================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
NOVEMBER 18, 2004
--------------
SOURCE INTERLINK COMPANIES, INC.
(Exact name of registrant as specified in its charter)
MISSOURI 1-13437 43-1710906
-------- ------- ----------
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
27500 RIVERVIEW CENTER BLVD.
BONITA SPRINGS, FL 34134
(Address of principal executive offices, including zip code)
(239) 949-4450
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
================================================================================
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On November 18, 2004, Source Interlink Companies, Inc. ("Source"),
Alliance Entertainment Corp. ("Alliance") and Alligator Acquisition, LLC
("Merger Sub") entered into an Agreement and Plan of Merger (the "Merger
Agreement"). Concurrently, and in connection therewith, (i) Source and Alliance
entered into identical voting agreements (the "Source Voting Agreements") with
each of certain directors and officers of Source and (ii) Source, Alliance and
AEC Associates, LLC (the "Principal Alliance Stockholder") entered into a voting
agreement (the "Alliance Voting Agreement").
Merger Agreement
Under the terms of the Merger Agreement, Alliance would merge with and
into Merger Sub, a wholly owned subsidiary of Source. Source will issue to
Alliance equityholders a number of shares of its common stock (including shares
reserved for issuance pursuant to outstanding options, warrants and other rights
assumed by Source) equal to Source's common stock outstanding prior to the
closing of the merger (including those shares issuable for outstanding options,
warrants and other rights). In addition, all outstanding Alliance stock options,
warrants and other rights would be assumed by Source. As a condition to the
merger, all shares of the preferred stock of Alliance would be converted into
shares of the common stock of Alliance. The equityholders of Alliance and the
equityholders of Source will each hold 50% of the fully diluted capitalization
of the combined company at the closing.
Source and Alliance have agreed that, immediately after the completion
of the merger, the board of directors of Source will consist of eleven
directors, including (i) six members designated by Source, three of whom will be
independent, and (ii) five members designated by Alliance, three of whom will be
independent.
Source and Alliance have made customary representations, warranties and
covenants in the Merger Agreement, including, among others, covenants (i) not to
(A) solicit proposals relating to alternative business combination transactions
or (B) subject to certain exceptions, enter into discussions concerning or
provide confidential information in connection with alternative business
combination transactions, (ii) to cause stockholder meetings to be held to
consider approval of the merger and related transactions, and (iii) subject to
certain exceptions, for their respective boards of directors to recommend
adoption and approval by its stockholders of the Merger Agreement and related
transactions.
Consummation of the merger is subject to various conditions, including,
among other things, the approval by the stockholders of Source and Alliance, no
legal impediment to the merger, the receipt of required regulatory approvals,
receipt of existing lender consent and completion of a distribution by Alliance
of its assets related to its "All Media Guide" and Digital On-Demand"
businesses. The Merger Agreement contains certain termination rights for both
Source and Alliance, and further provides that, upon termination of the Merger
Agreement under specified circumstances Source may be required to pay Alliance a
termination fee of $5 million.
A copy of the Merger Agreement is included herein as Exhibit 2.1 and is
incorporated herein by reference. The foregoing description of the Merger
Agreement is qualified in its entirety by reference to the full text of the
Merger Agreement.
Source Voting Agreements
Source and Alliance entered into the Source Voting Agreements with each
of the following directors and officers of Source (each in their capacity as
stockholders of Source): S. Leslie Flegel, Jason S. Flegel, John R. Amann, James
R. Gillis, Marc Fierman, A. Clinton Allen, Aron S. Katzman, Allan R. Lyons,
Harry L. Franc, III and Kenneth F. Teasdale (collectively, the "Source
Stockholders"). In the aggregate, the Source Stockholders hold 1,321,303 shares
of Source common stock and options to acquire 2,280,114 shares of Source common
stock. Pursuant to the Source Voting Agreements and subject to certain
conditions specified therein, each of the Source Stockholders agreed to (i)
retain Source shares until the merger is effective; (ii) vote in favor of the
share issuance and the actions contemplated by the Merger Agreement; (iii) vote
in favor of the amendment of Source's articles to increase authorized capital
stock; (iv) vote against any action in opposition to the merger, including an
Acquisition Proposal or Superior Proposal (as such terms are defined in the
Merger Agreement); (v) vote in favor
of the directors designated by the Principal Alliance Stockholder at the 2005
Source annual meeting; and (vi) grant an irrevocable proxy to Alliance to vote
on their behalf.
A copy of the form of the Source Voting Agreement is included herein
as Exhibit 10.46 and is incorporated herein by reference. The foregoing
description of the Source Voting Agreements is qualified in its entirety by
reference to the full text of the form of Source Voting Agreement.
Alliance Voting Agreement
Pursuant to the Alliance Voting Agreement and subject to certain
conditions specified therein, the Principal Alliance Stockholder agreed to: (i)
retain Alliance shares until the merger is effective; (ii) convert all Alliance
preferred stock to common; (iii) vote in favor of the Merger Agreement; (iv)
vote in favor of the Distribution (as defined in the Merger Agreement); (v) vote
against any action in opposition to the merger, including an Acquisition
Proposal or Superior Proposal (as such terms are defined in the Merger
Agreement); and (vi) grant an irrevocable proxy to Source to vote on their
behalf. The Alliance Voting Agreement includes an ability for Source to act on
behalf of the Principal Alliance Stockholder to call a stockholder meeting or
solicit written consent to approve the merger.
A copy of the Alliance Voting Agreement is included herein as
Exhibit 10.47 and is incorporated herein by reference. The foregoing description
of the Alliance Voting Agreement is qualified in its entirety by reference to
the full text of the Alliance Voting Agreement.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
The following exhibit is furnished herewith:
<Table>
<Caption>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
2.1 Agreement and Plan of Merger, dated November 18, 2004, by and
among Source Interlink Companies, Inc., Alliance Entertainment
Corp. and Alligator Acquisition, LLC.
10.46 Form of Source Interlink Voting Agreement, dated November 18,
2004, between Source Interlink Companies, Inc., Alliance
Entertainment Corp. and certain stockholders of Source
Interlink.
10.47 Company Voting Agreement, dated November 18, 2004, by and
among Source Interlink Companies, Inc., Alliance Entertainment
Corp. and AEC Associates, LLC.
</Table>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SOURCE INTERLINK COMPANIES, INC.
By: /s/ MARC FIERMAN
------------------------------------------
Marc Fierman
Vice President and Chief Financial Officer
Date: November 24, 2004
EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
2.1 Agreement and Plan of Merger, dated November 18, 2004, by and
among Source Interlink Companies, Inc., Alliance Entertainment
Corp. and Alligator Acquisition, LLC.
10.46 Form of Source Interlink Voting Agreement, dated November 18,
2004, between Source Interlink Companies, Inc., Alliance
Entertainment Corp. and certain stockholders of Source
Interlink.
10.47 Company Voting Agreement, dated November 18, 2004, by and
among Source Interlink Companies, Inc., Alliance Entertainment
Corp. and AEC Associates, LLC.
</Table>