FIRST AMENDMENT TO SECOND AMENDED AND RESTATED FINANCING AGREEMENT
Exhibit 99.1
FIRST AMENDMENT TO SECOND AMENDED AND
RESTATED FINANCING AGREEMENT
RESTATED FINANCING AGREEMENT
This First AMENDMENT TO SECOND AMENDED AND RESTATED FINANCING AGREEMENT (this “Amendment”) is
entered into as of May 24, 2006, by and between THE CIT GROUP/BUSINESS CREDIT, INC., a New York
corporation (hereinafter “CITBC”), the Revolving Lenders, the Term Lenders, and any other lenders
from time to time party hereto (CITBC and such other lenders are individually sometimes referred to
herein as a “Lender” and collectively as the “Lenders”), CITBC as agent for the Lenders (in such
capacity, the “Agent”), and BIG 5 CORP., a Delaware corporation (hereinafter referred to as “Big
5”), and BIG 5 SERVICES CORP., a Virginia corporation (hereinafter referred to as “Big 5 Services”;
and, together with Big 5, collectively, the “Companies”, and each individually a “Company”), with
respect to the following:
A. The Companies, the Lenders, and the Agent have previously entered into that certain Second
Amended and Restated Financing Agreement dated as of December 15, 2004 (as amended, restated or
otherwise modified from time to time, the “Financing Agreement”).
B. The Companies, the Lenders, and the Agent have agreed to amend the Financing Agreement on
the terms and subject to the conditions set forth below.
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. Definitions Incorporated. Initially capitalized terms used but not defined in this
Amendment have the respective meanings set forth in the Financing Agreement.
2. Amendments to Financing Agreement. The Financing Agreement is hereby amended as
follows:
(a) Amended and Restated Definitions. Each of the following definitions set
forth in the Financing Agreement is hereby amended and restated to read as follows:
(i) Availability Reserve shall mean at any time of determination an
amount equal to the sum of (a) the then undrawn amount of all outstanding Letters of
Credit, (b) the amount of all unpaid sales taxes due any state and which sales taxes
have been collected by the Companies, (c) reserves in an amount equal to all or a
portion of any tax liens outstanding at any time, including for all interest and
penalties thereon as described in Section 6.6, and (d) an amount equal to three
times the monthly rent for leased facilities in lieu of landlord waivers which have
not been obtained in favor of the Agent for leased locations at which Inventory is
located, provided, however, that such reserve required under this clause (d) shall
cease upon receipt of landlord’s waivers for the distribution centers and not less
than eighty-five (85) retail outlets.
(ii) Early Termination Fee shall mean the fee the Agent (for the
account of the Revolving Lenders) is entitled to charge the Companies in the
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event either Company terminates the Line of Credit or this Financing Agreement
before the end of the then-effective term hereof in the amount equal to (i) 0.75% of
the Line of Credit if such termination occurs on or before March 20, 2009; (ii)
0.50% of the Line of Credit if such termination occurs after March 20, 2009, and
before or on March 20, 2010; (iii) 0.25% of the Line of Credit if such termination
occurs after March 20, 2010, and before the last day of any term; provided that no
such early termination fee shall be charged if the Companies refinance the
Obligations with a credit facility led by the Agent.
Line of Credit shall mean the commitment of the Revolving Lenders acting
through the Agent to make loans and advances and issue Letter of Credit Guaranties,
all pursuant to and in accordance with, but subject to, Sections 3 and 4 of this
Financing Agreement, in the aggregate amount of $161,666,667, plus the amount of
principal repayment of the Term Loan not to exceed $13,333,333, subject to and in
accordance with Section 4A, but in no event to exceed a total of $175,000,000 or
such lesser amount as the Company may elect in accordance with Section 7 of this
Financing Agreement.
(b) Amendment to Definition of “Capital Expenditures”. The definition of
“Capital Expenditures” set forth in Section 1 of the Financing Agreement is hereby amended
by adding a new clause (iii) thereto to read as follows:
“(iii) tenant improvement allowances to the extent that such allowances do
not represent cash expended by the Companies during such period for capital
expenditures.”
(c) Commitments. Each of the Lenders Commitments as of the date hereof shall
be as set forth on the signature pages to this Amendment.
(d) Section 4.A.3. Section 4.A.3. of the Financing Agreement is hereby amended
and restated to read in its entirety as follows:
“4.A.3. Subject to Section 4.A.4 below, the principal amount of the Term
Loan shall be repaid by the Companies to the Agent on behalf of the Term
Lenders as follows: Six Million Six Hundred Sixty-Six Thousand Six Hundred
Sixty-Seven Dollars ($6,666,667) on December 15, 2007 and the remaining
principal balance, together with all accrued and unpaid interest thereon, on
December 15, 2008; provided, however, that the Companies may prepay, without
penalty, the principal amount of the Term Loan, at any time, at their
option, in whole or in part in a minimum amount of $5,000,000 or, if less,
the remaining balance thereof, together with accrued and unpaid interest
thereon, provided that at the time of any such prepayment and after giving
effect thereto, (a) no Default or Event of Default shall have occurred and
be continuing under the Financing Agreement and (b) the Availability under
the Revolving Loans shall be at least $25,000,000 after giving effect to any
prepayment made during the
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months of February through September of any year or $35,000,000 after giving
effect to any prepayment made during the months of October through January
of any year. Once repaid in whole or in part, the Term Loan may not be
reborrowed under this Financing Agreement. Prepayments of the Term Loan
will be applied to principal installments in inverse order of maturity.”
(e) Section 6.6. Section 6.6 of the Financing Agreement is hereby amended and
restated to read in its entirety as follows:
“6.6. Each Company agrees to pay, when due, all local, domestic and foreign
(as applicable) taxes, assessments, and other charges (herein “taxes”)
lawfully levied or assessed upon such Company or the Collateral, provided,
however, that such taxes need not be paid on or before the date fixed for
payment thereof if: (i) such taxes are being diligently contested by the
Companies in good faith and by appropriate proceedings; (ii) the Companies
establish such reserves as may be required by GAAP; (iii) such taxes are not
secured by a filed lien which is senior to the liens of the Agent on the
Collateral and iv) such taxes secured by a filed lien are not due the United
States of America; provided that notwithstanding clauses (iii) and (iv)
above, there may be filed tax liens in an aggregate amount of not to exceed
$1,000,000 outstanding at any time. The Agent may, in its sole discretion,
implement a reserve in an amount equal to all or a portion of any tax liens
outstanding at any time, including for all interest and penalties thereon,
and, to prevent the imminent foreclosure of any tax liens (whether such
liens are senior or junior to the liens of the Agent and whether or not any
reserve is in effect) or in the event the Agent on behalf of the Lenders is
exercising its remedies as a secured creditor on Collateral, then the Agent
may, on the Companies’ behalf, pay any taxes then due and secured by a lien
on the Collateral and the amount thereof shall be an Obligation secured
hereby.”
(f) Section 6.10G. Section 6.10G of the Financing Agreement is hereby amended
and restated to read in its entirety as follows:
“G. Declare or pay any dividend of any kind on, or purchase, acquire, redeem
or retire, any of its capital stock or equity interest of any class
whatsoever, whether now or hereafter outstanding, except that:
(i) Big 5 may declare and pay dividends on its capital stock:
(a) provided that no Default or Event of Default is then in
existence or will be in existence after giving effect to such
dividend, in cash (but not subject to any limitation based upon
Company Liquidity) in
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(1) amounts sufficient to enable the Parent to
(y) pay income or franchise taxes of the
Companies due as a result of the filing of a
consolidated, combined or unitary tax return in which
the operations of the Companies are included, and
(z) reimburse the Parent for out-of-pocket
expenses incurred by the Parent for the joint or
several benefit of the Parent and the Companies,
including fees and expenses of its directors for
attending the Board of Directors’ meeting, and
(2) additional amounts in the fiscal year ending
December 31, 2006, and any subsequent fiscal year not to
exceed $15,000,000, plus the net cash proceeds
realized from sales by Big 5 of its capital stock, in any
fiscal year starting with the fiscal year ending December 31,
2005, subject to the following:
(x) prior to declaring any dividend under
§6.10G.(i)(a)(2), Big 5 shall submit to Agent a
certificate signed by the President, Senior Vice
President, Vice President, Controller, or Treasurer
of Big 5 in form and substance satisfactory to Agent,
which certificate must: (i) state the proposed
amount of the dividend and proposed dividend payment
date, which date must be within ninety (90) days of
the date of the certificate; (ii) certify that no
Default or Event of Default has occurred and is
continuing; (iii) certify that, to the best of such
officer’s knowledge and belief after diligent
investigation, after giving effect to the proposed
dividend, no Default or Event of Default is expected
to occur during the period from the dividend’s
declaration date to and including its payment date;
and (iv) attach reasonably detailed projections of
the Companies’ Fixed Charge Coverage Ratio and Senior
Secured Debt Coverage Ratio in support of such
certifications,
(y) Big 5 shall not pay dividends under
§6.10G.(i)(a)(2) in excess of $5,000,000 in any
fiscal quarter,
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(z) if a Default or Event of Default exists on
the dividend payment date or would result from the
dividend payment, the dividend may nonetheless be
paid on the dividend payment date set forth in the
certificate so long as no Default or Event of Default
existed on the date of the certificate delivered to
Agent or on the dividend declaration date and the
other criteria under §6.10G.(i)(a)(2) are satisfied;
(b) in kind (i.e. in the form of capital stock only and not
subject to any limitation based upon Company Liquidity), and
(c) in cash in any amount if and only if such Big 5 dividend or
other distribution under this clause (c) is used either to
repurchase, acquire or redeem issued and outstanding capital stock
of Parent or to pay a cash dividend thereon; provided that such Big
5 dividend or other distribution under this clause (c) may not be
declared or paid if a Default or Event of Default is then in
existence or will be in existence after giving effect to the payment
of such dividend, or if, after giving effect to the making of such
dividend or other distribution under this clause (c), there shall be
less than $30,000,000 in Company Liquidity, subject to the
following;
(1) prior to declaring any dividend under §6.10G.(i)(c),
Big 5 shall submit to Agent a certificate signed by the
President, Senior Vice President, Vice President, Controller,
or Treasurer of Big 5 in form and substance satisfactory to
Agent, which certificate must: (i) state the proposed amount
of the dividend and proposed dividend payment date, which
date must be within ninety (90) days of the date of the
certificate; (ii) certify that no Default or Event of Default
has occurred and is continuing; (iii) certify that, to the
best of such officer’s knowledge and belief after diligent
investigation, after giving effect to the proposed dividend,
no Default or Event of Default is expected to occur during
the period from the dividend’s declaration date to and
including its payment date and the Company Liquidity will be
equal to or greater than $30,000,000 at all times during such
period; and (iv) attach reasonably detailed projections of
Company Liquidity, Fixed Charge Coverage Ratio, and Senior
Secured Debt Coverage Ratio in support of such
certifications,
(2) if a Default or Event of Default exists on the
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dividend payment date or would result from the dividend
payment, the dividend may nonetheless be paid on the dividend
payment date set forth in the certificate delivered to Agent
so long as, after giving effect to such dividend, Company
Liquidity is equal to or greater than $30,000,000 and no
Default or Event of Default existed on the date of the
certificate delivered to Agent or on the dividend declaration
date; and
(ii) Big 5 Services may declare and pay dividends and distributions to
Big 5 to the extent permitted by applicable law.”
(g) Section 7.1. Section 7.1 of the Financing Agreement is hereby amended and
restated to read in its entirety as follows:
“7.1 Interest on the Revolving Loans shall be payable monthly as of the end
of each month and shall be at a rate equal to the sum of the Chase Bank Rate
or Libor, as applicable, plus an applicable interest rate margin determined
in accordance with the following:
(a) From May 24, 2006, through September 30, 2006, interest on the
Revolving Loans shall be equal to the Chase Bank Rate plus 0.00% and Libor
plus 1.25%, as applicable.
(b) Except as provided in Section 7.1(c), from October 1, 2006, and
thereafter the applicable interest rate margin on the Revolving Loans shall
be in the amount set forth in the table below that corresponds to the
average daily outstanding aggregate balance of Revolving Loans and undrawn
Letters of Credit for the most recently ended twelve consecutive month
period, adjusted quarterly:
| Average Trailing | ||||||||
| 12 Month | ||||||||
| Revolving Loans | ||||||||
| and undrawn | Chase | |||||||
| Letters of Credit | Bank Rate | Libor | ||||||
| Balance | Margin | Margin | ||||||
Less than $80,000,000 |
0.00 | % | 1.00 | % | ||||
$80,000,000 to $100,000,000 |
0.00 | % | 1.25 | % | ||||
More than $100,000,000 |
0.00 | % | 1.50 | % | ||||
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(c) If EBITDA (as evidenced by the most recent fiscal quarter’s
financial statement) for the four fiscal quarters then ended is less than or
equal to $50,000,000, the applicable margin for Revolving Loans (other than
Libor Loans) will be 0.25% and the applicable margin for Libor Loans will be
1.75%.”
(h) Section 7.2. Section 7.2 of the Financing Agreement is hereby amended and
restated to read in its entirety as follows:
“7.2. Interest on the Term Loan shall be payable monthly as of the end of
each month and shall be equal to the Chase Bank Rate plus 1.00% and Libor
plus 3.00%, as applicable.”
(i) Section 7.3. The first sentence of Section 7.3 of the Financing Agreement
is hereby amended and restated to read in its entirety as follows:
“A change in the interest rate margin for Revolving Loans will become
effective the first day of each quarter for which a change of margin is
appropriate.”
(j) Section 7.3. Section 7.3 of the Financing Agreement is hereby amended by
deleting therefrom the following sentence in its entirety:
“The change in the interest rate margins for the Term Loan will become
effective the first Business Day after the Term Loan balance is reduced to
$10,000,000 or less.”
(k) Section 10. Section 10 of the Financing Agreement is hereby amended to
extend the date for termination set forth therein by replacing the date “March 20, 2008”
therein with the date “March 20, 2011”.
3. Fees. In addition to all other fees payable pursuant to the terms of the Financing
Agreement, the Companies agree to pay on the date hereof to the Agent, for the benefit of those
Lenders increasing their Commitments in connection with this Amendment and any new Lenders making
Commitments in connection with this Amendment, ratably in accordance with the amount of such
increase or new Commitment, a line increase fee equal to $37,500. Such fee shall be due and
payable in full on the date of this Amendment, may be charged to the Companies’ loan account as a
Revolving Loan, and shall be deemed fully-earned as of the date of this Amendment and
non-refundable for any reason once paid.
4. Conditions Precedent. The obligations of the Agent and of the Lenders hereunder
will be effective only upon satisfaction of each of the following conditions precedent, each in a
manner in form and substance acceptable to the Agent:
(a) Receipt by the Agent of a fully-executed original of this Amendment and the fee
letter accompanying this Amendment;
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(b) Receipt by the Agent and the Lenders of such financial information and projections
as they may request, including, without limitation, the projections required to be delivered
pursuant to the Financing Agreement with respect to fiscal year 2006;
(c) No Defaults or Events of Default shall have occurred or be continuing and there
shall not have been any material adverse change in the financial condition, business,
prospects, profitability, assets or operations of the Companies;
(d) Receipt by the Agent of the fees required to be paid pursuant to Section 3
above and all amounts payable pursuant to Section 12 below; and
(e) The Agent shall have received such other documents, certificates, opinions, and
information that the Agent shall require, each in form and substance satisfactory to the
Agent in its sole discretion.
5. Companies’ Representations and Warranties. To induce the Agent and the Lenders to
enter into this Amendment, each of the Companies hereby represents and warrants to the Agent and
each of the Lenders as of the date hereof as follows:
(a) This Amendment has been duly executed and delivered by such Company, constitutes a
legal and valid binding obligation of such Company enforceable against such Company in
accordance with its terms and has been duly authorized by all necessary corporate action.
(b) The representations and warranties contained in the Financing Agreement are, both
before and after giving effect to this Amendment, true and correct in all material respects
except to the extent any such representation or warranty is expressly stated to have been
made as of a specific date, in which case each such representation and warranty is true and
correct as of such specific date, and no Default or Event of Default has occurred and is
continuing.
6. Reaffirmation. Except as specifically modified by this Amendment, the Financing
Agreement and the other Financing Documents shall remain in full force and effect in accordance
with their respective terms and are hereby ratified, reaffirmed and confirmed by the Companies.
7. Failure to Comply. Any failure to comply with the terms and conditions of this
Amendment will constitute an Event of Default under the Financing Agreement.
8. Counterparts. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one and the same
instrument. Delivery of a signed counterpart of this Amendment by facsimile or electronic file
image is as effective as delivery of an original, ink-signed counterpart.
9. Governing Law; Successors and Assigns. The validity, interpretation and
enforcement of this Amendment shall be governed by the laws of the State of
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California. This
Amendment shall be binding upon and shall inure to the benefit of the Companies, the Agent, and
their respective successors and assigns.
10. Waiver of Jury Trial. Each of the Companies, the agent, and each Lender,
hereby waives any right to a trial by jury in any action or proceeding arising out of or relating
to this Amendment or the transactions contemplated hereunder.
11. Judicial Reference. The parties to this Amendment prefer that any dispute between
or among them be resolved in litigation subject to a jury trial waiver as set forth in Section
10 above and in Section 13.7 of the Financing Agreement. If a pre-dispute jury trial waiver of
the type provided for in Section 10 above and in Section 13.7 of the Financing Agreement is
unenforceable in litigation to resolve any dispute, claim, cause of action or controversy under
this Amendment, the Financing Agreement or any other Loan Document (each, a “Claim”) in the venue
where the Claim is being brought pursuant to the terms of the Financing Agreement (as amended
hereby), then, upon the written request of any party, such Claim, including any and all questions
of law or fact relating thereto, shall be determined exclusively by a judicial reference
proceeding. Except as otherwise provided in Section 13.7 of the Financing Agreement, venue for any
such reference proceeding shall be in the state or federal court in the County or District where
venue is appropriate under applicable law (the “Court”). The parties shall select a single neutral
referee, who shall be a retired state or federal judge. If the parties cannot agree upon a referee
within 15 days, the Court shall appoint the referee. The referee shall report a statement of
decision to the Court. Notwithstanding the foregoing, nothing in this paragraph shall limit the
right of any party at any time to exercise self-help remedies, foreclose against collateral or
obtain provisional remedies (including without limitation, requests for temporary restraining
orders, preliminary injunctions, writs of possession, writs of attachment, appointment of a
receiver, or any orders that a court may issue to preserve the status quo, to prevent irreparable
injury or to allow a party to enforce its liens and security interests). The parties shall bear
the fees and expenses of the referee equally unless the referee orders otherwise. The referee also
shall determine all issues relating to the applicability, interpretation, and enforceability of
this Section 11. The parties acknowledge that any Claim determined by reference pursuant
to this Section 11 shall not be adjudicated by a jury.
12. Attorneys’ Fees; Costs. The Company agrees to pay, on demand, all attorneys’ fees
and costs incurred in connection with the negotiation, documentation and execution of this
Amendment. Except as expressly provided by Section 11 above to the contrary in connection
with a judicial referee, if any legal action or proceeding shall be commenced at any time by any
party to this Amendment in connection with its interpretation or enforcement, the prevailing party
or parties in such action or proceeding shall be entitled to reimbursement of its reasonable
attorneys’ fees and costs in connection therewith, in addition to all other relief to which the
prevailing party or parties may be entitled.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the date first
written above.
| BIG 5 CORP., | ||||||
| a Delaware corporation | ||||||
| By: Name: |
/s/ Xxxxxx X. Xxxxxx
|
|||||
| Title: | President and Chief Executive Officer | |||||
| BIG 5 SERVICES CORP., | ||||||
| a Virginia corporation | ||||||
| By: Name: |
/s/ Xxxx X. Xxxxx
|
|||||
| Title: | Senior Vice President and General Counsel | |||||
| THE CIT GROUP/BUSINESS CREDIT, INC., | ||||||
| a New York corporation | ||||||
| By: Name: |
/s/ Xxxxxx Xxxxxx
|
|||||
| Title: | Vice President | |||||
| Revolving Loan Commitment: $55,000,000 | ||||||
| Term Loan Commitment: $10,000,000 | ||||||
| BANK OF AMERICA, N.A, | ||||||
| (as Lender) | ||||||
| By: Name: |
/s/ Xxxxxxx Xxxx
|
|||||
| Title: | Vice President | |||||
| Revolving Loan Commitment: $64,000,000 | ||||||
| Term Loan Commitment: $0 | ||||||
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| PNC BANK, NATIONAL ASSOCIATION | ||||||
| (as Lender) | ||||||
| By: Name: |
/s/ Xxxxxx Sha Xxxxxx
|
|||||
| Title: | Vice President | |||||
| Revolving Loan Commitment : $11,000,000 | ||||||
| Term Loan Commitment: $0 | ||||||
| GE BUSINESS CAPITAL CORPORATION | ||||||
| f/k/a Transamerica Business Capital Corporation | ||||||
| (as Lender) | ||||||
| By: Name: |
/s/ Xxxx X. Xxxxx
|
|||||
| Title: | Duly Authorized Signatory | |||||
| Revolving Loan Commitment: $31,666,667 | ||||||
| Term Loan Commitment: $3,333,333 | ||||||
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Each of the undersigned hereby consents to and acknowledges the terms and conditions of the
foregoing Amendment and agrees that its Guaranty and each other document executed by it in favor of
CITBC remains in full force and effect.
| BIG 5 SPORTING GOODS CORPORATION, | ||||||
| a Delaware corporation | ||||||
| By: Name: |
/s/ Xxxxxx X. Xxxxxx
|
|||||
| Title: | President and Chief Executive Officer | |||||
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