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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section l3 or l5(d) of the
Securities Exchange Act of l934
Date of Report (Date of earliest event reported) March 16, 1998
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SLM INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 34-0-19596 13-36-32297
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(State of other juris- (Commission (I.R.S. Employer
diction of incorporation) File Number) Identification No.)
c/o Maska U.S.,Inc.
139 HARVEST LANE, P.O. BOX 1200, WILLISTON, VT 05495
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(Address of principal executive offices) (Zip Code)
(802) 872-4226
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former name or former address, if changed since last report)
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<PAGE>
Item 5. Other Events.
On March 13, 1998, SLM International, Inc. (the "Company") and its U.S.
subsidiary, Maska U.S., Inc., consummated Waiver and Amendment No. 4 to Credit
Agreement dated as of March 6, 1998 (the "Credit Agreement Amendment") with the
lenders referred to therein (the "Lenders") and The Chase Manhattan Bank, as
agent for the Lenders ("Chase").
Pursuant to the Credit Agreement Amendment, the Lenders, among other
things: (i) consented to the redemption of all the Company's 14% Senior Secured
Notes due April 1, 2004 (the "Senior Notes") issued pursuant to the Indenture,
dated as of April 1, 1997, among the Company, the guarantors named therein and
The Bank of New York, as trustee; (ii) consented to the conversion of certain
trade payables and long term indebtedness in an aggregate amount of $18,000,000
owing to the Company by one of its subsidiaries, Sport Maska Inc., into capital
stock of such subsidiary (the "Conversion"); provided at the time of such
Conversion such stock is pledged as collateral to the Lenders; and (iii) amended
the revolving credit termination date to permit a one-year extension thereof to
April 11, 2001. After giving effect to the Credit Agreement Amendment, the total
aggregate commitment of the Lenders is $60,000,000.
Pursuant to the Credit Agreement Amendment, the proceeds of the new term
loans may only be used to redeem the Senior Notes as described below. The
Company intends to effect the Conversion on or about March 31, 1998.
On March 16, 1998, Sport Maska Inc., a corporation amalgamated under the
laws of the Province of New Brunswick ("SMI") and a wholly-owned subsidiary of
the Company, consummated Amending Agreement No. 2, dated as of March 10, 1998 to
the Credit Agreement dated as of April 1, 1997 (the "Canadian Amendment")
between SMI and The Chase Manhattan Bank of Canada ("Chase Canada"). Pursuant to
the Canadian Amendment, Chase Canada, among other things, amended the revolving
credit termination date, in the same manner as the Credit Agreement Amendment.
On March 16, 1998, the Company redeemed all of its Senior Notes. The
redemption consisted of $29,500,000 in principal amount of Senior Notes,
together with accrued interest thereon, and a 1% prepayment penalty.
<PAGE>
Item 7. Financial Statements and Exhibits.
(c) Exhibits
1. Waiver and Amendment No. 4 to Credit Agreement dated as of March
6, 1998.
2. Amending Agreement No. 2, dated as of March 10, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SLM INTERNATIONAL, INC.
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(Registrant)
/s/ R. J. DAVID
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Russell J. David (Signature)
Senior Vice President, Finance
Date: March 24, 1998
WAIVER AND AMENDMENT NO. 4 TO CREDIT AGREEMENT
WAIVER AND AMENDMENT NO. 4 TO CREDIT AGREEMENT, dated as of March 6, 1998
(this "Waiver and Amendment"), by and among SLM International, Inc., a Delaware
corporation ("Parent"), its wholly-owned subsidiary Maska U.S., Inc. ("Maska"),
a Vermont corporation (the Parent and such wholly-owned subsidiary being herein
referred to jointly and severally as the "Borrowers"), the lenders (the
"Lenders") named in Schedules 2.01(a) and 2.01(b) to the Credit Agreement (as
hereinafter defined) and The Chase Manhattan Bank, as agent for the Lenders (in
such capacity, the "Agent").
WHEREAS, the Borrowers, #1 Apparel, Inc., a Delaware corporation (which has
been merged into Maska), the Lenders, and the Agent entered into the Credit
Agreement dated as of April 1, 1997 (as amended, modified or supplemented from
time to time in accordance with its terms, the "Credit Agreement");
WHEREAS, the Borrowers are requesting the Lenders to advance additional
funds on a term loan and revolving loan basis to be utilized to redeem the
Senior Secured Notes;
WHEREAS, effective on or about March 31, 1998, the Parent wishes to convert
trade payables and long term Indebtedness in the approximate amounts set forth
on Schedule A hereto owing by Sport Maska, Inc. ("Sport Maska") to the Parent
into equity; and
WHEREAS, the Borrowers and the Lenders desire to amend certain other
provisions of the Credit Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. Defined Terms. Unless otherwise specifically defined herein, all capitalized
terms used herein shall have the respective meanings ascribed to such terms in
the Credit Agreement.
2. Waiver to Credit Agreement. Subject to the conditions as to effectiveness set
forth in Paragraph 5 of this Waiver and Amendment and the Amendment Effective
Date (as hereinafter defined), the Agent and each of the Lenders hereby waive
(a) the provisions of Sections 4.14 and 7.15 of the Credit Agreement with
respect to the redemption of the Senior Secured Notes (b) the provisions of
Sections 7.04 and 7.06(f) of the Credit Agreement with respect to the conversion
of Indebtedness owing by Sport Maska to the Parent into equity and (c) the
provisions of Section 6.05(c), as such provisions relate to the delivery of
monthly financial statements of the Parent and its consolidated Subsidiaries for
the month of January, 1998 as described therein; provided, that such financial
statements shall be delivered concurrently with the delivery of the annual
financial statements described in Section 6.05(a). Upon the Amendment Effective
Date, Sections 7.15(a), 7.15(b) and 7.15(c) of the Credit Agreement as each
relates to the Senior Secured Notes shall be of no further force or effect.
<PAGE>
3. Amendment to Credit Agreement. Subject to the conditions as to effectiveness
set forth in Paragraph 5 of this Waiver and Amendment and the Amendment
Effective Date (as hereinafter defined), the Credit Agreement is hereby amended
as follows:
a. The first two sentences of the recital to the Credit Agreement are
hereby amended in their entirety to read as follows:
"The Borrowers have applied to the Lenders for Credits (such term
and all other capitalized terms used in this paragraph having the
respective meanings ascribed to such terms above or hereinafter) up to
an aggregate principal amount of $60,000,000 in the form of (a) a Term
Loan to the Borrowers in an aggregate principal amount of $15,000,000
and (b) Revolving Credit Loans to the Borrowers at any time and from
time to time prior to the Revolving Credit Termination Date in an
aggregate principal amount not in excess of $45,000,000 at any time
outstanding. The Agent shall also issue a Canadian Letter of Credit in
the maximum amount of $25,000,000 to support borrowings of the
Canadian Borrower under the Canadian Credit Agreement to the extent
and in the manner provided in this Agreement. The proceeds of the Term
Loan shall be used to finance the redemption of the Senior Secured
Notes. "
b. In Section 1.01 of the Credit Agreement, the following definitions are
hereby added as follows:
" "Debt Service Coverage Ratio" shall mean, with respect to the
Parent and its Consolidated subsidiaries on a Consolidated basis, the
ratio of (i) Net Cash Flow for the four most recent consecutive fiscal
quarters ending on or prior to the date of determination to (ii) the
aggregate Debt Service Expense for the four consecutive fiscal
quarters immediately following the date of determination."
" "Inventory Amount" shall mean at any time an amount designated
by the Borrowers not to exceed (x) $20,000,000 less (y) the amount
designated by the Borrowers and confirmed to the Agent in the "SLM
Combined Totals" section under the column entitled "Canadian Totals"
on the most recently delivered certificate of Borrowing Base, in the
form of Schedule 6.05(j) hereof."
" "Mandatory Prepayment" shall mean an amount equal to fifty
percent (50%) of Excess Cash Flow, if any, of the Parent and its
Consolidated subsidiaries on a Consolidated basis for the Fiscal Year
then ended, but not to exceed $1,250,000 in any Fiscal Year."
" "Net Cash Flow" shall mean, with respect to the Parent and its
Consolidated subsidiaries on a Consolidated basis, for any period,
without duplication of addition or subtraction of items, (A) the sum
for such period of (i) Net Income, (ii) depreciation and amortization
and (iii) other noncash items
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properly deducted in arriving at Net Income minus (B) all Capital
Expenditures during such period."
c. In Section 1.01 of the Credit Agreement, the following terms are
hereby deleted:
"Cash Interest Expense"
"Interest Coverage Ratio"
"Seasonal Amount"
d. In Section 1.01 of the Credit Agreement, the definition of
"Availability" 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 Total Revolving Credit Commitment less the Canadian
Letter of Credit Usage 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 Agent in its reasonable exclusive judgment upon
notice to the Borrowers including, without limitation, reserves
reflecting the risk of suppliers repossessing shipped goods and
reserves relating to Liens permitted by Sections 7.01(b) and 7.01(c)
hereof and (y) the Domestic Letter of Credit Usage."
e. In Section 1.01 of the Credit Agreement, the definitions of "Debt
Service Expense" and "Excess Cash Flow" are hereby amended in their
entirety to read as follows:
" "Debt Service Expense" shall mean, for the Parent and its
Consolidated subsidiaries on a Consolidated basis, the aggregate of
regularly scheduled principal payments due on the Term Loans as set
forth in Section 2.04(c) and the aggregate of scheduled principal
payments on other Indebtedness, in each case, for the four consecutive
fiscal quarters immediately following the date of determination of
Debt Service Expense."
" "Excess Cash Flow" shall mean, for each Fiscal Year of the
Parent and its Consolidated subsidiaries on a Consolidated basis, the
amount, if any, by which Funds from Operations for such Fiscal Year
exceeds the sum (a) of the Debt Service Expense for the immediate
succeeding four fiscal quarters plus (b) Capital Expenditures paid in
cash and not financed with permitted Indebtedness during such Fiscal
Year."
f. In Section 1.01 of the Credit Agreement, the definitions of "Final
Maturity Date" and "Revolving Credit Termination Date" are hereby
amended to provide in their entirety as follows:
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" "Final Maturity Date" shall mean April 11, 2000 or if the
Revolving Credit Termination Date is extended pursuant to the terms
thereof, then April 11, 2001."
" "Revolving Credit Termination Date" shall mean the earlier to
occur of (i) April 11, 2000 (or April 11, 2001, if so extended by the
Agent in its sole discretion upon notice to the Borrowers given no
later than February 11, 2000) and (ii) such earlier date on which the
Revolving Credit Commitment shall terminate, expire or be canceled in
accordance with the terms of this Agreement."
g. In Section 1.01 of the Credit Agreement, the definition of "Interest
Margin" is hereby amended to provide in its entirety as follows:
" "Interest Margin" shall mean, with respect to any Loan, the
amount as set forth in the last paragraph hereof as such amount shall
be adjusted in accordance with the terms of this definition. The
Interest Margin shall be adjusted thereafter in accordance with the
table set forth below, on the first Business Day of the month
following the delivery of the financial statements to the Agent
required pursuant to Sections 6.05(a) and 6.05(b), together with the
corresponding compliance certificate required pursuant to Section
6.05(e), commencing with the financial statements and certificate for
the period ending March 31, 1998, or if a Default or Event of Default
shall have occurred and be continuing, then at the highest Interest
Margin provided for herein:
<TABLE>
<CAPTION>
Revolving Credit Revolving Credit Term Eurodollar Term Alternate
Eurodollar Loan Alternate Base Loan Loan Interest Base Loan
Total Funded Debt Ratio Interest Margin Interest Margin Margin Interest Margin
- ----------------------- --------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Greater than 4.50:1.00 2.75% 1.00% 3.00% 1.25%
Equal to or less than
4.50:1.00 but greater than
or equal to 3.50:1.00 2.50% 0.75% 2.75% 1.00%
Less than 3.50:1.00 but
greater than or equal to
2.50:1.00 2.25% 0.50% 2.50% 0.75%
Less than 2.50:1.00 but
greater than or equal to
2.00:1.00 2.00% 0.25% 2.50% 0.50%
Less than 2.00:1.00 but
greater than or equal to
1.50:1.00 1.75% 0.00% 2.00% 0.25%
Less than 1.50:1.00 1.50% 0.00% 1.75% 0.25%
</TABLE>
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The LIBO Rate Interest Margin for (i) Revolving Credit Eurodollar
Loans shall be 1.75% and (ii) Term Eurodollar Loans shall be 2.00%;
each shall thereafter be adjusted in accordance with the provisions
hereof. The Alternate Base Rate Interest Margin for (i) Revolving
Credit Alternate Base Loans shall be 0.00% and (ii) Term Alternate
Base Loans shall be 0.25%; each shall thereafter be adjusted in
accordance with the provisions hereof."
h. In Section 1.01 of the Credit Agreement, the definition of "Total
Funded Debt" is hereby amended to provide in its entirety as follows:
""Total Funded Debt" shall be computed for the Parent and its
Consolidated subsidiaries on a Consolidated basis at the end of each
fiscal quarter based on the average funded debt outstanding for the
previous four quarter fiscal period, provided, however, that for the
fiscal quarters ended March 31, 1998, June 30, 1998 and September 30,
1998, such calculation shall be made based on the one, two or three
quarter period then ended; for purposes hereof, funded debt shall
include all Indebtedness of the Parent and its Consolidated
subsidiaries on a Consolidated basis outstanding at such time which
matures more than one year after the date of calculation, and any such
Indebtedness maturing within one year from such date of calculation
which is renewable or extendable at the option of the obligor to a
date more than one year from such date and including in any event any
outstanding Revolving Credit Loans and Domestic Letters of Credit and
outstanding revolving credit loans and letters of credit due under the
Canadian Credit Agreement."
i. In Section 1.01 of the Credit Agreement, the definition of "Total
Funded Debt Ratio" is hereby amended to provide in its entirety as
follows:
""Total Funded Debt Ratio" shall mean for the Parent and its
Consolidated subsidiaries on a Consolidated basis at the end of each
fiscal quarter, the ratio of (i) Total Funded Debt as computed for the
applicable period then ended to (ii) EBITDA (with an adjustment to
exclude any special, one-time, restructuring or non-recurring charges
up to an aggregate of $500,000 for any consecutive four quarter
period) of the Parent and its Consolidated subsidiaries on a
Consolidated basis for the four quarter period then ended on the date
of determination."
j. In Section 1.01 of the Credit Agreement, the definition of "Vermont
Litigation Recovery" is hereby amended to provide in its entirety as
follows:
""Vermont Litigation Recovery" shall mean any recovery by Maska
U.S., Inc. net of any settlement payments made by Maska U.S., Inc. to
other claimants derived from the civil action entitled Maska U.S.,
Inc. vs. Kansas General
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<PAGE>
Insurance Company, et al., Case Number 1:93-CV-309, pending in the
United States District Court for the District of Vermont."
k. Sections 2.01(a) and 2.01(b) of the Credit Agreement are hereby
amended in their entirety to read as follows:
"(a) Subject to the terms and conditions and relying on the
representations and warranties herein set forth, each Lender,
severally and not jointly, agrees to make a Term Loan to the Borrowers
on the Closing Date and upon the effective date of Waiver and
Amendment No. 4 to the Credit Agreement, dated as of March 6, 1998, by
and among the Borrowers and the Agent, in a principal amount not to
exceed the difference between (x) the then unpaid principal balance of
such Lender's Term Loan and (y) the amount of such Lender's Term Loan
Commitment.
(b) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Lender,
severally and not jointly, agrees to make Revolving Credit Loans to
the Borrowers, 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 such
Lender's Revolving Credit Commitment. Notwithstanding the foregoing,
the aggregate principal amount of Revolving Credit Loans outstanding
at any time to the Borrowers shall not exceed (1) the lesser of (a)
the Total Revolving Credit Commitment (as such amount may be reduced
pursuant to this Agreement including, without limitation, Section 2.07
hereof), minus the Canadian Letter of Credit Usage 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,
plus (iii) fifty percent (50%) of the aggregate undrawn amount of all
outstanding Domestic Letters of Credit for the purchase of inventory
consigned to the Agent (such sum referred to herein as the "Borrowing
Base"), minus (2) the Domestic Letter of Credit Usage at such time
(not to exceed the limitations set forth in Section 2.17(a) hereof at
any time). 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 the Agent) and a compliance
certificate from a Responsible Officer of the Borrowers presenting its
computation will be delivered to the Agent in accordance with Section
6.05 hereof."
l. In Section 2.04(c) of the Credit Agreement, the first paragraph and
accompanying chart is hereby amended to provide in its entirety as
follows (such payment schedule replaces any existing payment schedule
to Term Loans):
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"(c) The aggregate principal amount of the Term Loan as evidenced
by the Term Notes, shall be payable in consecutive quarterly
installments (the date of each such installment, a "Repayment Date")
each in the amount of $625,000 payable on the first day of each fiscal
quarter, commencing April 1, 1998, and such payments shall be
distributed ratably among the Lenders in accordance with their
respective Term Loan Commitments."
m. In Section 2.07(c) of the Credit Agreement, the subsection is hereby
amended by replacing the words "Section 2.09(d)" with the words
"Sections 2.09(d) and 2.09(e)".
n. In Section 2.09(d) of the Credit Agreement, the subsection is hereby
amended by replacing the words "(or 50% in the case of (iii) above)"
with the words "(up to $4,000,000 in the case of the Vermont
Litigation Recovery)."
o. A new Section 2.09(e) will be added as follows and the remaining
subsections will be renumbered accordingly:
"(e) Within 90 days of the end of each Fiscal Year of the Parent,
commencing with the Fiscal Year ended December 31, 1998, the Borrowers
shall make a mandatory prepayment of the Loans in an amount equal to
the Mandatory Prepayment for the Fiscal Year then ended, such
prepayment to be applied as set forth in paragraph (g) below."
p. In renumbered Section 2.09(g) of the Credit Agreement, the phrase
"Prepayments made pursuant to paragraph (d) or (e)(i) above shall be
applied as follows" is hereby replaced with the phrase "Prepayments
made pursuant to paragraph (d), (e) or (f)(i) above shall be applied
as follows."
q. In Section 2.17(b) of the Credit Agreement, the figure "$35,000,000"
wherever it appears is hereby amended by replacing it with
"$25,000,000 and the words "(the Canadian Letter of Credit" are hereby
replaced by the words "(as from time to time amended, the Canadian
Letter of Credit."
r. Section 4.14(a) of the Credit Agreement is hereby amended to provide
in its entirety as follows:
"(a) All proceeds of the borrowing under the Total Term Loan
Commitment shall be used to (i) partially finance the payments to be
made pursuant to the Plan of Reorganization and (ii) redeem the Senior
Secured Notes."
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s. In Section 6.05(j) of the Credit Agreement, the phrase "after the end
of each week (but no later than Wednesday)" is hereby replaced with
the phrase "after each semi-monthly period."
t. Section 7.09 is hereby amended to provide in its entirety as follows:
"SECTION 7.09. Debt Service Coverage Ratio. Permit the Debt
Service Coverage Ratio for the fiscal quarters ending June 30, 1998,
September 30, 1998 and December 31, 1998 to be less than 1.50:1.00 and
thereafter at the end of each fiscal quarter to be less than
1.75:1.00."
u. Section 7.05(i) of the Credit Agreement is hereby amended by changing
the reference from Section 2.09(f) to Section 2.09(g).
v. Section 7.07 of the Credit Agreement is hereby amended by changing the
reference from Section 2.09(e) to Section 2.09(f).
w. Section 11.01(b) of the Credit Agreement is hereby amended by adding
the following language after the words "(Telecopy No. 212-622-5218)
"effective March 27, 1998, the address of The Chase Manhattan Bank
shall be 600 Fifth Avenue, 4th Floor, Asset Based Lending, New York,
New York 10020 (Telecopy No. 212-332-4299)."
x. In Section 11.08(b) of the Credit Agreement, clause (ii) is hereby
amended by deleting the words "or Seasonal Amount" and substituting
therefor the words "Inventory Amount."
y. Schedules 2.01(a) and 2.01(b) to the Credit Agreement are hereby
amended in their entirety to read as Schedules 2.01(a) and 2.01(b)
annexed hereto.
z. Schedules 2.02 and 2.03 to the Credit Agreement are hereby amended by
changing the address of The Chase Manhattan Bank to "600 Fifth Avenue,
4th Floor, Asset Based Lending, New York, New York 10020."
aa. Schedule 2.18 to the Credit Agreement shall be amended to read as
Schedule 2.18 annexed hereto."
bb. Schedule 6.05(j) to the Credit Agreement is hereby replaced by a new
Schedule 6.05(j) in the form annexed hereto.
4. Representations and Warranties. The Borrowers hereby represent and warrant as
of the date hereof as follows (which representations and warranties shall
survive the execution and delivery of this Waiver and Amendment):
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a. Each Borrower has the power to execute, deliver and carry out the
terms and provisions of this Waiver and Amendment.
b. This Waiver and Amendment has been duly executed and delivered and
constitutes the legal, valid and binding obligation of the Borrowers,
and is enforceable in accordance with its terms.
c. No Default or Event of Default under the Credit Agreement has occurred
or is continuing.
5. Conditions Precedent. Notwithstanding any term or provision of this Waiver
and Amendment to the contrary, Paragraphs 2 and 3 hereof shall not become
effective until the Agent 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, the "Amendment Effective Date"):
a. All required corporate actions in connection with the execution and
delivery of this Waiver and Amendment shall have been taken, and each
shall be satisfactory in form and substance to the Agent, and the
Agent shall have received all information and copies of all documents,
including, without limitation, records of requisite corporate action
that the Agent may reasonably request, to be certified by the
appropriate corporate person or government authorities.
b. An opinion of counsel of the Borrowers stating that all appropriate
corporate action has been taken by the Borrowers to enable the
Borrowers to enter into the transactions contemplated by this Waiver
and Amendment and that this Waiver and Amendment is the legal, valid
and binding obligation of each Borrower enforceable against such
Borrower in accordance with its terms.
c. The Agent shall have received the amendment fee for the ratable
benefit of the Lenders in the amount of $40,000 and the Agent's fee
for its own account in the amount of $50,000 and all reasonable fees,
costs and expenses of the Agent in connection with this Waiver and
Amendment, including, without limitation, reasonable fees, costs and
expenses of counsel to the Agent, shall have been paid in full to the
persons entitled thereto in immediately available funds.
d. All representations and warranties made by the Borrowers in Paragraph
4 hereof shall be true and correct in all material respects on the
date of effectiveness of this Waiver and Amendment with the same
effect as though such representations and warranties had been made on
such date after giving effect to this Waiver and Amendment (except to
the extent any such representation or warranty relates expressly to an
earlier date).
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e. Each Lender shall have received its Term Note and Revolving Credit
Note (such Notes, with respect to the Lenders, may be issued in
replacement of Notes delivered under the Credit Agreement prior to the
date hereof provided such previously issued Notes shall have been
delivered to the Borrowers concurrently with the issuance of the new
Notes), duly executed by the Borrowers, payable to the order of such
Lender and otherwise complying with the provisions of Section 2.04 of
the Credit Agreement.
f. Counterparts of this Waiver and Amendment shall have been duly
executed and delivered on behalf of the Borrowers, the Lenders and the
Agent.
g. Concurrently with the Amendment Effective Date, all Guarantees shall
have been reaffirmed, all appropriate amendments have been made to the
Canadian Credit Agreement and an amended Canadian Letter of Credit
shall have been executed by the parties thereto.
h. Concurrently with the Amendment Effective Date, the Borrowers shall
have redeemed the Senior Secured Notes.
i. The Agent shall have received evidence that the sum of (x)
Availability and (y) availability under the Canadian Credit Agreement
is not less than $5,000,000.
6. Conditions Subsequent. Notwithstanding any term or provisions of this Waiver
and Amendment to the contrary, upon the conversion of trade payables and long
term Indebtedness in the approximate amounts set forth on Schedule A hereto
owing by Sport Maska to the Parent into equity, an amendment to the Pledge
Agreement shall be executed with respect to additional Sport Maska shares being
issued to the Parent and such additional shares and an executed, undated, blank
stock power shall be delivered to the Agent. Failure to so execute such
amendment and deliver such shares and stock power promptly after the issuance of
such shares by Sport Maska shall constitute an Event of Default under the Credit
Agreement. The execution of such amendment, delivery of shares and stock power
shall also be accompanied by an opinion of counsel of the Parent stating that
all appropriate corporate action has been taken by the Parent to enable it to
enter into the transactions contemplated by the amendment to the Pledge
Agreement and that the amendment to the Pledge Agreement is the legal, valid and
binding obligation of the Parent enforceable against it in accordance with its
terms.
7. References to Credit Agreements. 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 as determined in accordance with Paragraph 5 hereof,
the Credit Agreement as amended by this Waiver and Amendment.
8. 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 of
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Default under, the Credit Agreement, and each of the parties hereto agrees that,
as amended by this Waiver and Amendment, 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 Waiver and Amendment.
9. Counterparts. This Waiver and Amendment may be executed in two or more
counterparts, each of which shall be an original, and all of which, taken
together, shall constitute a single instrument. Delivery of an executed
counterpart of a signature page to this Waiver and Amendment by telecopier shall
be effective as delivery of a manually executed counterpart of this Waiver and
Amendment.
10. GOVERNING LAW. THIS WAIVER AND AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (OTHER THAN THE CONFLICTS
OF LAWS PRINCIPLES THEREOF)
[Signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Waiver and
Amendment to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
SLM INTERNATIONAL, INC.
By:_____________________________________
Russell J. David
Senior Vice President, Finance
MASKA U.S., INC.
By:_____________________________________
Russell J. David
Senior Vice President, Finance
THE CHASE MANHATTAN BANK, as Agent and
as a Lender
By:_____________________________________
Name:
Title:
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GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By:_____________________________________
Name:
Title:
SANWA BUSINESS CREDIT CORPORATION,
as a Lender
By:_____________________________________
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By:_____________________________________
Name:
Title:
IBJ SCHRODER BUSINESS CREDIT CORPORATION,
as a Lender
By:_____________________________________
Name:
Title:
13
<PAGE>
Consented and agreed to:
SLM TRADEMARK ACQUISITION CORP.,
as Guarantor
By:_____________________________________
Russell J. David
Senior Vice President, Finance
14
<PAGE>
SCHEDULE A to Waiver and Amendment No. 4
Amount of intercompany debt owing by Sport Maska to SLM to be converted
into equity
[To be provided by SLM]
15
<PAGE>
SCHEDULE 2.01(a)
TERM LOAN COMMITMENTS
Term Loan Percentage of Total
Lender Commitment Term Loan Commitment
- ------ ---------- --------------------
The Chase Manhattan Bank $3,750,000 25%
600 Fifth Avenue - 4th Floor
New York, NY 10020
Attention: SLM Account Officer
General Electric Capital $3,750,000 25%
Corporation
201 High Ridge Road
Stamford, CT 06927-5100
Attention: James R. Dore
Sanwa Business Credit $3,750,000 25%
Corporation
500 Glen Point Center West
Teaneck, NJ 07766
Attention: Peter Skavla
PNC Bank, National Association $1,875,000 12.5%
1600 Market Street, 31st Floor
Philadelphia, PA 19103
Attention: Frank Phillips
IBJ Schroder Business $1,875,000 12.5%
Credit Corporation
One State Street
New York, NY 10004
Attention: Alfred Scoyni
<PAGE>
SCHEDULE 2.01(b)
Revolving Credit Commitments
Revolving Percentage of
Credit Total Revolving
Lender Commitment Credit Commitment
- ------ ---------- -----------------
The Chase Manhattan Bank $11,250,000 25%
600 Fifth Avenue - 4th Floor
New York, New York 10020
Attention: SLM Account Officer
General Electric Capital $11,250,000 25%
Corporation
201 High Ridge Road
Stamford, CT 06927-5100
Attention: James R. Dore
Sanwa Business Credit $11,250,000 25%
Corporation
500 Glenpointe Centre West
Teaneck, NJ 07666
Attention: Peter Skavla
PNC Bank, National Association $5,625,000 12.5%
1600 Market Street, 31st Floor
Philadelphia, PA 19103
Attention: Frank Phillips
IBJ Schroder Business $5,625,000 12.5%
Credit Corporation
One State Street
New York, NY 10004
Attention: Alfred Scoyni
<PAGE>
SCHEDULE 2.18
Canadian Letter of Credit Maximum Exposure
Lender Maximum Exposure
------ ----------------
The Chase Manhattan Bank $6,250,000
General Electric Capital Corporation $6,250,000
Sanwa Business Credit Corporation $6,250,000
PNC Bank, National Association $3,125,000
IBJ Schroder Business Credit Corporation $3,125,000
AMENDING AGREEMENT NO. 2
THIS AMENDING AGREEMENT is made as of this 10th day of March, 1998,
B E T W E E N :
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:
<PAGE>
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".
<PAGE>
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 800, Westmount, Quebec (Telecopy no.
514-932-6043), Attention: Russell J. David, Senior Vice-President,
Finance, with a copy to Goodman, Phillips & Vineberg, 1501 McGill
College, 26th Floor, Montreal, Quebec H3A 3N9, Attention: Leon
Garfinkle (Telecopy no. 514-841-6499); and
(b) if to the Lender, at The Chase Manhattan Bank of Canada, 1
First Canadian Place, Suite 6900, Toronto, Ontario M5X 1A4, Attention:
Christine Chan (Telecopy no. 416-216-4161), with a copy to Fraser &
Beatty, P.O. Box 100, 1 First Canadian Place, Toronto, Ontario M5X
1B2, Attention: Peter E. Murphy (Telecopy no. 416-863-4592) and a
copy concurrently to Chase U.S. at, effective March 27, 1998, 600 5th
Avenue, 4th Floor, Asset Base Lending, New York, NY 10020, 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.
<PAGE>
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;
<PAGE>
(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.
<PAGE>
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:
THE CHASE MANHATTAN BANK OF
CANADA
Per:
Name: Christine Chan
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:
