EXHIBIT 5.4
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT, dated as of October 18, 1999
(this "Agreement") is between COLLEGE TELEVISION NETWORK, INC., a Delaware
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corporation (the "Company"), and LASALLE BANK NATIONAL ASSOCIATION ("Lender")
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W I T N E S S E T H
WHEREAS, the Company and Lender are parties to that certain Credit
Agreement dated as of July 26, 1999, as amended by that certain First Amendment
to Credit Agreement dated as of August 31, 1999 (as so amended and from time to
time hereafter amended, restated, supplemented and in effect, the "Credit
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Agreement"; capitalized terms not otherwise defined herein shall have the
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definition provided therefor in the Credit Agreement) and to certain other
documents executed in connection with the Credit Agreement.
WHEREAS, Section 10.21 of the Credit Agreement provides that the Company
and its Subsidiaries (which term excludes MPM) may not make or permit to exist
any Investment in any Person, except as expressly permitted thereunder or as
consented to in writing by Lender.
WHEREAS, the Company desires to purchase $1,500,000 of convertible
preferred stock of e-palette, inc., a New York corporation ("E-Palette"), which
Investment would, at such time, represent not less than 15% of the aggregate
issued and outstanding capital stock of E-Palette on a fully diluted basis.
WHEREAS, Borrower has requested that Lender waive the provisions of Section
10.21 of the Credit Agreement to permit the Investment of $1,500,000 in E-
Palette as aforesaid and consent to the making of such Investment pursuant to
and in accordance with the terms and provisions of that certain letter of intent
by the Company to E-Palette dated August 16, 1999 (such Investment, on such
terms, is hereinafter referred to as the "E-Palette Investment").
WHEREAS, Borrower has requested that Lender reset certain financial
performance covenants based on revised financial projections of Borrower.
WHEREAS, the parties wish to amend the Credit Agreement as provided herein.
NOW, THEREFORE, in consideration of the foregoing premises (which are
incorporated herein by this reference thereto), to induce Lender to consent to
the transactions contemplated hereunder, and for other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Consent to E-Palette Investment. Effective upon satisfaction of the
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conditions precedent set forth in Section 5 below, Lender hereby consents to the
E-Palette Investment. This consent is effective with respect to the E-Palette
Investment only and shall not obligate Lender to make any additional consents or
waivers. Nor shall this Waiver and Consent constitute or be deemed to establish
a custom or a course of conduct or dealing as between the parties.
2. Amendments to the Credit Agreement. Effective upon satisfaction of the
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conditions precedent set forth in Section 5 below, and in reliance upon the
representations and warranties of the Company set forth in the Credit Agreement
and in this Agreement, the Credit Agreement is hereby amended and the Company
and Lender agree as follows:
(a) Section 1.1 of the Credit Agreement is hereby amended by adding
the words "directors or consultants" after the word "employees" appearing
in the fourth and fifth lines of the definition of EBITDA.
(b) Subsection 6.2.2(ii) of the Credit Agreement is hereby amended
by deleting said subsection in its entirety and substituting the following
in lieu thereof:
"(ii) Concurrently with the receipt by the Company or any Subsidiary
of any Net Cash Proceeds from any issuance of equity securities
of the Company or any Subsidiary, excluding (a) any issuance of
shares of capital stock pursuant to any employee or director
stock option program, benefit plan or compensation program, (b)
any issuance by a Subsidiary to the Company or another
Subsidiary, (c) in connection with the equity contribution
required pursuant to subsection 11.1 hereof, (d) in connection
with the exercise of the Warrants, (e) any issuance of shares of
capital stock to UC Holdings in an amount equal to not more than
$25,000,000 of Net Cash Proceeds to be used (i) in connection
with the financing of the MPM Acquisition in the amount of
approximately $15,000,000 and (ii) for the purpose of reducing
the liability of the guarantor under the CIBC Guaranty,
providing working capital for the Company and for other proper
business purposes; and provided further that no capital stock or
equity interests are issued in connection with such equity
contribution other than preferred stock of the Company (it being
understood and agreed by Lender that notwithstanding anything
expressed or implied to the contrary in the provisions of
Section 10.21 (a) of this Agreement to the contrary, the use of
Net Cash Proceeds as set forth in this Section 6.2.2 (ii) (e)
shall constitute a permitted Investment), and (f) issuances of
shares of capital stock made pursuant to and in accordance with
Section 11.2.4."
(c) Section 10.6.1 of the Credit Agreement is hereby amended by
deleting said Section in its entirety and substituting the following new
Section 10.6.1 therefor:
Not permit EBITDA for any measurement period indicated below to be less
than the applicable amount set forth below for such measurement period:
Measurement
Period Ending EBITDA
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One month ending September 30, 1999 -$1,200,000
Two months ending October 31, 1999 -$2,400,000
Three months ending November 30, 1999 -$3,500,000
Four months ending December 31, 1999 -$4,600,000
Five months ending January 31, 2000 -$5,800,000
Six months ending February 29, 2000 -$6,800,000
Seven months ending March 31, 2000 -$6,800,000
Eight months ending April 30, 2000 -$6,500,000
Nine months ending May 31, 2000 -$7,000,000
Ten months ending June 30, 2000 -$8,800,000
Eleven months ending July 31, 2000 -$10,250,000
Trailing twelve months ending August 31, 2000 -$10,500,000
Trailing twelve months ending September 30, 2000 -$8,000,000
Trailing twelve months ending October 31, 2000 -$5,500,000
Trailing twelve months ending November 30, 2000 -$3,500,000
Trailing twelve months ending December 31, 2000 -$2,100,000"
(d) Section 10.6.2 of the Credit Agreement is hereby amended by
deleting said Section in its entirety and substituting the following new
Section 10.6.2 therefor:
"Capital Expenditures. Not permit the aggregate amount of all Capital
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Expenditures made by the Company and its Subsidiaries for any measurement
period indicated below to exceed the applicable amount set forth below for
such measurement period:
Measurement
Period Ending CAPEX Limit
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Three months ending December 31, 1999 $ 4,500,000
Six months ending March 31, 2000 $ 7,000,000
Nine months ending June 30, 2000 $ 9,500,000
Trailing twelve months ending September 30, 2000 $ 12,000,000
Trailing twelve months ending December 31, 2000 $10,500,000"
(e) Borrower acknowledges that the financial performance covenants
shall be computed for Borrower and its Subsidiaries on a consolidated basis
excluding MPM.
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(f) Section 11.2 of the Credit Agreement is hereby amended by adding
the following subsection 11.2.4 at the end thereof:
"11.2.4 Required Equity Contribution. It is a further condition
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precedent to Lender's obligation to make any Loan that it shall first
receive evidence satisfactory to it, in its sole and absolute
discretion, that (a) Borrower has received a cash equity investment(s)
on or after October 1, 1999 on terms reasonably acceptable to Lender
(Lender hereby acknowledges, without limiting its rights hereunder,
that the terms contained in that certain Amended and Restated Purchase
Agreement dated as of October 18, 1999 by and between Borrower and UC
Holdings, with respect only to the transactions contemplated therein
between the parties thereto, are acceptable to Lender), and (b) that
after giving effect to any such investment Borrower will continue to
be in full compliance with the provisions of this Agreement,
including, without limitation, Section 12.1.12 hereof. Lender shall
be obligated to make Loans and to fund borrowing requests of Borrower
only to the extent, on a dollar for dollar basis (up to a maximum of
the Revolving Commitment Amount in effect as of the date hereof) that
such cash equity has been so contributed."
(g) The Credit Agreement is further amended by deleting all references
to Exhibits G, H or J thereof insofar as such references relate to the
attachment of a form of Solvency Certificate or to the form of Assignment
Agreement to the Credit Agreement.
3. Reaffirmation. The Company and each of its respective Subsidiaries
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(other than MPM), as guarantors, debtors, grantors, pledgors (including in
connection with any negative pledges), assignors, or in other similar capacities
in which such parties guarantee the Obligations, grant liens or security
interests in their properties or otherwise act as accommodation parties, as the
case may be, in any case under the Loan Documents, hereby each ratifies and
reaffirms all of its payment and performance obligations, contingent or
otherwise, affirmative or negative ,under each of such existing Loan Documents
to which it is a party and, to the extent such party granted liens on or
security interests in any of its properties pursuant to any such existing Loan
Documents as security for the Company's obligations under or with respect to the
Credit Agreement, each hereby ratifies and reaffirms such grant of liens and
security interests and confirms and agrees that such liens and security
interests hereafter secure all of the Obligations, in each case as if each
reference in such existing Loan Documents to the obligations secured thereby are
construed to hereafter mean and refer to such Obligations under the Credit
Agreement and other Loan Documents as hereby amended. Each of the foregoing
hereby acknowledges that each of the Loan Documents remains in full force and
effect and is hereby ratified and confirmed. The execution of this Agreement
shall not operate as a novation, waiver of any right, power or remedy of Lender
nor constitute a waiver of any provision of any of the Loan Documents, except
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as expressly set forth herein and shall be limited to the particular instance
expressly set forth. The Company and each of the foregoing Persons confirm and
agree that the Guaranty and the Security Agreement and each and every covenant,
condition, obligation, representation (except those representations which relate
only to a specific date, which are confirmed as of such date only), warranty and
provision set forth therein are, and shall continue to be, in full force and
effect and are hereby confirmed, reaffirmed and ratified in all respects.
4. Representations and Warranties. To induce Lender to enter into this
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Agreement, the Company represents and warrants to Lender that the execution,
delivery and performance by such Person of this Agreement are within its
corporate power, have been duly authorized by all necessary corporate action and
do not and will not contravene or conflict with any provision of law applicable
to such Person, the Certificate of Incorporation or By-laws of such Person, or
any order, judgment or decree of any court or other agency of government or any
contractual obligation binding upon such Person; and the Credit Agreement as
amended as of the date hereof is the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms. Borrower
further represents and warrants to Lender that certain letter dated September
24, 1999 by Borrower to Lender together with the reports referenced therein and
included therewith, are true, accurate and have been prepared in accordance with
GAAP consistently applied (except as disclosed therein) and except in the case
of unaudited financials, with respect to the absence of footnote disclosures and
changes resulting from normal year-end adjustments, do present fairly in all
material respects the financial condition of the Persons covered thereby as at
the dates thereof and the results of their operations for the periods then
ended. Lender acknowledges that the matters disclosed in such September 24,
1999 letter do not constitute a violation of Section 9.5 of the Credit
Agreement. The projections delivered therewith represent as of the date thereof
the good faith estimate of Borrower and its senior management concerning the
likely course of its business, it being recognized by Lender that projections as
to future events are not to be viewed as facts and that actual results during
the period or periods covered by any such projections may differ from projected
results.
5. Conditions. The effectiveness of the amendments and consents stated in
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the Agreement is subject to each of the following conditions precedent or
concurrent :
(a) No Default. No Default or Event of Default under the Credit
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Agreement, as amended hereby, shall have occurred and be continuing;
(b) Warranties and Representations. The warranties and
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representations of the Company contained in this Agreement, the Credit
Agreement, as amended hereby, and the other Loan Documents, shall be true and
correct as of the effective date hereof, with the same effect as though made on
such date, except for the revisions to the schedule to the Credit Agreement
attached hereto as Exhibits and except those representations which relate only
to a specific date, which are confirmed as of such date only;
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(c) Delivery of Second Amendment. The Company, UC Holdings and ▇▇▇▇▇▇
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▇▇▇▇▇ & Partners, L.P. shall have executed and delivered this Agreement and any
Joinders hereto, to Lender;
(d) Authorization. A copy, duly certified by the secretary or an
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assistant secretary of each such Person, of (i) resolutions of such Person's
Board of Directors (or like authority), authorizing or ratifying the execution
and delivery of this Amendment, (ii) all documents evidencing other necessary
corporate action, and (iii) all approvals or consents, if any, with respect to
this Agreement shall have been delivered to Lender;
(e) Negative Pledge of E-Palette Stock. Borrower shall deliver to
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Lender a negative pledge, in form and substance acceptable to Lender, with
respect to Borrower's ownership of the E-Palette stock. Borrower shall pledge to
Lender as additional security for the Obligations of Borrower, any and all
dividends, distributions and proceeds of, from or relating to the E-Palette
stock. Borrower shall execute and deliver to Lender a pledge or security
agreement in order to effectuate such pledge, together with such UCC-1 financing
statements as Lender may require, and shall execute and cause to be executed
such other agreements or instruments as Lender may reasonably require to
evidence or perfect its security interests in the distributions and proceeds of
the E-Palette stock as aforesaid, including, without limitation, an issuer
control agreement in form and substance reasonably acceptable to Lender with
respect thereto.
(f) Other. Such other documents as the Lender may reasonably require;
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and
(g) Payment of Fees and Expenses. Payment by the Company of fees and
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expenses of Lender incurred in connection with the negotiation and documentation
of this Agreement, including, without limitation, all reasonable attorneys'
fees, together with all fees and expenses (including attorneys' fees) incurred
in connection with the First Amendment or otherwise outstanding as of the date
hereof.
6. Miscellaneous.
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(a) Captions. Section captions used in this Agreement are for
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convenience only, and shall not affect the construction of this Agreement.
(b) Governing Law. This Agreement shall be a contract made under and
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governed by the laws of the State of Illinois, without regard to conflict of
laws principals. Whenever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
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(c) Counterparts. This Agreement may be executed in any number of
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counterparts, and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constituted but one and the same Agreement.
(d) Successors and Assigns. This Agreement shall be binding upon the
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Company (and the Joinders attached hereto shall be binding on UC Holdings) and
on their respective successors and assigns, and shall inure to the sole benefit
of the Lender and its successors and assigns.
(e) References. Any reference to the Credit Agreement contained in
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any notice, request, certificate, or other document executed concurrently with
or after the execution and delivery of this Agreement shall be deemed to include
this Agreement unless the context shall otherwise requires.
(f) Continued Effectiveness. The Credit Agreement as amended hereby
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and each of the other Loan Documents remains in full force and effect.
(g) Costs, Expenses and Taxes. The Company agrees to pay to Lender
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upon demand for all reasonable expenses, including reasonable attorneys' and
legal assistants' fees, all recording fees and charges, or other fees or charges
incurred by Lender in connection with the preparation, negotiation and execution
of this Agreement and all documents related thereto and any document required to
be furnished herewith.
Balance of Page Intentionally Left Blank
- Signature Page Follows -
This Second Amendment to Credit Agreement is executed and delivered at
Chicago, Illinois, as of the day and year first above written.
COLLEGE TELEVISION NETWORK, INC., a Delaware
corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Title: Chief Executive Officer
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LASALLE BANK NATIONAL ASSOCIATION, a national
banking association
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: First Vice President
JOINDER
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This Joinder to Second Amendment to Credit Agreement dated as of October
18, 1999 between College Television Network, Inc. and LaSalle Bank National
Association (the "Second Amendment"). Defined terms not otherwise defined here
to the contrary shall have the respective meanings ascribed to them in the
Credit Agreement as that term is defined in the Second Amendment. The
undersigned hereby acknowledges receipt of a counterpart of the Second Amendment
and acknowledges and confirms that its obligations under that certain Negative
Pledge Agreement dated as of July 26, 1999 made by the undersigned to LaSalle
Bank National Association hereby continue unmodified and in full force and
effect, notwithstanding the execution and delivery of the Second Amendment.
▇▇▇▇▇▇ ▇▇▇▇▇ & PARTNERS, L.P., a Delaware limited
partnership
By: ▇▇▇▇▇▇ ▇▇▇▇▇ & Partners, L.L.C., Its General
Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Its: General Manager
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JOINDER
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This Joinder to Second Amendment to Credit Agreement dated as of October
18, 1999 between College Television Network, Inc. and LaSalle Bank National
Association (the "Second Amendment"). Defined terms not otherwise defined here
to the contrary shall have the respective meanings ascribed to them in the
Credit Agreement as that term is defined in the Second Amendment. The
undersigned hereby acknowledges receipt of a counterpart of the Second Amendment
and acknowledges and confirms that its obligations under that certain Negative
Pledge Agreement dated as of July 26, 1999 made by the undersigned to LaSalle
Bank National Association hereby continue unmodified and in full force and
effect, notwithstanding the execution and delivery of the Second Amendment.
U-C HOLDINGS, LLC., a Delaware limited liability
company
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ & Partners, L.P.
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Its: Managing Member
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By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Its: General Manager
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