XXXXXXX XXXXX BUSINESS FINANCIAL SERVICES INC.
November 8, 2004
Medialink Worldwide Incorporated
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxx,
Vice President, Finance
Re: Fifth Modification Letter to WCMA Loan and Security Agreement
No. 885-07G15 dated as of July 15, 1999 (the "Loan Agreement")
between Xxxxxxx Xxxxx Business Financial Services Inc.
("MLBFS") and Medialink Worldwide Incorporated ("Customer")
Ladies and Gentlemen:
This letter refers to certain agreements between MLBFS and Customer, with
respect to the following documents:
(i) The Loan Agreement, as amended by that certain modification
letter dated as of April 8, 2002 from Xxxxx Xxxxxx to Customer
(the "First Modification Letter"), that certain modification
letter dated as of February 26, 2003 from Xxxxx Xxxxxx to
Customer (the "Second Modification Letter"), that certain
modification letter dated as of February 24, 2004 from Xxxxx
Xxxxxx to Customer (the "Third Modification Letter"), and that
certain modification letter dated as of April 13, 2004 from
Xxxxx Xxxxxx to Customer (the "Fourth Modification Letter") as
thereafter amended from time to time (collectively, the "Loan
Agreement");
(ii) that certain UNCONDITIONAL GUARANTY dated as of July 26, 1999
given in favor of MLBFS by The Delahaye Group, Inc. (the
"Unconditional Guaranty"); and
(iii) all other agreements between MLBFS, Customer, the parties to
the agreements listed above, or any other party who at any
time has guaranteed or provided collateral for Customer's
obligations to MLBFS in connection therewith (the "Other
Agreements").
For purposes of this letter, (a) the Loan Agreement, the Unconditional Guaranty
and the Other Agreements will collectively be referred to as the "Loan
Documents", and (b) Customer and any party who at any time has guaranteed or
provided collateral for Customer's obligations to MLBFS will collectively be
referred to as the "Obligors". Capitalized terms used herein and not defined
herein shall have the meaning set forth in the Loan Documents.
Medialink Worldwide Incorporated
November 8, 2004
Page 2
One or more Events of Default have occurred and are continuing under the Loan
Documents (the "Existing Events of Default"). MLBFS hereby waives such Existing
Events of Default solely through and including the date hereof; provided, such
waivers shall not constitute a future waiver of compliance with any mandatory
commitment reductions, any financial covenants or any other provisions under the
Loan Documents, as amended hereby.
Customer has requested that MLBFS agree to certain additional amendments to the
Loan Documents and MLBFS has agreed to do so, subject to the execution and
delivery of this letter agreement by Customer, and its continued compliance with
the terms and conditions of this letter agreement and the Loan Agreement and
other Loan Documents, as modified herein.
Accordingly, effective as of the Effective Date (as defined below), the Loan
Documents are hereby amended as follows:
(a) The Loan Agreement is hereby modified by deleting the defined
term "Applicable Margin" in Section 1(a)(xvii) in its entirety
and inserting the following in lieu thereof:
"Applicable Margin" shall mean 5.50%."
(b) The Loan Agreement is hereby modified by deleting the defined
term "Cap Amount" in Section 1(a) in its entirety.
(c) The Loan Agreement is hereby modified by amending the term
"Maturity Date" contained in Section 1(a) to mean December 31,
2005 (subject to earlier termination pursuant to the terms of
the Loan Agreement, as amended, including termination upon the
occurrence and during the continuance of any Event of
Default).
(d) The Loan Agreement is hereby modified by amending the term
"Maximum WCMA Line of Credit" in Section 1(a) to mean:
"Maximum WCMA Line of Credit shall mean an amount
equal to the lesser of: (A) $2,000,000, or (B) eighty
percent (80%) Customer's Accounts and Chattel Paper,
as shown on its regular books and records (excluding
Accounts over 90 days old, directly or indirectly due
from any person or entity not domiciled in the United
States, or from any shareholder, officer or employee
of Customer or any affiliate thereof)."
Medialink Worldwide Incorporated
November 8, 2004
Page 3
(e) The Loan Agreement is hereby modified by deleting Sections
6(g), (h) and (i) in their entirety and inserting the
following in lieu thereof:
"(g) ACQUISITIONS. Except upon the prior written consent of
MLBFS, neither Customer nor any Business Guarantor shall cause
or permit to cause an Acquisition.
(h) [INTENTIONALLY DELETED]
(i) [INTENTIONALLY DELETED]."
(f) The Loan Agreement is hereby modified by deleting Section 6(j)
in its entirety, and inserting the following in lieu thereof:
"(j) MINIMUM TANGIBLE NET WORTH. The "tangible net
worth" of Customer, consisting of Customer's net worth as
shown on Customer's regular financial statements prepared in a
manner consistent with the terms hereof, but excluding an
amount equal to: (i) any assets which are ordinarily
classified as "intangible" in accordance with generally
accepted accounting principles, and (ii) any amounts now or
hereafter directly or indirectly owing to Customer by
officers, shareholders or affiliates of Customer, shall at all
times exceed $9,500,000."
(g) The Loan Agreement is hereby modified by deleting Section 6(k)
in its entirety and inserting the following in lieu thereof:
(iv) "(k) BORROWED DEBT. Except upon the prior written consent of
MLBFS, Customer shall not directly or indirectly incur or
permit to exist any debt of Customer for borrowed money or the
lease under a capital lease or deferred purchase price of real
or personal property (other than the Customer's Variable Rate
Convertible Debenture due November 9, 2009 ("Convertible
Debentures"), which Convertible Debentures shall be
subordinated to the debt owing from Customer to MLBFS under
the Loan Agreement pursuant to the terms of a Subordination
Agreement dated on or about the date hereof among Customer,
MLBFS and the other creditors named therein)."
(a) The Loan Agreement is hereby modified by deleting the first
sentence of Section 6(n) in its entirety and inserting the
following in lieu thereof:
"Customer's Capital Expenditures shall not at any time exceed
$1,500,000 in the aggregate for the period beginning January
1, 2004 and ending on the Maturity Date."
Medialink Worldwide Incorporated
November 8, 2004
Page 4
(b) The Loan Agreement is hereby modified by deleting Section 6(q)
in its entirety and inserting the following in lieu thereof:
"MINIMUM QUARTERLY EBITDA Customer shall not permit its EBITDA
(Customer's income before interest (including payments in the
nature of interest under capital leases), taxes, depreciation
and amortization with a TBD add-back for any expensed fees
related to the TTX financing capped at $350,000) to be less
than the EBITDA set forth below for the corresponding calendar
quarter:
----------------------------------------- --------------------
Calendar Quarter Minimum EBITDA
----------------------------------------- --------------------
End of third quarter 2004 $ 225,000
----------------------------------------- --------------------
End of fourth quarter 2004 $ 900,000
----------------------------------------- --------------------
End of first quarter 2005 - $ 75,000
----------------------------------------- --------------------
End of second quarter 2005 $ 750,000
----------------------------------------- --------------------
End of third quarter 2005 $ 500,000"
----------------------------------------- --------------------
(c) The Loan Agreement is hereby modified by the addition of the
following new Section 6(u):
"MINIMUM LIQUIDITY. Customer shall maintain at all times an
aggregate of cash and unencumbered marketable securities owned
and controlled by Customer (excluding cash securities and
other financial assets in any IRA, 401(k) or other retirement
account) in excess of $2,000,000 at all times."
(d) The Loan Agreement is hereby modified by the addition of the
following new Section 6(v):
"SUBORDINATED DEBT. Customer shall subordinate or cause to be
subordinated to MLBFS Customer's indebtedness in an amount not
less than $5,000,000 pursuant to documentation in a form
satisfactory to MLBFS in its sole discretion."
(e) The Loan Agreement is hereby modified by the addition of the
following new Section 6(w):
Medialink Worldwide Incorporated
November 8, 2004
Page 5
"DISTRIBUTIONS TO SHAREHOLDERS. Except upon the prior written
consent of MLBFS, Customer shall not declare or pay, directly
or indirectly, any dividends or other distributions on any of
its shares of stock to Customer's shareholders in any fiscal
year."
(f) The Loan Agreement is hereby modified by the addition of the
following new Section 6(x):
"(x) LOANS AND ADVANCES. Notwithstanding anything to the
contrary contained herein:
(a) Except upon the prior written consent of MLBFS, Customer
shall not make any loans or advances to any of Customer's
affiliates or other related parties; provided, that Customer
may make advances in an aggregate amount not to exceed
$540,000 at any time to Business Wire/Medialink, LLC
("Newstream") to pay Newstream's general payroll in the
ordinary course of business.
(b) Customer shall not make loans, advances or other
investments in TTX (US) LLC and/or TTX Limited in an aggregate
combined basis in excess of the following amounts for the
following periods (which amounts are permitted to be paid by
Customer so long as no Default or Event of Default has
occurred or would result therefrom):
---------------------------- ---------------------------------
Measurement Date Maximum Permitted Amount
---------------------------- ---------------------------------
March 31, 2005 $8,000,000
---------------------------- ---------------------------------
June 30, 2005 $8,900,000
---------------------------- ---------------------------------
September 30, 2005 $9,750,000
---------------------------- ---------------------------------
December 31, 2005 $10,000,000"
---------------------------- ---------------------------------
(g) The Loan Agreement is hereby modified by deleting Section 7(l)
in its entirety and inserting the following in lieu thereof:
"ADDITIONAL GUARANTY. Not later than January 8, 2005, Customer
shall cause each of TTX (US) LLC to execute and deliver to
MLBFS an Unconditional Guaranty of the Obligations of Customer
limited to the U.S. Dollar equivalent of Five Million Euros on
the date demand for payment is made thereunder, as determined
by MLBFS, plus interest thereon until paid and all costs of
enforcement, in such form and containing such conditions as
MLBFS shall reasonably request, together with evidence
satisfactory to MLBFS as to the due authority of such entity
to execute and deliver such documents and be legally bound by
them, and which may include, among other things, certified
copies of each such entity's organizational documents,
resolutions of their respective boards or directors or
managers, opinions of counsel and the like."
Medialink Worldwide Incorporated
November 8, 2004
Page 6
Except as expressly set forth herein, this letter is not intended to be and
shall not be construed as a waiver or amendment of any of the terms and
provisions of the Loan Documents, which terms and provisions remain in full
force and effect upon all of their terms and conditions.
By their execution of this Letter Agreement, the below-named guarantor
("Guarantor") hereby consents to the foregoing modifications to the Loan
Documents, and hereby agrees that the "Obligations" under its Unconditional
Guaranty and/or agreements providing collateral shall extend to and include the
Obligations of Customer under the Loan Documents, as amended hereby.
Customer and said Guarantor acknowledge, warrant and agree, as a primary
inducement to MLBFS to enter into this Agreement, that: (a) no Default or Event
of Default (other than the Existing Events of Default) has occurred and is
continuing under the Loan Documents; (b) each of the warranties of Customer in
the Loan Documents are true and correct as of the date hereof and shall be
deemed remade as of the date hereof; (c) neither Customer nor Guarantor has any
claim against MLBFS or any of its affiliates arising out of or in connection
with the Loan Documents or any other matter whatsoever; and (d) neither Customer
nor Guarantor has any defense to payment of any amounts owing, or any right of
counterclaim for any reason under, the Loan Documents.
Provided that no Event of Default (other than the Existing Events of Default),
or event which with the giving of notice, passage of time, or both, would
constitute an Event of Default, shall then have occurred and be continuing under
the terms of the Loan Documents, the amendments and agreements in this Letter
Agreement will become effective on the date (the "Effective Date") upon which:
(a) Customer and the Guarantor shall have executed and returned to MLBFS the
duplicate copy of this Letter Agreement enclosed herewith; (b) an office of
MLBFS shall have reviewed and approved this Letter Agreement as being consistent
in all respects with the original internal authorization hereof; (c) Customer
shall have paid to MLBFS a principal repayment in an amount sufficient to cause
the principal amount of the outstanding Obligations outstanding on the date
hereof to be equal to or less than the Maximum WCMA Line of Credit, as amended
hereby; (d) Customer shall have paid to MLBFS a modification fee in the amount
of $15,000, which amount Customer authorizes MLBFS to charge against Customer's
WCMA Account on the date hereof; (e) Customer shall have delivered to MLBFS a
duly executed copy of the Subordination Agreement with respect to the
Convertible Debentures; and (f) Customer shall reimburse MLBFS for all of its
reasonable costs and expenses, including reasonable attorneys' fees, incurred in
connection with the preparation and negotiation of this Amendment, which amount
Customer authorizes MLBFS to charge against Customer's WCMA Account.
Medialink Worldwide Incorporated
November 8, 2004
Page 7
Notwithstanding the foregoing, if Customer and the Guarantor do not execute and
return the duplicate copy of this Letter Agreement within five days from the
date hereof, or if for any other reason (other than the sole fault of MLBFS) the
Effective Date shall not occur within said five day period, then all of said
amendments and agreements will, at the sole option of MLBFS, be void.
Very truly yours,
XXXXXXX XXXXX BUSINESS
FINANCIAL SERVICES INC.
By: /s/ Xxxxxxx Xxxxx
-----------------------------
Vice President
Accepted and Agreed this 8th
day of November, 2004.
MEDIALINK WORLDWIDE INCORPORATED
By: /s/ X. Xxxxxx XxXxxxxxx
-----------------------------
Printed Name: X. Xxxxxx XxXxxxxxx
Title: Executive Vice President
Approved and agreed to this 8th
day of November, 2004
THE DELAHAYE GROUP, INC.
By: /s/ X. Xxxxxx XxXxxxxxx
-----------------------------
Printed Name: X. Xxxxxx XxXxxxxxx
Title: Executive Vice President
