THIRD AMENDMENT TO AMENDED AND RESTATED lOAN AND SECURITY AGREEMENT AND LIMITED WAIVER
EXHIBIT
99.1
THIRD
AMENDMENT TO AMENDED
AND
RESTATED lOAN AND SECURITY AGREEMENT
AND
LIMITED WAIVER
This
THIRD AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT AND LIMITED
WAIVER (this “Amendment”) is dated as of
March 2, 2009, 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 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,
the Borrower has 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 and is continuing, as follows (referred to herein as the
“Existing
Default”): the Borrower has failed to maintain the Fixed
Charge Coverage Ratio requirement in accordance with Section 10.3.1 of the
Loan Agreement for the Covenant Testing Period beginning on December 28, 2008,
including for the calendar month ended December 31, 2008.
WHEREAS,
the Borrower has also informed the Lenders and the Agent that certain other
potential Defaults or Events of Default may have occurred prior to the date of
this Amendment under the following sections of the Loan Agreement (referred to
herein as the “Potential
Defaults”): (a) the third sentence of Section 9.1.7 insofar
as the effect of general economic conditions in the United States as of the date
of this Amendment; (b) Section 9.1.17 as to
the Existing Default and the other Potential Defaults described herein;
(c) Section 9.1.21;
(d) the second sentence of Section 9.2 insofar
as the effect of general economic conditions in the United States as of the date
of this Amendment; and (e) Section 10.2.1 to the
extent relating to trade payables incurred in the Ordinary Course of
Business.
WHEREAS,
the Borrower has requested that the Lenders and the Agent waive the Existing
Defaults and the Potential Defaults and amend the Loan Agreement in certain
other respects and the Agent and the Lenders have agreed to such waiver and
amendments pursuant to the terms and conditions set forth herein;
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:
ARTICLE
I
DEFINITIONS
SECTION
1.1 Definitions. Initially
capitalized terms used but not otherwise defined in
this
Amendment have the meanings given thereto in the Loan Agreement, as amended
hereby.
ARTICLE
II
LIMITED
WAIVER
SECTION
2.1 Waiver. The
Agent and the Lenders hereby waive the Existing Default and the Potential
Defaults and agree not to exercise any rights or remedies available as a result
of the occurrence thereof.
SECTION
2.2 Limitation of
Waiver. The waiver granted in Section 2.1 above shall be
limited strictly as written and shall not be deemed to constitute a waiver of,
or any consent to noncompliance with, any term or provision of this Amendment,
the Loan Agreement or any other Loan Document, except as expressly set forth
herein. Further, the waiver granted in Section 2.1 above shall not
constitute a waiver of any other Default or Event of Default arising as a result
of the breach of any other term or provision of this Amendment (including any
breach of the minimum EBITDA covenant established pursuant to Section 3.5 below
for any period), the Loan Agreement or any other Loan Document or a waiver of
any rights or remedies arising as a result of any such other Defaults or Events
of Default.
ARTICLE
III
AMENDMENTS
SECTION
3.1 The definition
of “Applicable Margin” set forth in Section 1.1 of the
Loan Agreement is hereby amended and restated to read in its entirety as
follows:
Applicable Margin: with
respect to any Base Rate Loans, 2.00%, and with respect to any LIBOR Rate Loans,
4.50%.
SECTION
3.2 The
definition of “Charges Reserve” set forth in Section 1.1 of the
Loan Agreement is hereby amended and restated to read in its entirety as
follows:
Charges Reserve: the aggregate
of (a) all past due amounts owing by an Obligated Party to any
warehouseman, processor, repairman, mechanic, shipper, freight forwarder, broker
or other Person (other than a landlord) who possesses any Collateral or could
assert a Lien on any Collateral, plus (b) a
reserve at least equal to three months charges that could be payable to any such
Person (other than a landlord), unless it has executed a Lien Waiver, plus (c) a
reserve equal to all accrued Royalties, whether or not then due and payable by
any Obligated Party.
SECTION
3.3 The definitions
of “Covenant Testing Period”, “Covenant Testing Trigger Date”, and “Covenant
Testing Trigger Amount” set forth in Section 1.1 of the
Loan Agreement are hereby deleted in their entirety.
SECTION
3.4 The definition
of “Debt” set forth in Section 1.1 of the
Loan Agreement is hereby amended and restated to read in its entirety as
follows:
Debt: as applied to any
Person, without duplication, (a) all items that would be included as liabilities
on a balance sheet in accordance with GAAP, including Capital Leases, but
excluding trade payables incurred in the Ordinary Course of Business
that
have not
been made the subject of a promissory note, installment agreement, or other
similar instrument; (b) all Contingent Obligations; (c) all reimbursement
obligations in connection with letters of credit issued for the account of such
Person; and (d) in the case of Obligated Parties, the
Obligations. The Debt of a Person shall include any recourse Debt of
any partnership in which such Person is a general partner or joint
venturer.
SECTION
3.5 The definition
of “EBITDA” set forth in Section 1.1 of the
Loan Agreement is hereby amended and restated to read in its entirety as
follows:
EBITDA: determined on a
consolidated basis for Borrower and its Subsidiaries, net income, calculated
before interest expense, provision for income taxes, depreciation and
amortization expense, non-cash impairment charges, gains or losses arising from
the sale of capital assets, gains arising from the write-up of assets, and any
extraordinary gains (in each case, to the extent included in determining net
income).
SECTION
3.6 The definition
of “Fiscal Quarter” set forth in Section 1.1 of the
Loan Agreement is hereby amended and restated to read in its entirety as
follows:
Fiscal Quarter: each period of
three consecutive Fiscal Months, commencing on the first day of a Fiscal
Year.
SECTION
3.7 A new
definition of “Fiscal Month” is hereby added to Section 1.1 of the
Loan Agreement in proper alphabetical order to read in its entirety as
follows:
Fiscal Month: each fiscal
month of Borrower and its Subsidiaries for accounting and tax
purposes.
SECTION
3.8 The
definition of “Inventory Formula Amount” set forth in Section 1.1 of the
Loan Agreement is hereby amended and restated to read in its entirety as
follows:
Inventory Formula
Amount: the lesser of (i) the sum of 68% of the value of
Eligible Base Inventory, plus 50% of the Value
of Eligible Surplus Inventory; or (ii) 85% of the NOLV Percentage of Eligible
Inventory. Following March 2, 2009, based on the Inventory appraisal
effective as of December 28, 2008, the Inventory Formula Amount shall be
calculated using the following monthly NOLV percentages:
|
Month
|
NOLV
Percentage
|
|
March
|
73.7%
|
|
April
|
74.7%
|
|
May
|
75.8%
|
|
June
|
75.5%
|
|
July
|
73.3%
|
|
August
|
71.6%
|
|
September
|
74.1%
|
|
October
|
78.4%
|
|
November
|
78.3%
|
|
December
|
73.3%
|
|
January
|
72.9%
|
|
February
|
72.8%
|
Upon
receipt of each subsequent Inventory appraisal requested by Agent, the NOLV
Percentage will thereafter be updated to reflect the findings of such appraiser
and Agent will apply either clause (i) or clause (ii) above (whichever yields
the lesser amount) in calculating the Inventory Formula Amount.
SECTION
3.9 The definition
of “Restricted Investment” set forth in Section 1.1 of the
Loan Agreement is hereby amended and restated to read in its entirety as
follows:
Restricted Investment: any
Investment by Borrower or any of its Subsidiaries, other than
(a) Investments in Subsidiaries to the extent existing on the Closing Date;
(b) Cash Equivalents that are subject to Agent’s Lien and control, pursuant
to documentation in form and substance satisfactory to Agent; (c) Investments
made in Team Sales in the Ordinary Course of Business when no Event of Default
has occurred and is continuing or would result therefrom, and so long as the
aggregate net amount of such Investments made on or after March 2, 2009, does
not exceed $1,000,000 (it being understood that the “net” amount shall be
calculated as the aggregate Investment made in excess of collections received by
the Borrower in respect of amounts due to Team Sales from third parties); (d)
Investments made in Value Services in the Ordinary Course of Business consisting
of purchases and redemptions of gift card liabilities without the transfer of
cash; and (e) loans and advances permitted under Section 10.2.7.
SECTION
3.10 Section 9.1.7 of the
Loan Agreement is hereby amended and restated to read in its entirety as
follows:
9.1.7 Financial
Statements. The consolidated balance sheets, and related
statements of income, cash flow and shareholder’s equity, of Borrower and its
Subsidiaries that have been and are hereafter delivered to Agent and Lenders,
are prepared in accordance with GAAP, and fairly present the financial positions
and results of operations of Borrower and its Subsidiaries at the dates and for
the periods indicated. All projections delivered from time to time to
Agent and Lenders have been prepared in good faith, based on reasonable
assumptions in light of the circumstances at such time. Since March
30, 2008, there has been no change in the condition, financial or otherwise, of
Borrower or its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect, except due to the effect of general economic conditions
in the United States as of March 2, 2009. No financial statement
delivered to Agent or Lenders at any time contains any untrue statement of a
material fact, nor fails to disclose any material fact necessary to make such
statement not materially misleading. Borrower and each of its
Subsidiaries is Solvent.
SECTION
3.11 Section 9.1.17 of the
Loan Agreement is hereby amended and restated to read in its entirety as
follows:
9.1.17 No
Defaults. No event or circumstance has occurred or exists that
constitutes a Default or Event of Default that is continuing. Neither
any Obligated Party nor any of its Subsidiaries is in default, and no event or
circumstance has occurred or exists that with the passage of time or giving of
notice would constitute a default, under any Material Contract or in the payment
of any Borrowed Money. There is no basis upon which any party (other
than any Obligated Party or its Subsidiaries) could terminate a Material
Contract prior to its scheduled termination date.
SECTION
3.12 Section 9.1.21 of the
Loan Agreement is hereby amended and restated to read in its entirety as
follows:
Section 9.1.21
[Intentionally Omitted].
SECTION
3.13 Section 10.3.1 of the
Loan Agreement is hereby amended and restated to read in its entirety as
follows:
Section
10.3.1 Minimum
EBITDA. Achieve EBITDA:
(a) for
(i) the Fiscal Month ended February 22, 2009, of not less than ($2,700,000), and
(ii) the Fiscal Month ending March 29, 2009, of not less than
($3,500,000);
b) as of
each measurement date set forth below, on a cumulative basis for the period from
March 30, 2009, through such measurement date, of not less than the
corresponding amounts set forth below:
|
Measurement
Date
|
Minimum
EBITDA
|
|
April
26, 2009
|
($1,650,000)
|
|
May
24, 2009
|
($2,700,000)
|
|
June
28, 2009
|
($1,200,000)
|
|
July
26, 2009
|
($200,000)
|
|
August
23, 2009
|
$850,000
|
|
September
27, 2009
|
$800,000
|
|
October
25, 2009
|
($550,000)
|
|
November
22, 2009
|
($2,950,000)
|
|
December
27, 2009
|
$5,550,000
|
|
January
24, 2010
|
$5,300,000
|
|
February
21, 2010
|
$5,450,000
|
|
March
28, 2010
|
$5,350,000
|
(c) as of
the last day of each Fiscal Month thereafter, measured on a trailing twelve
Fiscal Month basis, of not less than $5,350,000.
SECTION
3.14 Exhibit B to the Loan
Agreement (Form of Compliance Certificate) is hereby replaced with the form of
Compliance Certificate attached hereto as Exhibit
B.
SECTION
3.15 The Borrower acknowledges and
agrees that the Borrower has engaged FTI Consulting, Inc., a certified
turnaround professional (the “Consultant”), which was chosen and approved by the
Borrower’s Board of Directors and that the Consultant is empowered to prepare
cash flow and operating budgets to be presented periodically to the Borrower’s
Board of Directors, copies of which will be promptly delivered to, and discussed
with, the Agent. As a material inducement to the Agent and the
Lenders to enter into this Amendment and provide the limited waiver set forth
above, the Borrower will continue to engage the Consultant (or another certified
turnaround professional chosen by the Borrower but reasonably acceptable to the
Agent and the Lenders) with such powers and duties until average daily
Availability is greater than 10% of the Revolver Commitment for three (3)
consecutive months. Any failure of the Borrower to comply with this
Section 3.15
shall constitute an Event of Default.
SECTION
3.16 The Borrower agrees to (i)
promptly cause Team Sales to execute and deliver to the Agent such agreements as
may reasonably be required to cause Team Sales to guaranty the
Obligations
and grant a first priority, perfected security interest (subject only to
Permitted Liens) to the Agent in each of the classes of assets as the Borrower
has granted as Collateral as security for the Obligations; (ii) as soon as
practicable, deliver to the Agent satisfactory certificates of existence, good
standing and tax status (as applicable) for Team Sales from the State of
California; and (iii) following delivery of the items required by clause (ii)
above, cause Team Sales to ratify its guaranty and security agreement (and other
agreements) delivered pursuant to clause (i) above and, if requested by the
Agent, cause counsel for Team Sales to deliver to the Agent a favorable opinion
covering the due authorization, execution, delivery and enforceability of such
documents and ratifications, non-contravention and perfection of the foregoing
security interests, all consistent with the opinions delivered on behalf of the
Borrower and Value Services on the Closing Date. Any failure of the
Borrower to comply with this Section 3.16 shall
constitute an Event of Default.
ARTICLE
IV
ACKNOWLEDGEMENTS
SECTION
4.1 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:
(a) Recitals
True. Each of the Recitals set forth above is true and
correct.
(b) 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.
(c) 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.
(d) No New Defaults. No
Default or Event of Default has occurred other than the Existing Default and the
Potential Defaults.
(e) 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.
(f) 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.
(g) 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 as otherwise set forth herein and in the First
Amendment, and 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).
The
acknowledgements, confirmations, representations, warranties, and agreements
made by the Obligated Parties above will survive the execution and delivery
hereof.
ARTICLE
V
CONDITIONS
PRECEDENT
SECTION
5.1 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.
(a) 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);
(b) No
Default or Event of Default shall have occurred and be continuing other than the
Existing Default and the Potential Defaults.
(c) The
Obligated Parties shall have delivered to the Agent an executed counterpart of
this Amendment;
(d) The
Obligated Parties shall have paid to the Agent all costs and expenses owed to
and/or incurred by the Agent arising in connection with this Amendment;
and
(e) 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.
ARTICLE
VI
MISCELLANEOUS
SECTION
6.1 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.
SECTION
6.2 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.
SECTION
6.3 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.
SECTION
6.4 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.
SECTION
6.5 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.
SECTION
6.6 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.
SECTION
6.7 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.
SECTION
6.8 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 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 THE OBLIGATED
PARTIES 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 INDEMNITEE 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”).
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.”
THE
OBLIGATED PARTIES ACKNOWLEDGE THAT THEY 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 Obligated Parties to sell or assign any rights
under the Loan Agreement and the other Loan Documents, the Obligated Parties
represent and warrant that they have not heretofore sold, assigned, transferred,
pledged hypothecated or purported to have sold, assigned, transferred, pledged
or hypothecated any Released Claim. The Obligated Parties further
represent and warrant that Obligated Parties are the sole Obligated Parties
under the Loan Agreement and the other Loan Documents and are the sole owner and
holder of all Released Claims.
SECTION
6.9 Representation by
Counsel. The Obligated Parties represent and warrant that they
have been represented by independent counsel throughout their negotiation,
review and execution of this amendment.
SECTION
6.10 Jointly Drafted
Agreement. This Amendment shall be construed as though each of
Agent, the Lenders 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]
IN WITNESS WHEREOF, the parties have
executed and delivered this Amendment as of the day and year first written
above.
SPORT
CHALET, INC.,
a
Delaware corporation
By:
/s/ ▇▇▇▇▇ ▇▇▇▇▇
Name:
▇▇▇▇▇ ▇▇▇▇▇
Title: Chairman
& CEO
SPORT
CHALET VALUE SERVICES, LLC,
a
Virginia limited liability company
By:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Manager
BANK OF
AMERICA, N.A.
By:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Name:
▇▇▇▇▇▇▇ ▇▇▇▇
Title:
SVP
Exhibit
B
Exhibit
B
to
Amended
and Restated Loan and Security Agreement
FORM OF COMPLIANCE
CERTIFICATE
Financial
Statement Date: ________________, 20__
To: Bank
of America, N.A., as Agent
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Attention: Business Capital/URGENT;
Portfolio Manager
Ladies
and Gentlemen:
Reference
is made to the Amended and Restated Loan and Security Agreement dated as of June
___, 2008, as amended (“Loan
Agreement”), among SPORT CHALET, INC., a Delaware corporation (“Borrower”), each of Borrower’s
Subsidiaries party thereto from time to time as Obligated Parties, BANK OF
AMERICA, N.A., as administrative agent (“Agent”) for the financial
institutions from time to time party to the Loan Agreement (“Lenders”), and such
Lenders. Terms are used herein as defined in the Loan
Agreement.
The
undersigned Senior Officer hereby certifies as of the date hereof that he/she is
the __________________ of Borrower, and that, as such, he/she is authorized to
execute and deliver this Certificate to Agent on the behalf of Borrower, and
that:
[Use
following paragraph 1 for fiscal year-end financial statements]
1. Attached
hereto as Schedule
1 are the year-end audited financial statements of Borrower and its
Subsidiaries required by Section
10.1.2(a) of the Loan Agreement for the Fiscal Year ended as of the
above date, together with the report and opinion of an independent certified
public accountant required by such section.
[Use
following paragraph 1 for fiscal quarter-end financial statements]
1. Attached
hereto as Schedule
1 are the unaudited financial statements required by Section
10.1.2(b) of the Loan Agreement for the Fiscal Quarter ended as of
the above date. Such financial statements fairly present in all
material respects the financial condition, results of operations and cash flows
of Borrower and its Subsidiaries in accordance with GAAP as at such date and for
such period, subject to normal year-end adjustments and the absence of
footnotes.
[Use
following paragraph 1 for month -end financial statements]
1. Attached
hereto as Schedule
1 are the unaudited financial statements required by Section
10.1.2(c) of the Loan Agreement for the month ended as of the above
date. Such financial statements fairly present in all material
respects the financial condition, results of operations and cash flows of
Borrower and its Subsidiaries in accordance with GAAP as at such date and for
such period, subject to normal year-end adjustments and the absence of
footnotes.
2. The
undersigned has reviewed and is familiar with the terms of the Loan Agreement
and has made, or has caused to be made under his/her supervision, a detailed
review of the transactions and condition (financial or otherwise) of
Borrower and its Subsidiaries during the accounting period covered by the
attached financial statements.
3. A
review of the activities of Borrower and its Subsidiaries during such fiscal
period has been made under the supervision of the undersigned with a view to
determining whether during such fiscal period Borrower and its consolidated
Subsidiaries performed and observed all their Obligations under the Loan
Documents.
4. [select one:]
[To the
knowledge of the undersigned during such fiscal period, each Obligated Party
performed and observed each covenant and condition of the Loan Documents
applicable to it, and no Default or Event of Default has occurred and is
continuing.]
--or--
[The
following covenants or conditions have not been performed or observed and the
following is a list of each such Default or Event of Default and its nature and
status:]
5. The
representations and warranties contained in Section 9 of the Loan
Agreement and all representations and warranties of any Obligated Party that are
contained in any document furnished at any time under or in connection with the
Loan Documents, are true and correct in all material respects (without giving
effect to any materiality qualifiers contained therein) on and as of the
date hereof, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and correct
in all material respects (without giving effect to any materiality qualifiers
contained therein) as of such earlier date, and except that for purposes of
this Compliance Certificate, the representations and warranties contained in
Section 9.1.7
of the Loan Agreement shall be deemed to refer to the most recent statements
furnished pursuant to clauses (a) and (b), respectively, of
Section 10.1.2
of the Loan Agreement, including the statements in connection with which this
Compliance Certificate is delivered.
6. The
information set forth on Schedule 2 attached
hereto is true and accurate on and as of the date of this
Certificate.
IN
WITNESS WHEREOF, the undersigned has executed this Certificate as of
________________, 20__.
BORROWER:
SPORT
CHALET, INC.,
A
Delaware corporation
By:
Name:
Title:
SCHEDULE
1
to
Compliance Certificate
Financial
Statements
[attached]
SCHEDULE
2
to
Compliance Certificate
($ in
000’s)
FINANCIAL
COVENANT ANALYSES AND CALCULATIONS
For the
Month/Fiscal Quarter/Year ended __________________, 20__ (“Statement Date”) and
calculated as of the [month
ended on the Statement Date][period beginning April 1, 2009, and ended on the
Statement Date][twelve consecutive month period ended on the Statement
Date] (the “Subject
Period”)
|
I.
|
EBITDA for
the Subject Period:
|
|
1.
|
Net
income:
|
$__________
|
|
|
2.
|
Interest
expense:
|
$__________
|
|
|
3.
|
Provision
for income taxes:
|
$__________
|
|
|
4.
|
Depreciation
expenses:
|
$__________
|
|
|
5.
|
Amortization
expenses:
|
$__________
|
|
|
6.
|
Non-Cash
Impairment Charges:
|
$__________
|
|
|
7.
|
Gains
arising from the sale of capital assets:
|
$__________
|
|
|
8.
|
Losses
arising from the sale of capital assets:
|
$__________
|
|
|
9.
|
Gains
arising from the write-up of assets:
|
$__________
|
|
|
10.
|
Extraordinary
gains:
|
$__________
|
|
|
11.
|
EBITDA
(Lines I.1 + 2 + 3 + 4 + 5 +6 – 7 + 8 – 9 – 10
|
||
|
(in
each case, to the extent included in determining net
income)):
|
$__________
|
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