EXHIBIT 10.2.2
SECOND AMENDMENT AND WAIVER AGREEMENT
This SECOND AMENDMENT AND WAIVER AGREEMENT (this "Agreement") is
entered into this the 1st day of May, 2003 (the "Closing Date") by and among
Bank of America, N.A. (the "Bank"), Source Interlink Companies, Inc. (the
"Borrower"), formerly known as The Source Information Management Company, and
the undersigned guarantors (the "Guarantors"). Capitalized terms used herein but
not otherwise defined shall have the meanings set forth in the Credit Agreement
(defined below).
RECITALS
A. The Borrower and the Bank are parties to that certain Credit
Agreement dated as of December 22, 1999, as amended by that certain letter
agreement dated October 29, 2001 and that certain Amendment and Waiver Agreement
dated August 30, 2002 (as amended and otherwise modified from time to time, the
"Credit Agreement").
B. Events of Default exist under the Credit Agreement arising from
Borrower's failure to: (i) maintain the minimum EBITDA as set forth in Section
8.1(d) of the Credit Agreement, prior to giving effect to this Agreement, for
the Fiscal Quarter ended January 31, 2003, and (ii) maintain the Funded Debt to
EBITDA Ratio as set forth in Section 8.1(c) of the Credit Agreement, prior to
giving effect to this Agreement, for the Fiscal Quarter ended January 31, 2003
(collectively, the "Existing Defaults").
C. The Borrower has requested that the Bank waive the Existing Defaults
and amend the Credit Agreement in certain respects.
D. The Bank has agreed to do so, but only pursuant to the terms and
conditions set forth herein.
NOW THEREFORE, for good and valuable consideration, the mutual receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Estoppel; Reaffirmation. The Borrower and the Guarantors acknowledge
and agree that, as of April 29, 2003: (a) the outstanding principal balance of
the Revolving Loans was no less than $29,029,399.24, and (b) the outstanding
amount of Letter of Credit obligations was no less than $4,523,973.00, which
amounts constitute valid and subsisting obligations of the Borrower and the
Guarantors to the Bank that are not subject to any credits, offsets, defenses,
claims, counterclaims or adjustments of any kind. The Borrower hereby
acknowledges and affirms its obligations under the Hedging Agreement and the
other Credit Documents. Each of the Guarantors reaffirms its obligations under
its respective guaranty and agrees that the neither the execution nor
performance of this Agreement shall operate to reduce or discharge such
obligations.
2. Limited Waiver. The Bank hereby waives the Existing Defaults;
provided, however, that nothing set forth herein or contemplated hereby shall
modify or affect the obligations of the Borrower to comply with each and every
other duty, term, condition or covenant contained in this Agreement and the
other Credit Documents, as amended hereby, from and after the date hereof.
3. Amendments.
(a) Section 1.1 of the Credit Agreement is amended in the
following respects:
(i) The definition of "Applicable Margin" shall
mean the following for each respective
period:
Period Applicable Margin
------ -----------------
May 1, 2003 - August 1, 2003 4.85% per annum
August 2, 2003 - November 1, 2003 5.35% per annum
November 2, 2003 and thereafter 5.85% per annum
(ii) The definition of "Revolving Loan
Termination Date" is amended by deleting the
reference to "August 1, 2003" set forth
therein and replacing it with a reference to
"February 1, 2004".
(b) The following new definition is hereby added to
Section 1.1 of the Credit Agreement in the
appropriate alphabetical order to read as follows:
"Committed Amount" shall mean the following
for each respective period:
Period Committed Amount
------ ----------------
October 29, 2001 - August 1, 2003
$46,000,000.00 August 2, 2003 - November 1,
2003 $40,000,000.00 November 2, 2003 - the
last Business Day before the Revolving Loan
Termination Date $35,000,000.00
(c) Section 2.1(a) of the Credit Agreement is deleted and
replaced in its entirety with the following:
(a) The Bank hereby establishes, on the
terms and conditions of this
Agreement and in reliance upon the
representations and warranties made
hereunder, a revolving line of
credit in favor of the Borrower
(the "Revolving Line of Credit")
and agrees to make and remake one
or more Revolving Loans to the
Borrower, upon the terms and
conditions set forth in this
Article II, from time to time on
any Business Day during the period
from the date hereof through the
Revolving Loan Termination Date.
The Bank shall have no obligation
to issue Letters of Credit to the
Borrower under the Revolving Line
of Credit or otherwise. The
Borrower may borrow, repay and
reborrow any amount of the
Revolving Line of Credit, provided
that the aggregate principal amount
outstanding at any one time under
the Revolving Line of Credit may
not exceed the lesser of (i) the
Borrowing Base or (ii) the
Committed Amount. The Revolving
Loans shall be evidenced by the
Revolving Credit Note and the
amount of principal owing on the
Revolving Credit Note at any given
time shall be the aggregate amount
of all advances made under the
Revolving Line of Credit, less all
payments of principal
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theretofore paid by the Borrower.
Notwithstanding the foregoing, the
Bank shall have no obligation to
lend funds at any time when a
Default or Event of Default exists,
and the Bank may terminate the
Revolving Line of Credit upon an
Event of Default in accordance with
Article IX hereof.
(d) Section 2.6 of the Credit Agreement is amended by
deleting the reference to "46,000,000" set forth
therein and replacing it with a reference to "the
Committed Amount".
(e) Section 8.1 of the Credit Agreement is amended by
deleting clauses (c) and (d) thereof and replacing
them with the following new clauses (c) and (d):
(c) Funded Debt to EBITDA. Maintain Funded
Debt to EBITDA Ratio, determined as of the end of
each Fiscal Quarter, of not greater than the ratios
set forth below:
Fiscal Quarter Ending Funded Debt to EBITDA Ratio
--------------------- ---------------------------
April 30, 2003 4.25 to 1.0
July 31, 2003 3.5 to 1.0
October 31, 2003 and thereafter 3.0 to 1.0
(d) Minimum EBITDA. Maintain, as of the end
of each Fiscal Quarter for the then most recently
completed period of four (f) consecutive Fiscal
Quarters, EBITDA of not less than the amounts set
forth below:
Four Fiscal Quarters Ending EBITDA
--------------------------- ------
April 30, 2003 $9,000,000
July 31, 2003 $10,000,000
October 31, 2003 and thereafter $12,500,000
4. Fees.
(A) Amendment Fee. In consideration of the Bank's willingness
to enter into this Agreement, the Borrower shall be obligated to pay
the Bank a fee in the amount of $50,000 (the "Amendment Fee"), which
shall be fully earned upon the effectiveness of this Agreement and
shall be due and payable May 1, 2003.
(B) Extension Fees. In consideration of the Bank's willingness
to extend the Revolving Termination Date, the Borrower shall pay
extension fees (the "Extension Fees") to the Bank as follows:
Due Date Extension Fee
-------- -------------
May 1, 2003 $345,000.00
August 1, 2003 $500,000.00
November 1, 2003 $750,000.00
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The Extension Fee due and payable on May 1, 2003 may not be deferred by
the Borrower, notwithstanding the provisions of Section 4(B) of that
certain
Amendment and Waiver Agreement between the Borrower and the
Bank dated August 30, 2002. Each such Extension Fee shall be fully
earned when due and shall not be refundable for any reason whatsoever;
provided that all Extension Fees, if any, due on or after the date that
(x) all of the Obligations are satisfied in full (and the Revolving
Line of Credit terminated and all letters of credit issued thereunder
or pursuant to the Myco Replacement Reimbursement Agreement are
terminated) and (y) all Hedging Agreements are either terminated or
assigned to another financial institution, shall be waived by the Bank.
5. Expenses. Upon demand therefor, the Borrower shall reimburse the
Bank for all reasonable out-of-pocket expenses incurred by the Bank in
connection with the Bank's negotiation, review and closing of this Agreement,
including without limitation the fees and expenses of counsel to the Bank.
6. Consultant. Solely upon the occurrence and duration of an Event of
Default, the Borrower shall reimburse the Bank for all reasonable costs and
expenses associated with any outside consultant (a "Consultant") the Bank may,
at its discretion, engage to assist the Bank in its analysis of the operations
of the Borrower. The Borrower shall cooperate fully with the Consultant, which
cooperation shall include, but shall not be limited to, allowing the Consultant
reasonable access to the Borrower's books, records, plans, personnel and
operations to evaluate the Borrower's business plan and evaluate the Borrower's
business.
7. Additional Reporting. In addition to any reporting requirements
under the Credit Agreement, the Borrower shall deliver to the Bank, with each
monthly Borrowing Base Certificate, (a) a written summary in form acceptable to
the Bank of the status of its efforts to refinance the Obligations, and (b) an
accounts receivable aging for the Borrower and each Guarantor on a consolidated
basis in form acceptable to the Bank.
8. Release. Each of the Borrower and the Guarantors hereby represents
and warrants that it has no claims, counterclaims, offsets, or defenses to any
of the Credit Documents, or to the performance of its obligations thereunder. In
consideration of the Bank's willingness to enter into this Agreement, each of
the Borrower and the Guarantors hereby releases the Bank and its officers,
employees, representatives, counsel, trustees and directors, from any and all
actions, causes of action, claims, demands, damages and liabilities of whatever
kind or nature, in law or in equity, now known or unknown, suspected or
unsuspected to the extent that any of the foregoing arises from any action or
failure to act on or prior to the date hereof.
9. Representations and Warranties of Borrower. The Borrower hereby
represents and warrants to the Bank that:
(a) after giving effect to this Agreement, no Default or Event
of Default exists under the Credit Documents;
(b) after giving effect to this Agreement, the representations
and warranties of the Borrower contained in Article V of the Credit
Agreement are true, accurate and complete in all material respects on
and as of the date hereof to the same extent as though made on and as
of such date except to the extent such representations and warranties
specifically relate to an earlier date; and
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(c) (i) the execution, delivery and performance by the
Borrower of this Agreement are within the Borrower's corporate powers
and have been duly authorized by all necessary corporate action on the
part of the Borrower, (ii) subject to the effect of bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar
laws relating to or affecting creditors' rights (including, without
limitation, preference and fraudulent conveyance or transfer laws),
this Agreement constitutes a legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with its terms
and (iii) neither this Agreement, nor the execution, delivery or
performance by the Borrower hereof (A) violates any law or regulation,
or any order or decree of any court or Governmental Authority, or (B)
conflicts with or results in the breach or termination of, constitutes
a default under or accelerates any performance required by, any
material indenture, mortgage, deed of trust, lease, agreement or other
instrument to which the Borrower is a party or by which the Borrower or
any of its property is bound.
10. Representations and Warranties of Guarantors. Each of the
Guarantors hereby represents and warrants to the Bank that:
(a) it has had the assistance of legal counsel in carefully
reviewing, discussing and considering all terms of this Agreement;
(b) it executes this Agreement as a free and voluntary act,
without any duress, coercion or undue influence exerted by or on behalf
of the Bank or any other party;
(c) it has full and complete authorization and power to
execute this Agreement in the capacities herein stated, and this
Agreement does not violate any law, rule, regulation, contract or
agreement otherwise enforceable by or against it; and
(d) its respective obligations under the Credit Documents are
its binding obligations and that it has no rights of offset.
11. Conditions Precedent to Effectiveness. This Agreement shall be and
become effective as of the date hereof (the "Effective Date") when all of the
following conditions precedent shall have been satisfied:
(a) Executed Counterparts. The Bank shall have received
executed counterparts of this Agreement, duly executed by the Borrower
and the Guarantors.
(b) Payment of Interest. The Borrower shall have paid all
interest accrued through the Effective Date.
(c) Reimbursement of Attorney Fees. The Borrower shall have
reimbursed the Bank for the outstanding fees and expenses of the Bank's
counsel, Xxxxx & Xxx Xxxxx, PLLC in the amount of $18,000.
12. Reference to and Effect on Credit Agreement. Subject to the terms
hereof and except as specifically modified hereby, the Credit Documents shall
remain in full force and effect. The execution, delivery and effectiveness of
this Agreement shall not operate as a waiver of any right, power or remedy of
the Bank under the Credit Documents, or constitute a waiver or amendment of any
provision of the Credit Documents, except as expressly set forth herein.
13. Credit Document. This Agreement and the documents executed in
connection herewith shall be deemed Credit Documents executed pursuant to the
Credit Agreement and the other Credit
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Documents and shall (unless otherwise expressly indicated therein) be construed,
administered and applied in accordance with the terms and provisions of the
Credit Agreement and the other Credit Documents.
14. Further Assurances. The Bank, the Borrower and the Guarantors each
agrees to execute and deliver, or to cause to be executed and delivered, all
such instruments as they may reasonably request to effectuate the intent and
purposes, and to carry out the terms, of this Agreement.
15. CHOICE OF LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF
NORTH CAROLINA.
16. Miscellaneous.
(a) This Agreement shall be binding on and shall inure to the
benefit of the Borrower, the Guarantors, the Bank and their respective
successors and permitted assigns. The terms and provisions of this
Agreement are for the purpose of defining the relative rights and
obligations of the Borrower, the Guarantors and the Bank with respect
to the transactions contemplated hereby and there shall be no third
party beneficiaries of any of the terms and provisions of this
Agreement.
(b) Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
(c) Wherever possible, each provision of this Agreement shall
be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Agreement.
(d) Except as otherwise provided in this Agreement, if any
provision contained in this Agreement is in conflict with, or
inconsistent with, any provision in the Credit Documents, the provision
contained in this Agreement shall govern and control.
(e) This Agreement may be executed in any number of separate
counterparts, each of which shall collectively and separately
constitute one agreement. Delivery of an executed counterpart of this
Agreement by telecopy shall be effective as an original and shall
constitute a representation that an original shall be delivered to the
Bank.
17. Entirety. This Agreement and the other Credit Documents embody the
entire agreement between the parties and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof. This Agreement
and the other Credit Documents represent the final agreement between the parties
and may not be contradicted by evidence of prior, contemporaneous or subsequent
oral agreements of the parties. Any modification to this Agreement must be in
writing, signed by the party to be charged, to be effective.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK - SIGNATURE PAGES TO FOLLOW]
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Accepted and agreed to as of the date first above written.
BORROWER: SOURCE INTERLINK COMPANIES, INC.
F/K/A THE SOURCE INFORMATION
MANAGEMENT COMPANY
By:
--------------------------------
Name: XXXX XXXXXXX
Title: CHIEF FINANCIAL OFFICER
GUARANTORS: THE SOURCE - CANADA CORP.
By:
--------------------------------
Name: XXXX XXXXXXX
Title: CHIEF FINANCIAL OFFICER
SOURCE - HUCK STORE FIXTURE COMPANY
By:
--------------------------------
Name: XXXX XXXXXXX
Title: CHIEF FINANCIAL OFFICER
SOURCE - XXXXXX INDUSTRIES, INC.
By:
Name: XXXX XXXXXXX
Title: CHIEF FINANCIAL OFFICER
SOURCE - U.S. MARKETING SERVICES,
INC.
By:
--------------------------------
Name: XXXX XXXXXXX
Title: CHIEF FINANCIAL OFFICER
SECOND
AMENDMENT AND WAIVER AGREEMENT
SOURCE - MYCO, INC.
By:
--------------------------------
Name: XXXX XXXXXXX
Title: CHIEF FINANCIAL OFFICER
SOURCE - CHESTNUT DISPLAY SYSTEMS,
INC.
By:
--------------------------------
Name: XXXX XXXXXXX
Title: CHIEF FINANCIAL OFFICER
XXXXX WIRE AND METAL PRODUCTS LTD.
By:
--------------------------------
Name: XXXX XXXXXXX
Title: CHIEF FINANCIAL OFFICER
HUCK STORE FIXTURE COMPANY OF
NORTH
CAROLINA
By:
--------------------------------
Name: XXXX XXXXXXX
Title: CHIEF FINANCIAL OFFICER
T.C.E. CORPORATION
By:
--------------------------------
Name: XXXX XXXXXXX
Title: CHIEF FINANCIAL OFFICER
BRAND MANUFACTURING CORP.
By:
Name: XXXX XXXXXXX
Title: CHIEF FINANCIAL OFFICER
VAIL COMPANIES, INC.
By:
--------------------------------
Name: XXXX XXXXXXX
Title: CHIEF FINANCIAL OFFICER
SECOND
AMENDMENT AND WAIVER AGREEMENT
Accepted and agreed to as of the date first above written.
BANK: BANK OF AMERICA, N.A.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
SECOND
AMENDMENT AND WAIVER AGREEMENT
