SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report DECEMBER 17, 1999
THE SPORTS AUTHORITY, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-13426 36-3511120
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3383 N. State Road 7, Ft. Lauderdale, Florida 33319
(Address of principal executive offices) (Zip Code)
(954) 735-1701
(Registrant's telephone number, including area code)
1
<PAGE>
ITEM 5. OTHER EVENTS
On December 16, 1999, the Company issued a news release, attached
hereto as Exhibit 99.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) The following exhibits are filed with this report:
10.1 Second Amendment to Loan and Security Agreement,
dated December 14, 1999.
99 News Release, dated December 16, 1999.
2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE SPORTS AUTHORITY, INC.
Date: December 17, 1999 By: /S/ GEORGE MIHALKO
--------------------------------
George Mihalko
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Accounting Officer)
3
<PAGE>
EXHIBIT INDEX
EXHIBIT
- -------
10.1 Second Amendment to Loan and Security Agreement, dated December 14, 1999.
99 News Release dated December 16, 1999.
EXHIBIT 10.1
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Second Amendment to Loan and Security Agreement (the "Second
Amendment") is made as of the 14th day of December, 1999 by and between
BankBoston Retail Finance Inc. (in such capacity, the
"Agent"), as Agent for the Lenders party to a certain Loan and
Security Agreement dated as of April 13, 1999,
the Lenders party thereto,
and
Each of the following corporations (collectively, and each
individually, the "BORROWER"), each of which has its principal
executive offices at 3383 North State Road 7, Fort Lauderdale,
Florida 33319:
The Sports Authority, Inc. (A Delaware corporation)
The Sports Authority Florida, Inc. (A Florida corporation)
The Sports Authority Michigan, Inc. (A Michigan corporation)
Authority International, Inc. (A Delaware corporation)
and
The Sports Authority, Inc., a Delaware corporation with its
principal executive offices at 3383 North State Road 7, Fort
Lauderdale, Florida 33319 in the additional capacity as the
"LEAD BORROWER"
and
The Sports Authority, Inc., a Delaware corporation with its
principal executive offices at 3383 North State Road 7, Fort
Lauderdale, Florida 33319 in the additional capacity as the
"PARENT"
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
W I T N E S S E T H:
WHEREAS, on April 13, 1999, the Agent, the Lenders, and the Borrower
entered into a certain Loan and Security Agreement, as amended by a certain
First Amendment to Loan and Security Agreement dated November 17, 1999 (as so
amended, the "AGREEMENT"); and
WHEREAS, the Lead Borrower has requested that the Agent and the Lenders
agree to amend further the Agreement with respect to the Permitted Repurchases
which the Borrower is permitted to make under the Agreement, thereby superseding
the aforementioned First Amendment to Loan and Security Agreement; and
1
<PAGE>
WHEREAS, the Lead Borrower has also requested that the Agent and the
Lenders agree, among other things, to increase the amount of the Loan Ceiling to
$275 Million and to extend the Maturity Date; and
WHEREAS, the Agent, the Lenders, and the Borrower desire otherwise to
modify certain of the provisions of the Agreement as set forth herein.
NOW, THEREFORE, it is hereby agreed among the Agent, the Lenders, and
the Borrower as follows:
1. CAPITALIZED TERMS. All capitalized terms used herein and not
otherwise defined shall have the same meaning herein as in the Agreement.
2. AMENDMENTS TO ARTICLE 1 OF THE AGREEMENT.
(1) ARTICLE 1 (DEFINITION OF "COMMITMENT") is amended to read as
follows:
<TABLE>
<CAPTION>
"COMMITMENT" SUBJECT TO SECTION 2-20, AS FOLLOWS:
------------------------------------------- -------------------------- ------------------------
DOLLAR COMMITMENT
LENDER COMMITMENT PERCENTAGE
------------------------------------------- -------------------------- ------------------------
<S> <C> <C>
BANKBOSTON RETAIL FINANCE INC. $89,000,000.00 32.3636
------------------------------------------- -------------------------- ------------------------
FOOTHILL CAPITAL CORPORATION $30,000,000.00 10.9090
------------------------------------------- -------------------------- ------------------------
GENERAL ELECTRIC CAPITAL CORPORATION $34,000,000.00 12.3636
------------------------------------------- -------------------------- ------------------------
HELLER FINANCIAL, INC. $25,000,000.00 9.0909
------------------------------------------- -------------------------- ------------------------
BANK OF AMERICA, N.A. (FORMERLY
NATIONSBANK, N.A.) $25,000,000.00 9.0909
------------------------------------------- -------------------------- ------------------------
CITIZENS BUSINESS CREDIT, A DIVISION OF
CITIZENS LEASING CORPORATION $15,000,000.00 5.4545
------------------------------------------- -------------------------- ------------------------
FLEET CAPITAL CORPORATION $15,000,000.00 5.4545
------------------------------------------- -------------------------- ------------------------
LASALLE BUSINESS CREDIT, INC. $15,000,000.00 5.4545
------------------------------------------- -------------------------- ------------------------
DEUTSCHE FINANCIAL SERVICES CORPORATION $12,000,000.00 4.3636
------------------------------------------- -------------------------- ------------------------
MELLON BANK, N.A. $15,000,000.00 5.4545
------------------------------------------- -------------------------- ------------------------
TOTAL $275,000,000.00 100.00%
------------------------------------------- -------------------------- ------------------------
</TABLE>
(2) ARTICLE 1 (DEFINITION OF "EBITDA") is amended to read as
follows:
"EBITDA": THE BORROWERS' CONSOLIDATED EARNINGS BEFORE INTEREST,
TAXES, DEPRECIATION, AND AMORTIZATION, EXCLUSIVE OF
NON-RECURRING NON-CASH CHARGES, EACH AS DETERMINED IN
ACCORDANCE WITH GAAP.
2
<PAGE>
(3) ARTICLE 1 (DEFINITION OF "EURODOLLAR MARGIN") is amended to
read as follows:
"EURODOLLAR MARGIN": (A) UNTIL OCTOBER 31, 2000: THE EURODOLLAR
MARGIN SHALL BE RESET MONTHLY (COMMENCING WITH
THE BUSINESS DAY AFTER THE AGENT'S RECEIPT OF
THE PRICING CERTIFICATE (SECTION 5-6(B) AND
BASED UPON THE MONTHLY AVERAGE AVAILABILITY FOR
THE IMMEDIATELY PRECEDING FISCAL MONTH) FOR
LOANS INITIATED ON OR AFTER THE DATE WHEN SO
SET, THAT IS TO SAY EURODOLLAR CONTRACTS IN
EFFECT AT THE TIME OF INCREASES/DECREASES IN
MARGIN WILL REMAIN AT THE MARGIN ORIGINALLY
UTILIZED WHEN THE CONTRACT WAS OPENED. THE
MARGIN IN EFFECT AT A GIVEN TIME WILL APPLY TO
CONTRACTS OPENED AT THAT TIME, AND SHALL BE
BASED UPON THE FOLLOWING EURODOLLAR MARGIN
PRICING GRID I:
<TABLE>
<CAPTION>
EURODOLLAR MARGIN PRICING GRID I
------------ -------------------------------------------------- --------------------
TIER AVAILABILITY, FOR PRECEDING FISCAL MONTH MARGIN (BASIS
POINTS)
------------ -------------------------------------------------- --------------------
<S> <C> <C>
I AVAILABILITY OF GREATER THAN $40 MILLION 200
------------ -------------------------------------------------- --------------------
II AVAILABILITY OF LESS THAN OR EQUAL TO $40 MILLION 225
------------ -------------------------------------------------- --------------------
</TABLE>
(B) FROM AND AFTER NOVEMBER 1, 2000: THE
EURODOLLAR MARGIN SHALL BE RESET MONTHLY
(COMMENCING WITH THE BUSINESS DAY AFTER THE
AGENT'S RECEIPT OF THE PRICING CERTIFICATE
(SECTION 5-6(B) AND BASED UPON THE MONTHLY
AVERAGE AVAILABILITY FOR THE IMMEDIATELY
PRECEDING FISCAL MONTH) FOR LOANS INITIATED ON
OR AFTER THE DATE WHEN SO SET, THAT IS TO SAY
EURODOLLAR CONTRACTS IN EFFECT AT THE TIME OF
INCREASES/DECREASES IN MARGIN WILL REMAIN AT
THE MARGIN ORIGINALLY UTILIZED WHEN THE
CONTRACT WAS OPENED. THE MARGIN IN EFFECT AT A
GIVEN TIME WILL APPLY TO CONTRACTS OPENED AT
THAT TIME, AND SHALL BE BASED UPON THE
FOLLOWING EURODOLLAR MARGIN PRICING GRID II:
<TABLE>
<CAPTION>
EURODOLLAR MARGIN PRICING GRID II
------------ -------------------------------------------------- --------------------
TIER AVAILABILITY, FOR PRECEDING FISCAL MONTH MARGIN (BASIS
POINTS)
------------ -------------------------------------------------- --------------------
<S> <C> <C>
I AVAILABILITY OF GREATER THAN $80 MILLION 175
------------ -------------------------------------------------- --------------------
II AVAILABILITY OF GREATER THAN $40 MILLION BUT 200
LESS THAN OR EQUAL TO $80 MILLION
------------ -------------------------------------------------- --------------------
III AVAILABILITY OF LESS THAN OR EQUAL TO $40 MILLION 225
------------ -------------------------------------------------- --------------------
</TABLE>
3
<PAGE>
(C) THE CALCULATION OF THE MONTHLY AVERAGE
AVAILABILITY, AS SET FORTH IN (A) AND (B)
ABOVE, SHALL BE SET FORTH IN THE PRICING
CERTIFICATE AND SHALL BE CONFIRMED BY THE
LENDER BASED UPON THE FOLLOWING CALCULATION:
NUMERATOR: THE SUM OF THE DOLLAR AMOUNTS OF THE
ACTUAL DAILY AVAILABILITY FOR THE
EACH DAY OF THE PRIOR FISCAL MONTH
OF THE BORROWER
------------------------------------------
DENOMINATOR: THE ACTUAL NUMBER OF DAYS IN THE
SAME PRIOR FISCAL MONTH OF THE
BORROWER
(4) ARTICLE 1 (DEFINITION OF "INVENTORY ADVANCE RATE") is amended to
read as follows:
"INVENTORY ADVANCE RATE":
(A) 67.5% FROM THE FISCAL MONTHS JANUARY THROUGH SEPTEMBER,
INCLUSIVE, OF EACH FISCAL YEAR OF THE BORROWER.
(B) 70% FROM THE FISCAL MONTHS OF OCTOBER THROUGH DECEMBER,
INCLUSIVE, OF EACH FISCAL YEAR OF THE BORROWER.
(5) ARTICLE 1 (DEFINITION OF "LOAN CEILING") is amended to read as
follows:
"LOAN CEILING": $275,000,000.00.
(6) ARTICLE 1 (DEFINITION OF "MATURITY DATE") is amended to read as
follows:
"MATURITY DATE": SEPTEMBER 30, 2003.
(7) ARTICLE 1 (DEFINITION OF "PERMITTED INVESTMENT") is amended to read
as follows:
"PERMITTED INVESTMENT": AN INVESTMENT WHICH FULFILLS ANY OF THE
FOLLOWING NUMBERED CRITERIA:
(1) DEBT ENTITLED TO THE FULL FAITH AND CREDIT OF THE UNITED STATES
WITH MATURITIES NOT TO EXCEED NINETY-ONE (91) DAYS.
(2) BANKER'S ACCEPTANCES, SAVINGS ACCOUNTS, "REPO'S", OR
CERTIFICATES OF DEPOSIT ENTITLED TO THE FULL FAITH AND CREDIT OF
THE AGENT OR ANY BANK WHOSE MOST SENIOR DEBT HAS BEEN ASSIGNED AN
INVESTMENT GRADE CREDIT RATING BY A NATIONALLY RECOGNIZED CREDIT
RATING SERVICE.
(3) COMMERCIAL PAPER RATED A-2/P-2 OR BETTER.
(4) MONEY MARKET FUNDS (SO-CALLED) WHOSE INVESTMENTS ARE LIMITED TO
THOSE INVESTMENTS DESCRIBED IN (1) THROUGH AND INCLUDING (3) OF
THIS DEFINITION, OR WHICH OTHERWISE COMPLY WITH THE RISK LIMITING
CONDITIONS OF RULE 2A-7 UNDER THE INVESTMENT COMPANY ACT OF 1940,
AS AMENDED.
4
<PAGE>
3. AMENDMENTS TO ARTICLE 2 OF THE AGREEMENT.
(1) SECTION 2-1(B)(II) is hereby amended to read as follows:
(II) "BORROWING BASE" REFERS AT ANY TIME TO THE LESSER OF
2-1(B)(II)(A) OR 2-1(B)(II)(B), WHERE:
(A) IS THE LOAN CEILING.
(B) IS THE RESULT OF THE FOLLOWING:
(I) THE CREDIT CARD ADVANCE RATE MULTIPLIED BY
THE AGGREGATE FACE AMOUNT OF ELIGIBLE CREDIT
CARD RECEIVABLES.
PLUS
(II) THE LESSER OF (I) THE INVENTORY ADVANCE RATE
MULTIPLIED BY THE COST OF ELIGIBLE INVENTORY
(NET OF INVENTORY RESERVES), OR (II) THAT
PERCENTAGE DETERMINED BY THE AGENT WHICH IS
85% OF THE APPRAISED VALUE OF ELIGIBLE
INVENTORY, WHICH APPRAISED VALUE SHALL BE
DETERMINED AS A PERCENTAGE OF THE TOTAL COST
OF ELIGIBLE INVENTORY.
MINUS
(III) THE THEN AGGREGATE OF THE AVAILABILITY
RESERVES.
(2) SECTION 2-1(C) is hereby deleted.
(3) SECTION 2-20(D) is hereby amended to read as follows:
(D) UPON WRITTEN NOTICE GIVEN THE LEAD BORROWER FROM TIME TO TIME
BY THE AGENT, OF ANY ASSIGNMENT OR ALLOCATION REFERENCED IN SECTION
2-20(C):
(I) THE BORROWERS SHALL EXECUTE ONE OR MORE REPLACEMENT
REVOLVING CREDIT NOTES TO REFLECT SUCH CHANGED DOLLAR COMMITMENTS,
COMMITMENT PERCENTAGES, AND IDENTITIES AND SHALL DELIVER SUCH
REPLACEMENT REVOLVING CREDIT NOTES TO THE AGENT (WHICH PROMPTLY
THEREAFTER SHALL DELIVER TO THE LEAD BORROWER THE REVOLVING CREDIT
NOTES SO REPLACED) PROVIDED HOWEVER, IN THE EVENT THAT A REVOLVING
CREDIT NOTE IS TO BE EXCHANGED FOLLOWING ITS ACCELERATION OR THE
ENTRY OF AN ORDER FOR RELIEF UNDER THE BANKRUPTCY CODE WITH RESPECT
TO THE BORROWERS, THE AGENT, IN LIEU OF CAUSING THE BORROWERS TO
EXECUTE ONE OR MORE NEW REVOLVING CREDIT NOTES, MAY ISSUE THE
AGENT'S CERTIFICATE CONFIRMING THE RESULTING COMMITMENTS AND
COMMITMENT PERCENTAGES.
(II) SUCH CHANGE SHALL BE EFFECTIVE FROM THE EFFECTIVE DATE
SPECIFIED IN SUCH WRITTEN NOTICE AND ANY PERSON ADDED AS A LENDER
SHALL HAVE ALL RIGHTS AND PRIVILEGES OF A LENDER HEREUNDER
THEREAFTER AS IF SUCH PERSON HAD BEEN A SIGNATORY TO THIS AGREEMENT
AND ANY OTHER LOAN DOCUMENT TO WHICH A LENDER IS A SIGNATORY AND
ANY PERSON REMOVED AS A LENDER SHALL BE RELIEVED OF ANY OBLIGATIONS
OR RESPONSIBILITIES OF A LENDER HEREUNDER THEREAFTER.
5
<PAGE>
4. AMENDMENT TO ARTICLE 4 OF THE AGREEMENT.
SECTION 4-20(B) of the Agreement is hereby amended to read as
follows:
(B) SUBJECT TO THE SATISFACTION OF EACH OF THE CONDITIONS
INCLUDED IN THIS SECTION 4-20(B), THE PARENT MAY REPURCHASE ITS
CAPITAL STOCK AND THE 5.25% NOTES (EACH OF WHICH REPURCHASES IS
REFERRED TO HEREIN AS A "PERMITTED REPURCHASE"):
(I) ON THE DATE ON WHICH THE SUBJECT REPURCHASE IS TO BE
EFFECTED:
(A) NO EVENT OF DEFAULT SHALL HAVE OCCURRED AND NONE
WILL OCCUR BY REASON OF THE SUBJECT REPURCHASE.
(B) COLLATERAL AVAILABILITY FOR THE PERIOD IMMEDIATELY
PRIOR TO THE SUBJECT REPURCHASE WAS NOT, AND IMMEDIATELY
AFTER SUCH REPURCHASE SHALL NOT BE, LESS THAN $45 MILLION.
(C) COLLATERAL AVAILABILITY, ON A PRO FORMA GOING FORWARD
BASIS FOLLOWING SUCH REPURCHASE, AS REFLECTED ON A PROJECTION
PROVIDED TO THE AGENT IMMEDIATELY PRIOR TO THE SUBJECT
REPURCHASE (AND PREPARED BASED ON THE SAME METHODOLOGY AND
WITH THE SAME ASSUMPTIONS AS THOSE USED IN THE PREPARATION OF
THE BUSINESS PLAN) IS NOT LESS THAN $45 MILLION.
(II) THE CUMULATIVE AMOUNT OF FUNDS EXPENDED BY BORROWER
FOR ALL SUCH REPURCHASES OF CAPITAL STOCK SHALL NOT IN THE
AGGREGATE EXCEED $20MILLION.
(III) THE CUMULATIVE AMOUNT OF FUNDS EXPENDED BY BORROWER
FOR ALL SUCH REPURCHASES OF CAPITAL STOCK AND THE 5.25%
NOTES, COLLECTIVELY, SHALL NOT IN THE AGGREGATE EXCEED
$100MILLION.
5. AMENDMENTS TO ARTICLE 5 OF THE AGREEMENT.
(1) SECTION 5-4 is hereby amended to read as follows:
5-4. BORROWING BASE CERTIFICATES. THE LEAD BORROWER SHALL PROVIDE
THE AGENT WITH BORROWING BASE CERTIFICATES, EACH REFLECTING THE
BORROWERS' CONDITION FOR THE PERIOD INDICATED BELOW IMMEDIATELY
PRIOR TO THE DATE WHEN FURNISHED, AS FOLLOWS:
(A) ON EACH THURSDAY (OR THE NEXT BUSINESS DAY, IF THAT THURSDAY
IS NOT A BUSINESS DAY) OF EVERY FISCAL WEEK, THE LEAD BORROWER SHALL
PROVIDE THE AGENT WITH A BORROWING BASE CERTIFICATE (IN THE FORM OF
EXHIBIT 5-4(A) ANNEXED HERETO, AS SUCH FORM MAY BE REVISED FROM TIME
TO TIME BY THE AGENT), EACH REFLECTING THE BORROWERS' CONDITION ON
THE LAST DAY OF THE FISCAL WEEK IMMEDIATELY PRIOR TO THE DATE WHEN
FURNISHED. SUCH BORROWING BASE CERTIFICATE MAY BE SENT TO THE AGENT
BY FACSIMILE TRANSMISSION, PROVIDED THAT THE ORIGINAL THEREOF IS
FORWARDED TO THE AGENT ON THE DATE OF SUCH TRANSMISSION.
(B) ON THE THIRD THURSDAY (OR THE NEXT BUSINESS DAY, IF THAT
THURSDAY IS NOT A BUSINESS DAY) FOLLOWING THE END OF THE BORROWER'S
FISCAL MONTH, THE LEAD BORROWER SHALL, IN ADDITION TO THE WEEKLY
BORROWING BASE CERTIFICATE REQUIRED PURSUANT TO SUBSECTION (A)
ABOVE, PROVIDE THE AGENT WITH A BORROWING BASE CERTIFICATE (IN THE
FORM OF EXHIBIT 5-4(B) ANNEXED HERETO, AS SUCH FORM MAY BE REVISED
FROM TIME TO TIME BY THE AGENT), EACH REFLECTING THE BORROWERS'
CONDITION ON THE LAST DAY OF THE FISCAL MONTH IMMEDIATELY PRIOR TO
THE DATE WHEN FURNISHED, WITH EACH SUCH BORROWING BASE CERTIFICATE
BEING RECONCILED
6
<PAGE>
(WITH RESPECT TO THE WEEKLY BORROWING BASE CERTIFICATES DELIVERED
TO THE AGENT DURING SAID PRIOR FISCAL MONTH) TO REFLECT ALL ACTUAL
CUSTOMARY AND NORMAL MONTH END ADJUSTMENTS. SUCH BORROWING BASE
CERTIFICATE MAY BE SENT TO THE AGENT BY FACSIMILE TRANSMISSION,
PROVIDED THAT THE ORIGINAL THEREOF IS FORWARDED TO THE AGENT ON THE
DATE OF SUCH TRANSMISSION.
(2) SECTION 5-5(A)(II)(E) is hereby amended to read as follows:
(E) AN INTERNALLY PREPARED FINANCIAL STATEMENT OF THE BORROWERS'
FINANCIAL CONDITION, AND THE RESULTS OF THEIR RESPECTIVE OPERATIONS
FOR, THE PERIOD ENDING WITH THE END OF THE SUBJECT MONTH, WHICH
FINANCIAL STATEMENT SHALL INCLUDE, AT A MINIMUM, A BALANCE SHEET,
INCOME STATEMENT (ON A "CONSOLIDATED" BASIS FOR ALL OPERATIONS IN
THE UNITED STATES AND, IF REQUESTED BY THE AGENT, ON A STORE
SPECIFIC BASIS), CASH FLOW AND COMPARISON OF SAME STORE SALES FOR
THE CORRESPONDING MONTH OF THE THEN IMMEDIATELY PREVIOUS YEAR, AS
WELL AS TO THE BUSINESS PLAN.
(3) SECTION 5-6 is hereby amended to read as follows:
(A) QUARTERLY, WITHIN FORTY FIVE (45) DAYS FOLLOWING THE END OF
EACH OF THE PARENT'S FISCAL QUARTERS, THE LEAD BORROWER SHALL
PROVIDE THE AGENT WITH AN ORIGINAL COUNTERPART OF A MANAGEMENT
PREPARED CONSOLIDATED FINANCIAL STATEMENT OF THE BORROWERS FOR THE
PERIOD FROM THE BEGINNING OF THE BORROWERS' THEN CURRENT FISCAL YEAR
THROUGH THE END OF THE SUBJECT QUARTER, WITH COMPARATIVE INFORMATION
FOR THE SAME PERIOD OF THE PREVIOUS FISCAL YEAR, WHICH STATEMENT
SHALL INCLUDE, AT A MINIMUM, A BALANCE SHEET, INCOME STATEMENT (ON A
"CONSOLIDATED" BASIS FOR ALL OPERATIONS IN THE UNITED STATES AND, IF
REQUESTED BY THE AGENT, ON A STORE SPECIFIC BASIS), STATEMENT OF
CHANGES IN SHAREHOLDERS' EQUITY, AND CASH FLOWS AND COMPARISONS FOR
THE CORRESPONDING QUARTER OF THE THEN IMMEDIATELY PREVIOUS YEAR, AS
WELL AS TO THE BUSINESS PLAN.
(B) FOR EACH OF THE BORROWER'S FISCAL MONTHS, COMMENCING WITH
NOVEMBER, 1999, THE BORROWERS SHALL PROVIDE THE AGENT WITH AN
ORIGINAL COUNTERPART OF A CERTIFICATE (SIGNED BY THE BORROWERS
PRESIDENT, CHIEF FINANCIAL OFFICER, OR TREASURER) ON WHICH SHALL BE
INDICATED (WITH SUPPORTING CALCULATIONS) THE BORROWERS' PERFORMANCE
DURING SUCH FISCAL MONTH WITH RESPECT TO THOSE CRITERIA INCLUDED IN
THE DEFINITION OF EURODOLLAR MARGIN ( "PRICING CERTIFICATE"). UNLESS
OTHERWISE AGREED BY THE AGENT, THE PRICING CERTIFICATE SHALL BE
DELIVERED TO THE AGENT TOGETHER WITH THE BORROWING BASE CERTIFICATE
REQUIRED PURSUANT TO SECTION 5-4(B) FOR SUCH FISCAL MONTH AND SHALL
INCORPORATE, FOR ALL CALCULATIONS MADE FOR SUCH FISCAL MONTH, THE
RECONCILIATION OF ALL ACTUAL CUSTOMARY AND NORMAL MONTH END
ADJUSTMENTS.
(4) SECTION 5-9(B) is hereby amended to read as follows:
(B) THE BORROWER, AT ITS OWN EXPENSE, SHALL CAUSE AT LEAST ONE
(1) FULL PHYSICAL INVENTORY (WHICH PHYSICAL INVENTORY SHALL, ON A
CUMULATIVE BASIS, COVER ALL OF BORROWER'S STORE LOCATIONS IN THE
UNITED STATES) TO BE UNDERTAKEN IN EACH TWELVE (12) MONTH PERIOD
DURING WHICH THIS AGREEMENT IS IN EFFECT (THE SPACING OF THE
SCHEDULING OF WHICH INVENTORIES SHALL BE SATISFACTORY TO THE AGENT
IN ALL RESPECTS) CONDUCTED BY SUCH INVENTORY TAKERS AS ARE
REASONABLY SATISFACTORY TO THE AGENT AND FOLLOWING SUCH METHODOLOGY
AS MAY REASONABLY BE SATISFACTORY TO THE AGENT.
7
<PAGE>
(I) THE LEAD BORROWER SHALL PROVIDE THE AGENT WITH A
RECONCILIATION OF THE RESULTS OF EACH SUCH INVENTORY (AS WELL AS OF
ANY OTHER PHYSICAL INVENTORY UNDERTAKEN BY THE BORROWERS) TO THE
BORROWERS' BOOKS AND RECORDS WITHIN THIRTY (30) DAYS FOLLOWING THE
END OF THE CALENDAR MONTH DURING WHICH SUCH INVENTORY WAS COMPLETED.
(II) THE AGENT, IN ITS DISCRETION, FOLLOWING THE OCCURRENCE OF AN
EVENT OF DEFAULT, MAY CAUSE SUCH ADDITIONAL INVENTORIES TO BE TAKEN
AS THE AGENT DETERMINES (EACH, AT THE EXPENSE OF THE BORROWERS).
(5) SECTION 5-11, to read as follows, is hereby added to the
Agreement:
SECTION 5-11. FINANCIAL COVENANT BASED UPON COLLATERAL
AVAILABILITY; MINIMUM EBITDA. IF AT ANY TIME COLLATERAL AVAILABILITY
IS LESS THAN $25 MILLION, THEN THEREAFTER THE BORROWER SHALL NOT
SUFFER OR PERMIT ITS EBITDA FOR THE PREVIOUS FOUR (4) FISCAL
QUARTERS (ON A ROLLING FOUR QUARTER BASIS) TO BE LESS THAN $25
MILLION, TESTED QUARTERLY AS SOON AS THE INFORMATION IS PUBLICLY
AVAILABLE EACH FISCAL QUARTER.
6. AMENDMENTS TO ARTICLE 10 OF THE AGREEMENT.
SECTION 10-6 is hereby amended to read as follows:
10-6. ACCELERATION OF OTHER DEBT. BREACH OF LEASE. THE OCCURRENCE OF
ANY EVENT SUCH THAT ANY INDEBTEDNESS OF THE BORROWERS IN EXCESS OF
$10,000,000.00 TO ANY CREDITOR OTHER THAN THE AGENT OR ANY LENDER COULD
BE ACCELERATED OR, WITHOUT THE CONSENT OF SUCH BORROWERS, LEASES
REPRESENTING, IN THE AGGREGATE, MORE THAN FIFTEEN PERCENT (15%) OF THE
BORROWER'S TOTAL LEASES IN THE UNITED STATES COULD BE TERMINATED
(WHETHER OR NOT THE SUBJECT CREDITOR OR LESSOR TAKES ANY ACTION ON
ACCOUNT OF SUCH OCCURRENCE).
7. CONDITIONS TO EFFECTIVENESS OF THIS SECOND AMENDMENT.
This Second Amendment shall remain effective only if each of the
following conditions is satisfied on or before 5:00PM (Boston Time), on or
before December 14, 1999:
(1) An original counterpart of this Second Amendment is fully
executed by each Borrower and delivered to the Agent.
(2) An original replacement Revolving Credit Note, payable to each
Lender having an increased Dollar Commitment on account of this
Second Amendment and reflecting, respectively, the entire
amount that Lender's Commitment, is fully executed by each
Borrower and delivered to the Agent.
(3) Payment in full to the Agent of an Amendment Fee of
$300,000.00, which Amendment Fee shall be fully earned as of
the date hereof (with the Borrower hereby acknowledging that
the Borrower shall not be entitled to any credit, rebate, or
repayment of the Amendment Fee, or other fee previously earned
by the Agent or any Lender pursuant to this Agreement,
notwithstanding any termination of this Agreement or suspension
or termination of the Agent's and any Lender's respective
obligation to make loans and advances hereunder).
(4) Payment in full to the Agent of an additional Agent's Fee as
specifically provided in a certain Fee Letter dated December 3,
1999 between the Borrower and the Agent, which Agent's Fee
shall be fully earned as of the date hereof (with the
8
<PAGE>
Borrower hereby acknowledging that the Borrower shall not be
entitled to any credit, rebate, or repayment of the Agent's
Fee, or other fee previously earned by the Agent or any Lender
pursuant to this Agreement, notwithstanding any termination of
this Agreement or suspension or termination of the Agent's and
any Lender's respective obligation to make loans and advances
hereunder).
(5) Receipt by the Agent, for the account of the Lenders, of each
of the following:
(1) A Certificate setting forth the text of the resolutions
adopted by the Directors of each Borrower authorizing that
Borrower's execution of this Second Amendment and attesting
to the authority of the persons who executed the Second
Amendment on behalf of that Borrower.
(2) An opinion of counsel to the Borrower as to the due
execution and effectiveness of this Second Amendment (which
opinion is subject only to the same qualifications as had
been included in the opinion delivered by that counsel at
the initial execution of the Loan Agreement).
(3) A Certificate of corporate good standing, with respect to
each Borrower, issued by the Secretary of State of the
State in which that Borrower was organized.
(4) Certificates of due qualification, in good standing, issued
by the Secretary(ies) of State of each State in which the
nature of each Borrower's business conducted or assets
owned could require such qualification.
(5) Such additional instruments and documents as the Agent or
its counsel reasonably may require or request.
(6) Certificates executed on behalf of the Borrowers by the
Chief Executive Officer and the Chief Financial Officer of
the Parent and stating that the representations and
warranties made by the Borrowers to the Agent and the
Lenders in the Loan Documents are true and complete in all
material respects as of the date of such Certificate
(except as shall be specifically noted in such
Certificate), and that no event has occurred which is or
which, solely with the giving of notice or passage of time
(or both) would be an Event of Default. Such Certificates,
to the extent applicable, shall also include replacement or
supplemental Exhibits to the Loan Agreement with respect to
any changes made since the establishment of the Loan.
8. ADDITIONAL REPRESENTATION BY BORROWER.
Each Borrower hereby represents that, at the execution of this Second
Amendment, no Suspension Event has occurred.
9. RATIFICATION OF LOAN DOCUMENTS. Except as provided herein, all
terms and conditions of the Agreement on the other Loan Documents
remain in full force and effect.
10. MISCELLANEOUS.
(a) This Second Amendment may be executed in several
counterparts and by each party on a separate counterpart, each of
which when so executed and delivered shall be an original, and all
of which together shall constitute one instrument.
9
<PAGE>
(b) This Second Amendment expresses the entire
understanding of the parties with respect to the transactions
contemplated hereby. No prior negotiations or discussions
shall limit, modify, or otherwise affect the provisions
hereof.
(c) Any determination that any provision of this
Second Amendment or any application hereof is invalid,
illegal, or unenforceable in any respect and in any instance
shall not affect the validity, legality, or enforceability of
such provision in any other instance, or the validity,
legality, or enforceability of any other provisions of this
Second Amendment.
(d) The Borrower shall pay on demand all reasonable
costs and expenses of the Agent and each Lender, including,
without limitation, reasonable attorneys' fees in connection
with the preparation, negotiation, execution, and delivery of
this Second Amendment.
[SPACE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have hereunto caused this Second
Amendment to be executed and their seals to be hereto affixed as of the date
first above written.
The "BORROWER" :
The "LEAD BORROWER" :
The "PARENT" :
THE SPORTS AUTHORITY, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
THE SPORTS AUTHORITY FLORIDA, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
THE SPORTS AUTHORITY MICHIGAN, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
10
<PAGE>
AUTHORITY INTERNATIONAL, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
The "AGENT" :
BANKBOSTON RETAIL FINANCE INC.
By_________________________________
Print Name:________________________________
Title:________________________________
The "LENDERS" :
BANKBOSTON RETAIL FINANCE INC.
By_________________________________
Print Name:________________________________
Title:________________________________
FOOTHILL CAPITAL CORPORATION
By_________________________________
Print Name:________________________________
Title:________________________________
GENERAL ELECTRIC CAPITAL CORPORATION
By_________________________________
Print Name:________________________________
Title:________________________________
11
<PAGE>
HELLER FINANCIAL, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
BANK OF AMERICA, N.A.
By_________________________________
Print Name:________________________________
Title:________________________________
CITIZENS BUSINESS CREDIT,
A DIVISION OF CITIZENS LEASING CORPORATION
By_________________________________
Print Name:________________________________
Title:________________________________
FLEET CAPITAL CORPORATION
By_________________________________
Print Name:________________________________
Title:________________________________
LASALLE BUSINESS CREDIT, INC.
By_________________________________
Print Name:________________________________
Title:________________________________
12
<PAGE>
DEUTSCHE FINANCIAL SERVICES CORPORATION
By_________________________________
Print Name:________________________________
Title:________________________________
MELLON BANK, N.A.
By_________________________________
Print Name:________________________________
Title:________________________________
13
- ---------
THE
SPORTS
AUTHORITY December 16, 1999
- --------- FOR IMMEDIATE RELEASE
CONTACT: THE SPORTS AUTHORITY, INC.
George Mihalko
Executive Vice President & Chief Financial Officer
(954) 677-6360
THE SPORTS AUTHORITY ANNOUNCES ENHANCED COMMITTED LINE OF CREDIT AND FOURTH
QUARTER CHARGE
- --------------------------------------------------------------------------------
Fort Lauderdale, Florida, December 16, 1999 -- The Sports Authority, Inc. (NYSE:
TSA) today announced that it has increased its committed credit facility with a
group of lenders, led by BankBoston Retail Finance Inc., from $200 million to
$275 million and extended the maturity date of the facility to September 2003.
In addition, the Company announced that in the fourth quarter it expects to take
an estimated charge, net of taxes, of $128 to $132 million. The charge,
substantially all of which will be non-cash, is composed of the following
estimates:
(1) an $85 million write-down of long-lived assets, in accordance with
Financial Accounting Standard 121 and Accounting Principles Board
Opinion No.17, including the $47.3 million of goodwill on the Company's
balance sheet,
(2) a $37 million reduction of previously existing deferred tax assets to
estimated realizable value, in accordance with Financial Accounting
Standard 109 (these assets relate principally to future tax deductions,
the benefit of which depends on future taxable income),
(3) an $8 million charge associated with the Company's decision to close
its Canadian subsidiary.
In addition, the Company expects that fourth quarter operating results will
include approximately $14 million, net of taxes, of
(a) store closing costs related to two lease expirations and one upcoming
relocation, and
(b) incremental markdowns for slow selling seasonal merchandise as well as
inventory shrink.
The Company anticipates a cash inflow of approximately $10-$15 million in May
2000 due to a tax refund triggered by the actions described above.
Chief Financial Officer George Mihalko explained, "In light of our recent
financial performance, this fourth quarter charge will adjust our balance sheet
to levels required by accounting standards. Cash flow will actually be positive
since we will be able to capture a $10-$15 million tax refund through a tax loss
carry-back."
<PAGE>
Chairman and Chief Executive Officer Marty Hanaka, commenting further on the
Company's announcement, stated, "The decision to close our Canadian subsidiary
was extremely difficult, especially in light of the dedication our Canadian
employees have exhibited. We appreciate their efforts very much. While trends at
our five Canadian stores appear to be improving, a substantial additional
investment would be required to reach the minimum store count and operational
support necessary to position the Canadian subsidiary for sustainable
profitability. We are currently negotiating with other parties interested in
subleasing our Canadian locations, thereby affording many of our Canadian
associates the potential for future employment."
With respect to the committed line of credit, Hanaka added, "We increased our
secured credit facility by $75 million to $275 million utilizing the same
collateral as previously pledged. We also extended the maturity date to
September 2003, adding nearly 18 months to the term. This action further
fortifies our financial foundation and increases our flexibility as we continue
to position The Sports Authority for the future."
As previously announced, next year the Company plans to invest approximately $40
million, expected to be generated from its operations, in store remodels,
systems and three to five new stores.
The Sports Authority, Inc. directly operates 201 full-line sporting goods
superstores: 196 stores in 32 states across the United States and five stores in
Canada (to be closed as noted above). Mega Sports Co., Ltd. operates another 19
stores in Japan under a license agreement with The Sports Authority. The
operating results of Mega Sports Co., Ltd. are no longer consolidated in the
Company's financial statements due to a reduction of the Company's ownership in
the joint venture in the first quarter of 1999.
DISCLOSURE ON FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements that may involve risks
and uncertainties that could cause actual results to differ materially from
those set forth herein, including changes in the estimated fair value of
long-lived assets before the end of the Company's fourth quarter, changes in
estimates of income tax refunds, changes in assumptions about the disposition of
the stores leased by the Company's Canadian subsidiary, the rate of sell-through
of aged inventory in the fourth quarter, and a final determination of inventory
shrink levels.
