exv10w71



 



EXHIBIT 10.71




CONSENT AND SIXTH AMENDMENT

TO LOAN AND SECURITY AGREEMENT



     This CONSENT AND SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this
“Agreement”) is entered into as of this 23rd day of September, 2003, by and
among ACTION PERFORMANCE COMPANIES, INC., (the “Company”); each of RACING
COLLECTABLES CLUB OF AMERICA, INC. (“Racing Club”), ACTION RACING COLLECTABLES,
INC. (“Action Racing”), ACTION SPORTS IMAGE, L.L.C., (“Action Sports”), JEFF
HAMILTON COLLECTION, INC. (“JH”), MCARTHUR TOWEL AND SPORTS, INC. (“McArthur”),
TREVCO TRADING CORP. (“Trevco”) and FUNLINE MERCHANDISE COMPANY., INC.
(“Funline”) (each of Racing Club, Action Racing, Action Sports, JH, McArthur,
Trevco and Funline being referred to herein individually as a “Borrower” and
collectively as “Borrowers”); the Subsidiary Guarantors signatory hereto
(together with the Company and Borrowers, each an “Obligor” and together
“Obligors”); and BANK ONE, NA (in its individual capacity, “Bank One”), for
itself as a Lender and as Agent for any other Lender. Unless otherwise
specified herein, capitalized terms used in this Agreement shall have the
meanings ascribed to them in the Loan Agreement (as hereinafter defined).


RECITALS



     A.     Bank One, as Agent and sole Lender, and Obligors (excluding Funline)
are parties to that certain Loan and Security Agreement dated as of September
29, 2000 (as heretofore amended, the “Loan Agreement”).


     B.     Pursuant to a Stock Purchase Agreement dated as of September 22, 2003
(the “Funline Acquisition Agreement” and, together with all other agreements
and documents executed and delivered pursuant thereto, the “Funline Acquisition
Documents”) by and among the Company, Funline and the stockholders of Funline
(the “Funline Sellers”), the Company will acquire on the date hereof all of the
capital stock of Funline.


     C.     The Obligors have requested that Bank One, as sole Lender, consent to
the Funline Acquisition, and Bank One, as sole Lender, is willing to grant such
consent.


     D.     The parties have agreed to cause Funline to be joined to the Loan
Agreement as a Borrower and to amend certain provisions of the Loan Agreement,
upon the terms and subject to the conditions set forth herein.


     NOW, THEREFORE, in consideration of the foregoing, the covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:


     SECTION 1. Consent to Funline Acquisition.


     (a)     Subject to the terms and upon the conditions set forth herein, Lender
hereby consents to the consummation of the Funline Acquisition on the date
hereof upon the terms set forth in the Funline Acquisition Documents.


 






 


     (b)     Borrowers hereby represent and warrant to Bank One, as Agent and sole
Lender, that true and correct copies of all material Funline Acquisition
Documents have been provided to Agent and that, except as set forth on Schedule
A hereto, all of the conditions set forth in subsection 8.3(b) of the Loan
Agreement to the consummation of the Funline Acquisition will be satisfied on
or prior to the date hereof.


     SECTION 2. Joinder of Funline as Borrower.


     Funline hereby joins in the execution of the Loan Agreement and (i) hereby
agrees that it is a Borrower and an Obligor thereunder and agrees to be bound
by all of the terms and provisions thereof and (ii) without limiting the
generality of the foregoing, hereby grants, assigns, conveys, mortgages,
pledges, hypothecates and transfers to Agent, for itself and the benefit of
Lenders, a Lien upon all of its right, title and interest in, to and under the
Collateral, and grants to Agent a right of setoff against the property of such
Grantor held by or in transit to Agent or any Lender, in each case to secure
the prompt and complete payment, performance and observance of all of the
Liabilities, as provided in Section 5 of the Loan Agreement. Funline hereby
represents and warrants that the representations and warranties set forth in
Section 6 of the Loan Agreement are, with respect to such Person, true and
correct as of the date hereof.


     SECTION 3. Amendments to Loan Agreement.


     (a)     Subsection 1.1 of the Loan Agreement is hereby amended by inserting
the following new definition in its proper alphabetical order:



		
	 	     “Funline” shall mean Funline Merchandise Co., Inc., a California corporation.
	 
	 	     “Sixth Amendment Date” shall mean September 23, 2003.



     (b)     The definition of “Borrowers” contained in subsection 1.1 of the Loan
Agreement is hereby amended to read as follows:



		
	 	     “Borrower” shall mean each of Racing Club, Action Racing, Action Sports,
Trevco, McArthur, JH and Funline, and “Borrowers” shall mean such Persons,
collectively.



     (c)     Subsection 8.3(b)(ii) of the Credit Agreement is hereby amended to
read as follows:



		
	 	     (ii)     The sum of all amounts paid or payable by Obligors in connection with
such acquisitions (including without limitation, purchase price amounts,
non-compete payments and transaction costs) shall not exceed (1)
$5,000,000 for any such single acquisition or series of related
acquisitions and (2) $25,000,000 in the aggregate for all such
acquisitions during the period following the Sixth Amendment Date;



     (d)     Subsection 8.18.1 of the Loan Agreement is hereby amended to read as
follow:


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	 	     8.18.1     Capital Expenditures. Not expend or be committed to expend for Capital
Expenditures (including, without limitation, for the acquisition of fixed
assets) on a non-cumulative basis in the aggregate more than $35,000,000
during any Fiscal Year.



     SECTION 4. Representations and Warranties of Obligors. To induce Bank One
to execute and deliver this Agreement, Obligors jointly and severally represent
and warrant that:


     (a)     The execution, delivery and performance by each Obligor of this
Agreement have been duly authorized and this Agreement and the Loan Agreement
and all other Financing Agreements are legal, valid and binding obligations of
each Obligor, enforceable against each Obligor in accordance with their
respective terms, except as the enforcement thereof may be subject to (i) the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors’ rights generally and (ii) general principles
of equity (regardless of whether such enforcement is sought in a proceeding in
equity or at law); and


     (b)     No Unmatured Default or Default has occurred and is continuing and
each of the representations and warranties contained in the Loan Agreement and
the other Financing Agreements is true and correct in all material respects on
and as of the date hereof as if made on the date hereof.


     SECTION 5. Reference to and Effect Upon the Loan Agreement.


     (a)     Except as expressly set forth herein, all terms, conditions,
covenants, representations and warranties contained in the Loan Agreement or
any other Financing Agreement, and all rights of Agent and Lenders and all
Liabilities of Obligors thereunder, shall remain in full force and effect.
Obligors hereby confirm that the Loan Agreement and the other Financing
Agreements are in full force and effect and that no Obligor has any defense,
setoff or counterclaim to the Liabilities under the Loan Agreement or any other
Financing Agreement.


     (b)     Except as expressly set forth herein, the execution, delivery and
effectiveness of this Agreement and any waivers set forth herein shall not
directly or indirectly (i) constitute a waiver of any past, present or future
violations of any provisions of the Loan Agreement or any other Financing
Agreement, (ii) amend, modify or operate as a waiver of any provision of the
Loan Agreement or any other Financing Agreement or any right, power or remedy
of Agent or any Lender thereunder, or (iii) constitute a course of dealing or
other basis for altering any Liabilities of any Obligor under the Financing
Agreements or any other contract or instrument.


     (c)     This Agreement shall constitute a Financing Agreement.


     SECTION 6. Costs and Expenses. Obligors jointly and severally agree to
promptly reimburse Bank One on demand for all fees, costs and expenses
(including the fees, costs and expenses of counsel retained by Bank One) in
connection with the negotiation, preparation and consummation of this Agreement
and the transactions contemplated hereby and thereby.


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     SECTION 7. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS
PROVISIONS) OF THE STATE OF ARIZONA.


     SECTION 8. Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of
this Agreement for any other purposes.


     SECTION 9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed an original, but
all such counterparts shall constitute one and the same instrument, and all
signatures need not appear on any one counterpart. Any party hereto may
execute and deliver a counterpart of this Agreement by delivering by facsimile
transmission a signature page of this Agreement signed by such party, and any
such facsimile signature shall be treated in all respects as having the same
effect as an original signature. Any party delivering by facsimile
transmission a counterpart executed by it shall promptly thereafter also
deliver a manually signed counterpart of this Agreement.


     SECTION 10. Effectiveness. This Agreement shall become effective at the time Agent shall have
received sufficient copies of the following documents, all in form and
substance satisfactory to Agent:


     (a)     Agreement. Executed signature pages to this Agreement signed by
Obligors.


     (b)     Funline Acquisition Documents. Executed or conformed copies of all
material Funline Acquisition Documents.


     (c)     Articles of Incorporation and By-Laws. Certified copies of the
Articles of Incorporation and By-Laws of Funline, in each case as in effect on
the date hereof.


     (d)     Good Standing Certificates. A certificate of good standing for
Funline from such Obligor’s jurisdiction of incorporation or formation.


     (e)     Resolutions. Copies, certified by the Secretary or Assistant
Secretary of each Obligor, of resolutions of its Board of Directors (or other
governing body of such Obligor, if applicable) authorizing the execution of
this Agreement and the other Financing Agreements (if any) delivered herewith
by such Obligor.


     (f)     Joinder to Company Pledge Agreement. A Joinder to Company Pledge
Agreement pledging to Agent, for the benefit of Lenders, all of the capital
stock of Funline, together with certificates evidencing such shares of capital
stock and stock powers duly executed in blank by Borrower.


     (g)     Replacement Revolving Note. A replacement Revolving Note from
Borrowers payable to the order of Bank One.


     (h)     UCC Financing Statements. UCC-1 financing statements filed in favor
of Agent against Funline with the Secretary of State of the State of
California.


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     (i)     Patent and Trademark Security Agreements. Patent and Trademark
Security Agreements executed by Funline.


     (j)     Addenda to Schedules to Loan Agreement. Addenda to Schedules 6.1
(Jurisdictions of Organization and Qualification), 6.8 (Corporate or Fictitious
Names), 6.12 (Subsidiaries), 6.20 (Capitalization), 6.22 (Bank Accounts) and
6.25 (Insurance) to the Loan Agreement reflecting information for Funline,
certified by Borrower Representative.


     (k)     Insurance Policies. Certificates of insurance summarizing all
insurance coverages maintained by Funline, together with lenders’ loss payable
endorsements in favor of Agent and endorsements to all liability polices naming
Agent and Lenders as additional insureds.


     (l)     Payoff of Existing Indebtedness. Written evidence satisfactory to
Agent that the Business Loan Agreement dated as of December 16, 2002 between
Funline and East West Bank has been terminated and that all Indebtedness and
other liabilities thereunder have been paid in full and all Liens securing such
Indebtedness have been terminated.


     (m)     Other Information. Such other information and documents as Agent
shall request.


[confirm whether we will request landlord waivers from landlord of properties leased by Funline.]



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             IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
and year first above written.



	 	 	 	 	 
	 	 	ACTION PERFORMANCE COMPANIES, INC.,

as Borrower Representative and an Obligor
	 	 	 	 	 
	 	 	
By:
	 	/s/ R. David Martin
	 	 	 	 	

	 	 	
Title:
	 	Chief Financial Officer




	 	 	 	 	 
	 	 	RACING COLLECTABLES CLUB OF AMERICA, INC.,

as a Borrower
	 	 	 	 	 
	 	 	
By:
	 	/s/ R. David Martin
	 	 	 	 	

	 	 	
Title:
	 	Chief Financial Officer




	 	 	 	 	 
	 	 	ACTION RACING COLLECTABLES, INC., as a

Borrower
	 	 	 	 	 
	 	 	
By:
	 	/s/ R. David Martin
	 	 	 	 	

	 	 	
Title:
	 	Chief Financial Officer




	 	 	 	 	 
	 	 	ACTION SPORTS IMAGE, L.L.C., as a Borrower
	 	 	 	 	 
	 	 	
By:
	 	/s/ R. David Martin
	 	 	 	 	

	 	 	
Title:
	 	Chief Financial Officer




	 	 	 	 	 
	 	 	JH ACQUISITION, INC., as a Borrower
	 	 	 	 	 
	 	 	
By:
	 	/s/ R. David Martin
	 	 	 	 	

	 	 	
Title:
	 	Chief Financial Officer




	 	 	 	 	 
	 	 	MCARTHUR TOWEL AND SPORTS, INC., as a
Borrower
	 	 	 	 	 
	 	 	
By:
	 	/s/ R. David Martin
	 	 	 	 	

	 	 	
Title:
	 	Chief Financial Officer



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	 	 	TREVCO TRADING CORP., as a Borrower
	 	 	 	 	 
	 	 	
By:
	 	/s/ R. David Martin
	 	 	 	 	

	 	 	
Title:
	 	Chief Financial Officer




	 	 	 	 	 
	 	 	FUNLINE MERCHANDISE COMPANY, INC., as a

Borrower
	 	 	 	 	 
	 	 	
By:
	 	/s/ R. David Martin
	 	 	 	 	

	 	 	
Title:
	 	Chief Financial Officer




	 	 	 	 	 
	 	 	AW ACQUISITION CORP., as a Subsidiary 

Guarantor
	 	 	 	 	 
	 	 	
By:
	 	/s/ R. David Martin
	 	 	 	 	

	 	 	
Title:
	 	Chief Financial Officer




	 	 	 	 	 
	 	 	GORACING.COM, INC., as a Subsidiary

Guarantor
	 	 	 	 	 
	 	 	
By:
	 	/s/ R. David Martin
	 	 	 	 	

	 	 	
Title:
	 	Chief Financial Officer




	 	 	 	 	 
	 	 	THE FAN CLUB COMPANY, L.L.C., as a

Subsidiary Guarantor
	 	 	 	 	 
	 	 	
By:
	 	/s/ R. David Martin
	 	 	 	 	

	 	 	
Title:
	 	Chief Financial Officer




	 	 	 	 	 
	 	 	GORACING INTERACTIVE SERVICES, INC., as a

Subsidiary Guarantor
	 	 	 	 	 
	 	 	
By:
	 	/s/ R. David Martin
	 	 	 	 	

	 	 	
Title:
	 	Chief Financial Officer



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	 	 	ACTION CORPORATE SERVICES, INC., as a

Subsidiary Guarantor
	 	 	 	 	 
	 	 	
By:
	 	/s/ R. David Martin
	 	 	 	 	

	 	 	
Title:
	 	Chief Financial Officer




	 	 	 	 	 
	 	 	RYP, INC., as a Subsidiary Guarantor
	 	 	 	 	 
	 	 	
By:
	 	/s/ R. David Martin
	 	 	 	 	

	 	 	
Title:
	 	Chief Financial Officer




	 	 	 	 	 
	 	 	CREATIVE MARKETING & PROMOTIONS, INC., as a

Subsidiary Guarantor
	 	 	 	 	 
	 	 	
By:
	 	/s/ R. David Martin
	 	 	 	 	

	 	 	
Title:
	 	Chief Financial Officer




	 	 	 	 	 
	 	 	BANK ONE, NA, as Agent and Lender
	 	 	 	 	 
	 	 	
By:
	 	/s/ Steven J. Krakoski
	 	 	 	 	

	 	 	
Title:
	 	First Vice President



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Schedule A



Exceptions to Section (b) Conditions



Trevco Acquisition



The aggregate consideration paid in connection with the Funline Acquisition
exceeds the threshold set forth in subsection 8.3(b)(ii).


The Additional Consideration (as defined in the Funline Acquisition Agreement)
constitutes “earn-out or similar payment obligations” prohibited under
subsection 8.3(b)(i).



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