EXHIBIT 10.43
CONSENT AND SECOND AMENDMENT TO CREDIT AGREEMENT
THIS CONSENT AND SECOND AMENDMENT to Credit Agreement (the
"Amendment") is made as of this 17th day of January, 1997, by and among
Sportmart, Inc. ("Borrower"), BT Commercial Corporation, as agent (in
its capacity as agent, "Agent") and BT Commercial Corporation (in its
capacity as lender, "BTCC"), Sanwa Business Credit Corporation
( " S a n wa"), LaSalle National Bank ("LaSalle"), Fleet Capital
Corporation ("Fleet"), ▇▇▇▇▇▇ Financial, Inc. ("▇▇▇▇▇▇"), National
Bank of Canada ("NBC"), American National Bank and Trust Company of
Chicago ("American National") and IBJ ▇▇▇▇▇▇▇▇ Bank and Trust Company
("IBJ"), as Lenders (BTCC, Sanwa, LaSalle, Fleet, ▇▇▇▇▇▇, NBC,
American National and IBJ referred to collectively as "Lenders")
W I T N E S S E T H:
WHEREAS, Borrower, Agent and Lenders are parties to that certain
Credit Agreement dated as of September 6, 1996 as amended by that
certain Consent and First Amendment to Credit Agreement dated as of
November 21, 1996 (as so amended, the "Credit Agreement"); and
WHEREAS, Borrower has requested that Agent and Lenders provide
for certain amendments to the Credit Agreement and consent to the
transfer of certain assets and business of the Borrower in Canada all
as more fully set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the adequacy of
which is hereby acknowledged, and subject to the terms and conditions
hereof, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS. Unless otherwise defined herein, all
capitalized terms shall have the meaning given to them in the Credit
Agreement.
SECTION 2. WAIVER AND CONSENT. Subject to the conditions herein
stated, the Agent and Lenders hereby consent to Borrower's cessation
of SportDepot's business operations in Canada and the liquidation of
the assets thereof (the "Canadian Liquidation") as described in that
certain proposal to close Canadian operations set forth in that
certain letter delivered by Borrower to Agent on January 16, 1997 (the
"Canadian Liquidation Proposal") and hereby waive any Default or Event
of Default that would otherwise occur under the Credit Agreement upon
the implementation of the Canadian Liquidation, including, without
limitation, any breach under the terms of Section 6.13 of the Credit
Agreement (with respect to SportDepot leases or contracts), Section
7.4 (with respect to the existence or non existence of SportDepot),
Section 8.5(c) (with respect to Borrower's guaranty of SportDepot's
leases), Section 8.8 (with respect to the disposition of SportDepot's
assets), 9.1(e) (with respect to the dissolution of SportDepot) and
Section 9.1(h) (with respect to cross defaults of agreements to which
SportDepot is a party). This consent and waiver shall not be
construed as a consent or waiver with respect to the breach of
Sections 6.13, 7.4, 8.5(c), 8.8, 9.1(e) or 9.1(h) or any other
provision of the Credit Agreement on any other occasion, event or
occurrence other than those related to the Canadian Liquidation and is
subject to the conditions that (i) the transactions effected pursuant
to the Canadian Liquidation shall be on the terms and conditions as
generally set forth in the Canadian Liquidation Proposal, (ii) after
giving effect to all of the costs, fees and expenses associated with
the Canadian Liquidation, the maximum pre-tax charge to Borrower's
earnings as reflected in Borrower's audited financial statements shall
not in the aggregate exceed $40,000,000, (iii) Borrower shall cause
SportDepot to transfer the net proceeds of the Canadian Liquidation to
Borrower for application to the Obligations pursuant to Section 8.8
(iv)(b)(II), (iv) Borrower shall assign any Letter of Credit received
from any Hilco/Great American Group or from any other agent or broker
assisting Borrower with the Canadian Liquidation as security for
Borrower's Obligations hereunder and under the Credit Agreement and
(v) Borrower shall execute and deliver to Agent on behalf of Lenders
any security agreements, assignments, financing statements and the
like as Agent and its counsel shall reasonably request to effect such
assignment.
SECTION 3. AMENDMENTS TO CREDIT AGREEMENT.
3.1 Section 1.1 of the Credit Agreement is hereby amended
by deleting clause (b) in the definition of "Borrowing Base" in
its entirety and inserting the following in lieu thereof:
" ( b) sixty-five percent (65%) of Eligible
Inventory; provided, however, that so long as no
Default or Event of Default has occurred and is
continuing, during the period from the date hereof
through and including May 5, 1997, and during the
period from September 15 through and including
December 15 for each year during the term hereof
thereafter, the amount available for advance
against Eligible Inventory shall be increased by
the lesser of (i) an additional five percent (5%)
of Eligible Inventory or (ii) $10,000,000, plus
(c) a $5,000,000 Special Advance during the period
from the date hereof until the earlier of (i) May 31,
1997, or (ii) Borrower's receipt of a federal tax
refund as a result of the Company filing of a Form 1139
(Corporation Application for Tentative Refund) for the
fiscal years ending January 28, 1996, January 29, 1995
and January 30, 1994."
3.2 The Section 1.1 of the Credit Agreement is hereby
amended by inserting the following immediately preceding the
definition "Capital Expenditures":
"Canadian Liquidation" means any sale or transfer
to effect the transactions described in the
Canadian Liquidation Proposal.
"Canadian Liquidation Proposal" means that certain
proposal described in that certain letter dated January
16, 1997 to Agent from Borrower."
3.3 Section 1.1 is hereby further amended by inserting the
following definition immediately before the definition of
"Permitted Discretion":
"Orland Park Property" means the real estate of
Borrower located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇.
3.4 Section 1.1 is hereby further amended by inserting the
following definition immediately before the definition
"Subordinated Indebtedness":
"Special Advance" means that certain $5,000,000
Special Advance described in clause (c) of the
definition of "Borrowing Base."
3.5 Section 8.1 of the Credit Agreement is hereby amended
by deleting the text thereof in its entirety and inserting the
following in lieu thereof:
"8.1 Consolidated Book Net Worth" The Borrower
shall from the date hereof until May 5, 1997
maintain a Consolidated Book Net Worth of not less
than $70,000,000 and thereafter maintain at all
times during the term hereof a Consolidated Book
Net Worth of not less than $75,000,000.
3.6 Section 1.1 of the Credit Agreement is hereby further
amended by deleting the reference to clause "(j)" in the
definition of Permitted Liens and inserting (k) in lieu thereof.
3.7 Subsection 8.5 of the Credit Agreement is hereby
amended by deleting the "and" at the end of clause (g), deleting
clause (h), and inserting the following clauses in lieu thereof:
"(h) Indebtedness in an amount not to exceed $1,500,000
secured by the Orland Park Property and evidenced by
documentation in form and substance satisfactory to Agent
and Agent's counsel; and
(i) Additional unsecured Indebtedness not otherwise set
forth in subsections (a) through (h) above in an amount not
to exceed $1,000,000 in the aggregate outstanding at any one
time."
3.8 Subsection 8.6 of the Credit Agreement is hereby
amended by deleting the word "and" at the end of clause (i),
relettering clause (j) -- clause "(k)" and inserting the
following new clause (j) immediately before such relettered
clause (k):
"(j) a mortgage Lien in form and substance acceptable to
Agent and Agent's counsel on the Orland Park Property to
secure the financing described in Subsection 8.5 (h) above;
and"
3.9 Section 9.1 is hereby amended by inserting the
following at the end of such Section:
"(j) Misuse of Special Advance. Any portion of the Special
Advance shall be used for a purpose other than for expenditures
and costs associated with effecting the Canadian Liquidation.
(k) Costs in Excess of Canadian Liquidation Proposal. After
giving effect to all of the costs, fees and expenses associated with
the Canadian Liquidation, the maximum pre-tax charge to Borrower's
earnings as reflected in Borrower's audited financial statements shall
in the aggregate exceed $40,000,000."
SECTION 4. CONDITIONS PRECEDENT. The waiver, consent and
amendments herein shall be effective as of the date of this
Agreement upon the satisfactions of the following conditions
precedent:
4.1 Borrower shall have paid Agent for the ratable benefit
of the Lenders an amendment fee in the amount of $200,000.
4.2 Agent shall have received copies of this Amendment duly
executed by Borrower and each of the Lenders.
SECTION 5. REAFFIRMATION BY BORROWER. Borrower hereby
represents and warrants to Agent and Lender that (i) the
representations and warranties set forth in Section 6 of the Credit
Agreement are true and correct on and as of the date hereof, except to
the extent (a) that any such representations or warranties relate to a
specific date, or (b) of changes thereto as a result of transactions
for which Agent and Lenders have granted their consent; (ii) Borrower
is on the date hereof in compliance with all of the terms and
provisions set forth in the Credit Agreement as hereby amended; and
(iii) upon execution hereof no Default or Event of Default has
occurred and is continuing or has not previously been waived.
SECTION 6. FULL FORCE AND EFFECT. Except as herein amended, the
Credit Agreement and all other Credit Documents shall remain in full
force and effect.
SECTION 7. COUNTERPARTS. This Amendment may be executed in two
or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment on the day and year specified above.
BORROWER:
SPORTMART, INC.
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: EXECUTIVE VICE PRESIDENT -
CHIEF FINANCIAL OFFICER
AGENT:
BT COMMERCIAL CORPORATION
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: SENIOR VICE PRESIDENT
LENDERS:
BT COMMERCIAL CORPORATION
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: SENIOR VICE PRESIDENT
SANWA BUSINESS CREDIT
CORPORATION
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
Title: VICE PRESIDENT
LASALLE NATIONAL BANK
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: ASSISTANT VICE PRESIDENT
FLEET CAPITAL CORPORATION
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: VICE PRESIDENT
▇▇▇▇▇▇ FINANCIAL, INC.
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: ACCOUNT EXECUTIVE
NATIONAL BANK OF CANADA
By: /S/ ▇.▇. ▇▇▇▇▇▇, ▇▇. - ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇.▇. ▇▇▇▇▇▇, ▇▇. - ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: V.P. & MANAGER - ASST. V.P.
AMERICAN NATIONAL BANK
AND TRUST COMPANY OF
CHICAGO
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: FIRST VICE PRESIDENT
IBJ ▇▇▇▇▇▇▇▇ BANK AND
TRUST COMPANY
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: VICE PRESIDENT