30427050.5
Exhibit 10.11
XXXXXXX XXXXX BUSINESS FINANCIAL SERVICES INC.
April 13, 2004
Medialink Worldwide Incorporated
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxx,
Vice President, Finance
Re: Fourth 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"), and that certain modification letter dated
February 24, 2004 from Xxxxx Xxxxxx to Customer (the "Third
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
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April 13, 2004
Page 2
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.
Pursuant to that certain letter dated as of January 30, 2004 from Xxxxx Xxxxxx
to the Customer (the "Reservation of Rights Letter"), Customer was notified that
an Event of Default under the Loan Agreement and the other Loan Documents had
occurred and was continuing as a result of the Customer's failure to comply with
the minimum tangible net worth covenant as outlined in Section (e) of the First
Modification Letter (the "Existing Event of Default"). Pursuant to the
Reservation of Rights Letter, MLBFS reserved all of its rights and remedies
under the Loan Agreement and the other Loan Documents with respect to the
Existing Event of Default and any other Events of Default that may have occurred
or arise thereafter. Pursuant to the Third Modification Letter, MLBFS agreed to
forbear from enforcing any of its rights and remedies under the Loan Documents,
at law or in equity, with respect to the Existing Event of Default, and agreed
to certain amendments to the Loan Documents.
Customer has requested that (i) MLBFS continue to forbear from enforcing its
rights and remedies under the Loan Agreement and the other Loan Documents as a
result of the Existing Event of Default, and (i) 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 term
"Applicable Margin" in its entirety from Section 1(a), and inserting
the following in lieu thereof:
"Applicable Margin" shall mean 5.50%."
(b) The Loan Agreement is hereby modified by adding the new defined term
"Cap Amount" to Section 1(a) in the proper alphabetical order:
"Cap Amount" shall mean (i) $4,000,000 as of the
Effective Date through and including June 30, 2004; (ii)
$3,750,000 as of July 1, 2004 through and including
September 30, 2004; (iii) $3,500,000 as of October 1,
2004 through and including December 30, 2004, and (iv)
$3,000,000 at all times thereafter, through and
including the Maturity Date."
(c) The Loan Agreement is hereby modified by amending the term "Maturity
Date" contained in Section 1(a) to mean January 31, 2005 (subject to
earlier termination pursuant to the terms hereof, including
Medialink Worldwide Incorporated
April 13, 2004
Page 3
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) the Cap Amount, 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)."
(e) The Loan Agreement is hereby modified by inserting the following new
subsection (k) in Section 4 thereof.
"INACTIVE SUBSIDIARIES. Each of OnLine Broadcasting and
Tempest TV Limited (collectively, the "Inactive
Subsidiaries"), are wholly-owned subsidiaries of
Customer and currently possess no assets and conduct no
business activities."
(f) The Loan Agreement is hereby modified by adding the following
sentence to subsection (c) of Section 5:
"In addition, within twenty (20) days after the close of
each fiscal month of Customer, Customer shall furnish to
MLBFS a borrowing base certificate in the form supplied
by MLBFS to Customer, together with such additional
documents as may be required thereby."
(g) 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:
"For the period beginning January 1, 2004 and ending
December 31, 2004, Customer's Capital Expenditures shall
not exceed $1,500,000 in the aggregate. For the period
beginning January 1, 2005 and ending on the Maturity
Date, Customer's Capital Expenditures shall not exceed
$250,000 in the aggregate."
(h) The Loan Agreement is hereby modified by deleting Section 6(g) in
its entirety, and inserting the following in lieu thereof:
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April 13, 2004
Page 4
"ACQUISITIONS. Neither Customer nor any Business
Guarantor shall cause or permit to cause an
Acquisition."
(i) The Loan Agreement is hereby modified by deleting Sections 6(h),
6(i) and 6(o) in their entirety.
(j) The Loan Agreement is hereby modified by the addition of the
following new Section 6(q):
"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) to be less than
the EBITDA set forth below for the corresponding
calendar quarter:
---------------------------------- ---------------------------------
Calendar Quarter Minimum EBITDA
---------------------------------- ---------------------------------
End of second quarter 2004 $ 775,000
---------------------------------- ---------------------------------
End of third quarter 2004 $ 225,000
---------------------------------- ---------------------------------
End of fourth quarter 2004 $1,050,000
---------------------------------- ---------------------------------
End of first quarter 2005 $ 500,000
---------------------------------- ---------------------------------
(k) The Loan Agreement is hereby modified by the addition of the
following new Section 6(r):
"EQUITY FINANCING. Not later than January 15, 2005,
Customer shall have arranged equity financing to support
the operations of TTX (US) LLC and TTX Limited through
the Maturity Date in an amount satisfactory to MLBFS in
its sole discretion. From and after January 15, 2005,
Customer shall cease providing financial support of any
kind to TTX (US) LLC and TTX Limited, including, without
limitation, the making of loans, advances, guaranties,
transfer of assets, open account sales, or other
provision of goods, services or credit.
(l) The Loan Agreement is hereby modified by the addition of the
following new Section 6(s):
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April 13, 2004
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"LOANS AND ADVANCES. Customer shall not make any loans
or advances to any affiliate or any other party, except
for:
(i) loans and advances in the ordinary course of
business to its affiliate Business Wire/Medialink,
LLC for general payroll, which shall not exceed
$250,000 in the aggregate outstanding at any time;
and
(ii) loans, advances and investments in TTX (US) LLC
and TTX Limited in an aggregate amount not to
exceed $6,800,000 outstanding at any time.
(m) The Loan Agreement is hereby modified by the addition of the
following new Section 6(t):
"INACTIVE SUBSIDIARIES. Customer shall not conduct any
business in, or transfer any assets to, any Inactive
Subsidiaries."
(n) The Loan Agreement is hereby modified by the addition of the
following new Section 7(l):
"ADDITIONAL GUARANTEES. Not later than April 30, 2004,
Customer shall cause The Delahaye Group, Inc.
("Delahaye") to execute and deliver to MLBFS such
security agreements, pledge agreements, hypothecation
agreements, financing statements, and the like as MLBFS
shall reasonably request so as to cause Delahaye to
grant to MLBFS a security interest in all of the
business assets of Delahaye to secure its Obligations to
MLBFS under its Unconditional Guaranty dated as of July
26, 1999, as well as the Obligations of Customer,
howsoever created. In addition, not later than June 30,
2004, Customer shall cause each of TTX (US) LLC and TTX
Limited to execute and deliver to MLBFS an Unconditional
Guaranty of the Obligations of Customer 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 (including foreign
counsel), and the like. To the extent that Customer
demonstrates to the satisfaction of MLBFS that each of
TTX (US) LLC and TTX Limited are prohibited from issuing
guarantees in excess of One Million Euros, MLBFS agrees
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April 13, 2004
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that each such guaranty required hereunder shall be
limited to the U.S. Dollar equivalent of One 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.
So long as Customer shall continue to comply with the terms and conditions of
the Loan Documents, as modified herein, MLBFS agrees to forbear from enforcing
any of its rights and remedies under the Loan Documents, at law or in equity,
with respect to the Existing Event of Default. Notwithstanding the foregoing,
nothing herein constitutes a waiver by MLBFS with respect to any of its rights
or remedies under any of the Loan Documents as a result of the occurrence or
existence of any other Event of Default, all of which rights and remedies are
hereby reserved.
Except as expressly amended hereby, the Loan Documents shall continue in full
force and effect upon all of their terms and conditions.
By their execution of this Letter Agreement, the below-named 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 Event 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 Event 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 Guarantors 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 forbearance fee in the amount of
$30,000, which amount Customer authorizes MLBFS to charge against Customer's
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April 13, 2004
Page 7
WCMA Account on the date hereof; and (e) 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.
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, including the Agreement of
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April 13, 2004
Page 8
MLBFS to forbear from enforcing the Existing Event of Default, will, at the sole
option of MLBFS, be void.
Very truly yours,
XXXXXXX XXXXX BUSINESS
FINANCIAL SERVICES INC.
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
Assistant Vice President
Accepted and Agreed this ___
day of ____________, 2004.
MEDIALINK WORLDWIDE INCORPORATED
By: /s/ J. Xxxxxx XxXxxxxxx
------------------------------
Printed Name: J. Xxxxxx XxXxxxxxx
-------------------
Approved and agreed to this 14th
day of April, 2004
THE DELAHAYE GROUP, INC.
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Printed Name: J. Xxxxxx XxXxxxxxx
Title: Executive Vice President
