Exhibit 10.2
AMENDMENT NO. 4
to the
AMENDED AND RESTATED OPERATING AGREEMENT
of
AMERICAN PROCESSING COMPANY, LLC
     THIS AMENDMENT NO. 4 (this “Amendment”) to that certain Amended and
Restated Operating Agreement, dated as of March 14, 2006, as amended by that
certain Amendment No. 1 to the Amended and Restated Operating Agreement, dated
as of January 9, 2007, that certain Amendment No. 2 to the Amended and Restated
Operating Agreement, dated as of November 30, 2007 and that certain Amendment
No. 3 to the Amended and Restated Operating Agreement, dated as of February 28,
2008 (the “Operating Agreement”), of American Processing Company, LLC, a
Michigan limited liability company (the “Company”), is made and entered into to
be effective for all purposes as of August 15, 2008, by and among the Company,
the Manager and the Members listed on the signature pages hereto. Capitalized
terms used but not otherwise defined herein shall have meanings specified in the
Operating Agreement.
RECITALS
     A. On July 29, 2008, the Manager sent a Call Notice to each Member (the
“NDEx Notice”) whereby the Manager requested that each Member contribute to the
capital of the Company its pro rata share of an amount equal to $17,941,000,
which such amount is being raised in connection with the purchase by the
Company, directly and indirectly, of (i) all the outstanding capital stock of
THP/NDEx AIV Corp., a Delaware corporation (“THP Corp.”), (ii) all the general
partnership interests in THP/NDEx AIV, LP, a Delaware limited partnership (“THP
LP”), (iii) all the limited partnership interests in National Default Exchange
Holdings, L.P., a Delaware limited partnership (“NDEx Holdings”), other than
those limited partnership interests held by THP LP, and (iv) all the outstanding
capital stock of National Default Exchange Management, Inc., a Delaware
corporation which is the general partner of NDEx Holdings (“Management”), other
than the capital stock held by THP LP. NDEx Holdings, Management, THP Corp. and
THP LP are collectively referred to herein as “NDEx”.
     B. Dolan has elected to make capital contributions to the Company in
connection with the NDEx Notice and Dolan has agreed to make an additional
contribution to the Company in the amount equal to the sum of Trott & Trott’s
Optional Capital Contribution Amount and Feiwell & Hannoy’s Optional Capital
Contribution Amount set forth in the NDEx Notice.
     C. A portion of the capital contribution to be made by Dolan will be in the
form of 825,528 shares of Dolan Common Stock with an agreed fair market value of
$15,947,964.
     D. The Company is a party to that certain Equity Purchase Agreement, dated
as of July 28, 2008, by and among the Company and each of the other parties a
party thereto (the “NDEx Equity Purchase Agreement”) pursuant to which the
Company has agreed to purchase all the outstanding equity interests of NDEx.
     E. As a portion of the consideration being paid by the Company for the
acquisition of the equity interests of NDEx, the Company has agreed to issue an
aggregate of 84,137

 

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Common Units (the “NDEx Seller Units”) to the Persons, and in the amount, set
forth on Schedule A attached hereto (such Persons, the “NDEx Sellers”).
     F. Pursuant to Section 10.4 of the Operating Agreement, the Manager and a
Supermajority-in-Interest of the Members have agreed to amend the terms of the
Operating Agreement as provided in this Amendment in order to, among other
things, reflect (i) the additional Common Units issued to Dolan in connection
with the additional capital contributions made by Dolan described above,
(ii) the issuance of the NDEx Seller Units to the NDEx Sellers and (iii) the
liquidity right agreed to be granted to the NDEx Sellers.
AGREEMENT
1. AMENDMENTS
     1.1 The following definitions shall be added to, or amended in, as
appropriate, Article I of the Operating Agreement:
“Formula Value Per Common Unit” means, as of a specified date (such date, the
“Valuation Date”), an amount equal to the quotient of (x) the difference between
(i) the product of (A) the Company’s Adjusted EBITDA for the most recently
completed twelve (12) calendar months prior to the Valuation Date (the
“Valuation Period”) and (B) 6.25 and (ii) the aggregate amount of any interest
bearing indebtedness of the Company as of the Valuation Date and (y) the number
of Common Units of the Company outstanding as of the Valuation Date (determined
on a Common Equivalent Basis). For purposes of calculating the foregoing, if the
Company incurs interest bearing indebtedness from any Person, including, but not
limited to, an Affiliate of the Company, during the Valuation Period for
purposes of funding in part or in whole one or more Acquisitions, then the
Company’s Adjusted EBITDA shall include the annualized Adjusted EBITDA for each
such Acquisition, calculated as follows: an amount equal to the sum of (A) the
product of (x) the quotient of (i) Adjusted EBITDA attributable to such
Acquisition since the closing of such Acquisition that is included in the
Company’s Adjusted EBITDA for the Valuation Period (the “Annualized Acquisition
Adjusted EBITDA”), divided by (ii) the number of days since the closing of such
Acquisition during the Valuation Period, multiplied by (y) three hundred
sixty-five (365), minus (B) the Annualized Acquisition Adjusted EBITDA for such
Acquisition.
     “NDEx Sellers” means Michael C. Barrett, Jacqueline M. Barrett, Robert F.
Frappier, James C. Frappier, Mary A. Daffin, Barry Tiedt, Abbe L. Patton and
Barrett Daffin Frappier Turner & Engel, LLP, a Texas limited liability
partnership (formerly known as Barrett Burke Wilson Castle Daffin & Frappier,
LLP).
     “Minority Members” means Trott & Trott, Feiwell & Hannoy and each of the
NDEx Sellers.
     “Put Closing” is defined in Section 7.7(c).

 

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     “Put Note” is defined in Section 7.7(c).
     “Put Securities” is defined in Section 7.7(c).
     1.2 Section 7.7 of the Operating Agreement is hereby amended and restated
in its entirety as follows:
7.7 Liquidity Right.
(a) (i) For a period of six (6) months after August 2, 2009 with respect to
Trott & Trott and Feiwell & Hannoy only, or (ii) for a period of six (6) months
after the fourth anniversary of the Closing Date (as defined in the NDEx Equity
Purchase Agreement) with respect to the NDEx Sellers only, each Minority Member
will have the right to require the Company to repurchase all or any portion of
such Minority Member’s Common Units or other Membership Interests in the Company
for a purchase price equal to the Repurchase Price by delivering written notice
of the exercise of such right to the Manager (the “Put Notice”). The date on
which the Manager receives a Put Notice hereinafter is referred to as the “Put
Delivery Date”. The parties acknowledge and agree that, for purposes of
calculating the Repurchase Price, the specified date with respect to the Formula
Value Per Common Unit shall be the date of the Put Closing (as defined below).
(b) The Company shall be obligated to purchase all of each applicable Minority
Member’s Common Units or other Membership Interests in the Company requested to
be repurchased by such Minority Member in the Put Notice pursuant to Section
7.7(a) hereof (the “Put Securities”), at a closing (the “Put Closing”) on such
date as mutually agreed to by the Manager and the applicable Minority Members,
which date shall not be prior to thirty (30) days after the Put Delivery Date.
At the Put Closing, (i) each Minority Member shall (A) endorse and deliver any
certificates representing the Put Securities held by such Minority Member to be
repurchased by the Company, (B) execute and deliver any other instruments
requested by the Company to evidence the repurchase of the Put Securities by the
Company, and (C) execute and deliver definitive documentation containing
customary representations, warranties and indemnifications satisfactory to the
Manager (including that such Minority Member has good and marketable title to
the Put Securities free and clear of all liens, hypothecations, mortgages,
charges, security interests, pledges and other encumbrances and claims of any
nature), and (ii) the Manager shall deliver to such Minority Member a promissory
note issued by the Company (a “Put Note”) in the aggregate principal amount
equal to the Repurchase Price. Prior to the Put Closing, a Minority Member and
the Manager shall in good faith negotiate the terms and conditions of the Put
Note; provided, however, that such Put Note will (i) be unsecured, (ii) be for a
term of three years with level payments of principal and interest during the
term thereof, (iii) bear interest at a rate equal to the then prevailing prime
rate plus two percent (2%) and (iv) be subject to the terms and

 

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conditions of any subordination agreement requested by the Senior Agent and the
Senior Lenders.
     1.3 A new Section 3.3(c) is added to the Operating Agreement to read in its
entirety as follows:
(c) In-Kind Capital Contributions; Issuance of Additional Common Units. If
acceptable to the Manager, Optional Capital Contributions may be made in
property other than cash and the amount of such Optional Capital Contributions
(which shall be the fair market value of such property) shall be as determined
by a Supermajority-in-Interest of the Members. Dolan and each Minority Member
who makes Optional Capital Contributions shall receive additional Common Units
in the Company in an amount equal to the amount of Optional Capital
Contributions so made divided by the Formula Value Per Common Unit.
     1.4 Pursuant to Section 3.4 of the Operating Agreement, upon the closing of
the acquisition of NDEx by the Company, the Manager hereby authorizes the
issuance of the NDEx Common Units to each of the NDEx Sellers in the amounts set
forth on Schedule A.
     1.5 Section 3.4(b)(ii) and Section 3.4(b)(iii) are hereby amended to read
in their entirety as follows:
(ii) If some, but not all of the Eligible Investors, do not exercise their
rights under this Section 3.4(b) (in such capacity, each a “Declining
Investor”), the Company shall so advise the other Eligible Investor(s) which are
exercising their rights under this Section 3.4(b) (in such capacity, a
“Participating Investor(s)”) by providing the Participating Investor(s) with
written notice (the “Participating Notice”) within ten (10) Business Days after
the expiration of the fifteen (15) Business Day period in which such rights
could have been exercised. The Participating Investor(s) shall thereupon for a
period of five (5) Business Days from the date of such Participating Notice be
entitled to purchase the share of the New Securities which could have been
purchased by the Declining Investor(s). The Participating Investor(s) shall
close on the purchase of the New Securities within thirty (30) days after the
expiration of the 5-Business Day period.
(iii) The Company shall have one hundred twenty (120) days after the date of the
Preemptive Notice to sell or enter into an agreement (pursuant to which the sale
of New Securities covered thereby shall be closed, if at all, within sixty
(60) days from the date of such agreement) to sell the remaining New Securities
not purchased by the Eligible Investors or the Participating Investor(s), as the
case may be, at a price no less and upon the same terms and conditions as those
specified in the Preemptive Notice. If the price of the New Securities decreases
or the terms and conditions change, the provisions of this Section 3.4(b) shall
again apply de novo.
     1.6 Exhibit A of the Operating Agreement is hereby replaced with Exhibit A
attached hereto.

 

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     1.7 Distributions. The parties agree that Distributable Cash related to the
month in which the Closing (as defined in the NDEx Equity Purchase Agreement)
occurs shall be calculated by computing the Member’s Participating Percentages
for such month on a daily basis.
2. REFERENCE TO AND EFFECT ON THE OPERATING AGREEMENT
     2.1 Each reference in the Operating Agreement to “this Agreement”,
“hereunder”, “hereof”, “herein”, or words of like import shall mean and be a
reference to the Operating Agreement as amended hereby.
     2.2 Except as specifically amended above, the Operating Agreement shall
remain in full force and effect and is hereby ratified and confirmed.
3. MISCELLANEOUS
     3.1 This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute one and the same instrument. In accordance with the
Operating Agreement, this Amendment shall be effective upon execution by the
Company, the Manger and a Supermajority-in-Interest of the Members. This
Amendment, to the extent signed and delivered by means of a facsimile machine or
other electronic transmission (including transmission in portable document
format by electronic mail), shall be treated in all manner and respects and for
all purposes as an original agreement and shall be considered to have the same
binding legal effect as if it were the original signed version thereof delivered
in person. At the request of any party hereto, each other party hereto shall
re-execute original forms hereof and deliver them to all other parties, except
that the failure of any party to comply with such a request shall not render
this Amendment invalid or unenforceable. No party hereto shall raise the use of
a facsimile machine or other electronic transmission to deliver a signature, or
the fact that any signature was transmitted or communicated through the use of a
facsimile machine or other electronic transmission, as a defense to the
formation or enforceability of a contract and each such party forever waives any
such defense.
     3.2 Section headings in this Amendment are included herein for convenience
of reference only and shall not constitute a part of this Amendment for any
other purpose.
     3.3 Each party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Amendment and the consummation of the transactions contemplated hereby.
     3.4 The language used in this Amendment will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
     3.5 If and to the extent there are any inconsistencies between the
Operating Agreement and this Amendment, the terms of this Amendment shall
control.

 

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     IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
date first written above.

                  COMPANY:    
 
                AMERICAN PROCESSING COMPANY, LLC    
 
                By: DOLAN APC LLC
Its: Manager    
 
           
 
  By:  /s/ Scott J. Pollei
 
   
 
  Name: Scott J. Pollei         Its: Vice President    
 
                MANAGER:    
 
                DOLAN APC LLC    
 
           
 
  By:  /s/ Scott J. Pollei
 
   
 
  Name: Scott J. Pollei         Its: Vice President    
 
                MEMBERS:    
 
                DOLAN APC LLC    
 
           
 
  By:  /s/ Scott J. Pollei
 
   
 
  Name: Scott J. Pollei         Its: Vice President    
 
                APC INVESTMENTS, LLC    
 
           
 
  By:  /s/ David A. Trott
 
   
 
  Name: David A. Trott         Its: Manager    
 
                FEIWELL & HANNOY PROFESSIONAL CORPORATION    
 
           
 
  By:  /s/ Authorized Signer
 
   
 
  Name:
 
   
 
  Its:      

 

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SCHEDULE A
NDEx SELLERS

          Name   NDEX Seller Units
Michael C. Barrett and Jacqueline M. Barrett, JTWROS
    34,609  
 
       
Mary A. Daffin and Maynard Samuel Daffin, Sr., Tenants in Common
    14.899  
 
       
Robert F. Frappier
    14,899  
 
       
James C. Frappier and Judith A. Frappier, JTWROS
    5,714  
 
       
Abbe L. Patton and Lisle D. Patton, JTWROS
    5,714  
 
       
Barry Tiedt and Terri Tiedt, JTWROS
    5,714  
 
       
Brian S. Engel
    393  
 
       
Steve P. Turner and Marsha L. Turner, Tenants in Common
    394  
 
       
Barrett Daffin Frappier Turner & Engel, LLP
    1,801  
 
       
TOTAL:
    84,137  

 

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EXHIBIT A
List of Members, Capital Contributions, Capital Accounts
Common Units and Participating Percentages
As of August 15, 2008

                  Name, Address, Phone           Participating   and Fax of
Member   Common Units     Percentage  
Dolan APC, LLC
    1,173,952       90.14 %
c/o Dolan Media Company
1200 Baker Building
706 Second Avenue South
Minneapolis, Minnesota 55402
Phone: (612) 317-9425
Fax: (612) 317-9434
Attention: James P. Dolan
               
 
               
APC Investments, LLC
    104,905       8.05 %
31440 Northwestern Highway Suite 200
Farmington Hills, MI 48334
Phone: (248) 642-2515
Fax: (248) 642-3628
Attention: David A. Trott
               
 
               
Feiwell & Hannoy Professional Corporation
    23,560       1.81 %
251 North Illinois Street, Suite 1700
Indianapolis, Indiana 46204
Phone: (317) 237-2727
Fax: (317) 237-2722
Attention: Douglas Hannoy and Michael Feiwell
               
 
               
TOTAL:
    1,302,417       100.000 %

 

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EXHIBIT A
List of Members, Capital Contributions, Capital Accounts
Common Units and Participating Percentages
As of Closing of the NDEx Acquisition

                  Name, Address, Phone           Participating   and Fax of
Member   Common Units     Percentage  
Dolan APC, LLC
    1,173,952       84.67 %
c/o Dolan Media Company
1200 Baker Building
706 Second Avenue South
Minneapolis, Minnesota 55402
Phone: (612) 317-9425
Fax: (612) 317-9434
Attention: James P. Dolan
               
 
               
APC Investments, LLC
    104,905       7.57 %
31440 Northwestern Highway Suite 200
Farmington Hills, MI 48334
Phone: (248) 642-2515
Fax: (248) 642-3628
Attention: David A. Trott
               
 
               
Feiwell & Hannoy Professional Corporation
    23,560       1.70 %
251 North Illinois Street, Suite 1700
Indianapolis, Indiana 46204
Phone: (317) 237-2727
Fax: (317) 237-2722
Attention: Douglas Hannoy and Michael Feiwell
               
 
               
Barrett Daffin Frappier Turner & Engel, LLP
    1,801       0.13 %
15000 Surveyor Blvd., Suite 100
Addison, Texas 75001
Phone: (972) 386-5040
Fax: (972) 341-5024
Attention: Michael C. Barrett, Chairman
               

 

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                  Name, Address, Phone           Participating   and Fax of
Member   Common Units     Percentage  
Michael C. Barrett and Jacqueline M. Barrett,
    34,609       2.50 %
JTWROS
5941 Club Oaks Drive
Dallas, Texas 75248
Phone: (972) 341-0512
Fax: (972) 341-0601
               
 
               
Robert F. Frappier
    14,899       1.07 %
1735 North Blvd.
Houston, Texas 77098
Phone: (713) 693-2002
Fax: (713) 621-2179
               
 
               
James C. Frappier and Judith A. Frappier,
    5,714       0.41 %
JTWROS
4308 Mossey Oak Court
Flower Mound, Texas 75022
Phone: (214) 668-0303
Fax: (972) 341-5024
               
 
               
Mary A. Daffin and Maynard Samuel Daffin, Sr.,
    14,899       1.07 %
Tenants in Common
11750 Gallant Ridge Lane
Houston, Texas 77082
Phone: (281) 596-8733
Fax: (281) 596-8462
               
 
               
Barry Tiedt and Terri Tiedt, JTWROS
    5,714       0.41 %
921 Genoa Court
Argyle, Texas 76226
Phone: (972) 341-0572
Fax: (972) 341-0679
               
 
               
Abbe L. Patton and Lisle D. Patton, JTWROS
    5,714       0.41 %
6016 Pinnacle Cr.
Little Elm, Texas 75068
Phone: (972) 341-0506
Fax: (972) 341-0678
               
 
               
Brian S. Engel
    393       0.03  
P.O. Box 76
Driftwood, TX 78619
Phone: (512) 477-0008
Fax: (512) 477-1112
               

 

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                  Name, Address, Phone           Participating   and Fax of
Member   Common Units     Percentage  
Steve P. Turner and Marsha L. Turner,
    394       0.03  
Tenants in Common
10002 Brandywine Circle
Austin, TX 78750
Phone: (512) 477-0008
Fax: (512) 477-1112
               
 
               
TOTAL:
    1,386,554       100.000 %