Document:

exv10w2

 

Exhibit 10.2

			
	 	 	 
	
	 	CONSENT AGREEMENT

This
CONSENT AGREEMENT (“Consent Agreement”) is entered into as
of this 9th day of May, 2005
by and between MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC.
(“MLBFS”) and COLLEGIATE PACIFIC INC.
(“Customer”), KESSLER TEAM SPORTS INC. (“Kessler”), TOMARK SPORTS INC. (“Tomark”), DIXIE SPORTING
GOODS CO., INC, (“Dixie”) and CMS OF CENTRAL FLORIDA INC. (“CMS”, which together with Kesoler,
TomarK and Dixie shall collectively and Individually as “Guarantor”); individually each of
Customer and each Guarantor shall be known herein as a “Credit Party” and collectively as the
“Credit Parties”.

WHEREAS, MLBFS and Customer are parties to contain WCMA loan and Security Agreement No.
586-07007 dated as of December 16, 2003, as amended and/or
extended from time to time (as so
amended and/or extended, the “Loan Agreement”);

WHEREAS, the Credit Parties have requested that MLBFS consent to the proposed activity or
transactions described herein on the terms and conditions contained
herein.

NOW,
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby
acknowledged by the parties hereto, the parties hereto hereby agree as follows:

     Section 1. Limited-Consent. From and after the Consent Effective Date, but subject
to the satisfaction of the conditions set forth in Sections 2, 3 and 4 below, MLBFS hereby:

	 	(a)  	consents to customer’s acquisition of 100% of the stock of Salkeld and Sons Inc.
(“Salkeld”) (the “Acquisition”) and
	 
	 	(b)  	agrees that actions contemplated by clauses (a) above shall not constitute an Event of
Default under the Loan Documents.

The
Credit Parties acknowledge and agree that the consent contained in the foregoing
sentence shall not be deemed to be or constitute a consent to any future action or inaction on the
part of the Customer or any other Credit Party that might result in a
Default or Event of Default,
and shall not constitute a waiver of any covenant, term or provision
In the Loan Agreement or the
other Loan Documents, or hinder, restrict or otherwise modify the
rights and remedies of MLBFS
following the occurrence of any present or future Default or Event of Default under the
Loan Agreement or any other Loan Document.

     Section 2.-
Effectiveness of Consent. This Consent Agreement shall be effective as of
the closing of the Acquisition (the “Consent Effective Date”), subject, to receipt by MLBFS of each
of the following in form and substance satisfactory to
MLBFS:

	 	(a)  	counterparts of this Consent Agreement duly executed by each of the Credit Parties
and MLBFS;
	 
	 	(b)  	payment of all fees, costs and expenses of MLBFS, Including without
limitation the fees of MLBFS’ counsel
incurred in connection with the negotiation, documentation and closing of this
Consent Agreement and any
other outstanding fees and expenses owing by the Customer to such counsel;
	 
	 	(c)  	a copy of the final stock purchase agreement for the
Acquisition subject to the review and
approval of
MLBFS;
	 
	 	(d)  	Such other documents, certificates or other confirmations as MLBFS may reasonably
request;
	 
	 	(e)  	Balance sheet of Salkeld as of a date within 5 days prior to the closing date of
Acquisition; and
	 
	 	(f)  	By execution of this Consent Agreement, the Customer and all Guarantors (as
such term is defined in the Loan Agreement) hereby agree to amend the Loan Agreement
to require that the following be submitted in MLBFS within
45 days of the closing of the
Acquisition.

	 	(i)  	An executed unconditional Guaranty by Salked of the Customer’s
obligations to MLBFS;

 

 

	 	(ii)  	An executed security agreement and landlord waiver by Salkeld and
UCC financing statements
and lien searches evidencing a first lien on Salkelds’ assets; and
	 
	 	(iii)  	Subordination to all debt incurred by Customer in connection
with the Acquisition.

     Section 3.
Representations of the Credit Parties. The Credit Parties represent and
warrant to MLBFS that:

     (a) Compliance with Laws. Etc. The execution and delivery by the Customer and the
other Credit Parties of this Consent Agreement does not and will not, by the passage of time, the
giving of notice or otherwise; (i) require the approval of any governmental authority or any other
Person (other than those approvals which have been obtained and remain effective), or violate any
applicable law relating to such Credit Party or (ii) conflict with, result in a breach of or
constitute a default under the organizational documents of any Credit Party, or any indenture,
agreement or other instrument to which such Credit Party is a party or by which it or any of its
properties may be bound.

     (b) No
Default As of the data hereof and as of the Consent Effective Date, no
Default or Event of Default has occurred and is continuing, nor will any exist immediately
after giving effect to this Consent Agreement.

     (c) Representations and Warranties in Loan Agreement and other Loan
Documents. All representations and
warranties set forth in the Loan Agreement and other Loan Documents are true and correct on
and as of the date hereof except
for those that expressly relate to a prior date. Without limiting the generality of the
foregoing, the Credit Parties represent and
warrant to MLBFS that all conditions set forth in Section 3.3(k) of the Loan Agreement have
been satisfied.

     (d) Due
Authorization. The execution, delivery and performance by the Credit Parties
of this Consent
Agreement have been duly authorized by all necessary corporate and
other action.

     Section 4.
REAFFIRMATION OF OBLIGATIONS. Each of the Credit Parties
hereby reaffirms
its continuing obligations owing to MLBFS under the Loan Document to which such Person is a party
and agrees that the activity or transactions contemplated by this Consent Agreement shall not in
any way affect the validity and enforceability of any such Loan Document or reduce, impair or
discharge the obligations or collateral of such Person thereunder.

     Section 5.
GOVERNING LAW. THIS CONSENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.

     Section 6.
Effect. Except as expressly herein modified, the terms and conditions of the
Loan Agreement and the other Loan Documents shall remain in full force and effect.

     Section 7.
Counterparts. This Consent Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and shall be binding upon all
parties, their successors and assigns.

     Section 8.
Definitions. All capitalized terms not otherwise defined herein are used
herein with the respective definitions given them in the Loan Agreement and the other Loan
Documents.

     Section 9.
No Novation. Neither this Consent Agreement nor any of the transactions
contemplated hereby shall be deemed to be a novation of any of the
Obligations of the Customer or any
other Credit Party under the Loan Agreement or the other Loan Documents.

[Signatures on
Following Pages]

 

 

     IN WITNESS WHEREOF, the parties hereto have caused the Consent Agreement to be executed
as of the date
first above written.

	 	 	 	 	 
	 	COLLEGIATE PACIFIC INC.; 

 	 
	 	By:
 	/s/ MICHAEL J. BLUMENFELD 	 
	 	Name:  	MICHAEL J. BLUMENFELD           	 
	 	Title:  	CEO 	 
	 

	 	 	 	 	 
	KESSLER’S
TEAM SPORTS INC.:

	By:

	 	/s/ MICHAEL J. BLUMENFELD	 	 
	Name:

	 	MICHAEL J. BLUMENFELD	 	 
	Title:

	 	CEO	 	 
	 
	 	 	 	 
	TOMARK SPORTS
INC.:

	By:

	 	/s/ MICHAEL J. BLUMENFELD	 	 
	Name:

	 	MICHAEL J. BLUMENFELD	 	 
	Title:

	 	CEO

	 	 
	DIXIE SPORTING GOODS CO., INC.

	By:

	 	/s/ MICHAEL J. BLUMENFELD	 	 
	Name:

	 	MICHAEL J. BLUMENFELD	 	 
	Title:

	 	CEO

	 	 
	CMS OF CENTRAL
FLORIDA INC.

	By:

	 	/s/ MICHAEL J. BLUMENFELD	 	 
	Name:

	 	MICHAEL J. BLUMENFELD	 	 
	Title:

	 	CEO

	 	 
	MERRILL LYNCH
BUSINESS FINANCIAL SERVICES INC.;

	By:

	 	/s/ BRIAN TALTY	 	 
	Name:

	 	BRIAN TALTY	 	 
	Title :

	 	 VPexv10w3

 

Exhibit 10.3

	 	 	 
	

	 	Global Private Client
	

	 	Group
	

	 	Merrill Lynch Business
	

	 	Financial Services Inc.
	 
	 	 
	

	 	15 Exchange Place 4th Floor

Jersey City, NJ 07302

(201) 593-7908

FAX: (201) 593-7868

	 
	 	 
	

	 	Brian Talty,
	

	 	Vice President
	 
	 	 
	

	 	May 12, 2005     

Collegiate Pacific Inc.

13950 Senlac Drive, Suite 100

Dallas, Texas 75234

RE: Waiver and Amendment to Loan Documents

Ladies & Gentlemen:

This Waiver and Letter Agreement (“Letter Agreement”) will serve to confirm certain agreements of
Merrill Lynch Business Financial Services Inc. (“MLBFS”) and Collegiate Pacific Inc. (“Customer”)
with respect to: (i) that certain WCMA LOAN AND SECURITY AGREEMENT NO. 586-07067 between MLBFS and
Customer (including any previous amendments and extensions thereof) (the “Loan Agreement”), and
(ii) all other agreements between MLBFS and Customer or any party who has guaranteed or provided
collateral for Customer’s obligations to MLBFS (a “Guarantor”) in connection therewith
(collectively, the “Loan Documents”). Capitalized terms used herein and not defined herein shall
have the meaning set forth in the Loan Documents.

Covenant Waiver

Customer has requested that MLBFS waive a certain Default by Customer under the terms of the Loan
Agreement, which has occurred as a result of Customer’s failure to comply with the following
provision as of March 31, 2005, in that the Customer’s and Business Guarantors’ aggregate Fixed
Charge Coverage Ratio was 1.40x for the twelve months ended March 31, 2005 (the “Identified
Default”):

Fixed Charge Coverage Ratio. Customer’s and Business Guarantors’ aggregate “Fixed
Charge Coverage Ratio” shall at all times exceed 1.50 to 1. For purposes hereof,
“Fixed Charge Coverage Ratio” shall mean the ratio of: (a) income before interest
(including payments in the nature of interest under capital leases), taxes,
depreciation, amortization, and other non-cash charges, minus any internally
financed capital expenditures, to (b) the sum of (i) any dividends and other
distributions paid or payable to shareholders, any taxes paid in cash, and
interest expense, as determined on a trailing 12-month basis, plus (ii) the
aggregate principal scheduled to be paid or accrued over the next 12 month
period; all as set forth in Customer’s and Business Guarantors’ regular annual
financial statements prepared in accordance with GAAP.

In reliance upon the representations and warranties of the Customer set forth herein (including
without limitation the Customer’s and Business Guarantor’s aggregate Fixed Charge Coverage Ratio
as of March 31, 2005), and the agreement of Customer and each Guarantor set forth herein, MLBFS
hereby waives the Identified Default for the dates specified without declaring any such Default or
delivering any notice thereof to Customer pursuant to the terms of the Loan Agreement. In the
event that Customer’s and Business Guarantor’s aggregate Fixed Charge Coverage Ratio is

 

 

ever determined to be less than 1.40x for the period ending March 31, 2005, MLBFS’ waiver of the
Identified Default will, at the sole option of MLBFS, be void. Customer and each Guarantor
acknowledge that this waiver is limited precisely as written and except for the waiver of the
Identified Default for the dates specified, all terms and conditions of the Loan Agreements shall
remain in full force and effect.

Amendment

Subject to the terms hereof, effective as of the “Effective Date” (as defined below), the Loan
Documents are hereby amended as follows:

(a) Section 3.3 (h) of the Loan Agreement is hereby deleted in their entirety and replaced with
the following:

Fixed
Charge Coverage Ratio. Customer’s and Business Guarantors’ aggregate “Fixed Charge Coverage
Ratio” shall at all times exceed 1.30 to 1. For purposes hereof, “Fixed Charge Coverage Ratio”
shall mean the ratio of: (a) income before interest (including payments in the nature of interest
under capital leases), taxes, depreciation, amortization, and other non-cash charges, minus any
internally financed capital expenditures, to (b) the sum of (i) any dividends and other
distributions paid or payable to shareholders, any taxes paid in cash, and interest expense, as
determined on a trailing 12-month basis, plus (ii) the aggregate principal scheduled to be paid or
accrued over the next 12 month period; all as set forth in Customer’s and Business Guarantors’
regular annual or interim financial statements, as the case may be, prepared in accordance with
GAAP.

Miscellaneous

The effectiveness of this letter is hereby conditioned upon MLBFS’ receipt of the written
acknowledgment and acceptance of the same by the parties identified below. Except as expressly
amended hereby, the Loan Documents shall continue in full force and effect upon all of their terms
and conditions.

This letter does not in any manner constitute any waiver of either (a) any of MLBFS’ rights,
remedies or powers pursuant to the Loan Agreement or any other agreement, document or instrument
or applicable law, or (b) any defaults or Events of Default (howsoever defined, with the exception
of the waiver of the Identified Default as described herein) under the Loan Agreement.

By their execution of this Letter Agreement, the below-named Guarantors hereby consent to the
foregoing modifications to the Loan Documents, and hereby agree that the “Obligations” under their
respective Unconditional Guaranty and/or agreements providing collateral shall extend to and
include the Obligations of Customer under the Loan Documents, as amended hereby.

Customer and said Guarantors acknowledge, warrant and agree, as a primary inducement to MLBFS to
enter into this Agreement, that: (a) no Default or Event of Default other than the Identified
Default has occurred and is continuing under the Loan Documents; (b) each of the warranties of
Customer in the Loan Documents are true and correct as of the date hereof and shall be deemed
remade as of the date hereof; (c) neither Customer nor any of said Guarantors have any claim
against MLBFS or any of its affiliates arising out of or in connection with the Loan Documents or
any other matter whatsoever; and (d) neither Customer nor any of said Guarantors have any defense
to payment of any amounts owing, or any right of counterclaim for any reason under, the Loan
Documents.

Provided that no Default other than the Identified Default, or event which with the giving of
notice, passage of time, or both, would constitute an Event of Default, shall then have occurred
and be

 

 

continuing under the terms of the Loan Documents, and the condition specified above shall
have been met to our satisfaction, the amendments and agreements in this Letter Agreement will
become effective on the date (the “Effective Date”) upon which: (a) Customer and the Guarantors
shall have executed and returned the duplicate copy of this Letter Agreement enclosed herewith;
and (b) an officer of MLBFS shall have reviewed and approved this Letter Agreement as being
consistent in all respects with the original internal authorization hereof.

Notwithstanding the foregoing, if Customer and the Guarantors do not execute and return the
duplicate copy of this Letter Agreement within 14 days from the date hereof, or if for any other
reason (other than the sole fault of MLBFS) the Effective Date shall not occur within said 14-day
period, then all of said amendments and agreements will, at the sole option of MLBFS, be void.

Very truly yours,

Merrill Lynch Business Financial Services Inc.

	 	 	 	 	 
	By:
	 	/s/ Brian Talty	 	 
	

	 	

	 	 
	

	 	     Brian
Talty 
     Vice President	 	 
	 
	 	 	 	 
	Accepted:	 	 
	 
	 	 	 	 
	Collegiate Pacific Inc.	 	 
	 
	 	 	 	 
	By:
	 	/s/ Michael J. Blumenfeld	 	 
	

	 	

	 	 
	 
	 	 	 	 
	Printed Name:
	 	Michael J. Blumenfeld	 	 
	

	 	

	 	 
	Title:
	 	CEO	 	 
	

	 	

	 	 
	Approved:	 	 
	 
	 	 	 	 
	Tomark Sports, Inc.	 	 
	 
	 	 	 	 
	By:
	 	/s/ Michael J. Blumenfeld	 	 
	

	 	

	 	 
	 
	 	 	 	 
	Printed Name:
	 	Michael J. Blumenfeld	 	 
	

	 	

	 	 
	 
	 	 	 	 
	Title:
	 	CEO	 	 
	

	 	

	 	 
	Kesslers Team Sports, Inc.	 	 
	 
	 	 	 	 
	By:
	 	/s/ Michael J. Blumenfeld	 	 
	

	 	

	 	 
	 
	 	 	 	 
	Printed Name:
	 	Michael J. Blumenfeld	 	 
	

	 	

	 	 
	 
	 	 	 	 
	Title:
	 	CEO	 	 
	

	 	

	 	 

 

 

	 	 	 	 	 
	Dixie Sporting Goods Co., Inc.	 	 
	 
	 	 	 	 
	By:
	 	/s/ Michael J. Blumenfeld	 	 
	

	 	

	 	 
	 
	 	 	 	 
	Printed Name:
	 	Michael J. Blumenfeld	 	 
	

	 	

	 	 
	 
	 	 	 	 
	Title:
	 	CEO	 	 
	

	 	

	 	 
	 
	 	 	 	 
	CMS OF Central Florida, Inc.	 	 
	 
	 	 	 	 
	By:
	 	/s/ Michael J. Blumenfeld	 	 
	

	 	

	 	 
	 
	 	 	 	 
	Printed Name:
	 	Michael J. Blumenfeld	 	 
	

	 	

	 	 
	 
	 	 	 	 
	Title:
	 	CEO

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