EXHIBIT 10.2
AMENDMENT NO. 4 TO LOAN DOCUMENTS AND WAIVER
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July __, 1998
Foothill Capital Corporation
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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 by and among Foothill and Borrowers, as amended by
Consent, Amendment No. 1 to Loan Documents and Subordination Agreement, dated as
of January 28, 1998, Amendment No. 1 to Amended and Restated Loan and Security
Agreement, dated as of 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 (as so
amended, the "Loan Agreement") and all agreements, documents and instruments at
any time executed and/or delivered in connection therewith or related thereto,
including, without limitation, the Continuing Limited Guaranty, dated as of
December 15, 1997, executed and delivered by ▇▇▇▇▇▇▇ ▇▇▇▇▇ in favor of Foothill
in respect of the Obligations of Borrowers to Foothill (the "▇▇▇▇▇ Guaranty")
and the ▇▇▇▇▇ Subordination Agreement (as defined in the Loan Agreement. All
capitalized terms used herein shall have the meaning assigned thereto in the
Loan Agreement, unless otherwise defined herein.
Borrowers have requested that Foothill (a) make certain Advances to
Borrowers, for a limited period of time, in excess of the Borrowing Base, amend
certain other provisions of the Loan Agreement and waive certain Events of
Default that have occurred and are continuing, and Foothill is willing to agree
to the foregoing, on and subject to the terms and conditions contained in this
Amendment No. 4 to Loan Documents and Waiver (this "Amendment").
In consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties hereto, the parties hereto hereby agree as follows:
1. Definitions.
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a. Additional Definitions. As used herein, the following terms shall
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have the respective meanings given to them below and the Loan
Agreement shall be deemed and is hereby amended to include, in
addition and not in limitation, each of the following definitions:
i. "Overadvance Limit" shall mean $3,000,000 for the period from
and after the effective date of this Amendment through and
including September 16, 1998, $2,000,000 commencing with the
opening of business on Thursday, September 17, 1998, through and
including September 23, 1998, $1,000,000 on the opening of
business on Thursday, September 24, 1998 through and including
September 30, 1998, and zero on the opening of business on
Friday, October 1, 1998 and at all times thereafter.
ii. "Overadvances" shall mean the Advances hereafter made by
Foothill to or for the benefit of each Borrower on a revolving
basis (consisting of advances, repayments and readvances) as set
forth in Section 2 hereof.
iii "Overadvances Termination Date" shall mean September 30, 1998.
b. Amendment to Definition. All references to the term "Advances" in the
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Loan Agreement shall be deemed and each such reference is hereby
amended to include, in addition and not in limitation, the
Overadvances.
2. Overadvances.
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a. In addition to the Advances which may be made by Foothill to each
Borrower pursuant to Section 2.1 of the Loan Agreement, upon the
request of a Borrower, made at any time and from time to time prior to
the Overadvance Termination Date, subject to the terms and conditions
contained herein, in the Loan Agreement and in the other Loan
Documents, Foothill shall make Overadvances to such Borrower in
amounts in excess of the amounts otherwise available to such Borrower
under Section 2.1 of the Loan Agreement (as calculated by Foothill,
and subject to the sublimits provided for in the Loan Agreement and
reserves established by Foothill, if any, pursuant to Section 2.1(b)
of the Loan Agreement) up to the aggregate amount for both Borrowers
not to exceed the Overadvance Limit as then in effect.
b. Without limiting any of the rights of Foothill pursuant to Section
2(d) below or otherwise, on each date when any reduction to the
Overadvance Limit becomes effective, Borrowers agree absolutely and
unconditionally to automatically and without demand make a payment to
Foothill in respect of the Overadvances in an amount equal to the
excess, if any, of the aggregate unpaid
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principal amount of the Overadvances (including, without limitation,
any Letters of Credit issued as part of the Overadvances) over the
amount of Overadvance Limit as so reduced.
c. Except in Foothill's discretion, Borrowers shall have no right to
receive, and Foothill shall not make, any Overadvances in excess of
the Overadvance Limit as then in effect or at any time after the
Overadvance Termination Date. The Overadvances shall be secured by
all Collateral.
d. Unless sooner demanded by Foothill in accordance with the terms of the
Loan Agreement or the other Loan Documents, or otherwise due as
provided above, all outstanding and unpaid Obligations arising
pursuant to the Overadvances (including, but not limited to,
principal, interest, fees, costs, expenses and other charges in
respect thereof payable by Borrowers to Foothill) shall automatically,
without notice or demand, be absolutely and unconditionally due and
payable and Borrowers shall pay to Foothill in cash or other
immediately available funds all such Obligations on the Overadvance
Termination Date.
e. Each Borrower acknowledges and agrees that, notwithstanding anything
to the contrary contained in the Loan Agreement or the other Financing
Agreements, the failure of Borrowers to pay such Obligations arising
pursuant to the Overadvances in accordance with the terms of Sections
2(b) and 2(d) above shall constitute an Event of Default.
f. In the event that any Letters of Credit shall have been issued
pursuant hereto which are permitted to be issued only as part of the
Overadvances, then all such Letters of Credit shall have expired or
been drawn upon in full no later than the Overadvance Termination
Date. In the event that, at the close of business on the Overadvance
Termination Date, the aggregate amount of Advances under Section
2.1(a) of the Loan Agreement would exceed the amount permitted to be
outstanding thereunder as to a Borrower, as a result of any Letters of
Credit issued for the account of such Borrower as part of the
Overadvances, then, not later than the close of business on such day,
such Borrower shall repay that portion of the Overadvances in an
amount equal to the aggregate amount of such excess amount.
g. Notwithstanding anything to the contrary contained in the Loan
Agreement or in the ▇▇▇▇▇ Subordination Agreement, from and after the
effective date of this Amendment through and including the Overadvance
Termination Date and until such time as all Obligations of Borrowers
under and in respect of the Overadvances have been paid in full (such
date, the "Overadvances Payment Date"), KPR shall not make any
payments of principal whatsoever in respect of the Junior Debt (as
defined in the ▇▇▇▇▇ Subordination Agreement) otherwise permitted
pursuant to the ▇▇▇▇▇ Subordination Agreement to be made by KPR to
▇▇▇▇▇ during such
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period (collectively, the "Suspended Permitted Payments") and KPR may
make and ▇▇▇▇▇ may receive the Suspended Permitted Payments at any
time after the Overadvances Payment Date and prior to December 31,
1998.
h. Notwithstanding anything to the contrary contained in the Loan
Agreement or any of the other Loan Documents, during the period from
and after the effective date of this Amendment through and including
the Overadvance Termination Date, and unless and until all
Overadvances are paid in full, the Borrowing Base as to each Borrower
shall not include the Seasonal Supplemental Credit, and Borrowers
shall have no right to receive, and Foothill shall have no obligation
to make, Advances to Borrowers in respect of the Seasonal Supplemental
Credit.
3. ▇▇▇▇▇ Guaranty of Overadvances. By his signature hereinbelow, ▇▇▇▇▇ ▇▇▇▇▇▇
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acknowledges, confirms and agrees with and in favor of Foothill that:
a. Notwithstanding anything to the contrary contained in the ▇▇▇▇▇
Guaranty, the Guaranteed Obligations (as defined in the ▇▇▇▇▇
Guaranty) include, without limitation, all obligations and
indebtedness of the Borrowers to Foothill arising under and in respect
of the Overadvances, and in accordance with the ▇▇▇▇▇ Guaranty, ▇▇▇▇▇
irrevocably and unconditionally guarantees to Foothill the full, final
and indefeasible payment of, without limitation, all of the
Overadvances, each reference in the ▇▇▇▇▇ Guaranty to Guaranteed
Obligations is hereby amended to mean and include in addition, and not
in limitation, the Overadvances, and the Overadvances shall be
secured by all of the Real Property Collateral;
b. Section 2(b) of the ▇▇▇▇▇ Guaranty is hereby amended and restated in
its entirety as follows:
"(b) Notwithstanding anything to the contrary contained in this
Guaranty, the liability of Guarantor hereunder for the Guaranteed
Obligations shall not exceed an amount equal to the unpaid principal
balance of either the Overadvances or the Seasonal Supplemental Credit
(as such terms are defined in the Loan Agreement) outstanding at any
time Foothill seeks to exercise its rights hereunder, plus interest
thereon, and all fees, costs and charges related thereto."
c. Section 2(c)(ii) of the ▇▇▇▇▇ Guaranty is hereby amended and restated
in its entirety as follows:
"(ii) Foothill shall have received indefeasible payment in full, in
immediately
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available funds, of all Overadvances and of all amounts
outstanding under the Seasonal Supplemental Credit (including
principal, interest, unreimbursed amounts in respect of Letter of
Credit drawings, fees, costs and other charges) and all Letters of
Credit which were issued or outstanding as part of the Overadvances or
under a Seasonal Supplemental Credit shall have expired or been
terminated;"
4. Amendment to Account Concentration Limit. Solely during the period
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commencing as the effective date of this Amendment through and including
December 31, 1998, Subsection (h) of the definition of Eligible Accounts
set forth in Section 1.1 of the Loan Agreement shall be amended with
respect to Just For Feet, Inc. by deleting the reference to "25%" set forth
opposite such Account Debtor and substituting "35%" therefor. From and
after January 1, 1999, such percentage limit for Just for Feet, Inc. shall
again be "25%"; provided, however, that in the event that Foothill receives
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on or before December 31, 1998 a written non-offset agreement executed and
delivered in favor of Foothill by Just for Feet, Inc., in form and
substance satisfactory to Foothill, pursuant to which, among other things,
such Account Debtor agrees that it will at all times pay and remit to
Foothill (as assignee of and secured party with respect to all Accounts at
any time owing by such Account Debtor to either Borrower) the amount of
each invoice evidencing each such Account, in accordance with its terms,
without asserting against Foothill any offset, claim, counterclaim or
deduction which such Account Debtor may have against either Borrower, and
Foothill acknowledges in writing that such non-offset letter is in fact
satisfactory to Foothill, then such relevant percentage shall thereupon be
increased to "35%".
5. Waiver of Event of Default. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ acknowledge, confirm and
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agree with and in favor of Foothill that an Event of Default has occurred
and is continuing as a result of KPR's making to ▇▇▇▇▇, on or about July 1,
1998, a $250,000 principal payment on account of the Junior Debt (as
defined in the ▇▇▇▇▇ Subordination Agreement), notwithstanding that KPR and
▇▇▇▇▇ had at the time of such payment failed to satisfy the conditions
precedent relating to the making of such principal payment set forth in
Section 2.2(b)(ii)(z) and (xx) of the ▇▇▇▇▇ Subordination Agreement (such
Event of Default is hereinafter referred to as the "Existing Default"). At
the request of Borrowers and ▇▇▇▇▇, Foothill hereby waives the Existing
Default, provided, however, that nothing contained herein shall constitute
a waiver of any other existing Event of Default or any future noncompliance
with the ▇▇▇▇▇ Subordination Agreement and, further, nothing contained
herein shall limit, impair, waive or otherwise affect any other term or
condition of the ▇▇▇▇▇ Subordination Agreement, the Loan Agreement or any
other Loan Document, all of which remain in full
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force and effect in accordance with all of their respective existing terms
and conditions.
6. Amendment Fee. In consideration of the amendments set forth herein,
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including, without limitation, Foothill's agreement to make Overadvances to
Borrowers as set forth in this Amendment, Borrowers shall on the date
hereof pay to Foothill or Foothill, at its option, may charge the
account(s) of Borrowers maintained by Foothill, an amendment fee in the
amount of $25,000, which fee is fully earned as of the date hereof and
shall constitute part of the Obligations.
7. Representations, Warranties and Covenants. In addition to the continuing
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representations, warranties and covenants heretofore or hereafter made by
Borrowers to Foothill pursuant to the Loan Agreement and the other Loan
Documents, each Borrower and ▇▇▇▇▇ 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
Financing Agreements):
a. No Event of Default exists on the date of this Amendment (after giving
effect to the amendments to the Loan Agreement and waiver of the
Existing Default made by this Amendment); and
b. This 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 Borrower(s) and ▇▇▇▇▇
contained herein constitute their legal, valid and binding obligations
enforceable against them in accordance with their respective terms.
8. Conditions Precedent. The effectiveness of the amendments contained herein
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shall be subject to the following:
a. the receipt by Foothill of an original of this Amendment, duly
authorized, executed and delivered by each Borrower and each
Guarantor; and
b. other than the Existing Default, no Event of Default shall have
occurred and be continuing and no event shall have occurred or
condition be existing and continuing which, with notice or passage of
time or both, would constitute an Event of Default.
9. Effect of this Amendment.
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Except as modified pursuant hereto, no other changes or modifications
to the Loan Agreement and the other Loan Documents are intended or implied and
in all other respects the Loan Agreement and the other Loan Documents are hereby
specifically ratified, restated and confirmed by all parties hereto as of the
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effective date hereof. To the extent of any conflict between the terms of this
Amendment and any of the Loan Documents, the terms of this Amendment shall
control. The Loan Agreement, the other Loan Documents amended hereby and this
Amendment shall be read and be construed as one agreement.
10. Further Assurances. The parties hereto shall execute and deliver such
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additional documents and take such additional actions as may be necessary
or desirable to effectuate the provisions and purposes of this Amendment.
11. Governing Law. The validity, interpretation and enforcement of this
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Amendment and any dispute arising out of the relationship between the
parties hereto, whether in contract, tort, equity or otherwise, shall be
governed by the internal laws of the State of New York (without giving
effect to principles of conflicts of law).
12. Binding Effect. This Amendment shall be binding upon and inure to the
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benefit of each of the parties hereto and their respective successors and
assigns.
13. Counterparts. This Amendment may be executed in any number of
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counterparts, but all of such counterparts when executed shall together
constitute but one and the same agreement. In making proof of this
Amendment, it shall not be necessary to produce or account for more than
one counterpart thereof signed by each of the parties hereto.
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: CEO
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[SIGNATURES CONTINUED ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
AGREED:
FOOTHILL CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Title: AVP
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ACKNOWLEDGED AND AGREED TO
IN ALL RESPECTS:
GLOBAL SPORTS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title: CEO
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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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/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇
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