[LETTERHEAD OF MIDLANTIC APPEARS HERE]
May 7, 1996
Mr. Steven Wolf, CFO
Ryka, Inc.
555 S. Henderson Road
King of Prussia, Pa. 19406
RE: Loan and Security Agreement, dated as of July 31, 1995 (herein call the
"Agreement") as entered into between RYKA, INC. ("Borrower"), a Delaware
Corporation, and MIDLANTIC BANK N.A. ("Bank"), a National Banking
Company.
Dear Steven,
In response to your recent advisement and request pursuant to the Agreement,
please be advised that the Bank agrees to waive its rights to declare an event
of default as a result of Borrower's violation of the following covenants, said
waiver effective through May 31, 1996 for Section 6.01 (M)(2).
SECTION 6.01 (M)(2)
Borrower will at all times be in compliance with the following
financial covenants:
Leverage Ratio of not more than 1.50 to 1 as of the Closing and
1.75 to 1 as of December 31, 1995 and at all times thereafter.
This waiver does not apply to any other terms, conditions or covenants.
Furthermore the above waiver should not be construed as a waiver of said
covenants for any other period beyond May 31, 1996.
All Other Terms, Conditions And Covenants Remain In Full Force And Effect.
Sincerely,
/s/ Joseph G. Meterchick
Joseph G. Meterchick
Vice President
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[LETTERHEAD OF MIDLANTIC APPEARS HERE]
April 30, 1996
Mr. Steven Wolf, CFO
Ryka, Inc.
555 S. Henderson Road
King of Prussia, PA. 19406
RE: Loan and Security Agreement, dated as of July 31, 1995 (herein call the
"Agreement") as entered into between RYKA, INC. ("Borrower"), a Delaware
Corporation, and MIDLANTIC BANK N.A. ("Bank"), a National Banking
Company.
Dear Steven,
In response to your recent advisement and request pursuant to the Agreement,
please be advised that the Bank agrees to waive its rights to declare an event
of default as a result of Borrower's violation of the following covenants, said
waiver effective through May 31, 1996 for Section 3.04 (A), (B), and Section
3.03 (C), (D), and Section 6.01 (M) (1).
SECTION 3.03
(C) Borrower shall have received the cash sum of not less than
$2,000,000 as equity or subordinated indebtedness, which in the case of
subordinated indebtedness shall be fully and unconditionally subordinated in all
respects to Borrower's obligations to Bank.
(D) Bank shall have received a Support Agreement from Rubin and
MR. L.L.C. under which they unconditionally agree to provide or cause to be
provided by them or by any other Person a cash infusion to Borrower after
Closing under the terms and conditions set forth therein if Borrower's Tangible
Net Worth is from time to time less than $2,000,000. No such funding may
directly or indirectly be provided by Guarantor unless cash funds in a like
amount are received for such purpose by Guarantor (as equity or subordinated
debt, under agreements acceptable to Bank) from either of Rubin or MR. L.L.C. or
any other Person(s) contemporaneously with such funding.
SECTION 3.04 Post-Closing Conditions:
------------------------
(A) Borrower covenants and agrees that within thirty days
following Closing, Borrower shall obtain credit insurance with respect to all or
a substantial portion of its accounts receivable, a copy of the policy for which
shall, within such period, be delivered to and approved by Bank.
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(B) Within thirty days following Closing, Bank shall receive a current
pro forma balance sheet for Borrower prepared as of the date of submission
thereof which shall reflect a Tangible Net Worth, plus Subordinated Indebtedness
for Borrower of not less than $2,000,000 prior to transaction costs associated
with the acquisition by Rubin or his affiliate stock of Borrower and all
transactions related thereto and evidence satisfactory to Bank that indebtedness
of Borrower existing immediately prior to the Closing of at least $1,500,000 has
been forgiven or waived.
SECTION 6.01 (M)(1)
Borrower will at all times be in compliance with the following
financial covenants:
Tangible Net Worth of not less than $1,500,000 as of the Closing
and $2,000,000 as of thirty days following Closing and at all times
thereafter; and
This waiver does not apply to any other terms, conditions or covenants.
Furthermore the above waiver should not be construed as a waiver of said
covenants for any other period beyond May 31, 1996.
All Other Terms, Conditions And Covenants Remain In Full Force And Effect.
Sincerely,
/s/ Joseph G. Meterchick
Joseph G. Meterchick
Vice President
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[K.P.R. SPORTS INTERNATIONAL LOGO APPEARS HERE]
May 6, 1996
Steve Wolf
Chief Financial Officer
555 South Henderson Road
King of Prussia, PA. 19406
Dear Steve:
In connection with Loan and Securities Agreement dated as of July 31, 1995
between RYKA and KPR Sports International, Inc., we hereby waive through May 31,
1996 the default with the regard to the minimum tangible net worth and leverage
ratio requirements.
Sincerely
/s/ Michael Rubin
Michael Rubin
President
KPR Sports International
K.P.R SPORTS INTERNATIONAL, INC.
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[OFFICE LOCATIONS APPEAR HERE]
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