EXHIBIT 10.2
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
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THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment")
is made and entered into this 1st day of October, 2002, by and among
CONGRESS FINANCIAL CORPORATION (SOUTHWEST), a Texas corporation ("Lender"),
SPORT SUPPLY GROUP, INC., a Delaware corporation ("SSG"), and ATHLETIC
TRAINING EQUIPMENT COMPANY, INC., a Delaware corporation ("ATEC") (SSG and
ATEC, individually and/or collectively, jointly and severally, "Borrower").
PRELIMINARY STATEMENTS
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A. Lender and Borrower have entered into that certain Loan and
Security Agreement, dated March 27, 2001 (the "Loan Agreement"), pursuant to
which Lender has entered into certain financing arrangements with Borrower.
B. The parties hereto have agreed to amend the Loan Agreement as
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties, intending to be legally bound, agree
as follows:
AGREEMENT
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ARTICLE I
Definitions
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1.01 Capitalized terms used in this Amendment are defined in the Loan
Agreement, as amended hereby, unless otherwise stated.
ARTICLE II
Amendments
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2.01 Amendment to Section 1.3. Section 1.3 of the Loan Agreement is
hereby deleted in its entirety and the following is replaced in lieu
thereof:
"1.3 'Adjusted Net Worth' shall mean as to any Person, at any
time, in accordance with GAAP (except as otherwise specifically
set forth below), on a consolidated basis for such Person and its
subsidiaries (if any), the amount equal to: (a) the difference
between: (i) the aggregate net book value of all assets of such
Person and its subsidiaries, calculating the book value of
inventory for this purpose on a first-in-first-out basis, after
deducting from such book values all appropriate reserves in
accordance with GAAP (including but not limited to all reserves
for doubtful receivables, obsolescence, depreciation and
amortization) and (ii) the aggregate amount of the indebtedness
and other liabilities of such Person and its subsidiaries
(including taxes payable and other proper accruals, but excluding
any one-time non-cash adjustments, any adjustments caused by a
change in GAAP or due to an adoption of an existing accounting
policy different from that currently in existence) plus (b)
indebtedness of such Person and its subsidiaries which is
subordinated in right of payment to the full and final payment of
all of the Obligations on terms and conditions acceptable to
Lender."
2.02 Amendment to Section 9.15. Section 9.15 of the Loan Agreement is
hereby deleted in its entirety and the following is replaced in lieu
thereof:
"9.15 Adjusted Net Worth. SSG and its subsidiaries, on a
consolidated basis, shall, at all times during the periods set
forth below, maintain Adjusted Net Worth of not less than the
amount set forth below for each such period:
Minimum Adjusted
Period Net Worth
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From October 1, 2002 through $33,000,000
December 31, 2002
From January 1, 2003 through $34,000,000
March 31, 2003
From April 1, 2003 through $34,500,000
June 30, 2003
July 1, 2003 through $34,500,000
September 30, 2003
From October 1, 2003 through $34,000,000
December 31, 2003
Each fiscal year of SSG thereafter $35,000,000"
ARTICLE III
Conditions Precedent
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3.01 Conditions to Effectiveness. The effectiveness of this Amendment
is subject to the satisfaction of the following conditions precedent, unless
specifically waived in writing by Lender:
(a) Lender shall have received, in form and substance satisfactory to
Lender and its legal counsel:
(i) this Amendment, duly executed by Borrower;
(ii) a certificate of the Secretary of Borrower dated as of
the date of this Amendment, in form and substance
satisfactory to Lender, certifying among other things,
(i) that Borrower's Board of Directors has met and has
adopted, approved, consented to and ratified resolutions
which authorize the execution, delivery and performance
by Borrower of this Amendment and all such other
Financing Agreements to which Borrower is or is to be a
party, and (ii) the names of the officers of Borrower
authorized to sign this Amendment and each of such other
Financing Agreements to which Borrower is or is to be a
party hereunder (including the certificates contemplated
herein) together with specimen signatures of such
officers;
(iii) such additional documents, instruments and information
as Lender or its legal counsel may request; and
(iv) an amendment fee in the aggregate principal amount of
$5,000.00, which shall be deemed fully earned and
non-refundable as of the date hereof.
(b) The representations and warranties contained herein, in the Loan
Agreement and in the other Financing Agreements, shall be true and
correct as of the date hereof, as if made on the date hereof.
(c) No Event of Default or event or condition which, with notice or
passage of time or both, would constitute an Event of Default,
shall have occurred and be continuing, unless such event,
condition or Event of Default has been specifically waived in
writing by Lender.
(d) All corporate proceedings taken in connection with the
transactions contemplated by this Amendment and all documents,
instruments and other legal matters incident thereto shall be
satisfactory to Lender and its legal counsel.
ARTICLE IV
No Waiver
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Nothing contained in this Amendment shall be construed as a waiver by
Lender of any covenant or provision of the Loan Agreement or the other
Financing Agreements or of any other contract or instrument among Borrower
and Lender, and the failure of Lender at any time or times hereafter to
require strict performance by Borrower of any provision thereof shall not
waive, affect or diminish any right of Lender to thereafter demand strict
compliance therewith. Lender hereby reserves all rights granted under the
Loan Agreement, the other Financing Agreements and any other contract or
instrument among Borrower and Lender.
ARTICLE V
Ratifications, Representations and Warranties
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5.01 Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions
set forth in the Loan Agreement and the other Financing Agreements, and,
except as expressly modified and superseded by this Amendment, the terms and
provisions of the Loan Agreement and the other Financing Agreements are
ratified and confirmed and shall continue in full force and effect.
Borrower and Lender agree that (a) the Loan Agreement, as amended hereby,
and the other Financing Agreements shall continue to be legal, valid,
binding and enforceable in accordance with their respective terms, and
(b) the security interests in the Collateral are in full force and effect.
5.02 Representations and Warranties of Borrower. Borrower hereby
represents and warrants to Lender that (a) the execution, delivery and
performance of this Amendment and any and all other Financing Agreements
executed and/or delivered in connection herewith have been authorized by all
requisite corporate action on the part of Borrower and will not violate the
Certificate of Incorporation or Bylaws of Borrower; (b) the representations
and warranties contained in the Loan Agreement, as amended hereby, and any
other Financing Agreement are true and correct on and as of the date hereof
and on and as of the date of execution hereof as though made on and as of
each such date; (c) no Event of Default or event or condition which, with
notice or passage of time or both, would constitute an Event of Default
under the Loan Agreement, as amended hereby, has occurred and is continuing;
(d) Borrower is in full compliance with all covenants and agreements
contained in the Loan Agreement and the other Financing Agreements, as
amended hereby; and (e) Borrower has not amended, modified or in any way
altered its Certificate of Incorporation or Bylaws since March 27, 2001.
ARTICLE VI
Miscellaneous Provisions
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6.01 Survival of Representations and Warranties. All representations
and warranties made in the Loan Agreement or any other Financing Agreement,
including, without limitation, any document furnished in connection with
this Amendment, shall survive the execution and delivery of this Amendment
and the other Financing Agreements, and no investigation by Lender or any
closing shall affect the representations and warranties or the right of
Lender to rely upon them.
6.02 Reference to Loan Agreement. Each of the Loan Agreement and the
other Financing Agreements, and any and all other agreements, documents or
instruments now or hereafter executed and delivered pursuant to the terms
hereof or pursuant to the terms of the Loan Agreement, as amended hereby,
are hereby amended so that any reference in the Loan Agreement and such
other Financing Agreements to the Loan Agreement shall mean a reference to
the Loan Agreement and the other Financing Agreements as amended hereby.
6.03 Expenses of Lender. As provided in Section 9.16 of the Loan
Agreement, Borrower agrees to pay on demand all costs and expenses incurred
by Lender in connection with the preparation, negotiation and execution of
this Amendment and the other Financing Agreements executed pursuant hereto,
and any and all amendments, modifications, and supplements thereto,
including, without limitation, all costs and expenses of filing or recording
and the reasonable costs and fees of Lender's legal counsel (including legal
assistants).
6.04 Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
6.05 Successors and Assigns. This Amendment is binding upon and shall
inure to the benefit of Lender and Borrower and their respective successors
and assigns, except that Borrower may not assign or transfer any of its
rights or obligations hereunder without the prior written consent of Lender.
6.06 Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an
original, but all of which when taken together shall constitute one and the
same instrument.
6.07 Effect of Waiver. No consent or waiver, express or implied, by
Lender to or for any breach of or deviation from any covenant or condition
by Borrower shall be deemed a consent to or waiver of any other breach of
the same or any other covenant, condition or duty.
6.08 Headings. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
6.09 Applicable Law. THIS AMENDMENT AND ALL OTHER AGREEMENTS EXECUTED
PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN
AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS
OF THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF
LAW).
6.10 Final Agreement. THE LOAN AGREEMENT AND THE OTHER FINANCING
AGREEMENTS, EACH AS AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE
PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE THIS AMENDMENT
IS EXECUTED. THE LOAN AGREEMENT AND THE OTHER FINANCING AGREEMENTS, AS
AMENDED, MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES. NO MODIFICATION, RESCISSION, WAIVER,
RELEASE OR AMENDMENT OF ANY PROVISION OF THIS AMENDMENT SHALL BE MADE,
EXCEPT BY A WRITTEN AGREEMENT SIGNED BY BORROWER AND LENDER.
6.11 Release. BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE,
COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE
WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF
ITS LIABILITY TO REPAY THE "OBLIGATIONS" OR TO SEEK AFFIRMATIVE RELIEF OR
DAMAGES OF ANY KIND OR NATURE FROM LENDER. BORROWER HEREBY VOLUNTARILY AND
KNOWINGLY RELEASES AND FOREVER DISCHARGES LENDER, ITS PREDECESSORS,
OFFICERS, DIRECTORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL
POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS,
EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR
UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL,
AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE
THIS AMENDMENT IS EXECUTED, WHICH BORROWER MAY NOW OR HEREAFTER HAVE AGAINST
LENDER, ITS PREDECESSORS, OFFICERS, DIRECTORS, AGENTS, EMPLOYEES, SUCCESSORS
AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT
OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND
ARISING FROM ANY "LOANS", INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING
FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN
EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND
REMEDIES UNDER THE LOAN AGREEMENT OR OTHER FINANCING AGREEMENTS, AND
NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT.
IN WITNESS WHEREOF, this Amendment has been executed and is effective
as of the date first above-written.
LENDER:
CONGRESS FINANCIAL CORPORATION
(SOUTHWEST)
By: _______________________
Name: _______________________
Title: _______________________
BORROWERS:
SPORT SUPPLY GROUP, INC.
By: _______________________
Name: _______________________
Title: _______________________
ATHLETIC TRAINING EQUIPMENT
COMPANY, INC.
By: _______________________
Name: _______________________
Title: _______________________
