kable Fulfillment
Services as a Borrower under the Loan Agreement, are subject to the following
preconditions:
(a) Execution by each of the Borrowers, including Kable Fulfillment
Services, of this Amendment and the amended and restated Note in the form
of Exhibit A attached hereto;
(b) Execution by each of the Guarantors of a new Guaranty of all of
Borrowers' Obligations in form and substance acceptable to Bank;
(c) Execution and delivery by Kable News of an Amendment to Stock
Pledge Agreement, in form and substance acceptable to Bank, pledging to
Bank all of the issued and outstanding capital stock of Kable Fulfillment
Services, together with such stock powers (executed in blank), Regulation
U-1 affidavits, original stock certificates and other documents as Bank
shall require in order to perfect the pledge of such shares by Kable News
thereunder;
(d) Execution by Kable Fulfillment Services of a Security Agreement in
form and substance acceptable to Bank, together with such UCC-1 financing
statements, motor vehicle title lien applications and other documents as
Bank shall require in order to perfect the security interests granted by
Kable Fulfillment Services under such Security Agreement;
(e) Execution by Kable Fulfillment Services of a Patent, Trademark and
License Security Agreement in form and substance acceptable to Bank,
together with such other documents as Bank shall require, in order to
perfect the security interests granted by Kable Fulfillment Services under
such Patent, Trademark and License Security Agreement in all trademarks,
service marks, trademark applications and service mark applications and
other intellectual property being acquired by Kable Fulfillment Services as
of the date of the closing under the Asset Purchase Agreement;
(f) Receipt by Bank of such UCC, tax and judgment lien search results
as Bank may require in order to satisfy itself that the Security Agreement
of Kable Fulfillment Services shall grant Bank first perfected security
interests in all of the Collateral (as defined on Schedule 5 attached
hereto) now or hereafter owned by Kable Fulfillment Services;
(g) Delivery to Bank of evidence acceptable to Bank that Kable
Fulfillment Services has completed the EDS Acquisition for a collective
gross acquisition price not to exceed $11,500,000;
(h) Delivery by Kable News of a Secretary's Certificate of the
Secretary of Kable News certifying to Bank the resolutions of Kable News's
board of directors which authorize Kable News to borrow money jointly and
severally with the other Borrowers from Bank under the Loan Agreement, as
amended from time to time, to execute this Amendment thereto, to execute
the amended and restated Revolving Credit Note and to grant the pledge as
provided in the Amendment to Stock Pledge Agreement;
(i) Delivery by Kable Fulfillment of Ohio of a Secretary's Certificate
of the Secretary of Kable Fulfillment of Ohio certifying to Bank the
resolutions of Kable Fulfillment of Ohio's board of directors which
authorize Kable Fulfillment of Ohio to borrow money jointly and severally
with the other Borrowers from Bank under the Loan Agreement, as amended
from time to time, to execute this Amendment thereto and to execute the
amended and restated Revolving Credit Note;
(j) Delivery by Kable Distribution of a Secretary's Certificate of the
Secretary of Kable Distribution certifying to Bank the resolutions of Kable
Distribution's board of directors which authorize Kable Distribution to
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borrow money from Bank under the Loan Agreement, as amended from time to
time, to execute this Amendment thereto and to execute the amended and
restated Revolving Credit Note;
(k) Delivery by each of the Guarantors of a Secretary's Certificate of
the Secretary of such Guarantor certifying to Bank the resolutions of such
Guarantor's board of directors which authorize such Guarantor to guaranty
the obligations and indebtedness of Kable Fulfillment Services to Bank
under the Loan Agreement and the other Transaction Documents and to execute
a new amended and restated Guaranty with respect thereto;
(l) Delivery by Kable Fulfillment Services of a Secretary's
Certificate of the Secretary of Kable Fulfillment Services certifying to
Bank the resolutions of Kable Fulfillment Services' board of directors
which authorize Kable Fulfillment Services to borrow money from Bank under
the Loan Agreement, as amended from time to time, to execute the Loan
Agreement by execution of this Amendment thereto, to execute the amended
and restated Revolving Credit Note and to execute and deliver its Security
Agreement and grant the liens and security interests as provided therein;
(m) Delivery to Bank of certified Certificate of Incorporation of
Kable Fulfillment Services issued by the Secretary of State of Delaware;
(n) Delivery to Bank of a copy of the corporate bylaws of Kable
Fulfillment Services certified to Bank by the corporate Secretary of Kable
Fulfillment Services;
(o) Delivery to Bank of such landlord's consents and waiver of liens
on each leased location at which Kable Fulfillment Services shall operate
the subscription fulfillment services business being acquired in the EDS
Acquisition, which landlord's consents and waiver of liens shall be in form
and substance acceptable to the Bank;
(p) Delivery to Bank proof that Kable Fulfillment Services maintains
insurance of the types and in the amounts required by Section 5.01(l) of
the Loan Agreement and by its Security Agreement;
(q) Delivery to Bank of such UCC partial releases [or a payoff letter
duly executed] by Citicorp North America, Inc. in form and substance
satisfactory to Bank pursuant to which Citicorp North America, Inc. agrees
to release all Liens and security interests in any of the assets being
acquired by Kable Fulfillment Services;
(r) Payment to Bank of the amendment fee required under Paragraph 15
above;
(s) Delivery to Bank of an opinion of legal counsel to the Borrowers
addressed to Bank, in the form of Exhibit D attached hereto and otherwise
satisfactory to the Bank and its counsel; and
(t) Execution and delivery by Borrowers of such other documents or
agreements as Bank may reasonably require in order to fully and effectively
carry out the intents and purposes of the Loan Agreement as amended by this
Amendment.
17. Borrowers hereby agree to reimburse Bank upon demand for all reasonable
out-of-pocket costs and expenses (including legal fees and expenses of the
attorneys for Bank) incurred by Bank in the preparation, negotiation and
execution of this Amendment and all other documents, instruments and agreements
relating to this amendment of Borrowers' Loans from Bank.
18. Borrowers hereby represent and warrant to Bank that:
(a) The execution, delivery and performance by Borrowers of this
Amendment are within the corporate powers of each of the Borrowers, have
been duly authorized by all necessary corporate and partnership action and
require no action by or in respect of, or filing with, any governmental or
regulatory body, agency or official. The execution, delivery and
performance by Borrowers of this Amendment do not conflict with, or result
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in a breach of the terms, conditions or provisions of, or constitute a
default under or result in any violation of, and none of the Borrowers is
now in default under or in violation of, the terms of its Articles or
Certificate of Incorporation or Bylaws, any applicable law, any rule,
regulation, order, writ, judgment or decree of any court or governmental or
regulatory agency or instrumentality, or any agreement or instrument to
which any such Borrower is a party or by which any of them is bound or to
which any of them is subject;
(b) This Amendment has been duly executed and delivered and
constitutes the legal, valid and binding obligation of the Borrowers
enforceable in accordance with its terms; and
(c) As of the date hereof, all of the covenants, representations and
warranties of Borrowers set forth in the Loan Agreement are true and
correct and no "Event of Default" (as defined therein) under or within the
meaning of the Loan Agreement has occurred and is continuing.
19. All references in the Loan Agreement to "this Loan Agreement" and any
other references of similar import shall henceforth mean the Loan Agreement as
amended by this Amendment.
20. This Amendment shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that
Borrowers may not assign, transfer or delegate any of their respective rights or
obligations hereunder.
21. This Amendment shall be governed by and construed in accordance with
the internal laws of the State of Missouri.
22. All capitalized terms used and not otherwise defined herein shall have
the respective meanings ascribed to them in the Loan Agreement.
23. In the event of any inconsistency or conflict between this Amendment
and the Loan Agreement, the terms, provisions and conditions of this Amendment
shall govern and control.
24. The Loan Agreement, as hereby amended and modified, and the Note, as
hereby amended and restated, are and shall remain the binding obligations of
Borrowers and all of the provisions, terms, stipulations, conditions, covenants
and powers contained therein shall stand and remain in full force and effect,
except only as the same are herein and hereby specifically varied or amended,
and the same are hereby ratified and confirmed. If any installment of amended or
interest on the Note shall not be paid when due as provided in the Note as
hereby amended and restated, the holder of the Note shall be entitled to and may
exercise all rights and remedies under the Note, the Loan Agreement and the
other Transaction Documents.
25. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO
FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT, INCLUDING PROMISES TO EXTEND OR
RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT Borrowers AND BANK FROM ANY
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS REACHED BY Borrowers AND BANK
COVERING SUCH MATTERS ARE CONTAINED IN THE Note AND THE Loan Agreement, AS
AMENDED BY THIS AGREEMENT, WHICH CONSTITUTE A COMPLETE AND EXCLUSIVE STATEMENT
OF THE AGREEMENTS BETWEEN Borrowers AND BANK EXCEPT AS Borrowers AND BANK MAY
LATER AGREE IN WRITING TO MODIFY. THE Note AND THE Loan Agreement, AS AMENDED BY
THIS AGREEMENT, EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE
PARTIES HERETO AND SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS (ORAL OR
WRITTEN) RELATING TO THE SUBJECT MATTER HEREOF.
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IN WITNESS WHEREOF, the parties hereto have executed this instrument as of
the date first written above on this 31st day of March, 2003.
KABLE NEWS COMPANY, INC.
By: /s/ Michael P. Duloc
----------------------
Name: Michael P. Duloc
Title: President & COO
KABLE FULFILLMENT SERVICES OF
OHIO, INC.
By: /s/ Michael P. Duloc
----------------------
Name: Michael P. Duloc
Title: Chairman & CEO
KABLE DISTRIBUTION SERVICES, INC.
By: /s/ Michael P. Duloc
----------------------
Name: Michael P. Duloc
Title: President
KABLE FULFILLMENT SERVICES, INC.
By: /s/ Michael P. Duloc
----------------------
Name: Michael P. Duloc
Title: President
U. S. BANK NATIONAL ASSOCIATION
By: /s/ Lisa M. Riley
----------------------
Lisa Riley, Vice President
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