FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT AND LIMITED FORBEARANCE AGREEMENT
EXHIBIT
99.1
FIRST
AMENDMENT TO AMENDED
AND
RESTATED LOAN AND SECURITY AGREEMENT
AND
LIMITED FORBEARANCE AGREEMENT
This
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Amendment”) is dated as of
December 28, 2008, and is entered into by and among SPORT CHALET, INC., a
Delaware corporation (the “Borrower”), SPORT CHALET VALUE
SERVICES, LLC, a Virginia limited liability company (“SCVS”, and together with the
Borrower, the “Obligated
Parties”, and each individually, an “Obligated Party”), the
financial institutions that are now or that hereafter become a party to the Loan
Agreement (as defined below) (collectively, the “Lenders”, and each
individually a “Lender”)
and BANK OF AMERICA, N.A., a national banking association, as agent for the
Lenders (the “Agent”).
RECITALS
WHEREAS,
the Lenders, the Agent, and the Obligated Parties have entered into that certain
Amended and Restated Loan and Security Agreement (as amended, restated, or
otherwise modified from time to time, the “Loan Agreement”), dated as of
June 20, 2008;
WHEREAS,
Formula Availability is less than $10,500,000 and, as such, a Covenant Testing
Trigger Date has occurred and a Covenant Testing Period is in
effect.
WHEREAS,
the Obligated Parties have informed the Lenders and the Agent that, as of
December 31, 2008, an Event of Default has occurred under Section 11.1(c) of the
Loan Agreement due to the failure of the Borrower to maintain an Fixed Charge
Coverage Ratio of not less than 1.00 to 1.00 for the twelve consecutive month
period ending on such date (the “Existing Event of
Default”).
WHEREAS,
the Borrower has requested a $1,500,000 Overadvance Loan resulting from
the Borrowing Base exceeding the aggregate Revolver Commitments ($1.5MM
Overadvance).
WHEREAS,
the Obligated Parties have requested that the Lenders and the Agent agree to the
$1.5MM Overadvance and forbear from exercising available rights and remedies
arising as a result of the Existing Event of Default all pursuant to the terms
and conditions set forth herein.
WHEREAS,
the parties hereto are entering into this Amendment with the understanding and
agreement that, except as expressly set forth herein, none of the Agent’s nor
the Lenders’ rights or remedies as set forth in the Loan Agreement and the other
Loan Documents are being waived or modified by the terms of this
Amendment.
NOW,
THEREFORE, in consideration of the mutual conditions and agreements set forth in
the Loan Agreement and this Amendment, and other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
DEFINITIONS
Definitions. Initially
capitalized terms used but not otherwise defined in this Amendment have the
meanings given thereto in the Loan Agreement, as amended hereby.
1
AMENDMENT
Section
2.1 Section 1(e) of the
Post Closing Agreement is hereby amended and restated to read in its entirety as
follows:
“(e) Sport Chalet Team Sales,
Inc. On or before March 31, 2009, Borrower shall have (i)
delivered to Agent satisfactory certificates of existence, good standing and tax
status (as applicable) for Team Sales from the State of California; (ii) caused
Team Sales to execute and deliver to Agent such agreements as may reasonably be
required to cause Team Sales to become an Obligated Party to the Loan Agreement,
guaranty the Obligations, and grant a first priority, perfected security
interest (subject only to Permitted Liens) to Agent in each of the classes of
assets as Borrower has granted as Collateral as security for the Obligations;
and (iii) caused counsel for Team Sales to deliver to Agent a favorable opinion
covering the due authorization, execution, delivery and enforceability of
foregoing documents, non-contravention and perfection of the foregoing security
interests, all consistent with the opinions delivered on behalf of Borrower and
Value Services on the Closing Date;”
LIMITED
FORBEARANCE
Limited Forbearance
Period. As used herein, the “Limited Forbearance Period”
means the period beginning upon the satisfaction of the conditions precedent set
forth in Section 6.1
below, and ending on the date which is the earlier of (a) the occurrence of any
Default or Event of Default (other than the Existing Event of Default and the
Excluded Defaults); or (b) January 31, 2009.
Excluded
Defaults. As used in this Amendment, "Excluded Defaults"
means each of the following potential Defaults:
(a) The
third sentence of Section 9.1.7 of the Loan Agreement.
(b) Section
9.1.17 of the Loan Agreement as to the Existing Event of Default and the
Excluded Defaults.
(c) Section
9.1.21 of the Loan Agreement.
(d) The
second sentence of Section 9.2 of the Loan Agreement insofar as the effect of
general economic conditions in the United States as of the date of this
Amendment which may constitute a Material Adverse Effect.
(e) Section
10.2.1 of the Loan Agreement insofar as trade payables which may not be paid in
the Ordinary Course of Business.
Limited Forbearance.
In reliance upon the acknowledgements, confirmations, representations,
warranties, and agreements of the Obligated Parties set forth in this Amendment,
and subject to the terms and conditions set forth herein, during the
Limited Forbearance Period only, the Agent and the Lenders will forbear from
exercising their rights and remedies under the Loan Agreement, the other Loan
Documents and applicable law in respect of or arising out of the Existing Event
of Default. Notwithstanding the foregoing forbearance: (i)
no LIBOR Rate Portion may be requested; (ii) the Agent and the Lenders will
retain all of their rights set forth in the Loan Agreement and the other Loan
Documents to inspect the properties of the Obligated Parties at any time and
without prior notice during the continuation of an Event of Default (including
the Existing Event of Default) and during the Limited Forbearance Period; and
(iii) the Agent and the Lenders will retain all rights under the powers of
attorney granted under the Loan Documents during the continuance of an Event of
Default, provided that during the Limited Forbearance period only, neither the
Agent nor the Lenders will exercise the rights under Section 8.7(b)(i), (ii),
(iii), (vi), (viii) or (xii) but only as to the exercise of remedies upon an
Event of Default.
2
Reservation of Rights; No
Waiver. Subject to Section 3.2 above
solely with respect to the Existing Event of Default, the Agent and the Lenders
reserve the right, in their sole discretion, to exercise any or all of their
rights and remedies hereunder and under the Loan Documents and applicable law as
a result of any other Defaults or Events of Default occurring at any
time. The Agent and the Lenders have not waived, and are not by this
Amendment waiving, the Existing Event of Default or any other Defaults or Events
of Default that may be continuing on the date hereof or any other Defaults or
Events of Default that may otherwise exist or occur after the date of this
Amendment (whether the same or similar to the Existing Event of Default or
otherwise), and the Agent and the Lenders have not agreed to forbear with
respect to any of their rights or remedies concerning any other Defaults or
Events of Default occurring at any time (other than the Existing Event of
Default, solely during the Limited Forbearance Period and solely to the extent
expressly set forth herein). Nothing in this Amendment, and no delay
on the part of the Agent or the Lenders in exercising any of their rights or
remedies under the Loan Documents or applicable law, may be construed as a
waiver of any of such rights or remedies.
Tolling. All
periods of limitations specified by statutes and all defenses of laches or
waiver as to the Existing Event of Default will be tolled and otherwise
suspended during the Limited Forbearance Period.
Temporary
Overadvance. Agent and Lenders agree to permit the $1.5MM
Overadvance from the date hereof until January 13, 2009. If the
$1.5MM Overadvance is not paid in full by January 13, 2009, it will
be an Event of Default. This one time $1.5MM Overadvance is permitted only under
the terms and conditions hereof and nothing herein shall constitute a consent
to, or a commitment to permit, any other Overadvance.
ACKNOWLEDGEMENTS
Acknowledgements by
Obligated Parties. As a material inducement to the Agent and
the Lenders to enter into this Amendment, each of the Obligated Parties hereby
acknowledges, confirms, represents, warrants, and agrees that:
Recitals
True. Each of the Recitals set forth above is true and
correct.
Acknowledgment of Liens and
Obligations. The Borrower is indebted to the Agent and the
Lenders pursuant to the Loan Agreement and all of the Obligations are owing by
the Borrower to the Agent and the Lenders without offset, defense, or
counterclaim of any kind, nature, or description whatsoever) and the Agent has
and will continue to have valid, enforceable, and perfected first-priority liens
upon, and security interests in, all of the Collateral as security for the
Obligations. No Obligated Party will contest any of the
foregoing.
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Binding Effect of
Documents. (i) Each Loan Document to which any Obligated Party is a
party has been duly executed and delivered to the Agent and the Lenders by such
Obligated Party, and each such Loan Document is and will remain in full force
and effect as of the date of this Amendment (and after giving effect hereto);
(ii) the agreements and obligations of the Obligated Parties contained in
the Loan Documents and in this Amendment constitute the legal, valid, and
binding obligations of such Obligated Parties, enforceable against such
Obligated Parties in accordance with their respective terms; and no Obligated
Party has any valid defense to the enforcement of the Obligations; and
(iii) the Agent and the Lenders are and will be entitled to the rights,
remedies, and benefits provided for hereunder and under the Loan Documents and
applicable law.
Acknowledgment of
Defaults. (i) The Existing Event of Default has occurred and is
continuing, and constitutes a material Event of Default under the Loan Documents
and entitles the Agent and the Lenders to exercise their default rights and
remedies under the Loan Documents, applicable law or otherwise;
(ii) neither the Agent nor any of the Lenders has waived, and none of them
presently intends to waive, such Existing Event of Default; and
(iii) nothing contained herein or the transactions contemplated hereby will
be deemed to constitute any such waiver. No Default or Event of
Default has occurred other than the Existing Event of Default.
Power and Authority.
Such Obligated Party has all requisite power and authority to enter into this
Amendment and to carry out the transactions contemplated by, and perform its
obligations under, this Amendment and under the Loan Agreement as amended by
this Amendment.
Authorization of
Agreements. The execution and delivery of this Amendment by such
Obligated Party and the performance by the Obligated Parties of the Loan
Agreement as amended hereby, have been duly authorized by all necessary action,
and this Amendment has been duly executed and delivered by such Obligated
Party.
Representations and
Warranties in the Loan Agreement. Each Obligated Party
confirms that, as of the date hereof, the representations and warranties
contained in the Loan Agreement and each other Loan Document are true and
correct in all material respects as set forth in the Loan Agreement or such
other Loan Document (except to the extent any such representation and warranty
is expressly stated to have been made as of a specific date, in which case it is
true and correct as of such specific date).
Team
Sales. Each Obligated Party confirms that Team
Sales does not own any material assets other than inventory and accounts
receivable and does not have and will not have any interest in or ownership of
any Inventory in excess of $2,0000,000 at any time. The Obligated
Parties further confirm that none of the assets of Team Sales is or will be
included in the Borrowing Base or the Borrowing Base Certificate.
The
acknowledgements, confirmations, representations, warranties, and agreements
made by the Obligated Parties above will survive the execution and delivery
hereof and the termination of the Limited Forbearance Period.
4
CONDITIONS
PRECEDENT
Conditions
Precedent. This Amendment shall not be binding upon the
Lenders and the Agent until each of the following conditions precedent has been
satisfied in form and substance satisfactory to the Agent and Agent has informed
Borrower in writing that such conditions precedent have either been
satisfied or waived by Agent.
The
representations and warranties contained herein and in the Loan Agreement, as
amended hereby, shall be true and correct in all material respects as of the
date hereof as if made on the date hereof, except for such representations and
warranties limited by their terms to a specific date (such representations and
warranties being true and correct in all material respects as of the specified
date relative thereto);
No
Default or Event of Default shall have occurred and be continuing other than the
Existing Event of Default and the Excluded Defaults.
The
Obligated Parties shall have delivered to the Agent an executed original of this
Amendment;
The
Obligated Parties shall have paid to the Agent all fees, costs, and expenses
owed to and/or incurred by the Agent arising in connection with this
Amendment;
The Agent
shall have received such other documents, corporate resolutions, corporate
certificates, legal opinions and information, including, without limitation, any
third party consents, that the Agent shall require, each in form and substance
satisfactory to the Agent; and
All
proceedings taken in connection with the transactions contemplated by this
Amendment and all documentation and other legal matters incident thereto shall
be satisfactory to the Agent in its sole and absolute discretion.
MISCELLANEOUS
Loan Documents
Unmodified. Except as otherwise specifically modified by this
Amendment, all terms and provisions of the Loan Agreement and all other Loan
Documents, as modified hereby, shall remain in full force and
effect. Nothing contained in this Amendment shall in any way impair
the validity or enforceability of the Loan Documents, as modified hereby, or
alter, waive, annul, vary, affect, or impair any provisions, conditions, or
covenants contained therein or any rights, powers, or remedies granted therein,
except as otherwise specifically provided in this Amendment. Subject
to the terms of this Amendment, any Lien and/or security interest granted to the
Lenders in the Collateral set forth in the Loan Documents shall remain unchanged
and in full force and effect and the Loan Agreement and the other Loan Documents
shall continue to secure the payment and performance of all of the
Obligations. The parties hereto agree to be bound by the terms and
conditions of the Loan Agreement and other Loan Documents as amended by this
Amendment, as though such terms and conditions were set forth
herein. Each reference in the Loan Agreement to “this Agreement,”
“hereunder,” “hereof,” “herein” or words of similar import shall mean and be a
reference to the Loan Agreement as amended by this Amendment, and each reference
herein or in any other Loan Document to the “Loan Agreement” or “Agreement”
shall mean and be a reference to the Loan Agreement as amended and modified by
this Amendment.
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Parties, Successors and
Assigns. This Amendment shall be binding upon and shall inure to the
benefit of the Obligated Parties, the Lenders, the Agent, and their respective
successors and permitted assigns.
Counterparts. This
Amendment may be executed in counterparts, each of which taken together shall
constitute one instrument. This Amendment may be executed and
delivered by facsimile or electronic mail, and shall have the same force and
effect as manually signed originals. The Agent may require
confirmation by a manually-signed original, but failure to request or deliver
same shall not limit the effectiveness of any facsimile or electronically
delivered signature.
Headings. The
headings, captions, and arrangements used in this Amendment are for convenience
only, are not a part of this Amendment, and shall not affect the interpretation
hereof.
Expenses of the Lenders and the
Agent. Without limiting the terms and conditions of the Loan
Documents, the Obligated Parties agree to pay on demand: (a) all
costs and expenses incurred by the Lenders and the Agent in connection with the
preparation, negotiation, and execution of this Amendment and the other Loan
Documents executed pursuant hereto and any and all subsequent amendments,
modifications, and supplements hereto or thereto, including without limitation,
the costs and fees of the Lenders’ or the Agent’s legal counsel; and (b) all
costs and expenses reasonably incurred by the Lenders or the Agent in connection
with the enforcement or preservation of any rights under the Loan Agreement,
this Amendment, and/or the other Loan Documents, including without limitation,
the costs and fees of the Lenders’ or Agent’s legal counsel and the costs and
fees associated with any environmental due diligence conducted in relation
hereto.
Choice of Law; Jury Trial
Waiver; Etc. This
Amendment shall be governed by the laws of the State of California, without
giving effect to any conflict of law principles (but giving effect to federal
laws relating to national banks). To the fullest extent not
prohibited by Applicable Law, each of the parties hereto waives its right to a
trial by jury, if any, in any action to enforce, defend, interpret, or otherwise
concerning this Amendment. Without limiting the applicability
of any other provision of this Amendment, the terms of Sections 14.15 and
14.16 of the
Loan Agreement shall apply to this Amendment.
Total Agreement. This
Amendment, the Loan Agreement, and all other Loan Documents embody the entire
understanding of the parties with respect to the subject matter thereof and
supersede all prior understandings regarding the same subject
matter.
Acknowledgements and
Release. The Obligated Parties hereby acknowledge
that: (a) they have no defenses, claims or set-offs to the
enforcement of the Obligations on the date hereof; (b) to their knowledge, the
Lenders and the Agent have fully performed all undertakings and obligations owed
to the Obligated Parties as of the date hereof; and (c) except to the limited
extent expressly set forth in this Amendment, the Lenders and the Agent do not
waive, diminish or limit any term or condition contained in the Loan Agreement
or any of the other Loan Documents.
THE
OBLIGATED PARTIES EACH HEREBY IRREVOCABLY RELEASE AND FOREVER DISCHARGE EACH
“INDEMNITEE” (AS DEFINED IN THE LOAN AGREEMENT) (EACH INDEMNITEE, A “RELEASED PERSON”) OF AND FROM
ALL DAMAGES, LOSSES, CLAIMS, DEMANDS, LIABILITIES, OBLIGATIONS, ACTIONS OR
CAUSES OF ACTION WHATSOEVER (EACH A “CLAIM”) THAT ANY OBLIGATED
PARTY MAY NOW HAVE OR CLAIM TO HAVE AGAINST ANY RELEASED PERSON ON THE DATE
HEREOF, WHETHER KNOWN OR UNKNOWN, OF EVERY NATURE AND EXTENT WHATSOEVER, FOR OR
BECAUSE OF ANY MATTER OR THING DONE, OMITTED OR SUFFERED TO BE DONE OR OMITTED
BY ANY OF THE RELEASED PERSONS THAT BOTH (I) OCCURRED PRIOR TO OR ON THE DATE
HEREOF AND (II) IS ON ACCOUNT OF OR IN ANY WAY CONCERNING, ARISING OUT OF OR
FOUNDED UPON THE LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR AGENT'S
ADMINISTRATION OF AND ACTIONS UNDER THE LOAN AGREEMENT OF ANY OTHER LOAN
DOCUMENT (EACH, A "RELEASED CLAIM").
6
THE
OBLIGATED PARTIES INTEND THE ABOVE RELEASE OF RELEASED CLAIMS TO COVER,
ENCOMPASS, RELEASE, AND EXTINGUISH, INTER ALIA, ALL CLAIMS THAT
MIGHT OTHERWISE BE RESERVED BY THE CALIFORNIA CIVIL CODE SECTION 1542, WHICH
PROVIDES AS FOLLOWS:
“A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.”
EACH OF
THE OBLIGATED PARTIES ACKNOWLEDGES THAT IT MAY HEREAFTER DISCOVER FACTS
DIFFERENT FROM OR IN ADDITION TO THOSE NOW KNOWN OR BELIEVED TO BE TRUE WITH
RESPECT TO SUCH RELEASED CLAIMS, AND AGREES THAT THIS AMENDMENT AND THE ABOVE
RELEASE ARE AND WILL REMAIN EFFECTIVE IN ALL RESPECTS AS A RELEASE OF RELEASED
CLAIMS NOTWITHSTANDING ANY SUCH DIFFERENCES OR ADDITIONAL FACTS.
WITHOUT
LIMITING THE RESTRICTIONS ON THE OBLIGATIED PARTIES TO SELL OR ASSIGN ANY RIGHTS
UNDER THE LOAN AGREEMENT, THE OBLIGATED PARTIES EACH REPRESENT AND WARRANT THAT
IT HAS NOT HERETOFORE SOLD, ASSIGNED, TRANSFERRED, PLEDGED HYPOTHECATED OR
PURPORTED TO HAVE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR HYPOTHECATED ANY
RELEASED CLAIM. THE OBLIGATED PARTIES EACH FURTHER REPRESENT AND
WARRANT THAT BORROWER AND SCVS ARE THE SOLE OBLIGATED PARTIES UNDER THE LOAN
AGREEMENT AND ARE THE SOLE OWNERS AND HOLDERS OF ALL RELEASED
CLAIMS.
EACH OF
THE OBLIGATED PARTIES WARRANTS AND REPRESENTS THAT IT HAS BEEN REPRESENTED BY
INDEPENDENT COUNSEL THROUGHOUT ITS NEGOTIATION, REVIEW AND EXECUTION OF THIS
AMENDMENT.
THIS
AMENDMENT SHALL BE CONSTRUED AS THOUGH EACH OF AGENT AND THE OBLIGATED PARTIES
PARTICIPATED EQUALLY IN ITS DRAFTING AND, IT SHALL BE INTERPRETED, WHEREVER
POSSIBLE, TO MAKE IT VALID AND EFFECTIVE. IF ANY PART OF THIS
AMENDMENT IS DETERMINED TO BE INVALID, UNENFORCEABLE OR PROHIBITED, ONLY THAT
PART SHOULD BE AFFECTED AND THE REST SHALL BE ENFORCED AS WRITTEN
HERE.
[Remainder of page intentionally left
blank; signature page follows]
7
IN WITNESS WHEREOF, the parties have
executed and delivered this Amendment as of the day and year first written
above.
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SPORT
CHALET, INC.,
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a
Delaware corporation
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By:
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/s/
Xxxxxx Xxxxxxxx
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Name:
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Xxxxxx
Xxxxxxxx
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Title:
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EVP
& CFO
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SPORT
CHALET VALUE SERVICES, LLC,
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a
Virginia limited liability company
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By:
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/s/
Xxxxxx Xxxxxxxx
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Name:
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Xxxxxx
Xxxxxxxx
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Title:
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Manager
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BANK
OF AMERICA, N.A.
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By:
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/s/
Xxxxxxx Xxxx
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Name:
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Xxxxxxx
Xxxx
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Title:
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SVP
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