EXHIBIT 10(b)
INTERTAN CANADA LTD.
INTERTAN UK LIMITED
INTERTAN, INC.
SECOND AMENDMENT TO LOAN AGREEMENT
The Second Amendment to Loan Agreement (this "Amendment") is dated as
of January 1999 and entered into by and among InterTAN Canada Ltd., as
Canadian Borrower, InterTAN UK Limited, as UK Borrower, InterTAN, Inc., as the
Parent, the financial institutions listed on the signature pages hereof (the
"Lenders"), Bank of America Canada, a Canadian chartered bank, as agent for the
Lenders (the "Agent") and Bank of America National Trust and Savings Association
(London Bank), as a Lender and as Security Trustee, and is made with reference
to that certain Loan Agreement dated as of December 22, 1997 (as amended and in
effect the "Loan Agreement"), by and among the Borrower, the Lenders and the
Agent, as amended by the Rectification and Amendment No. 1 dated as of February
24, 1998. Capitalized terms used herein without definition shall have the same
meanings herein as set forth in the Loan Agreement.
RECITALS
WHEREAS the Borrowers have requested that the Agent, Security Trustee
and Lenders (i) consent to the sale by the Parent of all of the issued and
outstanding shares of the UK Borrower, (ii) release the Liens of the Agent,
Lenders and Security Trustee in respect of such shares and the UK Collateral,
(iii) terminate the UK Revolving Credit Facility and all Commitments in respect
thereof;
AND WHEREAS the Agent, Security Trustee and Lenders have agreed to
provide such consents and releases upon and subject to the terms hereof;
AND WHEREAS the Borrowers, the Parent and the Agent and Lenders desire
to amend the Loan Agreement to make certain amendments as set forth below;
NOW, THEREFORE, in consideration of the mutual covenants and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Agent, the Security Trustee, the Lenders and the Parent and
the Borrowers have agreed as follows:
Section 1 RELEASES
1.1 Agent's, Security Trustee's and Lenders' Releases
-------------------------------------------------
Each of the Agent, Security Trustee and Lenders hereby releases and
discharges any and all claims, charges, Liens (including pursuant to the UK
Security Documents) and rights which it or they may have in and to the shares in
the capital stock of the UK Borrower and/or the property and assets of the UK
Borrower, including the UK Collateral, but excluding the supporting letters of
credit referred to in Section 3.1.3 herein, and agrees at the sole expense of
the Canadian Borrower and Parent, jointly and severally, to register and file
such discharges of Liens as may be required in order to give effect to the
foregoing release.
1.1.2 Each of the Agent, Security Trustee and Lenders hereby releases
and discharges the Parent from its guarantee pursuant to Article 13 of the Loan
Agreement of the obligations of the UK Borrower.
1.1.3 The Parent hereby releases and discharges any and all claims,
charges, Liens (including pursuant to the UK Note and the UK Intercorporate
Security) which it may have in the property and assets of the UK Borrower and
agrees at its sole expense to register and file such discharges of Liens as may
be required in order to give effect to the foregoing release.
1.2 Parent's and Borrower's Releases
--------------------------------
Each of the Parent and Borrowers hereby releases the Agent, Security
Trustee and Lender and their affiliates, officers, directors, employees,
advisors or agents from any obligations which any of them may have (and each of
the Parent and the Borrowers forever waives any and all rights, claims, causes
of actions or proceedings which each of them has, may claim to have or may in
the future have), in each case arising in respect of the UK Borrower, the UK
Revolving Credit Facility, the UK Security Documents, the UK Collateral or any
other matter, act or thing which has occurred or not occurred on or prior to the
Second Amendment Effective Date in regard to the UK Borrower, the UK Revolving
Credit Facility (and any Loans made or Letters of Credit issued thereunder), the
UK Security Documents or the UK Collateral, against or in respect of the Agent,
Lenders, the Security Trustee or any of their affiliates, officers, directors,
employees, advisors or agents.
1.3 Authorization/Power of Attorney
-------------------------------
Each of the Lenders authorizes and directs BAUK, the Agent and/or the
Security Trustee to execute, deliver, do and perform such further instruments,
documents and things as it or they may consider appropriate in their discretion
to give effect to the foregoing releases and the other terms hereof, including,
without limitation, by signing, registering or filing discharges and by
releasing interests in insurance policies to the extent applicable to the UK
Borrower or its property. Each of the Lenders hereby irrevocably constitutes
and appoints BAUK its true and lawful attorney, with full power of substitution,
in order to give effect to the foregoing.
Section 2 AMENDMENTS TO THE LOAN AGREEMENT
2.1 Termination of UK Revolving Credit Facility
-------------------------------------------
The Loan Agreement shall be read and construed in accordance with the
following amendments:
2.1.1 The UK Revolving Credit Facility and all Commitments of the UK
Lenders in respect thereof are hereby terminated and for greater certainty, none
of the Agent or Lenders have any further obligations under Sections 2.1(b),
2.2(a)(ii) or 2.3 to make any extensions of credit available to the UK Borrower
provided, however, that no UK Lender is released from any obligations,
liabilities or responsibilities it may have to any Issuing Lender, BAUK or
Agent, including pursuant to Section 2.3 (d) and Article 14 of the Loan
Agreement.
2.1.2 The UK Lenders are hereby released as "UK Lenders" and
"Lenders" under the Loan Agreement and, for greater certainty, "Lenders" in
Section 1.1 of the Loan Agreement will not include any UK Lenders provided,
however, that no UK Lender is released from any obligations, liabilities or
responsibilities it may have to any Issuing Lender, BAUK or Agent, including
pursuant to Section 2.3 (d) and Article 14 of the Loan Agreement.
2.1.3 Each of the Agent, BAUK and Security Trustee are hereby
released of and from any further obligation or responsibility whatsoever in
respect of the UK Borrower, the UK Security Documents, the UK Collateral or the
UK Revolving Credit Facility, including under Article 14 and including in
respect of any matter, act or thing which has been done or not done or whether
may have occurred on or prior to the Second Amendment Effective Date provided,
however, that none of the Lenders, BAUK, the Issuing Lenders, nor the Agent is
hereby releasing any claims it may have against another of the Lenders in
respect of any payment or repayment of any Obligations under the UK Revolving
Credit Facility and, for greater certainty, all provisions of the Loan
Agreement, and in particular Sections 2.3 (d), 4.3(b), 4.4 and 4.9 and Article
14, shall continue to govern as between the Agent and each of the Lenders in
respect of such payments and repayments.
2.1.4 The term "Borrowers" in the Loan Agreement shall not include
the UK Borrower provided that this shall not affect any of the continuing
obligations of the Parent and specifically, for the avoidance of doubt, the
Parent shall be responsible for the provision of such information as the Agent
may from time to time request in regard to any contingent obligations of the
Canadian Borrower or Parent in regard to InterTAN UK Limited, any leases in the
UK or any tax obligations in the UK.
2.1.5 The Parent and Canadian Borrower shall, jointly and severally,
at their own expense and the Agent and Lenders shall, at the joint expense of
the Parent and the Canadian Borrower, forthwith do, execute, deliver and perform
such
further acts, things and documents requested by the Agent to give effect to the
terms hereof, including if requested by the Agent by executing and delivering an
amended and restated Loan Agreement together with all evidences of corporate
approvals, certified copies of articles and by-laws, certificates of incumbency
and legal opinions, all in form satisfactory to the Agent.
2.1.6 The designation of BAUK as Agent and as Security Trustee,
including pursuant to Article 14 of the Loan Agreement, are hereby terminated
but without limitation to the rights and remedies of BAUK and the Security
Trustee pursuant to the Loan Agreement and the other Loan Documents and, in
particular, the provision of Article 14 and Sections 2.3(d), 14.5, 14.16 and
16.9 with regard to any actions taken or not taken while BAUK was Agent or
Security Trustee.
2.1.7 The definition of "Tangible Net Worth" shall be amended so as
to read as follows:
"Tangible Net Worth" means, at any date: (a) book net worth as at the
Canadian Borrower's date of determination (but excluding for the purposes of
calculating such book net worth any reduction in the amount thereof resulting
directly from the sale of the whole of the issued share capital of the UK
Borrower to an entity under common ownership and control with The Carphone
Warehouse Limited substantially on the terms of the draft share sale agreement
dated [4] January 1999) plus (b) the translation adjustment in the equity
----
section of the Canadian Borrower's balance sheet as at such date less (c)
----
(without duplication) all amounts, to the extent not repaid after the Closing
Date, which have been paid, whether by loans, repayments, Distributions or
otherwise, to any Affiliate after the Closing Date."
3 CONDITIONS TO EFFECTIVENESS
3.1 Conditions Precedent
--------------------
The Provisions of Sections 1 and 2 of this Amendment shall become
effective only upon the satisfaction of all of the following conditions
precedent (the date of satisfaction of such conditions being referred to herein
as the "Second Amendment Effective Date"):
3.1.1 Each Borrower and the Parent shall deliver to the Agent (for
the Lenders) two originally executed copies of the following, each, unless
otherwise noted, dated the Second Amendment Effective Date:
A. Resolutions of its Board of Directors or, in the case of
the Canadian Borrower, its sole shareholder, approving and
authorizing the execution, delivery and performance of the
transactions contemplated by this Amendment, certified as
of the Second Amendment Effective Date by its corporate
secretary or an assistant secretary as being
in full force and effect without modification or amendment;
B. Executed copies of this Amendment;
C. Indemnity by the Parent in favour of BAUK, and in form and
substance satisfactory to BAUK, in respect of any sums due
and payable (but unpaid) or to become due and payable from
the UK Borrower to the UK Inland Revenue as tax withheld by
the UK Borrower on interest paid or payable to BAUK or the
Agent for the account of Burdale Financial Limited (formerly
Burdale Acceptances Limited) on that portion of the UK
Revolving Loans as are repayable to Burdale Financial
Limited whether on or before the Second Amendment Effective
Date;
D. Executed copy of the share sale agreement, in form and
substance reasonably satisfactory to BAUK, to be entered
into between the Parent and the identified Buyer (as defined
therein) providing for the sale of the whole of the equity
share capital of the UK Borrower to the Buyer.
3.1.2 The UK Borrower shall pay to BAUK:
A. (Pounds)2,500,000 in respect of the LIBOR Loan,
(Pounds)14,020.42 in respect of interest outstanding under
the Loan Agreement, (Pounds)6,093 representing amounts due
under and pursuant to Section 4.5 of the Loan Agreement,
(Pounds)2,199.79 in respect of U.K. Unused Line Fee,
(Pounds)958.52 in respect of the LC Fee, (Pounds)944.53 in
respect of fees and charges due under and pursuant to
Section 3.7 of the Loan Agreement and (Pounds)4,450.04 in
respect of the fees and charges due under and pursuant to
Section 2.3(g)(ii) of the Loan Agreement, for distribution
to the Agent and the UK Lenders in accordance with the
provisions of the Loan Agreement; and
B. a prepayment fee to compensate the UK Lenders for their time
and expense and loss of expected bargain in the amount of
U.S.$60,000, for distribution pro rata in accordance with
the Commitments (calculated immediately prior to the Second
Amendment Effective Date) of the UK Lenders.
3.1.3 The UK Borrower shall deliver to BAUK, in support of such of
BAUK's contingent liabilities under or pursuant to the Loan Agreement as are
subsisting on or after the Second Amendment Effective Date, standby documentary
letters of credit, each issued by Lloyds Bank plc and otherwise on terms and
conditions satisfactory to BAUK as follows:
A. a letter of credit for the sum of (Pounds)86,585 expiring on
22 May 1999 in respect of BAUK's contingent liabilities as
Issuing Lender in relation to any BPS denominated Letters of
Credit in issue as at the Second Amendment Effective Date;
B. a letter of credit for the sum of $372,460 expiring on 26
March 1999 in respect of BAUK's contingent liabilities as
Issuing Lender in relation to any US$ denominated Letters of
Credit in issue as at the Second Amendment Effective Date;
and
C. a letter of credit for the sum of (Pounds)646,007 expiring
on 30 June 1999 in respect of the BAUK's contingent
liabilities under any VAT deferment guarantee issued by it
to HM Customs & Excise in the United Kingdom which is in
effect on or after the Second Amendment Effective Date,
each such letter of credit to provide, inter alia, for BAUK to be entitled on
simple demand, and on any one or more occasions, to require payment to it of an
amount equal to any of BAUK's contingent liabilities thereunder (together with
any associated costs, fees and expenses) as shall have become, or in the opinion
of BAUK, shall be about to become, actual liabilities.
Section 4 BORROWERS' AND PARENT'S REPRESENTATIONS AND WARRANTIES
In order to induce the Agent, Security Trustee and Lenders to enter
into this Amendment and to amend the Loan Agreement in the manner provided
herein, each of the Borrowers and Parent represents and warrants to the Agent
and each Lender that the following statements are true, correct and complete:
4.1 Authorization, Validity, and Enforceability of this Amendment.
--------------------------------------------------------------
Such Borrower or the Parent, as applicable, has the corporate power and
authority to execute and deliver this Amendment and to perform the Loan
Agreement as amended by this Amendment (the "Amended Agreement"). Such Borrower
or the Parent, as applicable, has taken all necessary corporate action
(including, without limitation, obtaining approval of its stockholders if
necessary) to authorize its execution and delivery of this Amendment and the
performance of the Amended Agreement. This Amendment has been duly executed and
delivered by such Borrower or the Parent, as applicable, and this Amendment and
the Amended Agreement constitute the legal, valid and binding obligations of
such Borrower or the Parent, as applicable, enforceable against it in accordance
with their respective terms
without defence, setoff or counterclaim. Such Borrower's or the Parent's, as
applicable, execution and delivery of this Amendment and the performance by such
Borrower or the Parent, as applicable, of the Amended Agreement do not and will
not conflict with, or constitute a violation or breach of, or constitute a
default under, or result in the creation or imposition of any Lien upon the
property of such Borrower or the Parent, as applicable, or any of its
Subsidiaries by reason of the terms of (a) any contract, mortgage, Lien, lease,
agreement, indenture, or instrument to which such Borrower or the Parent, as
applicable, is a party or which is binding on it, (b) any Requirement of Law
applicable to such Borrower or the Parent, as applicable, or any of its
Subsidiaries, or (c) the certificate or articles of incorporation or
amalgamation or bylaws of such Borrower or the Parent, as applicable, or any of
its Subsidiaries.
4.2 Governmental Authorization. No approval, consent, exemption,
---------------------------
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other person is necessary or required in connection
with the execution, delivery or performance by, or enforcement against, such
Borrower or the Parent, as applicable, or any of its Subsidiaries of this
Amendment or the Amended Agreement except for such as have been obtained or made
and filings required in order to perfect the Agent's security interests.
4.3 Incorporation of Representations and Warranties From Loan
---------------------------------------------------------
Agreement. The representations and warranties contained in Section 8 (except to
----------
the extent applicable to be UK Borrower or the UK Collateral) of the Loan
Agreement are and will be true, correct and complete in all material respects on
and as of the Second Amendment Effective Date to the same extent as though made
on and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.
4.4 Absence of Default. No event has occurred and is continuing or
-------------------
will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event or an Event of Default.
Section 5 MISCELLANEOUS
5.1 Reference to and Effect on the Loan Agreement and the Other Loan
----------------------------------------------------------------
Documents.
----------
(1) On and after the Second Amendment Effective Date, each
reference in the Loan Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Loan
Agreement, and each reference in the other Loan Documents to the "Loan
Agreement", "thereunder", "thereof" or words of like import referring
to the Loan Agreement shall mean and be a reference to the Amended
Agreement.
(2) Except as specifically amended by this Amendment, the Loan
Agreement and the other Loan Documents and in, particular, the
guarantee by the Parent of the Obligation of the Canadian Borrower as
provided in Article 13 of the Loan Agreement, shall remain in full
force and effect and are hereby ratified and confirmed.
(3) Until such time as BAUK has released the Parent from its
obligations under its guarantee referred to in Section 3.1.1C (which
it shall do when it is satisfied that all sums due and payable (but
unpaid) from the UK Borrower to the UK Inland Revenue as referred to
in that Section have been unconditionally paid in full and
acknowledged as received by the UK Inland Revenue), there shall be
included in the reserves which the Agent is entitled to maintain in
its Permitted Discretion with respect to the Canadian Availability an
amount equal to the maximum contingent liability of the Parent under
such guarantee.
(4) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of
any provision of, or operate as a waiver of any right, power or remedy
of the Agent or any Lender under, the Loan Agreement or any of the
other Loan Documents.
5.2 Fees and Expenses. Each of the Parent and the Canadian Borrower
------------------
acknowledges that all costs, fees and expenses as described in Section 15.7 of
the Loan Agreement incurred by the Agent, Security Trustee and their Canadian
and UK counsel with respect to this Amendment and the documents and transactions
contemplated hereby shall be for the account of the Canadian Borrower and the
Parent provided however that if any amount of such costs, fees and expenses is
not paid by the Canadian Borrower or the Parent within 15 business days of any
request by BAUK or the Agent, such amount of costs, fees and expenses may be
charged to the Canadian Revolving Credit Facility.
5.3 Prepayment Fee. In addition to any early termination fee payable
---------------
by the Canadian Borrower pursuant to Clause 12 of the Loan Agreement on any
termination of the Canadian Revolving Credit Facility at any time during the
Term, the Canadian Borrower shall pay to the Agent for distribution pro rata in
accordance with the Commitments of the Canadian Lenders a further prepayment fee
of US$10,000, such fee to be payable either (i) on termination of the Loan
Agreement before the expiry of the Term or (ii) if a Lender ceases (following a
request in that respect from the Canadian Borrower) to be a Lender before the
expiry of the Term (in which case such terminated Lender shall immediately
become entitled to its pro rata share of the US$10,000 prepayment fee), such pro
rata distribution to be calculated by reference to the Commitments of the
Lenders (calculated immediately prior to the date upon which such termination or
cessation shall take effect) provided that Bank of America Canada's pro rata
share of such prepayment fee shall be waived in the event that the Revolving
Credit Facilities are refinanced by Bank of America NT & SA or any of its
affiliates.
5.4 Captions. The captions contained in this Amendment are for
---------
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge or restrict any provision.
5.5 Governing Law. THIS AMENDMENT SHALL BE INTERPRETED AND THE
--------------
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE PROVINCE OF ONTARIO AND THE FEDERAL LAWS OF CANADA APPLICABLE
THEREIN.
5.6 Counterparts; Effectiveness. This Amendment may be executed in
----------------------------
any number of counterparts, and by the Agent, Security Trustee, each Lender, the
Parent and the Borrowers in separate counterparts, each of which shall be an
original, but all of which shall together constitute one and the same amendment;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Amendment (other than the provisions of Sections 1 and
2 hereof, the effectiveness of which is governed by Section 3 hereof) shall
become effective upon the execution of a counterpart hereof by the Borrowers,
the Parent, the Agent, Security Trustee and the Lenders and receipt by the
Borrowers and the Agent of written or telephonic notification of such execution
and authorization of delivery thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to Loan Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date first written
above.
SECOND AMENDMENT TO LOAN AGREEMENT
SIGNATURE PAGE
INTERTAN CANADA LTD. BANKBOSTON RETAIL FINANCE INC.
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. X'Xxxxxx
------------------------------- ----------------------------
Name: Xxxxx X. Xxxxxxxx Name: Xxxxxxx X. X'Xxxxxx
Title: Title: Director
INTERTAN UK LIMITED CONGRESS FINANCIAL CORPORATION
By: /s/ Xxxxxx X. Xxxxx
By: /s/ Xxxxx X. Xxxxxxxxx ---------------------------
------------------------------- Name: Xxxxxx X. Xxxxx
Name: Xxxxx X. Xxxxxxxxx Title: Vice-President
Title:
INTERTAN, INC. BANKBOSTON, N.A.
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. X'Xxxxxx
------------------------------- ----------------------------
Name: Xxxxx X. Xxxxxxxx Name: Xxxxxxx X. X'Xxxxxx
Title: Vice President, Secretary Title: Director
and General Counsel
BANK OF AMERICA CANADA, as Agent and as BURDALE FINANCIAL LIMITED
Canadian Lender
By: /s/ Xxxxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------- ----------------------------
Name: Xxxxxx Xxxxxx Name: Xxxxxx X. Xxxxxxxx
Title: Vice-President Title: Director
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (London, England branch), as
Security Trustee and a UK Lender
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
SECOND AMENDMENT TO LOAN AGREEMENT
SIGNATURE PAGE
INTERTAN CANADA LTD. BANKBOSTON RETAIL FINANCE INC.
By: By:
------------------------------- ----------------------------
Name: Name:
Title: Title:
INTERTAN UK LIMITED CONGRESS FINANCIAL CORPORATION
By:
By: Name:
------------------------------- --------------------------
Name: Title:
Title:
INTERTAN, INC. BANKBOSTON, N.A.
By: By:
------------------------------- ----------------------------
Name: Name:
Title: Title:
BANK OF AMERICA CANADA, as Agent and as BURDALE FINANCIAL LIMITED
Canadian Lender
By: By:
------------------------------- ----------------------------
Name: Xxxxxx Xxxxxx Name:
Title: Vice-President Title:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (London, England branch), as
Security Trustee and a UK Lender
By:
-------------------------------
Name:
Title:
