Exhibit 10.1
FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
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THIS FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment")
is made and entered into as of the 29th day of December, 2003 ("Effective
Date"), by and among CONGRESS FINANCIAL CORPORATION (SOUTHWEST), a Texas
corporation ("Lender") and SPORT SUPPLY GROUP, INC., a Delaware corporation
(hereinafter referred to as "Borrower" or "SSG").
PRELIMINARY STATEMENTS
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A. Lender, SSG and Athletic Training Equipment Company, Inc., a
Delaware corporation ("ATEC") have entered into that certain Loan and
Security Agreement, dated March 27, 2001, as amended by that certain First
Amendment to Loan and Security Agreement dated October 1, 2002, as further
amended by that certain Second Amendment to Loan and Security Agreement
dated June 27, 2003, as further amended by that certain Third Amendment to
Loan and Security Agreement dated November 6, 2003 (as amended, modified or
supplemented from time to time, the "Loan Agreement"), pursuant to which
Lender has entered into certain financing arrangements with SSG and ATEC.
B. SSG has informed Lender that it has sold all of the issued and
outstanding capital stock of ATEC on November 18, 2003 pursuant to that
certain Stock Purchase Agreement by and between SSG and Amer Sports Company
("ATEC Sale").
C. In connection with the ATEC Sale, ATEC was released from its
obligations as a Borrower under the Loan Agreement.
D. The parties hereto have agreed to amend the Loan Agreement to
evidence the release of ATEC thereunder, among other things, 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 Preamble. Effective as of the Effective Date, the
preamble of the Loan Agreement is hereby deleted in its entirety and the
following is inserted in lieu thereof:
"'This Loan and Security Agreement dated March 27, 2001 is
entered into by and between CONGRESS FINANCIAL CORPORATION
(SOUTHWEST), a Texas corporation ("Lender") and SPORT SUPPLY
GROUP, INC., a Delaware corporation (hereinafter referred to as
"SSG" or "Borrower")."
2.02 Amendment to 1.3. Effective as of the Effective Date, Section 1.3
of the Loan Agreement is hereby deleted in its entirety and the following is
inserted in lieu thereof:
'"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 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 tax and other proper
accruals) 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; provided, however, that (i) the
one-time non-cash charges taken by SSG in its fiscal year ending
September 30, 2001 up to an aggregate amount of $300,000 and (ii)
any gains or losses incurred in accordance with GAAP reported by
SSG in connection with its sale of all of the outstanding capital
stock of ATEC or disposition of its Team Dealer Division, each of
which has been consented to by Lender shall be excluded from the
calculation of the Adjusted Net Worth of SSG"
2.03 Amendment to Section 1.4. Effective as of the Effective Date,
Section 1.4 of the Loan Agreement is hereby deleted in its entirety and the
following is inserted in lieu thereof:
"'ATEC' shall mean Athletic Training Equipment Company, Inc.,
a Delaware corporation."
2.04 Amendment to Section 1.7. Effective as of the Effective Date,
Section 1.7 of the Loan Agreement is hereby deleted in its entirety and the
following is inserted in lieu thereof:
"'Borrower' shall have the meaning set forth in the preamble
hereto."
2.05 Amendment to Section 1.8. Effective as of the Effective Date,
Section 1.8 of the Loan Agreement is hereby deleted in its entirety and the
following is inserted in lieu thereof:
"[Intentionally Omitted.]"
2.06 Amendment to Section 1.15(b). Effective as of the Effective Date,
Section 1.15(b) of the Loan Agreement is hereby deleted in its entirety and
the following is inserted in lieu thereof:
"(b) such Accounts are not unpaid more than one hundred
twenty (120) days after the date of the original invoice for
them;"
2.07 Amendment to Section 1.15(n). Effective as of the Effective Date,
Section 1.15(n) of the Loan Agreement is hereby deleted in its entirety and
the following is inserted in lieu thereof:
"(n) such Accounts are not owed by an account debtor who has
Accounts unpaid one hundred twenty (120) days after the date of
the original invoice for them, which unpaid Accounts constitute
more than fifty percent (50%) of the total Accounts of such
account debtor; and"
2.08 Amendment to Section 1.27. Effective as of the Effective Date,
Section 1.27 of the Loan Agreement is hereby deleted in its entirety and the
following is inserted in lieu thereof:
"'Financing Agreements' shall mean, collectively, this
Agreement, that certain Release Agreement, dated as of November
18, 2003, executed by Lender and agreed and acknowledged by Amer
Sports Company, SSG and ATEC, and all notes, guarantees, security
agreements, negative pledge agreements, collateral reports and
other agreements, documents, information and instruments now or at
any time hereafter executed and/or delivered by Borrower or any
Obligor in connection with this Agreement, as the same now exist
or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced."
2.09 Amendment to Section 1.29. Effective as of the Effective Date,
the reference to "Section 9.15" contained in Section 1.29 of the Loan
Agreement is hereby deleted and replaced with the references to
"Sections 9.15 and 9.18".
2.10 Amendment to Section 1.46. Effective as of the Effective Date,
Section 1.46 of the Loan Agreement is hereby deleted in its entirety and the
following is inserted in lieu thereof:
"'Obligations' shall mean any and all Revolving Loans and
Letter of Credit Accommodations and all other obligations,
liabilities and indebtedness of every kind, nature and description
owing by Borrower to Lender and/or its affiliates, including
principal, interest, charges, fees, costs and expenses, however
evidenced, whether as principal, surety, endorser, guarantor or
otherwise arising under this Agreement and the other Financing
Agreements, whether now existing or hereafter arising, whether
arising before, during or after the initial or any renewal term of
this Agreement or after the commencement of any case with respect
to Borrower under the United States Bankruptcy Code or any similar
statute (including the payment of interest and other amounts which
would accrue and become due but for the commencement of such case,
whether or not such amounts are allowed or allowable in whole or
in part in such case), whether direct or indirect, absolute or
contingent, joint or several, due or not due, primary or
secondary, liquidated or unliquidated, secured or unsecured. The
term Obligations shall include, without limitation, all
obligations, liabilities and indebtedness of Borrower, to Lender,
whether such obligations, liabilities and indebtedness shall be
joint, several, joint and several or individual."
2.11 Amendment to Section 2.5. Effective as of the Effective Date,
Section 2.5 of the Loan Agreement is hereby deleted in its entirety and the
following is inserted in lieu thereof:
"[Intentionally Omitted.]"
2.12 Amendment to Section 2.6. Effective as of the Effective Date,
Section 2.6 of the Loan Agreement is hereby deleted in its entirety and the
following is inserted in lieu thereof:
"[Intentionally Omitted.]"
2.13 Amendment to Section 3.1(b)(v). Effective as of the Effective
Date, Section 3.1(b)(v) of the Loan Agreement is hereby deleted in its
entirety and the following is inserted in lieu thereof:
"(v) the aggregate amount of the Eurodollar Rate Loans must
be in an amount not less than $2,000,000 or an integral multiple
of $500,000 in excess thereof."
2.14 Amendment to Section 3.4. Effective as of the Effective Date, the
reference to "$20,000,000" contained in Section 3.4 of the Loan Agreement is
hereby deleted in its entirety and replaced with the reference to
"$15,000,000."
2.15 Amendment to Section 9.15. Effective as of the Effective Date,
Section 9.15 of the Loan Agreement is hereby deleted in its entirety and the
following is inserted in lieu thereof:
"Borrower 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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At all times during the period from $22,000,000
October 1, 2003 through March 31, 2004
At all times thereafter $24,000,000"
2.16 Amendment to Section 9, Addition of Section 9.18. Effective as of
the Effective Date, a new Section 9.18 shall be added to Section 9 of the
Loan Agreement in its proper numerical order to read as follows:
"9.18 Minimum Excess Availability. Borrower shall
maintain at all times Excess Availability, as determined by
Lender, in an amount equal to or in excess of $1,500,000."
2.17 Amendment to Article 9; Addition of Section 9.19. Effective as of
the Effective Date, Section 9.19 is hereby added to Section 9 of the Loan
Agreement in its proper numerical order to read as follows:
"9.19 Exhibits and Schedules. On or before January 22,
2003, Borrower shall deliver to Lender a revised Exhibit A,
Schedule 1.5, Schedule 4.1(1), Schedule 8.3, Schedule 8.4,
Schedule 8.7, Schedule 8.9, Schedule 8.10, Schedule 8.13,
Schedule 9.9 and Schedule 9.10, which shall be in form and
substance acceptable to Lender in its sole discretion."
2.18 Amendment to Section 10.1(j). Effective as of the Effective Date,
Section 10.1(j) of the Loan Agreement is hereby deleted in its entirety and
the following is inserted in lieu thereof:
"[Intentionally Omitted.]"
2.13 Miscellaneous Amendments. (i) Effective as of the Effective Date,
(a) each reference to the term "Borrower Representative" contained in the
Loan Agreement shall be deleted in its entirety and replaced with the term
"Borrower"; provided, however, if the term "Borrower Representative" is
immediately preceded by the phrase "Borrower and" or "Borrower or" in this
Loan Agreement, then such phrases shall be deleted in their entirety in each
instance, and (b) each reference to the term "Borrowers" contained in the
Loan Agreement shall be deleted in its entirety and replaced with the term
"Borrower"; (ii) effective as of the January 22, 2003, Exhibit A,
Schedule 1.5, Schedule 4.1(1), Schedule 8.3, Schedule 8.4, Schedule 8.7,
Schedule 8.9, Schedule 8.10, Schedule 8.13, Schedule 9.9 and Schedule 9.10
attached to the Loan Agreement shall be amended and restated and replaced
with "Exhibit A, Schedule 1.5, Schedule 4.1(1), Schedule 8.3, Schedule 8.4,
Schedule 8.7, Schedule 8.9, Schedule 8.10, Schedule 8.13, Schedule 9.9 and
Schedule 9.10", respectively, upon delivery thereof to the Lender by
Borrower pursuant to Section 9.18 of the Loan Agreement; and (iii) effective
as of the Effective Date, each reference to "Borrowers" and each reference
to "ATEC" contained in the other Financing Agreements shall be deleted in
its entirety and replaced with the term "Borrower".
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) evidence satisfactory to Lender of the consummation of
the ATEC Sale;
(iii) 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; and
(iv) such additional documents, instruments and information
as Lender or its legal counsel may request.
(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 (unless
otherwise made on a specific date as set forth therein, in which case,
such representations and warranties shall be true and correct as of
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, 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.
(e) Borrower shall have paid the portion of the amendment fee due
on the Effective Date of this Amendment as required pursuant to
Section 3.6 of the Loan Agreement, as amended hereby.
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 (unless otherwise made on a specific date as set forth
therein, in which case, such representations and warranties shall be true
and correct as of 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: _______________________
BORROWER:
SPORT SUPPLY GROUP, INC.
By: _______________________
Name: _______________________
Title: _______________________
