EXHIBIT 10.44.2
SECOND AMENDMENT TO
AMENDED AND RESTATED LOAN AGREEMENT
SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT, dated as of
October 31, 2006 (this "Amendment"), by and among Source Interlink Companies,
Inc., a Delaware corporation, as successor by merger to Source Interlink
Companies, Inc., a Missouri corporation, as the administrative borrower on
behalf of all Loan Parties (as defined below) (the "Administrative Borrower"),
the other Loan Parties, Wells Fargo Foothill, Inc., a California corporation, as
the arranger, administrative agent and collateral agent for the Lenders (as
defined below) (the "Agent"), and Wachovia Bank, National Association, a
national banking association ("Wachovia"), as the documentation agent (the
"Documentation Agent").
WHEREAS, the Administrative Borrower, each of the Administrative
Borrower's Subsidiaries identified on the signature pages thereto as a
"Borrower" (such Subsidiaries, together with the Administrative Borrower, are
referred to hereinafter each individually as a "Borrower", and individually and
collectively, jointly and severally, as the "Borrowers"), and each of the
Administrative Borrower's Subsidiaries identified on the signature pages thereto
as a "Guarantor" (such Subsidiaries are referred to hereinafter each
individually as a "Guarantor", and individually and collectively, jointly and
severally, as the "Guarantors" and together with the Borrowers, each
individually as a "Loan Party", and individually and collectively, jointly and
severally, as the "Loan Parties"), the lenders that are signatories thereto (the
"Lenders"), and the Agent are parties to an Amended and Restated Loan Agreement
dated as of February 28, 2005 as amended by First Amendment to Amended and
Restated Loan Agreement, dated as of April 18, 2005 (as further amended,
restated, supplemented or otherwise modified from time to time, the "Loan
Agreement"); and
WHEREAS, the Borrowers have requested that the Lenders and the Agent
enter into this Amendment to amend certain terms and conditions of the Loan
Agreement, in each case subject to the terms and conditions set forth in this
Amendment.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto hereby agree as follows:
1. Definitions. Any capitalized term used herein and not defined herein
shall have the meaning assigned to it in the Loan Agreement.
2. Amendments. The Loan Agreement is hereby amended as follows:
2.1. Existing Definitions.
(a) Clause (ii) of the definition of "Borrowing Base" in
Section 1.1 of the Loan Agreement is hereby amended and restated to read as
follows:
"(ii) the sum of (x) the Bank Product Reserve, (y) the Mortgage
Reserve and (z) the aggregate amount of such other reserves, if any,
established by Agent under Section 2.1(b)."
(b) Clause (c) of the definition of "Eligible Inventory" in
Section 1.1 of the Loan Agreement is hereby amended and restated to read as
follows:
"(c) it is located on real property leased by a Loan Party or in
a contract warehouse, in each case, unless it is segregated or otherwise
separately identifiable from goods of others, if any, stored on the
premises, and it is subject to a Collateral Access Agreement executed by
the lessor, or warehouseman, as the case may be,"
(c) The definition of "Permitted Acquisition" in Section 1.1
of the Loan Agreement is hereby amended by (i) deleting the reference to "5
Business Days" in clause (c) thereof and substituting in lieu thereof "10
Business Days" and (ii) adding the following paragraph immediately after clause
(h) thereof:
"the foregoing notwithstanding, to the extent the aggregate
consideration paid by the Loan Parties for an Acquisition does not exceed
$15,000,000, such Acquisition shall be deemed a Permitted Acquisition if
the conditions set forth in clauses (c) through (h) above shall have been
satisfied, provided that any Accounts or Inventory acquired by the Loan
Parties from such Acquisition shall not be deemed Eligible Accounts or
Eligible Inventory, as the case may be, until Agent shall have satisfactory
evidence that such Accounts and/or Inventory are subject to a valid and
perfected first priority Collateral Agent's Lien and the other criteria set
forth in the definition of "Eligible Accounts" and "Eligible Inventory"
have been satisfied."
(d) The definition of the term "Permitted Investment" in
Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety
to read as follows:
"'Permitted Investments' means (a) Investments in cash and Cash
Equivalents, (b) Investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the
ordinary course of business, (d) Investments received in settlement of
amounts due to a Borrower or any Subsidiary of a Borrower effected in the
ordinary course of business or owing to a Borrower or any Subsidiary of a
Borrower as a result of Insolvency Proceedings involving an Account Debtor
or upon the foreclosure or enforcement of any Lien in favor of a Borrower
or any Subsidiary of a Borrower, (e) guarantees of the Guarantors
hereunder, (f) Investments in Subsidiaries that are Loan Parties (not to
exceed $10,000,000 in the aggregate in any Fiscal Year in the case of any
foreign Subsidiary), (g) Investments in [Word World] not to exceed
$2,500,000 in the aggregate at any time outstanding, (h) a minority equity
Investment in ICON Entertainment LLC, at no charge to the Loan Parties, and
(i) Investments in any other joint venture not to exceed $15,000,000 in the
aggregate at any time outstanding (it being agreed that such maximum amount
shall not include Investments in any other joint venture which is otherwise
expressly permitted in writing by the Required Lenders (or by Agent at the
written request of the Required Lenders) in accordance with Section 15.1
hereof, unless otherwise specified in writing by the
Required Lenders), provided that (A) in the case of such Investments
constituting loans or advances of money, such loan or advance of money
shall be evidenced by a promissory note, in form and substance reasonably
satisfactory to the Agent, which promissory note shall be pledged to the
Collateral Agent, for the benefit of the Lender Group and the Bank Product
Providers (on terms and conditions satisfactory to the Agent) and shall be
delivered to the Collateral Agent, accompanied by appropriate instruments
of transfer executed in blank, (B) in the case of such Investments
constituting equity interest, if such equity interest is evidenced by a
certificate and is treated as security under the Code, the Loan Parties
shall pledge and deliver such security certificate to the Collateral Agent,
for the benefit of the Lender Group and the Bank Product Providers,
accompanied by appropriate instruments of transfer executed in blank,
provided that, if such pledge and delivery is prohibited by an enforceable
contractual provision binding on the Loan Parties which has not been
waived, the Loan Parties shall be in compliance with this clause (B) if the
Loan Parties shall have used all commercially reasonable efforts to obtain
a waiver of such provision, (C) both (i) the average daily Excess
Availability for the 30 consecutive day period immediately prior to the
date of such Investment and (ii) Excess Availability immediately after
giving effect to such Investment, is at least $50,000,000, (D) no Default
or Event of Default shall have occurred and be continuing immediately prior
to such Investment or immediately after giving effect thereto, (E) such
joint venture shall be engaged in the same business as the Loan Parties or
a substantially similar or related business, (F) within 10 Business Days
after the closing date for such Investment, the Administrative Borrower
shall have furnished to Agent (1) the final version and executed
counterparts of the primary agreement (or agreements) pursuant to which
such Investment is consummated, and (2) copies of such other agreements,
instruments or other documents as any Agent shall reasonably request, and
(G) neither the Borrowers nor any of their respective Subsidiaries shall,
in connection with such Investment, assume or remain liable in respect of
any Indebtedness or other obligation (including contingent obligations) of
such joint venture (except for (x) Indebtedness which would be permitted
under Section 7.1 hereof, and (y) Indebtedness that the Required Lenders
otherwise expressly consent to in writing after their review of the terms
of the proposed Investment)."
(e) The definition of "Permitted Purchase Money
Indebtedness" in Section 1.1 of the Loan Agreement is hereby amended by deleting
the reference to "2,500,000" therein and substituting in lieu thereof
"20,000,000".
(f) The definition of "Rent Reserve" in Section 1.1 of the
Loan Agreement is hereby deleted in its entirety.
2.2. Location of Inventory and Equipment. Section 6.9 of the Loan
Agreement is hereby amended and restated in its entirety to read as follows:
"6.9 LOCATION OF INVENTORY AND EQUIPMENT. Keep Loan Parties' and
their Subsidiaries' Inventory and material Equipment only at the locations
identified on Schedule 5.5 (it being understood that the applicable Loan
Party shall provide Collateral Agent a Collateral Access Agreement for such
location within 10 Business Days of Collateral Agent's request made in
Collateral Agent's Permitted Discretion) and their
chief executive offices only at the locations identified on Schedule
5.7(b); provided, however, that Administrative Borrower may amend Schedule
5.5 and Schedule 5.7(b) so long as such amendment occurs by written notice
to Agent not less than 30 days prior to the date on which such Inventory or
material Equipment is moved to such new location or such chief executive
office is relocated, so long as such new location is within the continental
United States, and so long as, at the time of such written notification,
within 30 days of Collateral Agent's request made in Collateral Agent's
Permitted Discretion, the applicable Loan Party provides Collateral Agent a
Collateral Access Agreement for each Leased Real Property or Mortgaged Real
Property used in the manufacturing, warehousing and distribution operations
of the Loan Parties."
2.3. Formation of Subsidiaries. Section 6.15 of the Loan
Agreement is hereby amended by deleting the reference to "5 Business Days"
therein and substituting in lieu thereof "10 Business Days".
2.4. Indebtedness. Section 7.1(m) of the Loan Agreement is hereby
amended by deleting the reference to "$10,000,000" in clause (ii) thereof and
substituting "$20,000,000" in lieu thereof.
2.5. Minimum EBITDA. Section 7.18(a)(i) of the Loan Agreement is
hereby amended and restated in its entirety to read as follows:
"(i) MINIMUM EBITDA. EBITDA of $40,000,000 for the trailing four
(4) fiscal quarters, measured on a fiscal quarter-end basis."
2.6. WFF Debt Ratio. Section 7.18(b)(i) of the Loan Agreement is
hereby amended and restated in its entirety to read as follows:
"(i) WFF DEBT RATIO. The WFF Debt Ratio measured on a fiscal
quarter-end basis for each period of four fiscal quarters (commencing with
the fiscal quarter ending July 31, 2006) to exceed 3.5 to 1.0."
3. Conditions. This Amendment shall be effective as of the date hereof
(the "Amendment Effective Date"), subject to the fulfillment, in a manner
satisfactory to the Agent, of each of the following conditions precedent:
(a) Representations and Warranties. The representations and
warranties contained herein, in Section 5 of the Loan Agreement (after giving
effect to the amendments to the Loan Agreement set forth herein) and in each
other Loan Document and certificate or other writing delivered to the Agent or
any Lender pursuant hereto on or prior to the Amendment Effective Date shall be
correct in all material respects on and as of the Amendment Effective Date as
though made on and as of such date, except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall be true and correct in all
material respects on and as of such date).
(b) No Event of Default. No Default or Event of Default
shall have occurred and be continuing on the Amendment Effective Date, or result
from this Amendment becoming effective in accordance with its terms.
(c) Delivery of Documents. The Agent and the Lenders shall
have received on or before the Amendment Effective Date the following, each in
form and substance satisfactory to the Agent and unless indicated otherwise,
dated the Amendment Effective Date:
(i) counterparts of this Amendment, duly executed
by the Loan Parties, the Agent and the Required Lenders (provided that
the effectiveness of the amendments set forth in Sections 2.1(a) and
(b) hereof is subject to the receipt by the Agent counterparts of this
Amendment duly executed by all of the Lenders, provided further that,
the failure to obtain such counterparts from all of the Lenders shall
not affect the effectiveness of the other portions of this Amendment);
and
(ii) a certificate from the Secretary of each Loan
Party attesting to the resolutions of such Loan Party's Board of
Directors authorizing its execution, delivery and performance of this
Amendment and authorizing specific officers of such Loan Party to
execute the same.
(d) Proceedings. All proceedings in connection with the
transactions contemplated by this Amendment, and all documents incidental
thereto, shall be satisfactory to the Agent, and the Agent shall have received
from the Borrowers all such information and such counterpart originals or
certified copies of documents, and such other agreements, instruments,
approvals, opinions and other documents, as the Agent may reasonably request.
(e) Lender Group Expenses. Borrowers shall have paid all
Lender Group Expenses incurred in connection with the transactions evidenced by
this Amendment.
4. Representations and Warranties. Each Loan Party hereby represents
and warrants to the Agent and the Lenders as follows:
(a) The representations and warranties herein, in Section 5
of the Loan Agreement and in each other Loan Document (after giving effect to
the amendments set forth herein) and certificate or other writing delivered to
the Agent or any Lender pursuant hereto on or prior to the Amendment Effective
Date are correct in all material respects on and as of the Amendment Effective
Date as though made on and as of such date, except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties are true and correct in all
material respects on and as of such date).
(b) No Default or Event of Default has occurred and is
continuing or would result from this Amendment becoming effective in accordance
with its terms.
(c) Each Loan Party (i) is duly organized and existing and
in good standing under the laws of the jurisdiction of its organization, (ii)
has all requisite power and
authority to execute, deliver and perform this Amendment and to perform the Loan
Documents, as amended hereby, and (iii) is duly qualified to do business in each
jurisdiction in which the character of the properties owned or leased by it or
in which the transaction of its business makes such qualification necessary
except where the failure to be so qualified could not be expected to have a
Material Adverse Change.
(d) The execution, delivery and performance by the Loan
Parties of this Amendment and the performance by the Loan Parties of the Loan
Documents, as amended by this Amendment, (i) have been duly authorized by all
necessary action, and (ii) do not and will not contravene the Loan Parties'
Governing Documents.
(e) The execution, delivery, and performance by the Loan
Parties of this Amendment and the performance of the Loan Documents, as amended
by this Amendment, do not and will not (i) violate any provision of federal,
state, or local law or regulation applicable to any Loan Party, or any order,
judgment, or decree of any court or other Governmental Authority binding on any
Loan Party, (ii) conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any material contractual
obligation of any Loan Party, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any properties or assets of
any Loan Party, other than Permitted Liens, or (iv) require any approval of any
Loan Party's interestholders or any approval or consent of any Person under any
material contractual obligation of any Loan Party, other than consents or
approvals that have been obtained and that are still in force and effect.
(f) Except for Loan Parties' reporting obligations under the
Exchange Act, the execution, delivery, and performance by the Loan Parties of
this Amendment and the performance of the Loan Documents, as amended by this
Amendment, do not and will not require any registration with, consent, or
approval of, or notice to, or other action with or by, any Governmental
Authority or other Person.
(g) This Amendment, when executed and delivered by the Loan
Parties, and the Loan Documents, as amended hereby, are and will be the legally
valid and binding obligations of the Loan Parties, enforceable against the Loan
Parties in accordance with their respective terms.
5. Indemnification. The Loan Parties, jointly and severally, hereby
agree to pay, indemnify, defend, and hold the Agent and the Lenders and their
respective officers, directors, employees, members, attorneys, consultants,
agents, and affiliates harmless (to the fullest extent permitted by law) from
and against any and all claims, losses and liabilities growing out of or
resulting from this Amendment, except claims, losses or liabilities resulting
solely and directly from any such indemnified person's gross negligence or
willful misconduct as determined by a final judgment of a court of competent
jurisdiction.
6. Miscellaneous.
(a) Continued Effectiveness of the Loan Documents. Except as
otherwise expressly provided herein, the Loan Agreement and the other Loan
Documents are, and shall continue to be, in full force and effect and are hereby
ratified and confirmed in all
respects, except that on and after the Amendment Effective Date (i) all
references in the Loan Agreement to "this Agreement", "hereto", "hereof",
"hereunder" or words of like import referring to the Loan Agreement shall mean
the Loan Agreement as amended by this Amendment, and (ii) all references in the
other Loan Documents to the "Loan Agreement", "thereto", "thereof", "thereunder"
or words of like import referring to the Loan Agreement shall mean the Loan
Agreement as amended by this Amendment. Except as expressly provided herein, the
execution, delivery and effectiveness of this Amendment shall not operate as an
amendment of any right, power or remedy of the Agent or the Lenders under the
Loan Agreement or any other Loan Document, nor constitute an amendment of any
provision of the Loan Agreement or any other Loan Document.
(b) Counterparts; Telefacsimile Execution. This Amendment
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which shall be deemed to be an original, but all
of which taken together shall constitute one and the same agreement. Delivery of
an executed counterpart of this Amendment by telefacsimile or electronic mail
shall be equally as effective as delivery of an original executed counterpart of
this Amendment. Any party delivering an executed counterpart of this Amendment
by telefacsimile or electronic mail also shall deliver an original executed
counterpart of this Amendment but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment.
(c) Headings. Section headings herein are included for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
(d) Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.
(e) Costs and Expenses. Each Loan Party agrees to pay on
demand all fees, costs and expenses of the Agent in connection with the
preparation, execution and delivery of this Amendment and any other related
agreements, instruments and documents.
(f) Amendment as Loan Document. Each Loan Party hereby
acknowledges and agrees that this Amendment constitutes a "Loan Document" under
the Loan Agreement. Accordingly, it shall be an Event of Default under the Loan
Agreement if any representation or warranty made by any Loan Party under or in
connection with this Amendment shall have been untrue, false or misleading in
any material respect when made or any Loan Party shall fail to perform any
covenant or agreement set forth herein.
(g) No Waiver. This Amendment is not a waiver of, or consent
to, any Default or Event of Default now existing or hereafter arising under the
Loan Agreement or any other Loan Document and the Agent and the Lenders
expressly reserve all of their rights and remedies under the Loan Agreement and
the other Loan Documents, under applicable law or otherwise.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered as of the date first above written.
BORROWERS:
SOURCE INTERLINK COMPANIES, INC.,
a Delaware corporation,
as successor by merger to
SOURCE INTERLINK COMPANIES, INC.,
a Missouri corporation,
as Administrative Borrower
SOURCE U.S. MARKETING SERVICES, INC.
a Delaware corporation
BRAND MANUFACTURING CORP.
a New York corporation
SOURCE--MYCO, INC.
a Delaware corporation
SOURCE--YEAGER INDUSTRIES, INC.
a Delaware corporation
SOURCE--HUCK STORE FIXTURE COMPANY
a Delaware corporation
HUCK STORE FIXTURE COMPANY OF NORTH CAROLINA
a North Carolina corporation
INTERNATIONAL PERIODICAL DISTRIBUTORS, INC.
a Nevada corporation
SOURCE INTERLINK INTERNATIONAL INC.
a Delaware corporation
PRIMARY SOURCE, INC.
a Delaware corporation
SOURCE HOME ENTERTAINMENT, INC.
a Delaware corporation
By: /s/ Marc Fierman
-----------------------------------------
Name: Marc Fierman
Title:
ALLIANCE ENTERTAINMENT CORP.,
a Delaware corporation
By: /s/ Marc Fierman
-----------------------------------------
Name: Marc Fierman
Title: Authorized Signatory
CHAS. LEVY CIRCULATING CO. LLC,
a Delaware limited liability company
By: SOURCE INTERLINK COMPANIES, INC.,
its sole member
By: /s/ Marc Fierman
-----------------------------------------
Name: Marc Fierman
Title: Authorized Signatory
SOURCE-SCN SERVICES, LLC,
a Delaware limited liability company
By: SOURCE INTERLINK COMPANIES, INC.,
its sole member
By: /s/ Marc Fierman
-----------------------------------------
Name: Marc Fierman
Title: Authorized Signatory
SOURCE MID-ATLANTIC NEWS, LLC,
a Delaware limited liability company
By: SOURCE INTERLINK COMPANIES, INC.,
its sole member
By: /s/ Marc Fierman
-----------------------------------------
Name: Marc Fierman
Title: Authorized Signatory
GUARANTORS:
THE SOURCE-CANADA CORP.
an Ontario corporation
SOURCE INTERLINK CANADA INC.
a British Columbia corporation
SOURCE--CHESTNUT DISPLAY SYSTEMS, INC.
a Delaware corporation
T.C.E. CORPORATION
a Delaware corporation
VAIL COMPANIES, INC.
a Delaware corporation
THE INTERLINK COMPANIES, INC.
a Delaware corporation
DAVID E. YOUNG, INC.
a New York corporation
By: /s/ Marc Fierman
-----------------------------------------
Name: Marc Fierman
Title: Authorized Signatory
AEC DIRECT, INC.
a Delaware corporation
By: /s/ Marc Fierman
-----------------------------------------
Name: Marc Fierman
Title: Authorized Signatory
AGENT, COLLATERAL AGENT AND LENDER:
WELLS FARGO FOOTHILL, INC.,
a California corporation, as Agent and
Collateral Agent and as a Lender
By: /s/ Dennis Rebman
-----------------------------------------
Name: Dennis Rebman
Title: VP
LENDERS:
GMAC COMMERCIAL FINANCE LLC,
as a Lender
By: /s/ Bryan Shia
-----------------------------------------
Name: Bryan Shia
Title:
HSBC BANK USA, N.A., as a Lender
By: /s/ Barbara Baltar
-----------------------------------------
Name: Barbara Baltar
Title:
LASALLE BUSINESS CREDIT, LLC,
as a Lender
By: /s/ Vickie Tillman
-----------------------------------------
Name: Vickie Tillman
Title:
MERRILL LYNCH CAPITAL (a division of Merrill
Lynch Business Financial Services, Inc.),
as a Lender
By: /s/ Edward Shuster
-----------------------------------------
Name: Edward Shuster
Title:
PNC BANK NATIONAL ASSOCIATION,
as a Lender
By: /s/ Peter Redington
-----------------------------------------
Name: Peter Redington
Title:
SUNTRUST BANK,
as a Lender
By: /s/ Eduardo Balcazar
-----------------------------------------
Name: Eduardo Balcazar
Title:
UPS CAPITAL CORP.,
as a Lender
By: /s/ John P. Holloway
-----------------------------------------
Name: John P. Holloway
Title:
U.S. BANK NATIONAL ASSOCIATION,
as a Lender
By: /s/ Jeffrey Patton
-----------------------------------------
Name: Jeffrey Patton
Title:
WACHOVIA BANK, NATIONAL ASSOCIATION,
as a Lender
By: /s/ Roanne Disalvatore
-----------------------------------------
Name: Roanne Disalvatore
Title: