EXHIBIT 10.44.1
JOINDER AGREEMENT AND FIRST AMENDMENT
TO LOAN AGREEMENT
JOINDER AGREEMENT AND FIRST AMENDMENT TO LOAN AGREEMENT, dated as of
July 1, 2004 (this "Amendment and Agreement"), by and among 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 (as defined below), Primary Source, Inc., a Delaware
corporation ("Primary Source"), and Xxxxx Fargo Foothill, Inc., a California
corporation, as the arranger and administrative agent for the Lenders (as
defined below) (the "Agent") and as the Collateral 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 a Loan Agreement dated as of October
30, 2003 (the "Loan Agreement");
WHEREAS, The Interlink Companies, Inc., a Delaware corporation and a
Guarantor under the Loan Agreement ("Interlink"), formed a wholly-owned
Subsidiary, Primary Source, on April 21, 2004, to, among other things, conduct
certain lines of business currently conducted by International Periodical
Distributors, Inc., a Nevada corporation and a Borrower under the Loan Agreement
("IPD"), and to enter into related lines of business, in each case under the
Loan Parties' Fulfillment/IPD Business Segment;
WHEREAS, the Term Loan in the original principal amount of
$5,000,000, made by the Lenders to the Borrowers pursuant to the Loan Agreement,
has been paid in full;
WHEREAS, pursuant to the request of the Borrowers, the Lenders have
agreed to make a new term loan to the Borrowers in the principal amount of
$10,000,000 (the "New Term Loan"); and
WHEREAS, in connection with the formation of Primary Source and the
making of the New Term Loan, the Administrative Borrower has requested that the
Lenders and the Agent enter into this Amendment and Agreement to, among other
things, (i) join Primary Source as a Borrower, a Loan Party and an Eligible Loan
Party to the Loan Agreement and join Primary Source as a party to certain other
Loan Documents, (ii) reduce the Maximum Revolver Amount from $45,000,000 to
$40,000,000, (iii) establish the terms for the making of the New Term Loan and
for the repayment thereof; (iv) extend the Maturity Date from October 30, 2006
to October 30, 2009, (v) modify certain financial covenants, (vi) modify certain
reporting requirements, (vii) permit the Loan Parties to update certain
schedules to the Loan Agreement and certain other Loan Documents, (viii) provide
for the grant by Primary Source under the Security Agreement and the Pledge
Agreement of a Lien on all of its now owned or hereafter acquired assets, and a
pledge by Interlink under the Pledge Agreement of all of the Stock of Primary
Source, in each case in favor of the Collateral Agent as collateral security for
the Obligations (as defined in such Agreements), and (ix) amend certain other
terms and conditions of the Loan Agreement, in each case subject to the terms
and conditions set forth in this Amendment and Agreement;
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) The definition of the term "Applicable Prepayment
Premium" in Section 1.1 of the Loan Agreement is hereby amended in its entirety
to read as follows:
"'Applicable Prepayment Premium' means, as of any date of
determination, an amount equal to (a) during the period from and after the
date of the execution and delivery of this Agreement up to the date that
is the first anniversary of the Closing Date, 3% times the sum of (i) the
Maximum Revolver Amount, plus (ii) the outstanding principal balance of
the Term Loan on the date immediately prior to the date of determination,
(b) during the period from and including the date that is the first
anniversary of the Closing Date up to the date that is the second
anniversary of the Closing Date, 2% times the sum of (i) the Maximum
Revolver Amount, plus (ii) the outstanding principal balance of the Term
Loan on the date immediately prior to the date of determination, (c)
during the period from and including the date that is the second
anniversary of the Closing Date up to the third anniversary of the Closing
Date, 1% times the sum of (i) the Maximum Revolver Amount, plus (ii) the
outstanding principal balance of the Term Loan on the date immediately
prior to the date of determination, and (d) during the period from and
including the date that is the third anniversary of the Closing Date up to
the Maturity Date, 0.5% times the sum of (i) the Maximum Revolver Amount,
plus (ii) the outstanding principal balance of the Term Loan on the date
immediately prior to the date of determination."
(b) The definition of the term "Appraised Value" in
Section 1.1 of the Loan Agreement is hereby amended by deleting the words "net
forced liquidation value" in the first line of such definition and substituting
therefor the words "net orderly liquidation value".
(c) The definition of the term "Base Rate Term Loan
Margin" in Section 1.1 of the Loan Agreement is hereby amended in its entirety
to read as follows:
"'Base Rate Term Loan Margin' means 2.00 percentage points."
(d) The definition of the term "Change of Control" in
Section 1.1 of the Loan Agreement is hereby amended by inserting at the end of
clause (c) the words: "or
Parent ceases to own, directly or indirectly, and control 100% of the
outstanding Stock of Primary Source, or".
(e) The definition of the term "Compliance Certificate"
in Section 1.1 of the Loan Agreement is hereby amended by deleting the words
"chief financial officer" in the first sentence of such definition and
substituting therefor the words "Authorized Person".
(f) The definition of the term "Eligible Equipment" in
Section 1.1 of the Loan Agreement is hereby amended by deleting the words "net
forced liquidation value" in the second sentence of such definition and
substituting therefor the words "net orderly liquidation value".
(g) The definition of the term "Maximum Revolver Amount"
in Section 1.1 of the Loan Agreement is hereby amended in its entirety to read
as follows:
"'Maximum Revolver Amount' means $40,000,000."
(h) The definition of the term "Net Liquidation
Percentage" in Section 1.1 of the Loan Agreement is hereby amended by deleting
the words "a forced liquidation" in the second line of such definition and
substituting therefor the words "an orderly liquidation".
(i) The definition of the term "Term Loan Amount" in
Section 1.1 of the Loan Agreement is hereby amended in its entirety to read as
follows:
"'Term Loan Amount' means the lesser of (a) $10,000,000, and (b) the
sum of:
(i) 80% times the Net Liquidation Percentage times the Appraised
Value of Eligible Equipment, plus
(ii) 70% of the Appraised Value of Eligible Real Property
Collateral, less the amount, if any, of reserves established
by Agent, for potential environmental remediation costs
relating to such Eligible Real Property Collateral, plus
(iii) 2.5% of the Enterprise Value of the Loan Parties."
2.2. New Definitions.
(a) The definition of the new term "First Amendment
Effective Date" is hereby inserted in Section 1.1 of the Loan Agreement, in
appropriate alphabetical order, to read in its entirety as follows:
"'First Amendment Effective Date' means July 1, 2004."
(b) The definition of the new term "Primary Source" is
hereby inserted in Section 1.1 of the Loan Agreement, in the appropriate
alphabetical order, to read in its entirety as follows:
"'Primary Source' means Primary Source, Inc., a Delaware
corporation."
(c) The definition of the new term "Term Loan Draw
Conditions" is hereby inserted in Section 1.1 of the Loan Agreement, in
appropriate alphabetical order, to read in its entirety as follows:
"'Term Loan Draw Conditions' means all of the following conditions:
(i) the Joinder Agreement and First Amendment to
Loan Agreement, dated as of July 1, 2004, shall have been executed by Agent, the
Lenders and the Loan Parties and shall have become effective in accordance with
its terms;
(ii) Agent shall have received an updated
appraisal with respect to the Eligible Equipment and updated appraisals with
respect to the Eligible Real Property Collateral, each in form and substance
satisfactory to Agent and performed by a qualified independent appraiser
selected by Agent;
(iii) Agent shall have received an irrevocable
written Borrowing request from Administrative Borrower to Agent regarding the
extension of the Term Loan on the Term Loan Draw Date in accordance with Section
2.3(a); and
(iv) each of the statements set forth in clauses
(a) through (d) of Section 3.3 shall be true and correct as of the Term Loan
Draw Date and with respect to the extension of the Term Loan on such date."
(d) The definition of the new term "Term Loan Draw Date"
is hereby inserted in Section 1.1 of the Loan Agreement, in appropriate
alphabetical order, to read in its entirety as follows:
"'Term Loan Draw Date' means a Business Day occurring on or after
the First Amendment Effective Date on which each of the Term Loan Draw
Conditions have been satisfied to the satisfaction of the Agent and the Term
Loan is made."
2.3. Term Loan. Section 2.2 of the Loan Agreement is hereby
amended in its entirety to read as follows:
"2.2 Term Loan. Subject to the terms and conditions of this
Agreement, on the Term Loan Draw Date each Lender with a Term Loan Commitment
agrees (severally, not jointly or jointly and severally) to make term loans
(collectively, the "Term Loan") to Borrowers in an amount equal to such Lender's
Pro Rata Share of the Term Loan Amount. The Term Loan shall be repaid in
consecutive quarterly installments, each in the amount as set forth below
opposite the applicable period:
Applicable Period Applicable Quarterly Payment Amount
----------------- -----------------------------------
For each calendar quarter ending on or prior to
September 30, 2005 $250,000
Applicable Period Applicable Quarterly Payment Amount
----------------- -----------------------------------
For each calendar quarter in the 12 month period
ending on September 30, 2006 $350,000
For each calendar quarter in the 12 month period
ending on September 30, 2007 $500,000
For each calendar quarter in the 12 month period
ending on September 30, 2008 $650,000
For each calendar quarter ending after September
30, 2008 $750,000
Each such payment shall be due and payable, on the first day of each calendar
quarter, commencing on October 1, 2004. The outstanding unpaid principal balance
and all accrued and unpaid interest under the Term Loan shall be due and payable
on the date of termination of this Agreement, whether by its terms, by
prepayment, or by acceleration. All amounts outstanding under the Term Loan
shall constitute Obligations. Borrowers may, at any time, prepay all or a
portion of the Term Loan, subject to the payment of the Applicable Prepayment
Premium to the extent required by Section 3.6. Each prepayment shall be applied
against the remaining installments of principal due on the Term Loan in the
inverse order of maturity."
2.4. Mandatory Prepayment. Section 2.4(c)(iii) of the Loan
Agreement is hereby amended in its entirety to read as follows:
"(iii) If at any time the outstanding principal amount of the Term
Loan exceeds the Term Loan Amount, Borrowers shall immediately pay to Agent an
amount equal to such excess, to be applied to the principal installments of the
Term Loan in the inverse order of maturity. Agent shall have the right to have
the Eligible Real Property Collateral and the Eligible Equipment reappraised,
and the Enterprise Value of the Loan Parties reevaluated, by a qualified
appraisal or valuation company (as applicable) selected by Agent in its
Permitted Discretion from time to time after the Closing Date for the purposes
of the definition of "Term Loan Amount" and this Section 2.4(c)(iii); provided,
that Borrowers shall only be obligated to pay for fees, charges and expenses
incurred in connection with such appraisals of the Eligible Real Property
Collateral and Eligible Equipment and such reevaluation of the Enterprise Value
of the Loan Parties, to the extent provided in Section 2.11(c)."
2.5. Unused Line Fee. Section 2.11(a) of the Loan Agreement is
hereby amended in its entirety to read as follows:
"(a) Unused Line Fee. On the first day of each month during the term
of this Agreement, an unused line fee in the amount equal to the percentage per
annum set forth below opposite the applicable period, times the result of (i)
$30,000,000, less (ii) the sum of (A) the average Daily Balance of Advances that
were outstanding during the immediately preceding
month, plus (B) the average Daily Balance of the Letter of Credit Usage during
the immediately preceding month; provided, that, notwithstanding the foregoing,
if the average daily Availability during such preceding month exceeds
$30,000,000 (as reasonably determined by the Agent), the unused line fee shall
be in the amount equal to the percentage per annum set forth below opposite the
applicable period, times the result of (i) the Maximum Revolver Amount, less
(ii) the sum of (A) the average Daily Balance of Advances that were outstanding
during such immediately preceding month, plus (B) the average Daily Balance of
the Letter of Credit Usage during such immediately preceding month:
Applicable Period Applicable Percentage Per Annum
----------------- -------------------------------
For each calendar month ending on or prior to
December 31, 2006 0.25%
For each calendar month in the calendar year 2007 0.20%
For each calendar month in the calendar year 2008 0.17%
For each calendar month ending after December 31,
2008 0.15% "
2.6. Audit, Appraisal, and Valuation Charges. Section 2.11(c)
of the Loan Agreement is amended as follows:
(i) Clause (iv) of the proviso in such subsection
is amended in its entirety to read as follows:
"(iv) one determination of the Enterprise Value of the Loan Parties
in any Fiscal Year, but no determinations of the Enterprise Value so long as the
aggregate outstanding principal amount of the Advances, Letters of Credit and
the Term Loan is less than or equal to $20,000,000."
2.7. Term. Section 3.4 of the Loan Agreement is hereby amended
by changing the Maturity Date from "October 30, 2006" to "October 31, 2009".
2.8. Collateral Reporting. Section 6.2 of the Loan Agreement
is hereby amended as follows:
(i) by inserting after the word "Weekly", in the
column opposite clauses (b) through (e) a parenthetical to read as follows:
"(or Monthly, so long as (i) the Revolver Usage is less than or
equal to $10,000,000 and (ii) no Event of Default has occurred and is
continuing)",
(ii) by deleting the parenthetical after the word
"Monthly", in the column opposite clauses (f) through (m), and substituting
therefor a new parenthetical to read as follows:
"(not later than the 15th day of each month, and provided that such
reports shall be provided weekly at any time that (i) the Revolver Usage exceeds
$10,000,000 or (ii) an Event of Default shall have occurred and be continuing)",
and
(iii) by deleting clause (o) in its entirety and
substituting therefor the words "(o) [Intentionally Omitted]".
2.9. Fixed Charge Coverage Ratio. Section 7.18(a)(ii) of the
Loan Agreement is hereby amended in its entirety to read as follows:
"(ii) Fixed Charge Coverage Ratio. A Fixed Charge Coverage Ratio,
measured on a month-end basis for the applicable period set forth below, of at
least the required amount set forth below opposite such period:
Applicable Period Applicable Ratio
----------------- ----------------
For any period after July 1, 2004 4:1 "
2.10. Senior Debt Ratio. Section 7.18(b)(i) of the Loan
Agreement is hereby amended by deleting clause (i) in its entirety and
substituting therefor the words "(i) [Intentionally Omitted]"
2.11. WFF Debt Ratio. Section 7.18(b)(ii) of the Loan
Agreement is hereby amended in its entirety to read as follows:
"(ii) WFF Debt Ratio. The WFF Debt Ratio at any time during the
applicable period set forth below to exceed the applicable ratio set forth below
opposite such period:
Applicable Period Applicable Ratio
----------------- ----------------
At any time after July 1, 2004 2:1 "
2.12. Capital Expenditures. Section 7.18(c)(i) of the Loan
Agreement is hereby amended in its entirety to read as follows:
"(i) Capital Expenditures. Capital expenditures (excluding
expenditures made for Permitted Acquisitions) in any Fiscal Year in excess of
the amount set forth in the following table for the applicable period:
Fiscal Year 2006 and each
Fiscal Year 2005 Fiscal Year Thereafter
---------------- ----------------------
$3,800,000 $3,400,000 "
2.13. Schedules.
(a) Commitments. Schedule C-1 to the Loan Agreement is
hereby amended in its entirety to read as follows:
REVOLVER TERM LOAN TOTAL
LENDER COMMITMENT COMMITMENT COMMITMENT
------ ---------- ---------- ----------
XXXXX FARGO
FOOTHILL, INC. $40,000,000 $10,000,000 $50,000,000
ALL LENDERS $40,000,000 $10,000,000 $50,000,000
On and after the Amendment Effective Date (as defined in Section 9 hereof), all
references in any Loan Document to Schedule C-1 to the Loan Agreement shall mean
such Schedule as amended hereby.
(b) Eligible Loan Parties. Schedule E-2 to the Loan
Agreement is hereby amended by adding Primary Source to such Schedule. On and
after the Amendment Effective Date, all references in any Loan Document to
Schedule E-2 to the Loan Agreement shall mean such Schedule as amended hereby.
(c) Guarantors. Schedule G-1 to the Loan Agreement is
hereby amended by deleting the reference to Universal Circulation Services, Inc.
in such Schedule. On and after the Amendment Effective Date, all references in
any Loan Document to Schedule G-1 to the Loan Agreement shall mean such Schedule
as amended hereby.
(d) Subsidiaries and Business Segments. Schedule S-1 to
the Loan Agreement is hereby amended by (i) deleting each reference to Universal
Circulation Services, Inc. in such Schedule and (ii) inserting Primary Source
under Part I-C Fulfillment/IPD. On and after the Amendment Effective Date, all
references in any Loan Document to Schedule S-1 to the Loan Agreement shall mean
such Schedule as amended hereby.
(e) States of Organization. Schedule 5.7(a) to the Loan
Agreement is hereby amended by (i) deleting the reference to Universal
Circulation Services, Inc. in such Schedule and (ii) inserting the following
information for Primary Source:
Corporate Name Jurisdiction of Organization
-------------- ----------------------------
Primary Source, Inc. Delaware
On and after the Amendment Effective Date, all references in any Loan Document
to Schedule 5.7(a) to the Loan Agreement shall mean such Schedule as amended
hereby.
(f) XXXXX. Schedule 5.7(c) to the Loan Agreement is
hereby amended by (i) deleting the reference to Universal Circulation Services,
Inc. in such Schedule and (ii) inserting the following information for Primary
Source:
Corporate Name FEIN
-------------- ----
Primary Source, Inc. 00-0000000
On and after the Amendment Effective Date, all references in any Loan Document
to Schedule 5.7(c) to the Loan Agreement shall mean such Schedule as amended
hereby.
(g) Capitalization of Loan Parties. Schedule 5.8(b) to
the Loan Agreement is hereby amended by (i) deleting the reference to Universal
Circulation Services, Inc. in such Schedule and (ii) inserting the following
information for Primary Source:
Company Owner of
Name and Number of Number of Number of Issued and
Class of Authorized Issued and Treasury Outstanding Certificate
Stock/Equity Shares Outstanding Shares Shares No.
------------ ------ ----------- ------ ------ ---
Primary Source, Inc. 3,000 1,000 0 The Interlink 1
Companies, Inc.
(common $0.10 par
value)
On and after the Amendment Effective Date, all references in any Loan Document
to Schedule 5.8(b) to the Loan Agreement shall mean such Schedule as amended
hereby.
(h) Deposit Accounts and Securities Accounts. Schedule
5.18 to the Loan Agreement is hereby amended by (i) deleting the account numbers
000-000-000 and 000-000-000 at HSBC Bank USA, with its office at Boro Park
Office, 0000 00xx Xxxxxx, Xxxxxxxx, XX 00000, and the account number
2000370037125 at Wachovia Bank, National Association, with its office at X.X.
Xxx 000000, Xxxxxxxxx, XX 00000 in such Schedule and (ii) inserting the
following account information:
Wachovia Bank, National Association 2079940015838
0000 Xxxxxx Xxxxxx, 0xx Xxxxx, XX0000 2079940016031
Xxxx Xxxxx, XX 00000
Wachovia Bank, National Association
P.O. Box 563966 2000021336188
Xxxxxxxxx, XX 00000
On and after the Amendment Effective Date, all references in any Loan Document
to Schedule 5.18 to the Loan Agreement shall mean such Schedule as amended
hereby.
2.14. Exhibits.
(a) Form of Compliance Certificate. Exhibit C-1 to the
Loan Agreement is hereby amended by deleting the words "chief financial officer"
in the second paragraph and the signature block of such Exhibit and substituting
therefor the words "Authorized Person". On and after the Amendment Effective
Date, all references in any Loan Document to Exhibit C-1 to the Loan Agreement
shall mean such Exhibit as amended hereby.
3. Joinder of Primary Source to the Loan Agreement. By its execution
of this Amendment and Agreement, Primary Source hereby (i) confirms that the
representations and warranties contained in Section 5 of the Loan Agreement
(after giving effect to the amendments to the Loan Agreement set forth herein)
are true and correct as to it in all material respects on and as of the
Amendment Effective Date, (ii) agrees that from and after the Amendment
Effective Date it shall be a Borrower under the Loan Agreement as if it were a
signatory thereto on the Closing Date and shall be bound by all of the
provisions thereof, and without limiting the generality of the foregoing, hereby
acknowledges and confirms that it shall be jointly and severally liable with the
other Borrowers for all of the Obligations whether now existing or hereinafter
incurred or arising, and (iii) agrees that it shall comply with and be subject
to all of the terms, conditions, covenants, agreements and obligations set forth
in the Loan Agreement. Primary Source agrees that each reference to a
"Borrower", the "Borrowers", a "Loan Party" or the "Loan Parties" in the Loan
Agreement shall include Primary Source. Each of the parties hereto confirms and
agrees to the foregoing, and the Borrowers acknowledge and confirm their joint
and several liability with Primary Source for the Obligations. Primary Source
acknowledges that it has received a copy of the Loan Agreement and the other
Loan Documents, together with all Schedules and Exhibits thereto, and it has
read and understands the terms thereof.
4. Joinder of Primary Source to the Security Agreement and
Amendment.
(a) Joinder. By its execution of this Amendment and
Agreement, Primary Source hereby (i) confirms that the representations and
warranties contained in Section 4 of the Security Agreement are true and correct
as to it in all material respects on and as of the Amendment Effective Date
(after giving effect to the amendments to the Schedules thereto set forth
below), (ii) agrees that from and after the Amendment Effective Date it shall be
a Grantor (as defined in the Security Agreement) under the Security Agreement as
if it were a signatory thereto on the Closing Date and shall be bound by all of
the provisions thereof, and (iii) agrees that it shall comply with and be
subject to all of the terms, conditions, covenants, agreements and obligations
set forth therein. In furtherance of the terms and provisions of the Security
Agreement, Primary Source hereby grants to the Collateral Agent, for the benefit
of the Lenders and the Term Loan B Lenders, a continuing lien on and security
interest in all of its right, title, and interest in all currently existing and
hereafter acquired or arising Collateral (as defined in the Security Agreement)
in order to secure prompt repayment of any and all of the Obligations (as
defined in the Security Agreement) in accordance with the terms and conditions
of the Loan Documents and the Term Loan B Loan Documents and in order to secure
prompt performance by Primary Source and the other Grantors of each of their
covenants and duties under the Loan Documents and the Term Loan B Loan
Documents. The Collateral Agent's Liens on the Collateral of Primary Source
shall attach to all such Collateral without further act on the part of
the Collateral Agent or Primary Source. Primary Source hereby agrees that each
reference to a "Grantor" or the "Grantors" in the Security Agreement shall
include Primary Source. Each of the parties hereto confirms and agrees to the
foregoing. Primary Source acknowledges that it has received a copy of the
Security Agreement, together with all Schedules and Exhibits thereto, and it has
read and understands the terms thereof.
(b) Amendment. Each of the parties agrees that the
Schedules to the Security Agreement shall be amended as follows:
(i) Legal Names; Organizational Identification
Numbers; States or Jurisdictions of Organization. Schedule I to the Security
Agreement is hereby amended by (i) deleting the reference to Universal
Circulation Services, Inc. in such Schedule and (ii) inserting the following
information for Primary Source:
ORGANIZATIONAL STATES OR
IDENTIFICATION JURISDICTIONS OF
LEGAL NAMES NUMBERS ORGANIZATION
----------- ------- ------------
Primary Source, Inc. 3793407 Delaware
On and after the Amendment Effective Date, all references in any Loan Document
to Schedule I to the Security Agreement shall mean such Schedule as amended
hereby.
(ii) Deposit Accounts, Securities Accounts and
Commodities Accounts. Schedule IV to the Security Agreement is hereby amended by
(i) deleting the account numbers 000-000-000 and 000-000-000 at HSBC Bank USA,
with its office at Boro Park Office, 0000 00xx Xxxxxx, Xxxxxxxx, XX 00000, and
the account number 2000370037125 at Wachovia Bank, National Association, with
its office at X.X. Xxx 000000, Xxxxxxxxx, XX 00000 in such Schedule and (ii)
inserting the following account information:
Wachovia Bank, National Association 2079940015838
0000 Xxxxxx Xxxxxx, 0xx Xxxxx, XX0000 2079940016031
Xxxx Xxxxx, XX 00000
Wachovia Bank, National Association
P.O. Box 563966 2000021336188
Xxxxxxxxx, XX 00000
On and after the Amendment Effective Date, all references in any Loan Document
to Schedule IV to the Security Agreement shall mean such Schedule as amended
hereby.
(iii) UCC-1 Financing Statements. Schedule V to
the Security Agreement is hereby amended by (i) deleting each reference to
Universal Circulation Services, Inc. in such Schedule and (ii) inserting the
following information for Primary Source:
Secretary of State or Other
Name of Debtor Applicable Jurisdiction
-------------- -----------------------
Primary Source, Inc. Delaware
On and after the Amendment Effective Date, all references in any Loan Document
to Schedule V to the Security Agreement shall mean such Schedule as amended
hereby.
5. Joinder of Primary Source to the Pledge Agreement and Amendment.
(a) Joinder. By its execution of this Amendment and
Agreement, Primary Source hereby (i) confirms that the representations and
warranties contained in Section 5 of the Pledge Agreement (after giving effect
to the amendments to the Schedules thereto set forth below), are true and
correct as to it in all material respects on and as of the Amendment Effective
Date, (ii) agrees that from and after the Amendment Effective Date it shall be a
Pledgor (as defined in the Pledge Agreement) under the Pledge Agreement as if it
were a signatory thereto on the Closing Date and shall be bound by all of the
provisions thereof, and (iii) agrees that it shall comply with and be subject to
all of the terms, conditions, covenants, agreements and obligations set forth
therein. In furtherance of the terms and provisions of the Pledge Agreement,
Primary Source hereby pledges and assigns to the Collateral Agent, and grants to
the Collateral Agent, for the benefit of the Lenders and the Term Loan B
Lenders, a continuing lien on and security interest in all of its right, title,
and interest in all currently existing and hereafter acquired or arising Pledged
Collateral (as defined in the Pledge Agreement) in order to secure prompt
repayment of any and all of the Obligations (as defined in the Pledge Agreement)
in accordance with the terms and conditions of the Loan Documents and the Term
Loan B Loan Documents and in order to secure prompt performance by Primary
Source and the other Pledgors of each of their covenants and duties under the
Loan Documents and the Term Loan B Loan Documents. The Collateral Agent's Liens
on the Pledged Collateral of Primary Source shall attach to all such Pledged
Collateral without further act on the part of the Collateral Agent or Primary
Source. Primary Source hereby agrees that each reference to a "Pledgor" or the
"Pledgors" in the Pledge Agreement shall include Primary Source. Each of the
parties hereto confirms and agrees to the foregoing. Primary Source acknowledges
that it has received a copy of the Pledge Agreement, together with all Schedules
and Annexes thereto, and it has read and understands the terms thereof.
(b) Each of the parties agrees that the Schedules to the
Pledge Agreement shall be amended as follows:
Pledged Shares. Schedule II to the Pledge Agreement is hereby
amended by (i) deleting each reference to Universal Circulation Services, Inc.
in such Schedule and (ii) inserting the following information for Primary
Source:
Name of Percentage of
Pledged Number of Outstanding Certificate
Pledgor Issuer Shares Shares Class Number
------- ------ ------ ------ ----- ------
The Interlink Primary Source, 1,000 100% Common, $0.10 par 1
Companies, Inc. Inc. value
On and after the Amendment Effective Date, all references in any Loan Document
to Schedule II to the Pledge Agreement shall mean such Schedule as amended
hereby.
6. Joinder of Primary Source to the Contribution Agreement. By its
execution of this Amendment and Agreement, Primary Source hereby (i) confirms
that the representations and warranties contained in Section 4 of the
Contribution Agreement are true and correct as to it in all material respects on
and as of the Amendment Effective Date, (ii) agrees that from and after the
Amendment Effective Date it shall be an Obligor under the Contribution Agreement
as if it were a signatory thereto and shall be bound by all of the provisions
thereof, and (iii) agrees that it shall comply with and be subject to all the
terms, conditions, covenants, agreements and obligations set forth therein.
Primary Source hereby agrees that each reference to an "Obligor" or the
"Obligors" in the Contribution Agreement shall include Primary Source. Each of
the parties hereto consents to the foregoing. Primary Source acknowledges that
it has received a copy of the Contribution Agreement and that it has read and
understands the terms thereof.
7. Joinder of Primary Source to the Intercompany Subordination
Agreement. By its execution of this Amendment and Agreement, Primary Source
hereby (i) agrees that from and after the Amendment Effective Date it shall be
an Obligor under the Intercompany Subordination Agreement as if it were a
signatory thereto and shall be bound by all of the provisions thereof, and (ii)
agrees that it shall comply with and be subject to all the terms, conditions,
covenants, agreements and obligations set forth therein. Primary Source hereby
agrees that each reference to an "Obligor" or the "Obligors" in the Intercompany
Subordination Agreement shall include Primary Source. Each of the parties hereto
consents to the foregoing. Primary Source acknowledges that it has received a
copy of the Intercompany Subordination Agreement and that it has read and
understands the terms thereof.
8. Acknowledgment of Primary Source to the Intercreditor and
Collateral Agency Agreement. By its execution of this Amendment and Agreement,
Primary Source hereby acknowledges and agrees to the terms and provisions of the
Intercreditor and Collateral Agency Agreement and agrees to comply therewith.
Primary Source acknowledges that it has received a copy of the Intercreditor and
Collateral Agency Agreement and that it has read and understands the terms
thereof.
9. Conditions. This Amendment and Agreement shall be effective as of
July 1, 2004 (the "Amendment Effective Date"), subject to the fulfillment, in a
manner satisfactory to the Agent, of each of the following conditions:
(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 and Agreement 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 and Agreement
that bear the signatures of each Loan Party, each Lender and
the Agent;
(ii) a UCC Filing Authorization Letter, duly
executed by Primary Source;
(iii) evidence of the filing of UCC-1 financing
statements by the Collateral Agent against Primary Source
reflecting the security interests granted by Primary Source to
the Collateral Agent, for the benefit of the Lenders and the
Term Loan B Lenders, in all the assets and properties of
Primary Source;
(iv) certificates evidencing all of the issued and
outstanding Capital Stock of Primary Source, together with a
Stock power undated and endorsed in blank, executed by
Interlink;
(v) a certificate from the Assistant Secretary of
Primary Source certifying (A) the resolutions of Primary
Source's Board of Directors authorizing its execution,
delivery, and performance of this Amendment and Agreement and
the other Loan Documents to which Primary Source is a party
and authorizing specific officers of Primary Source to execute
the same, and (B) that attached thereto is a true, correct and
complete copy of Primary Source's Governing Documents as of
the Amendment Effective Date;
(vi) a certificate from the Assistant Secretary of
Primary Source certifying the names and true signatures of the
representatives of Primary Source authorized to sign this
Amendment and Agreement and the other documents to be executed
and delivered by Primary Source in connection herewith,
together with evidence of the incumbency of such authorized
officers;
(vii) a certificate of the appropriate official(s)
of the state of organization and each state of foreign
qualification of Primary Source certifying as to the
certificate of incorporation and the subsistence and good
standing of, and the payment of taxes by, Primary Source in
such states;
(viii) an opinion of Cohen& Xxxxxxx, P.C., counsel
to the Administrative Borrower and Primary Source, as to such
matters as the Agent may reasonably request; and
(ix) an opinion of Xxxxxxx Xxxxx, general counsel
to the Loan Parties, as to such matters as the Agent may
reasonably request.
(d) UCC Searches. The Agent shall have received UCC
searches for Primary Source and updated UCC searches for IPD.
(e) Proceedings. All proceedings in connection with the
transactions contemplated by this Amendment and Agreement, 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.
(f) Lender Group Expenses. Borrowers shall have paid all
Lender Group Expenses incurred in connection with the transactions evidenced by
this Amendment and Agreement.
10. Agreements. The Loan Parties hereby agree that, within 14 days
of the Amendment Effective Date, the Loan Parties shall deliver to Agent (i) an
Acknowledgement, Waiver and Consent, in form and substance satisfactory to the
Agent, executed by the Term Loan B Agent, pursuant to which the Term Loan B
Agent (on behalf of itself and the Term Loan B Lenders) shall consent to the
amendments and other transactions contemplated by this Amendment and Agreement
and waive any Term Loan B Event of Default that would otherwise occur as a
result thereof, and an amendment to the Intercreditor and Collateral Agency
Agreement, in form and substance satisfactory to the Agent, executed by the
Agent and the Term Loan B Agent and acknowledged by the Loan Parties, or (ii)
satisfactory evidence that the Term Loan B Loan Documents have been terminated
and all of the Loan Parties' obligations under the Term Loan B Loan Documents
have been paid in full.
11. 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 and Agreement 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 Agreement 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 Agreement and the performance by the Loan Parties
of the Loan Documents, as amended by this Amendment and Agreement, (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 Agreement and the performance of the Loan
Documents, as amended by this Amendment and Agreement, 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 and as otherwise contemplated by Section 10(i) hereof, the
execution, delivery, and performance by the Loan Parties of this Amendment and
Agreement and the performance of the Loan Documents, as amended by this
Amendment and Agreement, 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 and Agreement, 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.
12. 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 and Agreement, 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.
13. 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 Agreement, 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
and Agreement. Except as expressly provided herein, the execution, delivery and
effectiveness of this Amendment and Agreement 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 and Agreement 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 and
Agreement by telefacsimile shall be equally as effective as delivery of an
original executed counterpart of this Amendment and Agreement. Any party
delivering an executed counterpart of this Amendment and Agreement by
telefacsimile also shall deliver an original executed counterpart of this
Amendment and Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment and Agreement.
(c) Headings. Section headings herein are included for
convenience of reference only and shall not constitute a part of this Amendment
and Agreement for any other purpose.
(d) Governing Law. This Amendment and Agreement 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 Agreement and any
other related agreements, instruments and documents.
(f) Amendment and Agreement as Loan Document. Each Loan
Party hereby acknowledges and agrees that this Amendment and Agreement
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 and Agreement
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 and Agreement 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
and Agreement to be executed and delivered as of the date first above written.
BORROWERS:
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-XXXXXX 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
XXXXX X. XXXXX, INC.
a New York corporation
By: /s/ Xxxx Xxxxxxx
------------------------------------
Name: Xxxx Xxxxxxx
Title: Chief Financial Officer
PRIMARY SOURCE, INC.,
a Delaware corporation
By: /s/ Xxxx Xxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxx
Title: Chief Financial Officer
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
By: /s/ Xxxx Xxxxxxx
------------------------------------
Name: Xxxx Xxxxxxx
Title: Chief Financial Officer
AGENT, COLLATERAL AGENT AND LENDER:
XXXXX FARGO FOOTHILL, INC.,
a California corporation
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
