CREDIT AGREEMENT
THIS CREDIT AGREEMENT(this "Agreement") is made and delivered effective
as of the 26th day of April, 1999 (the "Effective Date"), by and
between SPORT SUPPLY GROUP, INC., a Delaware corporation ("Borrower"),
and COMERICA BANK - TEXAS, a Texas banking association ("Bank").
RECITALS
A. Borrower desires to obtain certain credit facilities from the Bank,
and the Bank is willing to provide such credit facilities to and in
favor of Borrower.
B. Such credit facilities are subject to the terms and conditions set
forth herein and in every other Loan Document.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein contained, Borrower and Bank agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. The terms as used in this Agreement shall have the
meanings assigned to such terms in the Defined Terms Addendum.
1.2 Accounting Terms. All accounting terms not specifically defined in
this Agreement shall be determined and construed in accordance with
GAAP.
1.3 Singular and Plural. Where the context herein requires, the
singular number shall be deemed to include the plural, the masculine
gender shall include the feminine and neuter genders, and vice versa.
SECTION 2. TERMS, CONDITIONS AND PROCEDURES FOR BORROWING
Subject to the terms, conditions and procedures of this Agreement and
each other Loan Document including, but not limited to, the terms,
conditions and procedures set forth in the Defined Terms Addendum and
Loan Terms, Conditions and Procedures Addendum, Bank agrees to make
credit available to the Borrower on such dates and in such amounts as
the Borrower shall request from time to time or as may otherwise be
agreed to by Borrower and Bank.
SECTION 3. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants, and such representations and
warranties shall be deemed to be continuing representations and
warranties during the entire life of this Agreement, and so long as Bank
shall have any commitment or obligation to make any Loans, issue any
Letters of Credit or effect any Foreign Exchange Transaction hereunder,
and so long as any Indebtedness remains unpaid and outstanding under any
Loan Document, as follows:
3.1 Authority. Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and is duly qualified and authorized to do business in each
other jurisdiction in which the character of its assets or the nature of
its business makes such qualification necessary, except where the
failure to so qualify would not have a Material Adverse Effect.
3.2 Due Authorization. Each Borrower Party has all requisite power and
authority to execute, deliver and perform its obligations under each
Loan Document to which it is a party or is otherwise bound, all of which
have been duly authorized by all necessary action, and are not in
contravention of law or the terms of any Borrower Party's organizational
or other governing documents.
3.3 Title to Property. Each Borrower Party has good title to all
property and assets purported to be owned by it, including those assets
identified on the Financial Statements most recently delivered by
Borrower to Bank.
3.4 Encumbrances. There are no security interests or other Liens or
encumbrances on, and no financing statements on file with respect to,
any of the property or assets of any Borrower Party, except for
Permitted Encumbrances.
3.5 Subsidiaries. Borrower has no Subsidiaries, except as set forth in
Schedule 3.5 which Schedule sets forth the percentage of ownership of
Borrower in each such Subsidiary as of the date of this Agreement.
3.6 Taxes. Each Borrower Party has filed, on or before their
respective due dates, all federal, state, local and foreign tax returns
which are required to be filed, or has obtained extensions for filing
such tax returns, and is not delinquent in filing such returns in
accordance with such extensions, and has paid all taxes which have
become due pursuant to those returns or pursuant to any assessments
received by any such party, as the case may be, to the extent such taxes
have become due, except to the extent such tax payments are being
actively and diligently contested in good faith by appropriate
proceedings, and if requested by Bank have been bonded or reserved in an
amount and manner satisfactory to Bank.
3.7 No-Defaults. There exists no default (or event which, with the
giving of notice or passage of time, or both, would result in a default)
under the provisions of any instrument or agreement evidencing,
governing, securing or otherwise relating to any Debt of any Borrower
Party or pertaining to any of the Permitted Encumbrances, which, if the
same remained uncured for any applicable cure period, would entitle the
holder of any such Debt to accelerate the maturity thereof or would
otherwise have a Material Adverse Effect.
3.8 Enforceability of Agreement and Loan Documents. Each Loan Document
has been duly executed and delivered by duly authorized officer(s) or
other representative(s) of each Borrower Party, and constitutes the
valid and binding obligations of each Borrower Party, enforceable in
accordance with their respective terms, except to the extent that
enforcement thereof may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting the
enforcement of creditors' rights generally at the time in effect.
3.9 Non-contravention. The execution, delivery and performance by each
Borrower Party of the Loan Documents to which such Borrower Party is a
party or otherwise bound, are not in contravention of the terms of any
indenture, agreement or undertaking to which any such Borrower Party is
a party or by which it is bound, except to the extent that such terms
have been waived or that failure to comply with any such terms would not
have a Material Adverse Effect.
3.10 Actions, Suits, Litigation or Proceedings. Except as otherwise
disclosed in the Annual Report of Borrower, Form 10-K, filed as of
November 25, 1998, with the Securities and Exchange Commission, there
are no actions, suits, litigation or proceedings, at law or in equity,
and no proceedings before any arbitrator or by or before any
Governmental Authority, pending, or, to the best knowledge of Borrower,
threatened against or affecting any Borrower Party, which, if adversely
determined, could materially impair the right of any Borrower Party to
carry on its business substantially as now conducted or could have a
Material Adverse Effect. To Borrower's knowledge no Borrower Party is
under investigation by, or is operating under any restrictions imposed
by, any Governmental Authority.
3.11 Compliance with Laws. Each Borrower Party has complied with all
Governmental Requirements, including, without limitation, Environmental
Laws, to the extent that failure to so comply could have a Material
Adverse Effect.
3.12 Consents, Approvals and Filings, Etc. Except as have been
previously obtained or as otherwise expressly provided in this
Agreement, no authorization, consent, approval, license, qualification
or formal exemption from, nor any filing, declaration or registration
with, any Governmental Authority and no material authorization, consent
or approval from any other Person, is required in connection with the
execution, delivery and performance by each Borrower Party of any Loan
Document to which it is a party. All such authorizations, consents,
approvals, licenses, qualifications, exemptions, filings, declarations
and registrations which have previously been obtained or made, as the
case may be, are in full force and effect and are not the subject of any
attack, or to the knowledge of Borrower, any threatened attack, in any
material respect, by appeal, direct proceeding or otherwise.
3.13 Contracts, Agreements and Leases. To Borrower's knowledge, no
Borrower Party is in default (beyond any applicable period of grace or
cure) in complying with any provision of any material contract,
agreement, indenture, lease or instrument to which it is a party or by
which it or any of its properties or assets are bound. To Borrower's
knowledge, each such contract, commitment, undertaking, agreement,
indenture and instrument is in full force and effect and is valid and
legally binding.
3.14 ERISA. Except as shown on Schedule 3.14, no Borrower Party
maintains or contributes to any employee benefit plan subject to Title
IV of ERISA. Furthermore, no Borrower Party has incurred any accumulated
funding deficiency within the meaning of ERISA or incurred any liability
to the PBGC in connection with any employee benefit plan established or
maintained by such Borrower Party, and no reportable event or prohibited
transaction, as defined in ERISA, has occurred with respect to such
plans.
3.15 No Investment Company. No Borrower Party is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended, nor is any Borrower Party "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
3.16 No Margin Stock. No Borrower Party is engaged principally, or as
one of its important activities, directly or indirectly, in the business
of extending credit for the purpose of purchasing or carrying margin
stock, and none of the proceeds of any of the Loans will be used,
directly or indirectly, to purchase or carry any margin stock or made
available by any Borrower Party in any manner to any other Person to
enable or assist such Person in purchasing or carrying margin stock, or
otherwise used or made available for any other purpose which might
violate the provisions of Regulations G, T, U, or X of the Board of
Governors of the Federal Reserve System. Terms for which meanings are
provided in Regulation U of said Board of Governors or any regulations
substituted therefor, as are from time to time in effect, are used in
this Section with such meanings, and these representations and
warranties shall be immediately effective.
3.17 Environmental Representations.
(a) To Borrower's knowledge, no Borrower Party has received any notice of
any violation of any Environmental Law(s) which, either singularly or in
the aggregate, could have a Material Adverse Effect; and no Borrower
Party is a party to any litigation or administrative proceeding, nor, so
far as is known by Borrower, is any litigation or administrative
proceeding threatened against any Borrower Party which, in any case,
(i) asserts or alleges that any Borrower Party violated any Environmental
Law(s), (ii) asserts or alleges that any Borrower Party is required to
clean up, remove or take any other remedial or response action due to
the disposal, depositing, discharge, leaking or other release of any
Hazardous Materials, or (iii) asserts or alleges that any Borrower Party
is required to pay all or a portion of any past, present or future
clean-up, removal or other remedial or response action which arises out
of or is related to the disposal, depositing, discharge, leaking or
other release of any Hazardous Materials by any Borrower Party, and
which, either singularly or in the aggregate, could have a Material
Adverse Effect.
(b) To Borrower's knowledge, there are no conditions existing currently
which could subject any Borrower Party to damages, penalties, injunctive
relief or clean-up costs under any applicable Environmental Law(s), or
which require, or are likely to require, clean-up, removal, remedial
action or other response pursuant to any applicable Environmental Law(s)
by any Borrower Party, and which, in any case, either singularly or in
aggregate, could have a Material Adverse Effect.
(c) To Borrower's knowledge, no Borrower Party is subject to any
judgment, decree, order or citation related to or arising out of any
applicable Environmental Law(s), which, either singularly or in the
aggregate, could have a Material Adverse Effect; and, to Borrower's
knowledge, no Borrower Party has been named or listed as a potentially
responsible party by any governmental body or agency in any matter
arising under any applicable Environmental Law(s), except as disclosed
in Schedule 3.17, and, in the event that any such matters are disclosed
in said Schedule 3.17 they will not, either singularly or in the
aggregate, have a Material Adverse Effect.
(d) Each Borrower Party has all permits, licenses and approvals
required under applicable Environmental Laws, where the failure to so
obtain or maintain any such permits, licenses or approvals could have a
Material Adverse Effect.
3.18 Accuracy of Information. The annual audited Financial Statements
previously furnished to Bank have been prepared in accordance with GAAP
and fairly present the financial condition of Borrower and, as
applicable, the consolidated financial condition of Borrower and such
other Person(s) as such Financial Statements purport to present, and the
results of their respective operations as of the dates and for the
periods covered thereby; and since the date(s) of said Financial
Statements, there has been no material adverse change in the financial
condition of Borrower or any other Person covered by such Financial
Statements. No Borrower Party has any material contingent obligations,
liabilities for taxes, long-term leases or long-term commitments not
disclosed by, or reserved against in, such Financial Statements. Each
Borrower Party is solvent, able to pay its respective debts as they
mature, has capital sufficient to carry on its business and has assets
the fair market value of which exceed its liabilities, and no Borrower
Party will be rendered insolvent, under-capitalized or unable to pay
debts generally as they become due by the execution or performance any
Loan Document to which it is a party or by which it is otherwise bound.
3.19 Equity Ownership. Set forth on the Annual Report of Borrower, Form
10-K, filed as of November 25, 1998, with the Securities and Exchange
Commission is a schedule describing all classes of authorized capital
stock of Borrower and the number of shares of each such class issued and
outstanding, held by Borrower as treasury stock or available for
issuance under any employee benefit plans or stock option plans. Except
as set forth on the Annual Report of Borrower, Form 10-K, filed as of
November 25, 1998, with the Securities and Exchange Commission no shares
of capital stock or other voting securities of Borrower are issued,
reserved for issuance or outstanding. All outstanding shares of capital
stock of Borrower are duly authorized, validly issued, fully paid and
non-assessable and not subject to pre-emptive rights. Except as set
forth on the Annual Report of Borrower, Form 10-K, filed as of November
25, 1998, with the Securities and Exchange Commission there are no
bonds, debentures, notes or other indebtedness of Borrower having the
right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which shareholders of
Borrower may vote. Except as set forth on the Annual Report of
Borrower, Form 10-K, filed as of November 25, 1998, with the Securities
and Exchange Commission there are no outstanding securities, options
(other than employee stock options previously disclosed to Bank),
warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which Borrower or any Subsidiary is a party
or by which such entity is bound, obligating Borrower or any Subsidiary
to issue, deliver, sell or cause to be issued, delivered or sold,
additional shares of any class of securities or other ownership
interests of Borrower or any Subsidiary.
SECTION 4. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as Bank is committed to make
any Loan, issue any Letter of Credit or effect any Foreign Exchange
Transaction under this Agreement, and until all instruments and
agreements evidencing any Loan which is payable on demand or which
conditions advances upon the Bank's discretion are fully discharged and
terminated, and thereafter, so long as any Indebtedness remains
outstanding, it will, and, as applicable, it will cause each Borrower
Party within its control or under common control to:
4.1 Preservation of Existence, Etc. Preserve and maintain its
existence and except where the failure to do any of the following would
not have a Material Adverse Effect, preserve and maintain such of its
rights, licenses, and privileges as are material to the business and
operations conducted by it; qualify and remain qualified to do business
in each jurisdiction in which such qualification is material to its
business and operations or ownership of its properties, continue to
conduct and operate its business substantially as conducted and operated
during the present and preceding calendar year; at all times maintain,
preserve and protect all of its franchises and trade names and preserve
all the remainder of its property and keep the same in good repair,
working order and condition; and from time to time make, or cause to be
made, all needed and proper repairs, renewals, replacements, betterments
and improvements thereto.
4.2 Keeping of Books. Keep proper books of record and account in which
full and correct entries shall be made of all of its financial
transactions and its assets and businesses so as to permit the
presentation of financial statements (including, without limitation,
those Financial Statements to be delivered to Bank pursuant Section 4.3
hereof) prepared in accordance with GAAP; and permit Bank, or its
representatives, at reasonable times and intervals, at Borrower's cost
and expense, upon reasonable prior notice, to visit any office of a
Borrower Party, discuss its financial matters with its officers,
employees and independent certified public accountants, and by this
provision, Borrower authorizes such officers, employees and accountants
to discuss the finances and affairs of any Borrower Party and to examine
any of its books and other corporate records.
4.3 Reporting Requirements. Furnish to Bank, or cause to be furnished
to Bank, the following:
(a) as soon as possible, and in any event within three (3) Business
Days after becoming aware of the occurrence or existence of each Default
or Event of Default hereunder or any material adverse change in the
financial condition of any Borrower Party, a written statement of the
chief financial officer of Borrower (or in his or her absence, a
responsible senior officer of Borrower), setting forth details of such
Default, Event of Default or change, and the action which Borrower has
taken, or has caused to be taken, or proposes to take, or to cause to be
taken, with respect thereto;
(b) as soon as available, and in any event within one hundred twenty
(120) days after and as of the end of each fiscal year of Borrower,
audited Financial Statements of Borrower and such of the Borrower
Parties as may be required by the Bank, consolidated, as applicable,
including a balance sheet, income statement and statement of cash flows,
for and as of such fiscal year then ending, with comparative numbers for
the preceding fiscal year, and such other comments and financial details
as are usually included in similar reports. Such audited Financial
Statements shall be prepared in accordance with GAAP by independent
certified public accountants of recognized standing selected by Borrower
and approved by Bank and shall contain opinions, which opinions shall
not be "going concern" opinions, as to the fairness of the statements
therein contained.
(c) as soon as available, and in any event within thirty (30) days
after and as of the end of each calendar month, including the last such
reporting period of each of Borrower's fiscal years, unaudited Financial
Statements of Borrower and such of the Borrower Parties as may be
required by the Bank, consolidated, as applicable, for and as of such
reporting period, including a balance sheet and income statement for and
as of such reporting period then ending and for and as of that portion
of the fiscal year then ending, with comparative numbers for the same
period of the preceding fiscal year, in each case;
(d) upon request by Bank and as soon as available, and in any event
within thirty (30) days after and as of the end of each calendar month,
agings and reports of accounts receivable of Borrower and such of the
Borrower Parties as may be required by the Bank, in form and detail
satisfactory to Bank;
(e) upon request by Bank and as soon as available, and in any event
within thirty (30) days after and as of the end of each calendar month,
agings and reports of accounts payable of Borrower and such of the
Borrower Parties as may be required by the Bank, in form and detail
satisfactory to Bank;
(f) upon request by Bank and as soon as available, and in any event
within thirty (30) days after and as of the end of each calendar month,
a listing of Inventory of Borrower and such of the Borrower Parties as
may be required by the Bank, in form and detail satisfactory to Bank;
(g) as soon as available, and in any event within fifteen (15) days
after and as of the end of each calendar month, a stock status report of
Inventory as is presently prepared by Borrower, and of agings and
reports of both accounts receivable and accounts payable, in the form of
Exhibit F attached to this Agreement;
(h) within forty-five (45) days after and as of the end of each of the
first three (3) fiscal quarters of each year and together with the
annual Financial Statements to be delivered to Bank pursuant to
subsection (b) above, a Compliance Certificate certified as being true
and correct by the chief financial officer or other officer acceptable
to Bank of Borrower and, as applicable, each Borrower Party;
(i) at any time that a Borrowing Base Limitation is in effect, within
thirty (30) days after and as of the end of each calendar month, a
Borrowing Base Certificate certified as being true and correct by the
chief financial officer or other officer acceptable to Bank of Borrower
and, as applicable, each Borrower Party;
(j) promptly upon receipt thereof, copies of all management letters and
other substantive reports submitted to any Borrower Party by independent
certified public accountants in connection with any annual audit of any
such party;
(k) promptly after filing the same, copies of all documents filed with
the Securities and Exchange Commission, including, without limitation,
reports on Forms 10Q, 8K and 10K, and with any national securities
exchange;
(l) promptly after filing the same, a copy of Borrower's annual federal
income tax return; and
(m) promptly, and in form and detail satisfactory to Bank, such other
information as Bank may request from time to time.
4.4 Financial Covenants. On a consolidated basis, Borrower and its
Subsidiaries will maintain all financial covenants set forth in the
Financial Covenants Addendum.
4.5 Inspections. Permit Bank, through its authorized attorneys,
accountants and representatives, at Borrower's cost and expense, to
examine each Borrower Party's books, accounts, records, ledgers and
assets and properties of every kind and description, wherever located,
at all reasonable times during normal business hours, upon oral or
written request of Bank.
4.6 Further Assurances; Financing Statements. Furnish Bank, at
Borrower's expense, upon Bank's request and in form satisfactory to Bank
(and execute and deliver or cause to be executed and delivered), such
additional pledges, assignments, mortgages, lien instruments or other
security instruments, consents, acknowledgments, subordinations and
financing statements covering any or all of the Collateral pledged,
assigned, mortgaged or encumbered pursuant to any Loan Document, of
every nature and description, whether now owned or hereafter acquired by
Borrower or any other Person providing such Collateral, together with
such other documents or instruments as Bank may require to effectuate
more fully the purposes of any Loan Document.
4.7 Compliance with Leases. Comply with all terms and conditions of
any leases covering any premises or property (real or personal) wherein
any of the Collateral is or may be located, or covering any of the other
material personal or real property now or hereafter owned, leased or
otherwise used by any Borrower Party in the conduct of its business, and
any Governmental Requirement, except where the failure to so comply
would not have a Material Adverse Effect.
4.8 Indemnification. Indemnify, defend and save Bank harmless from any
and all claims, losses, costs, damages, liabilities, obligations and
expenses, including, without limitation, reasonable attorneys' fees,
incurred by Bank by reason of any Default or Event of Default, in
defending or protecting the Liens which secure or purport to secure all
or any portion of the Indebtedness, whether existing under any Loan
Document or otherwise or the priority thereof, or in enforcing the
obligations of Borrower or any other Person under or pursuant to any
Loan Document, or in the prosecution or defense of any action or
proceeding concerning any matter growing out of or connected with the
Collateral or any Loan Document, INCLUDING ANY CLAIMS, LOSSES, COSTS,
DAMAGES, LIABILITIES, OBLIGATIONS, AND EXPENSES RESULTING FROM BANK'S
OWN NEGLIGENCE, except and to the extent but only to the extent caused
by Bank's gross negligence or willful misconduct.
4.9 Governmental and Other Approvals. Apply for, obtain and/or
maintain in effect, as applicable, all authorizations, consents,
approvals, licenses, qualifications, exemptions, filings, declarations
and registrations (whether with any court, governmental agency,
regulatory authority, securities exchange or otherwise) which are
necessary in connection with the execution, delivery and/or performance
by any Borrower Party of any Loan Document to which it is a party.
4.10 Insurance. Maintain insurance coverage on its physical assets and
against other business risks in such amounts and of such types as are
customarily carried by companies similar in size and nature (including,
without limitation, business interruption insurance), and in the event
of acquisition of additional property, real or personal, or of the
incurrence of additional risks of any nature, increase such insurance
coverage in such manner and to such extent as prudent business judgment
and present practice would dictate; and in the case of all policies
covering property subject to any Loan Document or property in which the
Bank shall have a Lien of any kind whatsoever, other than those policies
protecting against casualty liabilities to strangers, all such insurance
policies shall provide that the loss payable thereunder shall be payable
to Borrower (or other Person providing Collateral) and Bank, with
mortgagee's clauses in favor of and satisfactory to Bank for all such
policies, and such policies shall also provide that they may not be
canceled or changed without thirty (30) days' prior written notice to
Bank. Upon the request of Bank, all of said policies, or copies
thereof, including all endorsements thereon and those required
hereunder, shall be deposited with Bank.
4.11 Compliance with ERISA. In the event that any Borrower Party or any
of its Subsidiaries maintain(s) or establish(es) a Pension Plan subject
to ERISA, (a) comply in all material respects with all requirements
imposed by ERISA as presently in effect or hereafter promulgated,
including, but not limited to, the minimum funding requirements thereof;
(b) promptly notify Bank upon the occurrence of a "reportable event" or
"prohibited transaction" within the meaning of ERISA, or that the PBGC
or any Borrower Party has instituted or will institute proceedings to
terminate any Pension Plan, together with a copy of any proposed notice
of such event which may be required to be filed with the PBGC; and (c)
furnish to Bank (or cause the plan administrator to furnish Bank) a copy
of the annual return (including all schedules and attachments) for each
Pension Plan covered by ERISA, and filed with the Internal Revenue
Service by any Borrower Party not later than thirty (30) days after such
report has been so filed.
4.12 Environmental Covenants.
(a) Comply with all applicable Environmental Laws, and maintain all
permits, licenses and approvals required under applicable Environmental
Laws, where the failure to do so could have a Material Adverse Effect.
(b) Promptly notify Bank, in writing, as soon as Borrower becomes aware
of any condition or circumstance which makes any of the environmental
representations or warranties set forth in this Agreement incomplete,
incorrect or inaccurate in any material respect as of any date; and
promptly provide to Bank, immediately upon receipt thereof, copies of
any material correspondence, notice, pleading, citation, indictment,
complaint, order, decree, or other document from any source asserting or
alleging a violation of any Environmental Laws by any Borrower Party, or
of any circumstance or condition which requires or may require, a
financial contribution by any Borrower Party, or a clean-up, removal,
remedial action or other response by or on behalf of any Borrower Party,
under applicable Environmental Law(s), or which seeks damages or civil,
criminal, or punitive penalties from any Borrower Party or any violation
or alleged violation of Environmental Law(s).
(c) Borrower hereby agrees to indemnify, defend and hold Bank, and any
of Bank's past, present and future officers, directors, shareholders,
employees, representatives and consultants, harmless from any and all
claims, losses, damages, suits, penalties, costs, liabilities,
obligations and expenses (including, without limitation, reasonable
legal expenses and attorneys' fees) incurred or arising out of any
claim, loss or damage of any property, injuries to or death of any
persons, contamination of or adverse effects on the environment, or
other violation of any applicable Environmental Law(s), in any case,
caused by any Borrower Party or in any way related to any property owned
or operated by any Borrower Party or due to any acts of any Borrower
Party or any of its officers, directors, shareholders, employees,
consultants and/or representatives INCLUDING ANY CLAIMS, LOSSES,
DAMAGES, SUITS, PENALTIES, COSTS, LIABILITIES, OBLIGATIONS OR EXPENSES,
RESULTING FROM BANK'S OWN NEGLIGENCE; provided, however, that the
foregoing indemnification shall not be applicable, and Borrower shall
not be liable for any such claims, losses, damages, suits, penalties,
costs, liabilities, obligations or expenses, to the extent (but only to
the extent) the same arise or result from any gross negligence or
willful misconduct of Bank or any of its agents or employees.
4.13 Year 2000 Compliant. Perform all acts reasonably necessary to
ensure that each Borrower Party become Year 2000 Compliant in a timely
manner. Such acts shall include, without limitation, performing a
comprehensive review and assessment of all of any Borrower Party's
systems and adopting a detailed plan, with itemized budget, for the
remediation, monitoring and testing of such systems. As used in this
Section, "Year 2000 Compliant" shall mean, in regard to any entity, that
all software, hardware, firmware, equipment, goods or systems utilized
by or material to the business operations or financial condition of such
entity, will properly perform date sensitive functions before, during
and after the year 2000. Borrower shall, immediately upon request,
provide to Bank such certifications or other evidence of each Borrower
Party's compliance with the terms of this Section as Bank may from time
to time require.
4.14 Collateral Audits. Permit Bank to conduct audits of any Borrower
Party's Accounts and Inventory as often as Bank deems such audits to be
desirable. Upon Bank's request, Borrower shall reimburse Bank for the
reasonable costs and expenses expended by Bank in connection with such
audits, such expenses not to exceed $5,000.00 per audit. Without
limiting Bank's right to conduct more frequent audits, Bank acknowledges
that it currently intends to conduct one (1) such audit during each 12
month period; provided however, so long as no Event of Default has
occurred and is continuing, any additional audit conducted by Bank shall
be at the sole cost and expense of Bank.
SECTION 5. NEGATIVE COVENANTS
Borrower covenants and agrees that, so long as Bank is committed to make
any Loan, issue any Letter of Credit or effect any Foreign Exchange
Transaction under this Agreement and until all instruments and
agreements evidencing any Loan which is payable on demand or which
conditions advances upon the Bank's discretion are fully discharged and
terminated, and thereafter, so long as any Indebtedness remains
outstanding, it will not, and it will not allow any Borrower Party
within its control or under common control to, without the prior written
consent of Bank:
5.1 Capital Structure, Business Objects or Purpose. Purchase, acquire
or redeem any of its equity ownership interests in excess of the
2,000,000.00 shares of Borrower's common stock which Borrower's board of
directors has authorized to be acquired by Borrower, or enter into any
reorganization or recapitalization or reclassify its equity ownership
interests, or make any material change in its capital structure or
general business objects or purpose.
5.2 Mergers or Dispositions. Change its name, enter into any merger or
consolidation, whether or not the surviving entity thereunder, or sell,
lease, transfer, relocate or dispose of all, substantially all, or any
material part of its assets (whether in a single transaction or in a
series of transactions); provided, however, Borrower may merge or
consolidate with any Subsidiary of Borrower, so long as Borrower is the
surviving entity thereunder.
5.3 Guaranties. Guarantee, endorse, or otherwise become secondarily
liable for or upon the obligations or Debt of others (whether directly
or indirectly), except:
(a) guaranties in favor of and satisfactory to Bank;
(b) endorsements for deposit or collection in the ordinary course of
business; and
(c) guaranties of Debt that are subordinated to the prior payment in
full of the Indebtedness upon terms and conditions approved in writing
by Bank.
5.4 Debt. Become or remain obligated for any Debt, except:
(a) Indebtedness and other Debt from time to time outstanding and owing
to Bank;
(b) current unsecured trade, utility or non-extraordinary accounts
payable arising in the ordinary course of business;
(c) Debt subordinated to the prior payment in full of the Indebtedness
pursuant to a subordination agreement in form and content satisfactory
to Bank;
(d) Debt outstanding as of the date hereof more particularly described
in Schedule 5.4 attached hereto; and
(e) Debt other than as contemplated in Section 5.4(a)-(d) above not
exceeding $500,000 in the aggregate outstanding at any one time.
5.5 Encumbrances. Create, incur, assume or suffer to exist any Lien
upon, or create, suffer or permit to exist any Lien upon any of its
property or assets, whether now owned or hereafter acquired, except for
Permitted Encumbrances.
5.6 Acquisitions. Purchase or otherwise acquire or become obligated
for the purchase of all or substantially all of the assets or business
interests of any Person or any shares of stock or other ownership
interests of any Person or in any other manner effectuate or attempt to
effectuate an expansion of present business by acquisition, except (i)
in a single transaction in which the aggregate consideration (not
including the issuance of Borrower's capital stock) given by all
Borrower Parties does not exceed $5,000,000; or (ii) up to four (4)
transactions in each fiscal year in which the aggregate consideration
given by all Borrower Parties does not exceed $15,000,000.
5.7 Dividends. Declare or pay dividends on, or make any other
distribution (whether by reduction of capital or otherwise) in respect
of any shares of its capital stock or other ownership interests except
as permitted by Section 5.1.
5.8 Investments. Make or allow to remain
outstanding any investment (whether such investment shall be of the character
of investment in shares of stock, evidences of indebtedness or other
securities or otherwise) in, or any loans, advances or extensions of credit
to, any Person, other than:
(a) Borrower's current ownership interests in those Subsidiaries of
Borrower identified on Schedule 3.5 attached hereto;
(b) any investment in direct obligations of the United States of
America or any agency thereof, or in certificates of deposit issued by
Bank, maintained consistent with Borrower's or such Subsidiary's
business practices prior to the date hereof; provided, that no such
investment shall mature more than ninety (90) days after the date when
made or the issuance thereof; and
(c) investments permitted under Section 5.6.
5.9 Transactions with Affiliates. Enter into any transaction with any
of their stockholders, officers, employees, partners or any of their
Affiliates, except, subject to the terms hereof, transactions in the
ordinary course of business and on terms not less favorable than would
be usual and customary in similar transactions between Persons dealing
at arm's length.
5.10 Defaults on Other Obligations. Fail to perform, observe or comply
duly with any covenant, agreement or other obligation to be performed,
observed or complied with by any Borrower Party, subject to any grace
periods provided therein, which failure could have a Material Adverse
Effect.
5.11 Prepayment of Debt. Prepay any Debt (or take any actions which
impose an obligation to prepay), except, subject to the terms hereof or
thereof, Indebtedness or other Debt payable to Bank.
5.12 Pension Plans. Except in compliance with this Agreement, enter
into, maintain, or make contribution to, directly or indirectly, any
Pension Plan that is subject to ERISA.
5.13 Subordinate Indebtedness. Subordinate any indebtedness due to it
from any Person to indebtedness of other creditors of such Person.
5.14 No Further Negative Pledges. Enter into or become subject to any
agreement (other than this Agreement or the Loan Documents) (a)
prohibiting the guaranteeing by any Borrower Party of any obligations,
(b) prohibiting the creation or assumption of any Lien upon the
properties or assets of any Borrower Party, whether now owned or
hereafter acquired or (c) requiring an obligation to become secured (or
further secured) if another obligation is secured or further secured.
5.15 Accounts Receivable. Sell or assign any Account, account
receivable, note or trade acceptance, except to the Bank.
5.16 Capital Expenditures. Acquire or expend for, or commit to acquire
or expend for, capital assets by lease (including any Capitalized Lease
Obligations), purchase or otherwise in an aggregate amount that exceeds
$1,000,000.00 in any fiscal year, except for capital expenditures
anticipated to be expended during fiscal year 1999 by Borrower Parties
to upgrade their computer systems (which expenditures shall not be
counted against the $1,000,000 cap).
SECTION 6. EVENTS OF DEFAULT
6.1 Events of Default. The occurrence or
existence of any of the following conditions or events shall constitute an
"Event of Default" hereunder:
(a) upon non-payment of any principal, interest or other sums due under
the terms of this Agreement or under any Note(s), or under any other
instrument or evidence of Indebtedness, whether under this Agreement,
any Note(s), or otherwise, in any case, when due in accordance with the
terms hereof or thereof and the continuation of such non-payment for a
period of five (5) days; or if any Guarantor shall fail to pay, when
due, any indebtedness, obligation or liability whatsoever of any such
Guarantor to Bank;
(b) default in the observance or performance of any of the other
conditions, covenants or agreements of Borrower set forth in this
Agreement and the continuation of such default for a period of twenty
(20) days following receipt of written notice thereof;
(c) any representation or warranty made by any Borrower Party in any
Loan Document shall be untrue or incorrect in any material respect and
the continuation of the breach of such representation or warranty for a
period of twenty (20) days following receipt of written notice thereof;
(d) any default or event of default, as the case may be, in the
observance or performance of any of the conditions, covenants or
agreements of any Borrower Party set forth in any Loan Document and
continuation thereof for a period of twenty (20) days following written
notice thereof;
(e) any default by any Borrower Party, in the payment of any Debt
(other than Debt owing to Bank), or in the observance or performance of
any conditions, covenants or agreements related or given with respect
thereto and, in each such case, continuation thereof beyond any
applicable grace or cure period;
(f) the rendering of one or more judgments or decrees for the payment
of money, against any Borrower Party which is not covered by insurance,
and such judgment(s) or decree(s) shall remain unvacated, unbonded or
unstayed, by appeal or otherwise, for a period of sixty (60) consecutive
days after the date of entry;
(g) if there shall be any change in the management (including, without
limitation, the executive management) or control of Borrower, whether by
reason of incapacity, death, resignation, termination or otherwise,
which, in Bank's sole judgment, shall have a material adverse effect
upon the future prospects for the successful operation by Borrower, of
its businesses as conducted before such change, or its ability to pay
and perform its liabilities and obligations under this Agreement, the
Indebtedness, or the Loan Documents;
(h) the failure by any Borrower Party, to meet the minimum funding
requirements under ERISA with respect to any Pension Plan established or
maintained by it; the occurrence of any "reportable event", as defined
in ERISA, which could constitute grounds for termination by the PBGC of
any Pension Plan or for the appointment by the appropriate United States
District Court of a trustee to administer such Pension Plan, and such
reportable event is not corrected and such determination is not revoked
within thirty (30) days after notice thereof has been given to the plan
administrator or any Borrower Party, as the case may be; or the
institution of any proceedings by the PBGC to terminate any such Pension
Plan or to appoint a trustee by the appropriate United States District
Court to administer any such Pension Plan;
(i) if any Borrower Party, becomes insolvent or generally fails to pay,
or admits in writing its inability to pay, its debts as they mature, or
applies for, consents to, or acquiesces in the appointment of a trustee,
receiver, liquidator, conservator or other custodian for any Borrower
Party, or a substantial part of its property, or makes a general
assignment for the benefit of creditors; or in the absence of such
application, consent or acquiescence, a trustee, receiver, liquidator,
conservator or other custodian is appointed for any Borrower Party, or
for a substantial part of its property, and the same is not discharged
within thirty (30) days; or any bankruptcy, reorganization, debt
arrangement, or other proceedings under any bankruptcy or insolvency
law, or any dissolution or liquidation proceeding, is instituted by or
against any Borrower Party, and, if instituted against any Borrower
Party, the same is consented to or acquiesced in by any such Borrower
Party or otherwise remains undismissed for thirty (30) days; or any
warrant of attachment is issued against any substantial part of the
property of any Borrower Party, which is not released within thirty (30)
days of service thereof; or
(j) if any Loan Document shall be terminated, revoked, or otherwise
rendered void or unenforceable, in any case, without Bank's prior
written consent.
6.2 Remedies Upon Event of Default. Upon the occurrence and at any
time during the existence or continuance of any Event of Default, but
without impairing or otherwise limiting the Bank's right to demand
payment of all or any portion of the Indebtedness which is payable on
demand, at Bank's option, Bank may give notice to Borrower declaring all
or any portion of the Indebtedness remaining unpaid and outstanding,
whether under the Notes or otherwise, to be due and payable in full
without presentation, demand, protest, notice of dishonor, notice of
intent to accelerate, notice of acceleration or other notice of any
kind, all of which are hereby expressly waived, whereupon all such
Indebtedness shall immediately become due and payable. Furthermore,
upon the occurrence of a Default or Event of Default and at any time
during the existence or continuance of any Default or Event of Default,
but without impairing or otherwise limiting the right of Bank, if
reserved under any Loan Document, to make or withhold financial
accommodations at its discretion, to the extent not yet disbursed, any
commitment by Bank to make any further loans to Borrower, issue any
further Letters of Credit or effect any further Foreign Exchange
Transactions for Borrower's account under this Agreement shall
automatically terminate; provided, should such Default or Event of
Default be cured to Bank's satisfaction, Bank may, but shall be under no
obligation to, reinstate any such commitment by written notice to
Borrower. Notwithstanding the foregoing, in the case of an Event of
Default under Section 6.1(j), and notwithstanding the lack of any
notice, demand or declaration by Bank, the entire Indebtedness remaining
unpaid and outstanding shall become automatically due and payable in
full, and any commitment by Bank to make any further loans to Borrower,
issue any further Letters of Credit or effect any further Foreign
Exchange Transactions for Borrower's account shall be automatically and
immediately terminated, without any requirement of notice or demand by
Bank upon Borrower, each of which are hereby expressly waived by
Borrower. The foregoing rights and remedies are in addition to any
other rights, remedies and privileges Bank may otherwise have or which
may be available to it, whether under this Agreement, any other Loan
Document, by law, or otherwise.
6.3 Setoff. In addition to any other rights or remedies of Bank under
any Loan Document, by law or otherwise, upon the occurrence and during
the continuance or existence of any Event of Default, Bank may, at any
time and from time to time, without notice to Borrower (any requirements
for such notice being expressly waived by Borrower), setoff and apply
against any or all of the Indebtedness (whether or not then due), any or
all deposits (general, time or demand, provisional or final) at any time
held by Borrower and other indebtedness at any time owing by Bank to or
for the credit or for the account of Borrower, and any property of
Borrower, from time to time in possession or control of Bank,
irrespective of whether or not Bank shall have made any demand hereunder
or for payment of the Indebtedness and although such obligations may be
contingent or unmatured, and regardless of whether any Collateral then
held by Bank is adequate to cover the Indebtedness. The rights of Bank
under this Section are in addition to any other rights and remedies
(including, without limitation, other rights of setoff) which Bank may
otherwise have. Borrower hereby grants Bank a Lien on and security
interest in all such deposits, indebtedness and other property as
additional collateral for the payment and performance of the
Indebtedness.
6.4 Waiver of Certain Laws. To the extent permitted by applicable law,
Borrower hereby agrees to waive, and does hereby absolutely and
irrevocably waive and relinquish, the benefit and advantage of any
valuation, stay, appraisement, extension or redemption laws now existing
or which may hereafter exist, which, but for this provision, might be
applicable to any sale made under the judgment, order or decree of any
court, on any claim for interest on the Notes, or to any security
interest or other Lien contemplated by or granted under or in connection
with this Agreement or the Indebtedness.
6.5 Waiver of Defaults. No Default or Event of Default shall be waived
by Bank except in a written instrument specifying the scope and terms of
such waiver and signed by an authorized officer of Bank, and such waiver
and shall be effective only for the specific time(s) and purpose(s)
given. No single or partial exercise of any right, power or privilege
hereunder, nor any delay in the exercise thereof, shall preclude other
or further exercise of Bank's rights. No waiver of any Default or Event
of Default shall extend to any other or further Default or Event of
Default. No forbearance on the part of Bank in enforcing any of Bank's
rights or remedies under any Loan Document shall constitute a waiver of
any of its rights or remedies. Borrower expressly agrees that this
Section may not be waived or modified by Bank by course of performance,
estoppel or otherwise.
6.6 Receiver. Bank, in any action or suit to foreclose upon any of the
Collateral, shall be entitled, without notice or consent, and completely
without regard to the adequacy of any security for the Indebtedness, to
the appointment of a receiver of the business and premises in question,
and of the rents and profits derived therefrom. This appointment shall
be in addition to any other rights, relief or remedies afforded Bank.
Such receiver, in addition to any other rights to which he shall be
entitled, shall be authorized to sell, foreclose or complete foreclosure
on Collateral for the benefit of Bank, pursuant to provisions of
applicable law.
6.7 Discretionary Credit. To the extent any Loan Document authorizes
the Bank, at its discretion, to make or to decline to make financial
accommodations to the Borrower, nothing contained in this Agreement or
any other Loan Document shall be construed to limit or impair such
discretion or to commit or otherwise obligate the Bank to make any such
financial accommodation.
6.8 Application of Proceeds of Collateral. Notwithstanding anything to
the contrary set forth in any Loan Document, after an Event of Default,
the proceeds of any of the Collateral, together with any offsets,
voluntary payments, and any other sums received or collected in respect
of the Indebtedness, may be applied in such order and manner as
determined by Bank in its sole and absolute discretion.
SECTION 7. MISCELLANEOUS
7.1 Accounting Principles. Except to the extent expressly stated to the
contrary herein, where the character or amount of any asset or
liability or item of income or expense is required to be determined, or
any consolidation or other accounting computation is required to be made
for purposes of this Agreement, it shall be done in accordance with
GAAP, and all accounting terms not specifically defined in this
Agreement shall be construed in accordance with GAAP.
7.2 Taxes and Fees. Unless otherwise prohibited by applicable law,
should any tax (other than a tax based upon the net income of Bank) or
recording or filing fee become payable in respect of any Loan Document,
any of the Collateral, any of the Indebtedness or any amendment,
modification or supplement hereof or thereof, Borrower agrees to pay
such taxes (or reimburse Bank therefor promptly following demand for
reimbursement), together with any interest or penalties thereon, and
agrees to hold Bank harmless with respect thereto.
7.3 Governing Law. Each Loan Document shall be deemed to have been
delivered in the State of Texas, and shall be governed by and construed
and enforced in accordance with the laws of the State of Texas, except
to the extent that the Uniform Commercial Code, other personal property
law or real property law of another jurisdiction where Collateral is
located is applicable, and except to the extent expressed to the
contrary in any Loan Document. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall
be prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions
of this Agreement.
7.4 Costs and Expenses. Borrower shall pay Bank, on demand, all costs
and expenses, including, without limitation, reasonable attorneys' fees
and legal expenses, incurred by Bank in perfecting, revising, protecting
or enforcing any of its rights or remedies against any Borrower Party or
any Collateral, or otherwise incurred by Bank in connection with any
Default or Event of Default or the enforcement of the Loan Documents or
the Indebtedness. Following Bank's demand upon Borrower for the payment
of any such costs and expenses, and until the same are paid in full, the
unpaid amount of such costs and expenses shall constitute Indebtedness
and shall bear interest at the Default Rate.
7.5 Notices. All notices and other communications provided for in any
Loan Document (unless otherwise expressly stipulated therein) or
contemplated thereby, given thereunder or required by law to be given,
shall be in writing (unless expressly provided to the contrary). If
personally delivered, such notices shall be effective when delivered,
and in the case of mailing or delivery by overnight courier, such
notices shall be effective when placed in an envelope and deposited at a
post office or official depository under the exclusive care and custody
of the United States Postal Service or delivered to an overnight
courier, postage prepaid, in each case addressed to the parties as set
forth on the signature page of this Agreement, or to such other address
as a party shall have designated to the other in writing in accordance
with this Section. In the case of mailing, the mailing shall be by
overnight courier or certified or first class mail. The giving of at
least five (5) days' notice before Bank shall take any action described
in any notice shall conclusively be deemed reasonable for all purposes;
provided, that this shall not be deemed to require Bank to give such
five (5) days' notice, or any notice, if not specifically required to do
so in this Agreement.
7.6 Further Action. Borrower, from time to time, upon written request
of Bank, will promptly make, execute, acknowledge and deliver, or cause
to be made, executed, acknowledged and delivered, all such further and
additional instruments, and promptly take all such further action as may
be reasonably required to carry out the intent and purpose of the Loan
Documents, and to provide for the Loans thereunder and payment of the
Notes, according to the intent and purpose therein expressed.
7.7 Successors and Assigns; Participation. This Agreement shall be
binding upon and shall inure to the benefit of Borrower and Bank and
their respective successors and assigns. The foregoing shall not
authorize any assignment or transfer by Borrower, of any of its
respective rights, duties or obligations hereunder, such assignments or
transfers being expressly prohibited. Bank, however, may freely assign,
whether by assignment, participation or otherwise, its rights and
obligations hereunder, and is hereby authorized to disclose to any such
assignee or participant (or proposed assignee or participant) any
financial or other information in its knowledge or possession regarding
any Borrower Party or the Indebtedness. Notwithstanding the foregoing,
Bank will not assign to any third party more than forty-nine percent
(49%) of its interests in any of the Loans, Notes or obligations to Bank
under the Loan Documents.
7.8 Indulgence. No delay or failure of Bank in exercising any right,
power or privilege hereunder or under any of the Loan Documents shall
affect such right, power or privilege, nor shall any single or partial
exercise thereof preclude any further exercise thereof, nor the exercise
of any other right, power or privilege available to Bank. The rights and
remedies of Bank hereunder are cumulative and are not exclusive of any
rights or remedies of Bank.
7.9 Amendment and Waiver. No amendment or waiver of any provision of
any Loan Document, nor consent to any departure by any Borrower Party
therefrom, shall in any event be effective unless the same shall be in
writing and signed by Bank, and then such waiver or consent shall be
effective only in the specific instance(s) and for the specific time(s)
and purpose(s) for which given.
7.10 Severability. In case any one or more of the obligations of any
Borrower Party under any Loan Document shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining obligations of such Borrower Party shall
not in any way be affected or impaired thereby, and such invalidity,
illegality or unenforceability in one jurisdiction shall not affect the
validity, legality or enforceability of the obligations of such Borrower
Party under any Loan Document in any other jurisdiction.
7.11 Headings and Construction of Terms. The headings of the various
sub-Sections hereof are for convenience of reference only and shall in
no way modify or affect any of the terms or provisions hereof. Where the
context herein requires, the singular number shall include the plural,
and any gender shall include any other gender.
7.12 Independence of Covenants. Each covenant hereunder shall be given
independent effect so that if a particular action or condition is not
permitted by any such covenant, the fact that it would be permitted by
an exception to, or would be otherwise within the limitations of,
another covenant shall not avoid the occurrence of any Default or Event
of Default.
7.13 Reliance on and Survival of Various Provisions. All terms,
covenants, agreements, representations and warranties of any Borrower
Party made in any Loan Document, or in any certificate, report,
financial statement or other document furnished by or on behalf of any
Borrower Party in connection with any Loan Document, shall be deemed to
have been relied upon by Bank, notwithstanding any investigation
heretofore or hereafter made by Bank or on Bank's behalf, and those
covenants and agreements of Borrower set forth in Sections 4.8 and
4.12 hereof (together with any other indemnities of Borrower contained
elsewhere in any Loan Document) shall survive the termination of this
Agreement and the repayment in full of the Indebtedness.
7.14 Effective Upon Execution. This Agreement shall become effective
upon the execution hereof by Bank and Borrower, and shall remain
effective until the Indebtedness under this Agreement and each of the
Notes and the related Loan Documents shall have been repaid and
discharged in full and no commitment to extend any credit hereunder
(whether optional or obligatory) remains outstanding.
7.15 Complete Agreement; Conflicts. The Loan Documents contain the
entire agreement of the parties thereto, and none of the parties shall
be bound by anything not expressed in writing. In the event that and to
the extent that any of the terms, conditions or provisions of any of the
other Loan Documents are inconsistent with or in conflict with any of
the terms, conditions or provisions of this Agreement, the applicable
terms, conditions and provisions of this Agreement shall govern and
control.
7.16 Exhibits and Addenda. The following Addenda, Exhibits and
Schedules are attached to this Agreement and are incorporated into this
Agreement by this reference and made a part hereof for all purposes:
Addenda:
Defined Terms Addendum
Financial Covenants Addendum
Loan Terms, Conditions and Procedures Addendum
Exhibits:
Exhibit A - Form of Borrowing Base Certificate
Exhibit B - Form of Compliance Certificate
Exhibit C - Form of Request for Advance
Exhibit D - Form of SAF Note
Exhibit E - Description of Property
Exhibit F - Form of Stock Status Report and Agings of Accounts
Receivable and Accounts Payable
Schedules:
Schedule 3.5 Subsidiaries
Schedule 3.14 Employee Benefit Plans
Schedule 3.17 Environmental Disclosures
Schedule 5.4 Debt
Schedule 5.5 Liens
Loan Terms Schedule 2.3 Debt to be Refinanced
7.17 Separate Loans. Notwithstanding anything to the contrary contained
in this Agreement or any other Loan Document, to the extent the loan
agreement or promissory note which evidences a specified portion of the
Indebtedness (herein referred to as a "Separate Loan"), or any security
agreement, mortgage, deed of trust or other document which specifically
secures such Separate Loan (collectively referred to as the "Separate
Loan Documents"), expressly stipulates that the Separate Loan shall only
be secured by specifically identified collateral or that the collateral
described in the Separate Loan Documents shall not secure any
Indebtedness other than the Separate Loan, the applicable provisions of
the Separate Loan Documents shall control. Furthermore, to the extent
any Separate Loan Document expressly stipulates that a default or event
of default under the Loan Documents shall not, unless otherwise
expressly stipulated in a Separate Loan Document, constitute a default
or event of default with respect to the Separate Loan, the applicable
provisions of the Separate Loan Documents shall control.
7.18 WAIVER OF JURY TRIAL. BANK AND BORROWER EACH ACKNOWLEDGE THAT THE
RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE
WAIVED. EACH OF THEM, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO
CONSULT, WITH COUNSEL OF THEIR CHOICE, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY
JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF ANY LOAN DOCUMENT OR
ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS OR ANY COURSE
OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTION OF
EITHER OF THEM. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN
MODIFIED IN ANY RESPECT OR RELINQUISHED BY BANK OR BORROWER, EXCEPT BY A
WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM.
7.19 ORAL AGREEMENTS INEFFECTIVE. THIS AGREEMENT AND THE OTHER "LOAN
AGREEMENTS" (AS DEFINED IN SECTION 26.02(A)(2) OF THE TEXAS BUSINESS &
COMMERCE CODE, AS AMENDED) REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES, AND THIS AGREEMENT AND THE OTHER WRITTEN LOAN AGREEMENTS MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Remainder of the Page
Left Blank Intentionally
Signature Page to Follow
WITNESS the due execution hereof as of the day and year first above
written.
COMERICA BANK - TEXAS SPORT SUPPLY GROUP, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Xxxxx By: /s/ Xxxx X. Xxxxxx
Xxxxxxx Xxxxx Xxxx X. Xxxxxx
Corporate Banking Officer President
Address: 0000 Xxx Xxxxxx Address: 0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000 Farmers Xxxxxx, Xxxxx 00000
P.O. Box 650282 Attn: Xx. Xxxx X. Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attn: T. Xxxxxx Xxxxx
