Exhibit 10.1
AMENDMENT NUMBER FIVE TO LOAN AND SECURITY AGREEMENT
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This Amendment Number Five to Loan and Security Agreement (this
"Amendment") is entered into as of November 16, 2005, by and among, on the one
hand, ADVANCED MARKETING SERVICES, INC., a Delaware corporation ("Parent"),
PUBLISHERS GROUP WEST INCORPORATED, a California corporation ("PGWI"), and
PUBLISHERS GROUP INCORPORATED, a California corporation ("PGI" and collectively,
jointly and severally, with PGWI, "Borrowers"), and, on the other hand, the
lenders identified on the signature pages to the Agreement (as defined below)
(collectively, "Lenders"), and XXXXX FARGO FOOTHILL, INC., a California
corporation, as the arranger and administrative agent for the Lenders (in such
capacity, "Agent"), in light of the following:
A. Borrowers and the Lender Group have previously entered into that
certain Loan and Security Agreement, dated as of April 27, 2004 (as
amended and modified, from time to time, the "Agreement").
B. Borrowers and the Lender Group desire to further amend the Agreement
as provided for and on the conditions herein.
NOW, THEREFORE, Borrowers and the Lender Group hereby amend and
supplement the Agreement as follows:
1. DEFINITIONS. All initially capitalized terms used in this Amendment
shall have the meanings given to them in the Agreement unless
specifically defined herein.
2. AMENDMENTS.
(a) Section 2.11(c) of the Agreement is hereby amended and restated
in its entirety as follows:
"(c) Audit, Appraisal, and Valuation
Charges; Annual Appraisals. Audit, appraisal, and valuation fees and
charges as follows (i) a fee of $850 per day, per auditor, plus
out-of-pocket expenses for each collateral audit of a Borrower performed by
personnel employed by Agent, which collateral audits may be performed as
frequently as Agent deems necessary, provided, however that so long as no
Event of Default shall have occurred and shall be continuing, Borrowers
shall not be obligated to reimburse Agent for more than 3 collateral audits
during any calendar year (with additional collateral audits at the Agent's
expense), (ii) if implemented, a fee of $850 per day, per applicable
individual, plus out of pocket expenses for the establishment of electronic
collateral reporting systems, (iii) a fee of $1,500 per day per appraiser,
plus out-of-pocket expenses, for each appraisal of the Collateral, or any
portion thereof, performed by personnel employed by Agent, and (iv) the
reasonable charges paid or incurred by Agent if it elects to employ the
services of one or more third Persons to perform financial audits of
Borrowers or their Subsidiaries, to establish electronic collateral
reporting systems, to appraise the Collateral, or any portion thereof, or
to assess Borrowers' and their Subsidiaries' business valuation. Agent
shall have the right to have the Inventory reappraised by a qualified
appraisal company selected by Agent: (1) except as provided in clauses (2)
and (3) below, once during any year following the Closing Date for the
purpose of redetermining the Net Liquidation Percentage of the Inventory
portion of the Collateral and, as a result, redetermining the Borrowing
Base, (2) at any time following an appraisal, the results of which are not
reasonably satisfactory to Agent, and (3) at any time following the
occurrence of an Event of Default which is continuing, provided, however
that so long as no Event of Default shall have occurred and shall be
continuing, Borrowers shall not be obligated to reimburse Agent for more
than 1 reappraisal during any calendar year (with additional reappraisals
at the Agent's expense)."
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(b) Section 7.18(a) of the Agreement is hereby amended and restated
in its entirety as follows:
7.18 Financial Covenants.
(a) Fail to maintain or achieve:
(i) Minimum EBITDA. EBITDA, measured on a
quarterly basis, of at least the required amount set forth in the
following table for the applicable period set forth opposite thereto:
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Applicable Amount Applicable Period
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$2,500,000 For the 9 month period ending
December 31, 2005
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$1,500,000 For the 12 month period ending
March 31, 2006
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The "Applicable Amount(s)" for such future periods For the trailing 12 month period ending on the
periods shall be determined by Agent in its sole last day of each fiscal quarter of Administrative
discretion based upon, among other things, the Borrower thereafter.
Projections to be delivered to Agent (pursuant to
Section 6.3(c) of the Agreement) prior to the
commencement of Parent's 2007 fiscal year.
Within 30 days of Agent's receipt of such
Projections, Agent shall advise Borrowers in
writing of such future "Applicable Amount(s)".
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3. LIMITED WAIVER. It has come to the Lender Group's attention that
Borrowers have failed to satisfy the Minimum EBITDA covenant set forth
in Section 7.18(a)(i) of the Agreement for the period ended September
30, 2005. Such failure constitutes an Event of Default under the
Agreement (the "EBITDA Default"). Borrowers have requested, and the
Lender Group has agreed, to waive the EBITDA Default for the
prescribed period subject to the satisfaction of each of the
conditions set forth in Section 7 of this Amendment. The foregoing
waiver shall be limited precisely as written and shall not be deemed
to be (a) an amendment, consent, waiver, or modification of any other
term or condition of the Agreement, or (b) prejudice any right or
remedy which the Agent or the Lenders may now or in the future have
under or in connection with the Agreement.
4. EXTENSION. Pursuant to Section 6.3(d) of the Agreement, Borrowers are
required to deliver to Agent, with copies to each Lender, certain
consolidated financial statements of Parent and its Subsidiaries for
each fiscal year, audited by independent certified public accountants.
Borrowers hereby request and Agent and the Lenders hereby agree to
extend to December 31, 2005 the date that the Borrowers are required
to deliver such financial statements for Parent's fiscal year ending
March 31, 2004.
5. REPRESENTATIONS AND WARRANTIES. Borrowers hereby affirm to the Lender
Group all of Borrowers' representations and warranties set forth in
the Agreement are true, complete and accurate in all respects as of
the date hereof.
6. NO DEFAULTS. Borrowers hereby affirm to the Lender Group that, other
than the EBITDA Default, no Event of Default has occurred and is
continuing as of the date hereof.
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7. CONDITIONS PRECEDENT. The effectiveness of this Amendment is expressly
conditioned upon: (i) the receipt by Agent of a fully executed copy of
this Amendment; and (ii) receipt by Agent of an amendment fee in the
aggregate amount of $15,000, which fee may be charged to Borrowers'
Loan Account pursuant to the terms of Section 2.6(d) of the Agreement.
8. COSTS AND EXPENSES. Borrowers shall pay to Agent all of the Lender
Group's out-of-pocket costs and expenses (including, without
limitation, the fees and expenses of its counsel, which counsel may
include any local counsel deemed necessary, search fees, filing and
recording fees, documentation fees, appraisal fees, travel expenses,
and other fees) arising in connection with the preparation, execution,
and delivery of this Amendment and all related documents.
9. LIMITED EFFECT. In the event of a conflict between the terms and
provisions of this Amendment and the terms and provisions of the
Agreement, the terms and provisions of this Amendment shall govern. In
all other respects, the Agreement, as amended and supplemented hereby,
shall remain in full force and effect.
10. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any
number of counterparts and by different parties on separate
counterparts, each of which when so executed and delivered shall be
deemed to be an original. All such counterparts, taken together, shall
constitute but one and the same Amendment. This Amendment shall become
effective upon the execution of a counterpart of this Amendment by
each of the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first set forth above.
ADVANCED MARKETING SERVICES, INC.,
a Delaware corporation
By: /s/ Xxxx Xxxxx
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Executive Vice President and
Title: Chief Financial Officer
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PUBLISHERS GROUP WEST INCORPORATED, a California corporation
By: /s/ Xxxxxxx X. Xxxxxx
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Title: President
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PUBLISHERS GROUP INCORPORATED,
a California corporation
By: /s/ Xxxx Xxxxx
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Title: Chief Financial Officer
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Amendment Number Five to Loan and Security Agreement
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XXXXX FARGO FOOTHILL, INC.,
a California corporation, as Agent and a Lender
By: /s/ Xxxxxx Xxxxxxx
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Title: Vice President
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Amendment Number Five to Loan and Security Agreement
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MARATHON STRUCTURED FINANCE FUND L.P.,
a Lender
By: /s/ Xxxx Xxxxx
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Title: Director
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Amendment Number Five to Loan and Security Agreement
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