AMENDING AGREEMENT NO. 2
THIS AMENDING AGREEMENT is made as of this 10th day of March, 0000,
X X X X X X X :
SPORT MASKA INC., a corporation amalgamated under the laws
of the Province of New Brunswick (the "Borrower") and -
THE CHASE MANHATTAN BANK OF CANADA, one of the chartered
banks of Canada (the "Lender") and -
SLM TRADEMARK ACQUISITION CANADA CORPORATION, a corporation
continued under the laws of the Province of New Brunswick
WHEREAS the Lender and Sport Maska Inc. ("Sport Maska") entered into a
credit agreement dated as of April 1, 1997, as amended by an Amending Agreement
No. 1 dated as of November 7, 1997 (such agreement as amended and supplemented
from time to time is hereinafter referred to as the "Credit Agreement");
AND WHEREAS SLM Trademark Acquisition Canada Corporation (the "Guarantor")
executed and delivered an unlimited guarantee dated as of April 1, 1997 whereby
the Guarantor guaranteed all of the liabilities and obligations of Sport Maska
to the Lender pursuant to the Credit Agreement;
AND WHEREAS Sport Maska amalgamated effective January 1, 1998 with #1
Apparel Canada Inc. ("#1 Apparel Canada"), with the amalgamated corporation
resulting from such amalgamation (the "Amalgamation") being called Sport Maska
Inc. (being the "Borrower");
AND WHEREAS the Borrower and the Lender desire to amend certain provisions
of the Credit Agreement;
NOW THEREFORE in consideration of the premises and the agreements herein
set out and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings ascribed to such terms in the Credit
Agreement.
SECTION 2. AMENDMENT TO CREDIT AGREEMENT. Subject to the conditions as to
effectiveness set forth in paragraph 4 of this Amending Agreement and the
Amendment Effective Date (as hereinafter defined) the Credit Agreement is hereby
amended as follows:
2.01 The reference to the amount of "$35,000,000.00 U.S." in the first recital
of the Credit Agreement is hereby replaced with the amount of "$20,000,000.00
U.S.".
2.02 In section 1.01 of the Credit Agreement, the following definition is hereby
added:
" "INVENTORY AMOUNT" shall mean at any time an amount designated
by the Borrower, and confirmed to the Lender and Chase U.S., not to
exceed (x) the Canadian Dollar Equivalent of $20,000,000.00 U.S. less
(y) the amount designated by the borrowers under the U.S. Credit
Agreement in the "SLM-Combined Totals" section under the column
entitled "U.S. Totals" on the most recently delivered certificate of
Borrowing Base, in the form of Schedule 6.05(j) of the U.S. Credit
Agreement."
2.03 The definition of "SEASONAL AMOUNT" in Section 1.01 of the Credit Agreement
is hereby deleted.
2.04 The definition of "AVAILABILITY" in Section 1.01 of the Credit Agreement is
hereby amended in its entirety to read as follows:
" "AVAILABILITY" shall mean at any time (i) the lesser at such
time of (x) the Revolving Credit Commitment and (y) the Borrowing
Base, minus (ii) the sum at such time of (x) the unpaid principal
balance of the Revolving Credit Loans together with all reserves
(without duplication of deductions taken in determining Net Amount of
Eligible Receivables) established by the Lender in its reasonable
exclusive judgement upon notice to the Borrower including, without
limitation, reserves reflecting the risk of suppliers to the Borrower
repossessing shipped goods from the Borrower and (y) the Domestic
Letter of Credit Usage and (z) the aggregate of all outstanding
Bankers Acceptances and all outstanding liability of the Borrower to
reimburse the Lender for matured Bankers Acceptances."
2.05 The definition of "INTEREST PAYMENT DATE" in Section 1.01 of the Credit
Agreement is hereby amended in its entirety to read as follows:
""INTEREST PAYMENT DATE" shall mean with respect to any Prime
Rate Loan, the last Business Day of each month."
2.06 The words "Canadian Dollar Equivalent of $35,000,000.00 U.S." in the
definition of "REVOLVING CREDIT COMMITMENT" in Section 1.01 of the Credit
Agreement are hereby replaced with the words "Canadian Dollar Equivalent of
$20,000,000.00 U.S.".
2.07 The third line of the definition of "REVOLVING CREDIT TERMINATION DATE" is
hereby amended by deleting the phrase "no later than 60 days prior to April 3,
2000" and replacing it with the phrase, "no later than February 3, 2000".
2.08 The first paragraph of Section 2.01(a) of the Credit Agreement is hereby
amended in its entirety to read as follows:
"(a) Subject to the terms and conditions herein and relying upon
the representations and warranties herein set forth, the Lender agrees
to make or extend Credit to the Borrower, at any time and from time to
time from the date hereof to the Revolving Credit Termination Date, in
an aggregate principal amount at any time outstanding not to exceed
the amount of the Revolving Credit Commitment. Notwithstanding the
foregoing, the aggregate principal amount of Credit outstanding at any
time shall not exceed (1) the lesser of (a) the Revolving Credit
Commitment (as such amount may be reduced pursuant to this Agreement
including, without limitation, Section 2.08 hereof) and (b) an amount
equal to the sum of (i) eighty percent (80%) of the Net Amount of
Eligible Receivables, plus (ii) the lesser of (A) the Inventory Amount
and (B) fifty percent (50%) of the Net Amount of Eligible Inventory
(such sum referred to herein as the "BORROWING BASE") minus (2) the
sum of (x) the unpaid principal balance of Revolving Credit Loans
together with all reserves established by the Lender and referred to
in the definition of Availability and (y) the Domestic Letter of
Credit Usage at such time and (z) the aggregate of all outstanding
Bankers' Acceptances and all outstanding liabilities of the Borrower
to reimburse the Lender for matured Bankers' Acceptances. The
Borrowing Base will be computed on or about the fifteenth day of each
fiscal month and at the end of each fiscal month (or more frequently
if requested by Lender) and a compliance certificate from a
Responsible Officer of the Borrower presenting its computation will be
delivered to the Lender and to Chase U.S. in accordance with Section
6.05 of the U.S. Credit Agreement."
2.09 In Section 10.01 of the Credit Agreement, paragraphs (a) and (b) are hereby
amended in their entirety to read as follows:
"(a) if to the Borrower, at 2 Place Alexis Nihon, 3500 Boulevard
De Maisonneuve Ouest, Bureau 000, Xxxxxxxxx, Xxxxxx (Telecopy no.
514-932-6043), Attention: Xxxxxxx X. Xxxxx, Senior Vice-President,
Finance, with a copy to Xxxxxxx, Xxxxxxxx & Xxxxxxxx, 1501 XxXxxx
College, 26th Floor, Montreal, Quebec H3A 3N9, Attention: Xxxx
Xxxxxxxxx (Telecopy no. 514-841-6499); and
(b) if to the Lender, at The Chase Manhattan Bank of Canada, 0
Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx X0X 0X0, Attention:
Xxxxxxxxx Xxxx (Telecopy no. 416-216-4161), with a copy to Fraser &
Xxxxxx, P.O. Box 100, 1 First Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxx X0X
0X0, Attention: Xxxxx X. Xxxxxx (Telecopy no. 416-863-4592) and a
copy concurrently to Chase U.S. at, effective March 27, 1998, 000 0xx
Xxxxxx, 0xx Xxxxx, Xxxxx Base Lending, Xxx Xxxx, XX 00000, Attention:
Credit Deputy (Telecopy no. 212-332-4299)."
2.10 In Section 10.08(b) of the Credit Agreement, clause (ii) is hereby amended
by deleting the words "Seasonal Amount" and substituting therefor the words
"Inventory Amount".
2.11 Any and all references in the Credit Agreement to #1 Apparel Canada Inc. or
Apparel Canada, as the case may be, shall now be read as meaning the Borrower
and shall be read as the context requires.
SECTION 3. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents
and warrants that as of the date hereof as follows (which representations and
warranties shall survive the execution and delivery of this Amending Agreement):
(a) the Borrower has the corporate power and capacity to execute, deliver
and carry out the terms and provisions of this Amending Agreement;
(b) this Amending Agreement has been duly executed and delivered
by the Borrower and constitutes a legal, valid and binding obligation
of the Borrower, enforceable against the Borrower in accordance with
its terms; and
(c) no Default or Event of Default under the Credit Agreement has
occurred or is continuing.
SECTION 4. CONDITIONS PRECEDENT. Notwithstanding any term or provision of
this Amending Agreement to the contrary, Sections 2.01 through to 2.08 hereof
shall not become effective until the Lender shall have determined that each of
the following conditions precedent shall have been satisfied, provided, however,
that such conditions precedent must be satisfied by March 20, 1998 (the date on
which such conditions precedent are satisfied is hereinafter referred to as the
"Amendment Effective Date");
(a) all required corporate actions in connection with the
execution and delivery of this Amending Agreement shall have been
taken, and each shall be satisfactory in form and substance to the
Lender and the Lender shall have received all information and copies
of all documents, including, without limitation, records of requisite
corporate action that the Lender may reasonably request, to be
certified by the appropriate corporate person or government
authorities;
(b) an opinion of counsel of the Borrower stating, inter alia,
that all appropriate corporate action has been taken by the Borrower
to enable the Borrower to enter into the transactions contemplated by
this Amending Agreement and that this Amending Agreement is a legal,
valid and binding obligation of the Borrower enforceable against the
Borrower in accordance with its terms;
(c) the Lender shall have received reimbursement or payment from
the Borrower for all reasonable fees, costs and expenses of the Lender
in connection with this Amending Agreement, and, without limitation,
reasonable fees, costs and expenses of counsel to the Lender shall
have been paid in full to the persons entitled thereto in immediately
available funds;
(d) all representations and warranties made by the Borrower in
Section 3 hereof shall be true and correct in all material respects on
the Amendment Effective Date with the same effect as though such
representations and warranties had been made on such date after giving
effect to this Amending Agreement (except to the extent any such
representation or warranty relates expressly to an earlier date);
(e) counterparts of this Amending Agreement shall have been duly
executed and delivered on behalf of the Borrower, the Guarantor and
the Lender;
(f) concurrently with the Amendment Effective Date, all
guarantees granted in favour of the Lender shall have been reaffirmed,
all appropriate amendments have been made to the U.S. Credit Agreement
and an amendment to the letter of credit issued by Chase U.S. in
favour of Chase Canada shall have been executed by the parties
thereto;
(g) concurrently with the Amendment Effective Date, the U.S.
Borrowers shall have redeemed the Senior Secured Notes;
(h) Chase U.S. shall have received evidence that the sum of (x)
availability under the U.S. Credit Agreement and (y) Availability is
not less than $5,000,000.00 U.S.; and
(i) the Lender shall have received, in form and substance
satisfying to it, the Acknowledgment and Confirmations, legal
opinions, certificates and other documents that it has required of the
Borrower and the Guarantor in connection with the Amalgamation.
SECTION 5. GUARANTOR. The Guarantor hereby acknowledges, consents and
agrees to the amendments to the Credit Agreement contained herein. The
obligations of the Guarantor owing to the Lender under its guarantee shall not
be diminished, released or extinguished by the amendment to the Credit Agreement
contained herein and the Guarantor hereby acknowledges and agrees that the
Guarantor's guarantee constitutes a legal, valid and binding and continuing
obligation of the Guarantor enforceable against the Guarantor in accordance with
its terms.
SECTION 6. REFERENCES TO CREDIT AGREEMENT. The term "Agreement", "hereof",
"herein" and similar terms as used in the Credit Agreement, and references in
the other Loan Documents to the Credit Agreement, shall mean and refer to, from
and after the Amendment Effective Date, the Credit Agreement as modified or
supplemented by this Amending Agreement.
SECTION 7. CONTINUED EFFECTIVENESS. Except as expressly set forth herein,
nothing herein shall be deemed to be a waiver of any covenant or agreement
contained in, or any Default or Event or Default under, the Credit Agreement,
and each of the parties hereto agree that, as modified or supplemented by this
Amending Agreement, all of the covenants and agreements and other provisions
contained in the Credit Agreement and the other Loan Documents are hereby
ratified and confirmed in all respects and shall remain in full force and effect
from and after the date of this Amending Agreement.
SECTION 8. FURTHER ASSURANCES. Each of the parties hereto agrees to execute
and deliver or cause to be executed and delivered all such instruments and to
take all such action as the other party may reasonably request, and at the
expense of such other party in order to effectuate the intent and purposes of
and to carry out the terms of this Amending Agreement.
SECTION 9. GOVERNING LAW. This Amending Agreement shall be governed by and
construed in accordance with the laws of the Province of Ontario and the federal
laws of Canada applicable therein.
SECTION 10. COUNTERPARTS. This Amending Agreement may be executed in two or
more counterparts, each of which when so executed shall be deemed to be an
original and such counterparts together shall constitute one and the same
agreement. Counterparts may be executed in original or facsimile form and the
parties may adopt any signatures received by a facsimile machine as original
signatures of the parties.
SECTION 11. CAPTIONS AND HEADINGS. The captions and headings preceding the
text of the sections of this Amending Agreement are inserted for convenience
only and shall not constitute a part of this Amending Agreement, nor shall they
in any way affect its meaning, construction or effect.
SECTION 12. TIME OF THE ESSENCE. Time shall be of the essence in this
Amending Agreement in all respects.
IN WITNESS WHEREOF the parties have executed this Amending agreement on the
date first set out above.
SPORT MASKA INC.
Per:
Name:
Title:
XXX XXXXX XXXXXXXXX XXXX XX
XXXXXX
Per:
Name: Xxxxxxxxx Xxxx
Title: Vice-President
For purposes of Sections 5 herein, the undersigned hereby acknowledges and
consents to the foregoing this 10th day of March, 1998.
SLM TRADEMARK ACQUISITION CANADA
CORPORATION
Per:
Name:
Title:
