EXHIBIT 10.40-F
CONSENT AND AMENDMENT NO. 6 TO LOAN DOCUMENTS
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January 29, 1999
Foothill Capital Corporation
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▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Foothill Capital Corporation ("Foothill") and KPR Sports International,
Inc. ("KPR") and RYKA Inc. ("Ryka", and together with KPR, individually,
"Borrower" and collectively, "Borrowers") have entered into certain financing
arrangements pursuant to the Amended and Restated Loan and Security Agreement
dated as of December 15, 1997 ("Restated Loan Agreement") by and among Foothill
and Borrowers as amended by Consent, Amendment No. 1 to Loan Documents and
Subordination Agreement, dated January 28, 1998, Amendment No. 1 to Amended and
Restated Loan and Security Agreement dated February 20, 1998, Consent, Amendment
No. 2 to Loan Documents and Waiver as to Certain Events of Default dated March
25, 1998, and Consent and Amendment No. 3 to Loan Documents dated as of May 12,
1998 and Amendment No. 4 to Loan Documents and Waiver, dated July __, 1998,
Amendment No. 5 to Loan Documents, dated December 3, 1998 (collectively, the
"Loan Agreement") and all agreements, documents and instruments at any time
executed and/or delivered in connection therewith or related thereto (together
with the Loan Agreement as the same are amended hereby, and as the same may be
amended, modified, supplemented, extended, renewed, restated or replaced,
collectively, the "Loan Documents"). All capitalized terms used herein shall
have the meanings assigned thereto in the Restated Loan Agreement, unless
otherwise defined herein.
Borrowers have requested that Foothill consent to (a) the formation of a
new indirectly wholly-owned subsidiary of Global Sports, Inc. (the "Holding
Company"), namely, G.S.I., Inc., a Delaware corporation (the "IP Subsidiary"),
which will, subject to the conditions hereof, acquire from the Borrowers and
Apex (i) all of the registered and unregistered trademarks, trade names, trade
styles, logos, service marks and artwork related thereto listed on the Schedule
annexed hereto as Exhibit "A", together with all translations, adaptations,
derivations and combinations thereof and including all goodwill associated
therewith and all applications, registrations and renewals in connection
therewith (collectively, the "Assigned Trademarks"), and (ii) all of the patents
listed on the Schedule annexed hereto as "Exhibit B", together with all
translations, adaptations, derivations and combinations thereof and including
all goodwill associated therewith and all applications, registrations and
renewals in connection therewith (collectively, the "Assigned Patents"), subject
to the assignments, liens and security interests granted by ▇▇▇▇▇▇▇▇▇ and Apex
in favor of Lender pursuant to and in accordance with the Loan Documents, and
(b) amend the Loan Agreement in connection with the foregoing.
Foothill is willing to consent to the foregoing subject to the terms and
conditions contained herein, including, without limitation, the execution and
delivery of a Continuing Guaranty by the IP Subsidiary in favor of Foothill,
together with other security agreements and
instruments as required by Foothill. By this Consent and Amendment, Foothill and
Borrowers desire and intend to evidence such consent and amendments.
In consideration of the foregoing, the parties hereto agree as follows:
1. Restated Loan Agreement Definitions.
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(a) The Restated Loan Agreement's definition of "Corporate Guarantors"
in Section 1.1 thereof is hereby deleted in its entirety and the following
substituted therefor:
"Corporate Guarantors" means Apex, MR Management, Holding Company
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and G.S.I., Inc.
(b) The following definition is hereby added to Section 1.1 of the
Restated Loan Agreement:
"G.S.I., Inc." means G.S.I., Inc., a Delaware corporation.
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(c) The Restated Loan Agreement's definition of "Guarantors" set forth
in Section 1.1 thereof is hereby deleted in its entirety and the following
substituted therefor:
"Guarantors" means Apex, MR Management, Holding Company, G.S.I.,
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Inc. and ▇▇▇▇▇.
2. Schedule 5.8. Schedule 5.8 of the Restated Loan Agreement is hereby
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amended by adding the following to the end thereof:
- G.S.I., INC.
- DELAWARE CORPORATION
- 100 SHARES OF COMMON STOCK AUTHORIZED
- 10 SHARES OWNED BY KPR WHICH IS 33 1/3% OF THE ISSUED
AND OUTSTANDING STOCK
- 10 SHARES OWNED BY RYKA WHICH IS 33 1/3% OF THE ISSUED
AND OUTSTANDING STOCK
- 10 SHARES OWNED BY APEX WHICH IS 33 1/3% OF THE ISSUED
AND OUTSTANDING STOCK
3. Consent to Formation of Subsidiary. Pursuant to Section 7.13 of the
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Restated Loan Agreement and any other applicable provision of the Loan
Documents, Borrowers and Apex hereby request and Lender hereby consents to the
formation of G.S.I., Inc., a Delaware corporation, to be owned by the Borrowers
and Apex as set forth on Schedule 5.8 of the Restated Loan Agreement.
4. Section 7.1 of the Restated Loan Agreement. Section 7.1 of the
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Restated Loan Agreement is hereby amended to include the following additional
clause (h):
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(h) Indebtedness to G.S.I., Inc., provided, that, such Indebtedness
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shall at all times be subject to a Subordination Agreement between
G.S.I., Inc. and Lender in form and substance satisfactory to Lender.
5. Consent to Transfer of Assigned Trademarks and Assigned Patents to IP
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Subsidiary. Pursuant to Sections 7.3, 7.4 and 7.14 of the Restated Loan
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Agreement and any other applicable provisions of the Loan Documents requiring
the consent or approval by Lender, Lender hereby further consents to the
transfer by Borrowers and Apex to IP Subsidiary of all of the Assigned
Trademarks and Assigned Patents and the licensing of such Assigned Trademarks
and Assigned Patents by IP Subsidiary to the Borrowers and Apex, respectively,
in accordance with the License Agreements (as such term is defined below),
provided, that:
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(a) Lender shall have received, in form and substance satisfactory to
Lender, an absolute and unconditional Continuing Guaranty by IP Subsidiary of
payment and performance of all of the Obligations of Borrowers, secured by first
and only security interests in favor of Lender granted by IP Subsidiary on all
of its existing and future assets, including, but not limited to, all existing
and future trademarks and patents, including all of the Assigned Trademarks and
Assigned Patents and other intellectual property;
(b) Lender shall have received, in form and substance satisfactory to
Lender, a written agreement from IP Subsidiary granting Lender the right to use
any of the Assigned Trademarks and Assigned Patents and any of the other
intellectual property owned by IP Subsidiary, in order that Lender shall have
the right to exercise its rights and remedies and otherwise deal with the
Assigned Trademarks and Assigned Patents including, without limitation, the
right to complete all work-in-process and other inventory and sell the Inventory
of Borrowers and Apex with the Assigned Trademarks and Assigned Patents affixed
to such Inventory;
(c) Borrowers and Apex shall have delivered, or cause to be delivered,
to Lender, true, correct and complete copies of the documents, agreements and
instruments executed and/or delivered by Borrowers, Apex and IP Subsidiary in
connection with the transfer of the Assigned Trademarks and Assigned Patents by
Borrowers and Apex to IP Subsidiary and the licensing arrangements entered into
among Borrowers, Apex and IP Subsidiary;
(d) Borrowers shall have delivered, or cause to be delivered, to
Lender, a copy of the Certificate of Incorporation of IP Subsidiary certified to
by the Secretary of State of Delaware and any amendments thereto together with a
Good Standing Certificate certified by the Secretary of State of Delaware on the
date hereof;
(e) Borrowers shall have delivered, or cause to be delivered, a true
and complete copy of the By-Laws of IP Subsidiary certified by the corporate
secretary of IP Subsidiary;
(f) Borrowers shall have delivered, or cause to be delivered, to
Lender, a true
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and complete copy of the resolutions of the Board of Directors of IP Subsidiary,
with shareholders' consent, certified by the corporate secretary, authorizing
the execution of the guarantee and security agreements delivered in favor of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, in form and substance satisfactory to Lender;
(g) Borrowers shall have delivered, or cause to be delivered, to
Lender, UCC, tax lien and judgments reports from a search company acceptable to
Lender for each of the jurisdictions in which IP Subsidiary maintains assets and
has its chief executive office evidencing that no UCC financing statements have
been filed by any Person against IP Subsidiary, except ▇▇▇▇▇▇, and that there
are no tax liens or judgments filed or entered against IP Subsidiary;
(h) Each of the Borrowers and Apex shall have delivered, or cause to
be delivered, to Lender a true and complete copy of the resolutions of each
Board of Directors with shareholder's consent, certified by the corporate
secretary, authorizing the formation of IP Subsidiary, the assignment of the
Assigned Trademarks and Assigned Patents to IP Subsidiary and the license of IP
Subsidiary to Borrowers and Apex, respectively, of the right to use the Assigned
Trademarks and the Assigned Patents;
(i) Borrowers shall have delivered, or cause to be delivered, to
Lender, in form and substance satisfactory to Lender, such opinions of counsel
to Borrowers, Apex and IP Subsidiary with respect to the transactions
contemplated among Borrowers, Apex and IP Subsidiary and other matters as Lender
may request.
6. Representations and Warranties. In addition to, and not in limitation
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of, the continuing representations, warranties and covenants heretofore or
hereafter made by Borrowers to Foothill pursuant to the Loan Documents, each
Borrower hereby represents, warrants and covenants with and to Foothill as
follows (which representations, warranties and covenants are continuing and
shall survive the execution and delivery hereof and shall be incorporated into
and made a part of the Loan Documents):
(a) As of the date hereof, and after giving effect to the consents set
forth in paragraphs 3, 4 and 5 hereof, there exists no Event of Default and no
condition or event or other state of facts which, with the giving of notice or
lapse of time, or both, would constitute an Event of Default.
(b) This Consent and Amendment has been duly executed and delivered by
each Borrower and each Guarantor and is in full force and effect as of the date
hereof, and the agreements and obligations of each Borrower and each Guarantor
contained herein constitute legal, valid and binding obligations of each
Borrower and each Guarantor enforceable against each Borrower and each Guarantor
in accordance with their respective terms.
(c) All of the representations and warranties set forth in the Loan
Agreement and the other Loan Documents are true and correct in all material
respects on and as of the date hereof as if made on the date hereof, after
giving effect to the consents set forth in paragraphs 3, 4 and 5 hereof and the
consummation of the formation of the IP Subsidiary and the transactions
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contemplated by the transfer of the Assigned Trademarks and Assigned Patents to
the IP Subsidiary, except to the extent any such representation or warrant is
made as of a specified date, in which case such representation or warranty shall
have been true and correct as of such date.
(d) Borrowers have delivered to Foothill true, complete and correct
executed or execution copies (to the extent a fully executed copy has not be
delivered to either Borrower) of the (i) Purchase Agreement between Ryka and the
IP Subsidiary, (ii) the Purchase Agreement between KPR and the IP Subsidiary,
(iii) the Purchase Agreement between Apex and the IP Subsidiary, (iv) the
Assignment between Ryka and the IP Subsidiary, (v) the Assignment between KPR
and the IP Subsidiary, (vi) the Assignment between Apex and the IP Subsidiary,
(vii) the License Agreement between Ryka and the IP Subsidiary, (viii) the
License Agreement between KPR and the IP Subsidiary, and (ix) the License
Agreement between Apex and the IP Subsidiary, including all Schedules and
Exhibits thereto (the agreements referred to in clauses (vii) through (ix)
hereof are collectively referred to herein as the "License Agreements"), and all
documents, instruments and agreements executed, or to be executed, and delivered
in connection therewith.
7. Conditions Precedent. The consent and amendments herein shall be
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effective upon the receipt by Foothill of a counterpart of this Consent and
Amendment, duly authorized, executed and delivered by ▇▇▇▇▇▇▇▇▇ and Guarantors
and the receipt by Foothill of all documents described in Paragraph 5 hereof,
duly authorized, executed and delivered by Borrowers, Apex and/or IP Subsidiary
as the case may be.
8. Effect of this Consent and Amendment.
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(a) Except as modified pursuant hereto, no other changes or
modifications to the Loan Documents are intended or implied and in all other
respects the Loan Documents are hereby specifically ratified, restated and
confirmed by all parties hereto as of the effective date hereof. To the extent
of any conflict between the terms hereof and the other Loan Documents, the terms
hereof shall control.
(b) In addition to, and not in limitation of, any term or provision
contained in the Loan Agreement or any other Loan Document that prohibits the
disposal of assets of any Borrower or Guarantor, including, without limitation,
Section 7.4 of the Restated Loan Agreement, none of Borrowers or Guarantors
shall, without the prior written consent of Foothill in each instance, dispose
of any assets of any Borrower or Guarantor to any Person.
9. Further Assurances. The parties hereto shall execute and deliver such
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additional documents and take such additional action as may be necessary or
desirable to effectuate the provisions and purposes of this Consent and
Amendment.
10. Governing Law. The rights and obligations hereunder of each of the
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parties hereto shall be governed by and interpreted and determined in accordance
with the laws of the State of New York.
11. Binding Effect. This Consent and Amendment shall be binding upon and
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inure to
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the benefit of each of the parties hereto and their respective successors and
assigns.
12. Counterparts. This Consent and Amendment may be executed in any
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number of counterparts, but all of such counterparts shall together constitute
but one and the same agreement. In making proof of this Consent and Amendment,
it shall not be necessary to produce or account for more than one counterpart
thereof signed by each of the parties hereof.
Please sign the enclosed counterpart of this Consent and Amendment in the
space provided below, whereupon this Consent and Amendment, as so accepted by
Foothill, shall become a binding agreement among Borrowers and Foothill.
Very truly yours,
KPR SPORTS INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title: President
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RYKA, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title: C.E.O
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AGREED:
FOOTHILL CAPITAL CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Vice President
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[SIGNATURES CONTINUE ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
ACKNOWLEDGED AND AGREED TO
IN ALL RESPECTS:
APEX SPORTS INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title: President
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MR MANAGEMENT INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title: President
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GLOBAL SPORTS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title: C.E.O.
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G.S.I., INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Vice President
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/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇
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