ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. Share Purchase Agreement On
July 2, 2014, KVH Media Group Limited("KMG UK"), an indirectly wholly owned subsidiary of KVH Industries, Inc.(the "Company"), entered into a Share Purchase Agreement with Nigel Cleaveto acquire all of the issued share capital of Super Dragon Limited("SDL") and Videotel Marine Asia Limited("VMA", together with SDL referred to as "Videotel"), for an aggregate purchase price of approximately $49 million. Videotel is a maritime training services company based in Londonthat produces and distributes training films and eLearning computer-based training courses to commercial customers in the maritime market. The acquisition was consummated on the same day. The purchase price was determined through arm's-length negotiation and is subject to a potential post-closing adjustment based on the value of the net assets delivered at the closing. The Share Purchase Agreement contains certain representations, warranties, covenants and indemnification provisions. The Share Purchase Agreement provides that 10% of the purchase price shall be held in escrow for a period of approximately 21 months after the closing in order to satisfy valid indemnification claims that KMG UKmay assert for specified breaches of representations, warranties and covenants. In the Share Purchase Agreement, the Seller agreed to comply with certain confidentiality, non-competition and non-solicitation covenants with respect to the business of Videotel for a period of 18 months after the closing. Credit Agreement and Notes On July 1, 2014, the Company entered into (i) a five-year senior credit facility agreement (the "Credit Agreement") with Bank of America, N.A., as Administrative Agent, and the lenders named from time to time as parties thereto (the "Lenders"), for an aggregate amount of up to $80,000,000, including a revolving credit facility (the "Revolver") of up to $15,000,000and a term loan ("Term Loan") of $65,000,000to be used for general corporate purposes, including both (A) the refinancing of the Company's current $30,000,000outstanding indebtedness under its existing credit facility and (B) permitted acquisitions, and (ii) revolving credit notes (together, the "Revolving Credit Note") to evidence the Revolver, (iii) term notes (together, the "Term Note," and together with the Revolving Credit Note, the "Notes") to evidence the Term Loan, (iv) a Security Agreement (the "Security Agreement") required by the Lenders with respect to the grant by the Company of a security interest in substantially all of the assets of the Company in order to secure the obligations of the Company under the Credit Agreement and the Notes, and (v) Pledge Agreements (the "Pledge Agreements") required by the Lenders with respect to the grant by the Company of a security interest in 65% of the capital stock of each of KVH Industries A/S and KVH Industries U.K. Limitedheld by the Company in order to secure the obligations of the Company under the Credit Agreement and the Notes. Merrill Lynch, Pierce, Fenner & Smith Incorporated, was the sole lead arranger and sole book runner. The $65 millionTerm Note was executed in connection with the acquisition of all of the outstanding shares of Videotel pursuant to the Share Purchase Agreement, on July 1, 2014. The proceeds of $35 millionwere applied toward the payment of a portion of the purchase price for the acquired shares of Videotel, and approximately $30 millionwas applied toward the refinancing of the outstanding balance of the Company's existing credit facility. The Company must make principal repayments on the Term Loan in the amount of approximately $1,219,000at the end of each of the first eight three-month periods following the closing; thereafter, the Company must make principal repayments in the amount of $1,625,000for each succeeding three-month period until the maturity of the loan on July 1, 2019. On the maturity date, the entire remaining principal balance of the loan, including any future loans under the Revolver, is due and payable, together with all accrued and unpaid interest, penalties and other amounts due and payable under the Credit Agreement. The Credit Agreement contains provisions requiring the mandatory prepayment of amounts outstanding under the Term Loan and the Revolver under specified circumstances, including (i) 100% of the net cash proceeds from certain dispositions to the extent not reinvested in the Company's business within a stated period, (ii) 50% of the net cash proceeds from stated equity issuances and (iii) 100% of the net cash proceeds from certain receipts of more than $250,000outside the ordinary course of business. The prepayments are first applied to the Term Loan, in inverse order of maturity, and then to the Revolver. In the discretion of the Administrative Agent, certain mandatory prepayments made on the Revolver can permanently reduce the amount of credit available under the Revolver.
Loans under the Credit Agreement bear interest at varying rates determined in accordance with the Credit Agreement. Each LIBOR Rate Loan, as defined in the Credit Agreement, bears interest on the outstanding principal amount thereof for each interest period from the applicable borrowing date at a rate per annum equal to the LIBOR Daily Floating Rate or LIBOR Monthly Floating Rate, each as defined in the Credit Agreement, as applicable, plus the Applicable Rate, as defined in the Credit Agreement, and each Base Rate Loan, as defined in the Credit Agreement, bears interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate, as defined in the Credit Agreement, plus the Applicable Rate. The Applicable . . .
ITEM 1.02. TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.
The material terms of the Prior Credit Facility, filed as Exhibits 10.11, 10.12, 10.13, 10.14, 10.15, 10.16, 10.17, 10.18, 10.19, 10.20 and 10.21 to the Company's Annual Report on Form 10-K for the year ended
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT. The information set forth in Item 1.01 of this Form 8-K is incorporated into this Item 2.03 by reference.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements of Businesses Acquired The financial statements required by this item will be filed by amendment within 71 calendar days after the date on which this report must be filed. (b) Pro Forma Financial Information The pro forma financial statements required by this item will be filed by amendment within 71 calendar days after the date on which this report must be filed. (d) Exhibits Exhibit No. Description 2.1* Share Purchase Agreement, dated as of
July 2, 2014, by and between KVH Media Group Limitedand Nigel Cleave10.1 Credit Agreement, dated as of July 1, 2014, by and between Bank of America, N.A., The Washington Trust Companyand KVH Industries, Inc.10.2 Term Notes, dated as of July 1, 2014, by and between KVH Industries, Inc.and each of Bank of America, N.A. and The Washington Trust Company10.3 Revolving Credit Notes, dated as of July 1, 2014, by and between KVH Industries, Inc.and each of Bank of America, N.A. and The Washington Trust Company10.4 Security Agreement, dated as of July 1, 2014, by and between Bank of America, N.A. and KVH Industries, Inc.10.5 Pledge Agreements, dated as of July 1, 2014, by and between Bank of America, N.A. and KVH Industries, Inc.with respect to KVH Industries A/S and KVH Industries U.K. Limited* Certain schedules are omitted pursuant to Item 601(b)(2) of Regulation S-K. The Companyagrees to furnish copies thereof to the Securities and Exchange Commissionupon request.