SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Dated as of September ____, 1997
between
SPORT SUPPLY GROUP, INC.,
as Borrower
and
LASALLE BUSINESS CREDIT, INC.,
as Lender
$25,000,000.00
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
("Agreement") is made as of this 9th day of September, 1997, by and
among LASALLE BUSINESS CREDIT, INC., a Delaware corporation
("LaSalle"), with an office at 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxx, Xxxxxxxx 00000, and SPORT SUPPLY GROUP, INC., a Delaware
corporation ("Borrower"), with its principal office at 0000 Xxxxxxxx
Xxxxx, Xxxxxxx Xxxxxx, Xxxxx 00000.
WITNESSETH:
WHEREAS, Borrower is currently indebted to LaSalle in
connection with certain loans, advances and credit accommodations
extended to Borrower by LaSalle pursuant to the Amended and Restated
Loan and Security Agreement dated as of March 23, 1995;
AND WHEREAS, the parties wish to modify in certain respects
the terms and conditions upon which such loans, advances and credit
accommodations shall be made;
NOW, THEREFORE, in consideration of any loans, advances and
credit accommodations (including any loans by renewal or extension)
heretofore and hereafter made to Borrower by LaSalle, and for other
good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by Borrower, the parties agree as follows:
1. DEFINITIONS.
A. General Definitions
"Account Debtor" shall mean the Person who is obligated on or
under an Account.
"Accounts" shall mean all of Borrower's presently existing and
hereafter arising accounts, accounts receivable, contract rights,
instruments, documents, chattel paper, and all other forms of
obligations owing to Borrower arising out of the sale or lease of
goods or the rendition of services by Borrower, whether or not earned
by performance, and any and all credit insurance, guarantees, letters
of credit and other security therefor, as well as all merchandise
returned to or reclaimed by Borrower, and all products and proceeds
of the foregoing.
"Affiliate" shall mean any Person (1) that directly or
indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with Borrower, (2) that
directly or beneficially owns or holds ten percent (10%) or more of
any class of the voting stock of Borrower, (3) ten percent (10%) or
more of whose voting stock (or in the case of a Person which is not a
corporation, ten percent (10%) or more of the equity interest of
which) is owned directly or beneficially or held by Borrower, or (4)
ten percent (10%) or more of whose voting stock (or in the case of a
Person which is not a corporation, ten percent (10%) or more of the
equity interest of which) is owned directly or beneficially or held
by a Person referred to in (1), (2) or (3) above.
"Bank" shall mean LaSalle National Bank, Chicago, Illinois,
and its successors.
"Basis Point" shall mean one one-hundredth of a percentage
point.
"Borrower's Books" shall mean all of Borrower's books and
records including, but not limited to: minute books; ledgers;
records indicating, summarizing, or evidencing Borrower's assets,
liabilities, the Accounts and all information relating thereto;
records indicating, summarizing, or evidencing Borrower's business
operations or financial condition; records indicating, summarizing,
or evidencing Borrower's compliance with or problems or activities
concerning environmental laws; and all computer programs, disc or
tape files, printouts, runs, and other computer prepared information
and the equipment containing such information and any software
necessary to operate the same, to the extent of Borrower's ownership
interest or other rights in and to all of such property.
"Borrowing Base" shall have the meaning specified in paragraph
2.A.(2) hereof.
"Breakage Costs" shall have the meaning specified in paragraph
5.C.(4) hereof.
"Business Day" shall mean any day other than a Saturday,
Sunday, or such other day as banks in Illinois are authorized or
required to be closed for business.
"Capital Expenditure Loan" shall have the meaning specified in
paragraph 3.B hereof.
"Capital Expenditure Loan Note" shall have the meaning
specified in paragraph 3.B hereof.
"Capital Expenditures" shall mean, with respect to any period,
the aggregate of all expenditures (whether paid in cash or accrued as
liabilities and including expenditures for capitalized lease
obligations) by Borrower during such period that are required by GAAP
to be included in or reflected by the property, plant or equipment or
similar fixed asset accounts on the balance sheet of Borrower.
"Change of Control" shall mean a change in a majority of the
directors of the Borrower sitting on the Borrower's Board of
Directors as of the date of this Agreement; however, any director
elected after the date of this Agreement shall not be considered a
new director if a majority of the then existing directors propose the
admission of such new director.
"Closing Date" shall mean the date set forth on the first page
of this Agreement.
"Collateral" shall mean all of the personal property and other
assets owned by Borrower, all of the real property, improvements and
other assets owned by Borrower described in the Mortgage and all
other real or personal property owned by any Obligor or any other
Person now or hereafter pledged to LaSalle to secure, either directly
or indirectly, repayment of any of the Obligations, including without
limitation all of the following wherever located and whether now
existing or owned or hereafter created or acquired: the Accounts;
the General Intangibles; the Negotiable Collateral; the Inventory;
Borrower's Books; the Equipment; any money, deposit accounts or other
assets of Borrower in which LaSalle receives a lien or which
hereafter comes into the possession, custody or control of LaSalle or
any bailee of LaSalle; and all products and proceeds of every nature
of any of the foregoing, including, but not limited to, proceeds of
insurance covering the Collateral and any and all Accounts, General
Intangibles, Negotiable Collateral, Inventory, contract rights,
instruments, documents and chattel paper, Equipment, money, deposit
accounts or other tangible and intangible property of Borrower
resulting from the sale or other disposition of the Collateral, and
the proceeds and products thereof.
"Continuation" shall have the meaning specified in paragraph
5.C hereof.
"Conversion" shall have the meaning specified in paragraph 5.C
hereof.
"Default" shall mean an Event Of Default or any event,
condition or default which with the giving of notice, the lapse of
time or both would be an Event Of Default.
"EBITDA" shall mean, with respect to any period, net income
from Borrower's continuing operations, as reported in Borrower's
Report on Form 10K, after taxes for such period (excluding any after-
tax gains or losses on the sale of assets and excluding other after-
tax extraordinary gains or losses) plus interest expense, income tax
expense, depreciation and amortization for such period, less gains
and plus losses attributable to any fixed asset sales made during
such period, plus any other non-recurring and non-cash charges or
losses, or minus any non-cash gains which have been subtracted or
added in calculating net income after taxes for such period.
"Eligible Account" shall mean an Account owing to Borrower
which is acceptable to LaSalle in LaSalle's reasonable credit
judgment for lending purposes, provided that such Account shall be
considered an Eligible Account if it meets, and so long as it
continues to meet, the following requirements:
(1) it is genuine and in all respects is what it purports to
be;
(2) it is owned by Borrower and Borrower has the right to
subject it to a security interest in favor of LaSalle;
(3) it arises from: (a) the performance of services by
Borrower and such services have been fully performed; or (b)
the sale or lease of Goods by Borrower, and such Goods have
been completed in accordance with the Account Debtor's
specifications (if any) and delivered to and accepted by the
Account Debtor, such Account Debtor has not refused to accept
and has not returned any of the Goods, or has not refused to
accept any of the services, which are the subject of such
Account, and Borrower has possession of, or has delivered to
LaSalle promptly after being requested by LaSalle, and in any
event within ten (10) days after receipt by Borrower, shipping
and delivery receipts evidencing delivery of such Goods;
(4) it is evidenced by an invoice rendered to the Account
Debtor thereunder, is due and payable within thirty (30) days
after the stated invoice date thereof (or sixty (60) days as
to those Account Debtors specified by LaSalle in its
reasonable credit judgment) and does not remain unpaid more
than one hundred twenty (120) days past the original invoice
date thereof (or one hundred fifty (150) days as to those
Account Debtors specified by LaSalle in its reasonable credit
judgment); provided, however, that if more than fifty percent
(50%) of the aggregate dollar amount of invoices owing by a
particular Account Debtor remain unpaid for more than one
hundred twenty (120) days (or one hundred fifty (150) days as
to those Account Debtors specified by LaSalle in its
reasonable credit judgment) past the respective invoice dates
thereof, then all Accounts owing to Borrower by that Account
Debtor shall be deemed ineligible;
(5) it is subject to a perfected, first priority lien and
security interest in favor of LaSalle, and it is not subject
to any prior assignment, claim, lien, security interest or
encumbrance whatsoever, other than Permitted Liens;
(6) it is not an Account with respect to which Borrower is or
is expected to become liable to the Account Debtor for goods
sold or services rendered by the Account Debtor to Borrower,
to the extent of Borrower's existing or expected liability to
such Account Debtor;
(7) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor thereunder, and is not
subject to setoff, counterclaim, credit, allowance or
adjustment by such Account Debtor, or to any claim by such
Account Debtor denying liability thereunder in whole or in
part;
(8) it does not arise out of a contract or order which fails
in any material respect to comply with the requirements of
applicable law;
(9) the Account Debtor thereunder is not a director, officer,
employee or agent of Borrower, or a Subsidiary, Parent or
Affiliate of Borrower, except with respect to Accounts owing
to Borrower by Xxxxxxx under the Management Services
Agreement, for which Accounts in an amount not exceeding One
Hundred Fifty Thousand Dollars ($150,000.00) may constitute
Eligible Accounts so long as they meet the other requirements
set forth herein;
(10) it is not an Account with respect to which the Account
Debtor is the United States of America or any department,
agency or instrumentality thereof, unless Borrower has
directed such Account Debtor to remit all payments directly to
the Lock Box;
(11) it is not an Account with respect to which the Account
Debtor is located in a state which requires Borrower, as a
precondition to commencing or maintaining an action in the
courts of that state, either to: (a) receive a certificate of
authority to do business and be in good standing in such
state, or (b) file a notice of business activities report or
similar report with such state's taxing authority, unless (i)
Borrower has taken one of the actions described in clauses (a)
or (b), (ii) the failure to take one of the actions described
in either clause (a) or (b) may be cured retroactively by
Borrower at its election, or (iii) Borrower has proven, to
LaSalle's satisfaction, that it is exempt from any such
requirements under any such state's laws;
(12) it is an Account which arises out of a sale made in the
ordinary course of Borrower's business;
(13) the Account Debtor is a resident or citizen of, and is
located within, the United States of America or the Canadian
Provinces of Ontario, Manitoba, Saskatchewan, Alberta, or
Yukon, unless the Account is secured by a letter of credit or
credit insurance which has been specifically approved by and
assigned to LaSalle, or LaSalle is otherwise satisfied with
the creditworthiness of the Account Debtor;
(14) it is not an Account with respect to which the Account
Debtor's obligation to pay is conditional upon the Account
Debtor's approval of the Goods or services or is otherwise
subject to any repurchase obligation or return right (other
than return rights existing in the ordinary course of
Borrower's business), as with sales made on a xxxx-and-hold,
guaranteed sale, sale on approval, sale or return or
consignment basis;
(15) it is not an Account (a) with respect to which any
representation or warranty contained in this Agreement is
untrue in any material respect or (b) which violates any of
the covenants of Borrower contained in this Agreement;
(16) it is not an Account which, when added to a particular
Account Debtor's other indebtedness to Borrower, exceeds the
greater of ten percent (10%) of the aggregate of Borrower's
Accounts or a credit limit determined by LaSalle in its
reasonable credit judgment for that Account Debtor, provided,
however, that Accounts excluded from Eligible Accounts solely
by reason of this sub-paragraph (16) shall be Eligible
Accounts to the extent of such percentage credit limit; and
(17) it is not an Account with respect to which the prospect
of payment or performance by the Account Debtor is or will be
impaired, as determined by LaSalle in its reasonable credit
judgment, which shall become ineligible twenty (20) calendar
days after LaSalle advises Borrower of such determination.
"Eligible Capital Expenditure" shall mean a capital asset to
be used in the Borrower's normal course of business or computer
hardware, in either case which LaSalle, in its reasonable credit
discretion based upon such information as LaSalle may request from
Borrower, has determined to be eligible for an advance under the
Capital Expenditure Line.
"Eligible Finished Goods" shall mean Eligible Inventory of
Borrower which constitutes finished goods held for sale by Borrower,
normally saleable in the ordinary course of Borrower's business.
"Eligible Foreign Account" shall mean each Eligible Account
which is owed by an Account Debtor which is not a resident or citizen
of, and is not located within, the United States of America or the
Canadian Provinces of Ontario, Manitoba, Saskatchewan, Alberta, or
Yukon, but which is secured by a letter of credit or credit insurance
which has been specifically approved by and assigned to LaSalle or
LaSalle is otherwise satisfied with the creditworthiness of the
Account Debtor.
"Eligible Inventory" shall mean Inventory of Borrower which is
acceptable to LaSalle in its reasonable credit judgment, provided
that such Inventory shall be considered Eligible Inventory if it
meets, and so long as it continues to meet, the following
requirements:
(1) it constitutes either: (a) raw materials normally used in
the ordinary course of Borrower's business, provided such raw
materials have not become obsolete, or (b) finished goods
held for sale by Borrower, normally and currently saleable in
the ordinary course of Borrower's business, and in either case
it is not tubing, boxes or other packaging materials,
storeroom inventory, customer reserves or work in process;
(2) it is owned by Borrower and Borrower has the right to
subject it to a security interest in favor of LaSalle;
(3) it is located on premises within the United States of
America, and such premises are listed on Schedule 15.B
attached hereto, or it has been paid for in full by Borrower,
Borrower possesses negotiable documents evidencing title
thereto, and it is in transit;
(4) it is subject to a perfected, first priority lien and
security interest in favor of LaSalle, and it is not subject
to any prior assignment, claim, lien, security interest or
encumbrance whatsoever, other than Permitted Liens;
(5) it is held for sale or lease or furnishing under contracts
of service, it is of good and merchantable quality, and it is
new and unused (or otherwise saleable as new) and free from
defects which would, in LaSalle's reasonable credit judgment,
affect its market value;
(6) it is not stored with a bailee, consignee, warehouseman,
processor or similar party unless LaSalle has given its prior
written approval and Borrower has caused any such bailee,
consignee, warehouseman, processor or similar party to issue
and deliver to LaSalle, in form and substance acceptable to
LaSalle, such UCC financing statements, warehouse receipts,
waivers and other documents as LaSalle shall reasonably
require;
(7) it is not located on premises leased by Borrower from a
landlord with whom LaSalle has not entered into a landlord's
waiver on terms reasonably satisfactory to LaSalle;
(8) it is not Inventory covered by a patent or trademark which
could not be sold by LaSalle after an Event of Default without
violating the patent or trademark unless the written consent
of the patent or trademark holder to a liquidation of the
Inventory by LaSalle after an Event of Default under the
patent or trademark has been obtained;
(9) LaSalle has determined in accordance with LaSalle's
reasonable credit judgment that the Inventory is not
unacceptable due to age, type, category or quantity, as
evaluated in accordance with LaSalle's past audit practices;
and
(10) it is not Inventory (a) with respect to which any of the
representations and warranties contained in this Agreement are
untrue in any material respect, or (b) which violates any of
the covenants of Borrower contained in this Agreement.
"Eligible Raw Materials" shall mean Eligible Inventory of
Borrower which constitutes raw materials normally used in the
ordinary course of Borrower's business, provided such raw materials
have not become obsolete.
"Xxxxxxx" shall mean Xxxxxxx Radio Corp., a Delaware
corporation.
"Equipment" shall mean all machinery and equipment owned by
Borrower, including without limitation processing equipment, data
processing and computer equipment with software and peripheral
equipment, and all engineering, processing and manufacturing
equipment, office machinery, furniture, materials handling equipment,
tools, molds, dies, attachments, accessories, automotive equipment,
trailers, trucks, motor vehicles, and all other equipment of every
kind and nature, as well as all fixtures, all whether now owned or
hereafter acquired, and wheresoever situated, together with all
additions and accessions thereto, replacements therefor, all parts
therefor, and all manuals, drawings, instructions, warranties, and
rights with respect thereto, and all products and proceeds of the
foregoing, and condemnation awards and insurance proceeds with
respect thereto.
"Event Of Default" shall have the meaning specified in
paragraph 16 hereof.
"Excess Availability" shall mean, as of any date of
determination by LaSalle, the excess, if any, of (1) the Borrowing
Base over (2) the outstanding Revolving Loans, plus forty percent
(40%) of the Letter of Credit Obligations for documentary Letters of
Credit issued for the purchase of Eligible Finished Goods, plus sixty
percent (60%) of the Letter of Credit Obligations for documentary
Letters of Credit issued for Eligible Raw Materials, plus one hundred
percent (100%) of the Letter Of Credit Obligations for stand-by
Letters of Credit, in each case as of the close of business on such
date. For purposes of calculating Borrower's Excess Availability and
the amount of the Borrowing Base relating thereto, LaSalle may, in
the exercise of its reasonable credit judgment, establish a reserve
in an aggregate amount based on Borrower's outstanding trade payables
which are past due in any material respect with stated vendor terms,
as of such date of determination, to the extent thereof.
"Fiscal Quarter" shall mean each fiscal quarter of Borrower,
which shall mean the Borrower's fiscal quarters ending August 1, 1997
and September 26, 1997, and thereafter shall mean Borrower's fiscal
quarters ending on or about each March 31, June 30, September 30 and
December 31.
"GAAP" shall mean generally accepted accounting principles and
policies in the United States as in effect from time to time.
"General Intangibles" shall mean all of the present and future
general intangibles and other personal property owned by Borrower
(including without limitation, all rights and interests of Borrower
in any and all rights of Borrower to all choses or things in action,
tax refund claims, credits, claims, demands, goodwill, licenses,
franchise agreements, subscription costs, patents, trade names,
trademarks, copyrights, rights to royalties, blueprints, drawings,
customer lists, purchase orders, computer programs, computer discs,
computer tapes, literature, reports, catalogs, methods, sales
literature, video tapes, confidential information and trade secrets,
consulting agreements, employment agreements, leasehold interests in
real and personal property, insurance policies, deposits with
insurers relating to workmen's compensation liabilities, deposit
accounts, tax refunds and proprietary rights in any Equipment), other
than Equipment, Inventory and Accounts, as well as Borrower's Books
relating to any of the foregoing, and all products and proceeds of
the foregoing.
"Government Account Debtor" shall mean any Account Debtor
which is the United States of America or any department, agency or
instrumentality of the United States of America.
"Government Accounts" shall mean all Accounts with respect to
which the person who is obligated on or under such Accounts are
Government Account Debtors.
"Indemnified Party" shall have the meaning specified in
paragraph 18 hereof.
"Interest Period" shall mean for any LIBOR Rate Loan the
period commencing on the date of the borrowing thereof and ending
one, two, three or six months thereafter, provided, however, that
Borrower may not select any Interest Period that ends after the
Original Term, or if applicable, any Renewal Term. Whenever the last
day of an Interest Period would otherwise occur on a day other than a
Business Day, the last day of such Interest Period shall be extended
to occur on the next succeeding Business Day; provided, that if such
extension would cause the last day of such Interest Period to occur
in the next following calendar month, the last day of such Interest
Period shall occur on the next preceding Business Day.
"Inventory" shall mean all present and future inventory in
which Borrower has any ownership interest, including, but not limited
to, goods held by Borrower for sale or lease or to be furnished under
a contract of service and all of Borrower's present and future raw
materials, work in process, finished goods, supplies and packing and
shipping materials, wherever located, and any documents of title
representing any of the above.
"Kind" shall mean, with respect to any Loan, whether such Loan
is a Revolving Loan or a Term Loan.
"Letters Of Credit" shall mean all documentary and stand-by
letters of credit issued for Borrower's account in accordance with
the terms of paragraph 2.B hereof.
"Letter Of Credit Obligations" shall mean, as of any date of
determination, the sum of (1) the aggregate undrawn amount of all
Letters Of Credit, and (2) the aggregate unreimbursed amount of all
drawn Letters Of Credit.
"Liabilities" shall mean at any date all liabilities required
under GAAP to be recorded on a balance sheet as of such date.
"LIBOR Rate" shall mean, with respect to the Interest Period
applicable to the borrowing of a LIBOR Rate Loan, the rate obtained
(rounded upwards to the nearest 1/100 of 1%) by dividing (i) the rate
of interest per annum offered to LaSalle or to Bank, as applicable,
in the London interbank foreign currency deposits market as of
approximately 9:00 A.M. (Chicago time) two (2) Business Days prior to
the commencement of such Interest Period for U.S. dollar deposits of
amounts in immediately available funds comparable to the principal
amount of the LIBOR Rate Loan for which the LIBOR Rate is being
determined with maturities comparable to the Interest Period for
which such LIBOR Rate will apply, by (ii) a percentage equal to 1
minus the stated reserve (expressed as a decimal), if any, required
to be maintained against "Eurocurrency liabilities" as specified in
Regulation D of the Board of Governors of the Federal Reserve System
as from time to time shall be in effect (or against any other
category of liabilities, which includes deposits, by reference to
which the interest rate on LIBOR Rate Loans is determined or any
category of extensions of credit on other assets, which includes
loans by a non-U.S. office of LaSalle or Bank to U.S. Residents). In
the absence of manifest error, each determination by LaSalle of the
applicable LIBOR Rate shall be deemed conclusive.
"LIBOR Rate Loan" shall mean a Revolving Loan or portion of
any Term Loan that bears interest based on the LIBOR Rate.
"LIBOR Rate Revolving Loan" shall mean a Revolving Loan that
bears interest based on the LIBOR Rate.
"LIBOR Rate Term Loan" shall mean that portion of the Term
Loan that bears interest based on the LIBOR Rate.
"Loan" or "Loans" shall mean any and all Revolving Loans, the
Term Loan, and any Capital Expenditure Loan made by LaSalle to
Borrower pursuant to paragraphs 2 and 3 hereof, and all other loans,
advances and financial accommodations made by LaSalle to or on behalf
of Borrower hereunder.
"Lock Box" shall have the meaning specified in paragraph 10.A
hereof.
"Management Services Agreement" shall mean that certain
Management Services Agreement dated July 1, 1997 to be effective as
of March 7, 1997, by and between Borrower and Xxxxxxx, together with
any amendments or modifications thereto which have been submitted to
LaSalle.
"Material Adverse Effect" shall mean with respect to any
event, act, condition or occurrence of whatever nature (including any
adverse determination in any litigation, arbitration or governmental
investigation or proceeding), whether singly or in conjunction with
any other event or events, act or acts, condition or conditions,
occurrence or occurrences, whether or not related, a material adverse
change in, or a material adverse effect upon, the business, property,
assets, operations, condition (financial or otherwise) or prospects
of Borrower considered as a whole, as determined by LaSalle in its
reasonable credit judgment.
"Mortgage" shall mean each mortgage or deed of trust executed
by Borrower in favor of LaSalle to secure the Obligations.
"Negotiable Collateral" shall mean a letter of credit, advice
of credit, instrument, money, negotiable document, warehouse receipt,
xxxx of lading, certificated security, certificate of title,
certificate of deposit, chattel paper, or similar property, and
proceeds thereof.
"Notes" shall collectively mean the Revolving Note and the
Term Note, and all other promissory notes which from time to time
evidence any of the Loans.
"Obligations" shall mean all loans, advances, overdrafts,
debts, liabilities (including without limitation any and all amounts
charged to Borrower's account pursuant to any agreement authorizing
LaSalle to charge Borrower's loan account), obligations,
reimbursement and indemnity obligations with respect to Letters Of
Credit, covenants, lease payments, guarantees and duties owing by
Borrower to LaSalle or to any parent, affiliate or subsidiary of
LaSalle, of any kind or description (whether advanced pursuant to or
evidenced by this Agreement, by any of the Notes, or by any Other
Agreement), whether direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, and including
without limitation any debt, liability or obligation owing from
Borrower to another Person which LaSalle may have obtained by
assignment (or otherwise as a result of a payment made by LaSalle on
behalf of Borrower as permitted under this Agreement or any Other
Agreement) and further including without limitation all interest, all
fees, costs and expenses which Borrower is required to pay or
reimburse by this Agreement or any Other Agreement, by law or
otherwise.
"Obligor" shall mean Borrower and each Person who is or shall
become primarily or secondarily liable for any of the Obligations,
provided, however, that such term shall not include any Account
Debtor.
"Original Term" shall have the meaning specified in paragraph
12.A hereof.
"Other Agreements" shall mean all agreements, instruments and
documents including, without limitation, guaranties, Mortgages, trust
deeds, pledges, powers of attorney, consents, assignments, contracts,
notices, security agreements, leases, financing statements and all
other writings heretofore, now or from time to time hereafter
executed by or on behalf of Borrower or any other Obligor and
delivered to LaSalle or to any parent, affiliate or subsidiary of
LaSalle in connection with the Obligations or the transactions
contemplated hereby, including but not limited to the Loans and the
Letters Of Credit.
"Parent" shall mean any Person now or at any time or times
hereafter owning or controlling (alone or with any other Person) not
less than a majority of the issued and outstanding stock of Borrower
or any Subsidiary.
"Permitted Liens" shall mean: (1) statutory liens of
landlords, carriers, warehousemen, mechanics, materialmen or
suppliers incurred in the ordinary course of business and securing
amounts not yet past due or declared to be past due by the claimant
thereunder, unless being contested in good faith by Borrower by
appropriate proceedings so long as (a) the amount so contested is
shown on Borrower's financial statements, if required by GAAP, (b)
the contesting of any such payment does not give rise to a lien of
equal or greater priority to LaSalle's liens, (c) upon the occurrence
of an Event of Default, Borrower at all times has Excess Availability
in an amount which is sufficient to pay such claim and any interest
or penalties that may accrue thereon (or LaSalle may establish a
reserve against availability under the Revolving Loans in such
amount), and (d) if Borrower fails to prosecute such contest with
reasonable diligence, LaSalle may pay such amount on Borrower's
behalf and any such sums advanced shall constitute Revolving Loans
hereunder and, until paid, shall bear interest at the rate then
applicable to the Revolving Loans; (2) liens or security interests in
favor of LaSalle; (3) zoning restrictions and easements, rights of
way, licenses, covenants and other restrictions affecting the use of
real property that do not have a Material Adverse Effect and do not
otherwise, individually or in the aggregate, restrict or impair in
any significant manner the Borrower's ability to use such real
property for its intended purpose in connection with Borrower's
business; (4) liens securing the payment of taxes or other
governmental charges not yet delinquent or being contested in good
faith and by appropriate proceedings, in accordance with the terms
set forth in paragraph 14.F; (5) liens incurred or deposits made in
the ordinary course of Borrower's business in connection with
capitalized leases or purchase money security interests for purchase
of, and applying only to, Equipment permitted as Capital Expenditures
under paragraph 14.L(5), including those existing liens described on
Schedule 13.D attached hereto and other such liens hereafter created
by Borrower so long as the documents relating to such liens are in
form and substance reasonably acceptable to LaSalle; (6) deposits to
secure performance of bids, trade contracts, leases and statutory
obligations (to the extent not excepted elsewhere herein); (7) liens
existing on the date hereof and described on Schedule 13.D attached
hereto, and other liens hereafter specifically permitted by LaSalle
in writing, including without limitation any liens granted by
Borrower in connection with any financing obtained by Borrower in
accordance with the terms set forth in paragraph 14.G below; (8) any
lien arising out of the refinancing, extension, renewal or refunding
of any indebtedness secured by a lien permitted by any of the
foregoing sections (1) through (7) inclusive provided that (a) such
indebtedness is not secured by any additional assets, and (b) the
principal amount of such indebtedness is not increased; (9) pledges
or deposits in connection with worker's compensation, unemployment
insurance and other social security legislation; (10) grants of
security and rights of setoff in deposit accounts, securities and
other properties held at banks or financial institutions to secure
the payment or reimbursement under overdraft, acceptance and other
facilities; and (11) rights of setoff, banker's lien and other
similar rights arising solely by operation of law.
"Person" shall mean any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust,
unincorporated organization, association, corporation, institution,
entity, party or foreign or United States government (whether
federal, state, county, city, municipal or otherwise), including,
without limitation, any instrumentality, division, agency, body or
department thereof.
"Prime Rate" shall mean the publicly announced prime rate of
the Bank, in effect from time to time. The Prime Rate is not
intended to be the lowest or most favorable rate of the Bank in
effect at any time.
"Prime Rate Loan" shall mean a Revolving Loan or portion of
the Term Loan that bears interest based on the Prime Rate.
"Prime Rate Revolving Loan" shall mean a Revolving Loan that
bears interest based on the Prime Rate.
"Prime Rate Term Loan" shall mean that portion of the Term
Loan that bears interest based on the Prime Rate.
"Property" shall mean those parcels of real property owned by
Borrower and located in Xxxxxxx County, Alabama.
"Renewal Term" shall have the meaning specified in paragraph
12.A hereof.
"Revolving Loans" shall have the meaning specified in
paragraph 2.A.(1) hereof.
"Revolving Loan Commitment" shall mean the sum of Twenty-Five
Million Dollars ($25,000,000.00).
"Revolving Note" shall mean the promissory note in the maximum
principal amount of the Revolving Loan Commitment executed by
Borrower to the order of LaSalle, dated as of the Closing Date.
"Subsidiary" shall mean any corporation of which more than
fifty percent (50%) of the outstanding capital stock having ordinary
voting power to elect a majority of the board of directors of such
corporation (irrespective of whether at the time stock of any other
class of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time, directly
or indirectly, owned by Borrower or by any partnership or joint
venture of which more than fifty percent (50%) of the outstanding
equity interests are at the time, directly or indirectly, owned by
Borrower.
"Tangible Net Worth" shall mean shareholders' equity
(including retained earnings) less the book value of all intangible
assets including but not limited to advances to Affiliates (other
than loans to employees) but excluding prepaid catalogs, determined
by LaSalle on a consistent basis, plus the amount of any debt
subordinated to LaSalle on terms and conditions reasonably acceptable
to LaSalle in its sole judgment, plus pre-tax LIFO reserves, plus any
amount paid by Borrower to purchase treasury stock subsequent to May
2, 1997, in accordance with paragraph 14.J below, all as determined
in accordance with GAAP, consistently applied.
"Term Loan" shall have the meaning specified in paragraph 3
hereof.
"Term Note" shall mean the promissory note in the original
principal amount of One Million Six Hundred Twenty-Five Thousand
Dollars ($1,625,000.00) executed by Borrower to the order of LaSalle,
dated as of the Closing Date.
"Total Credit Facility" shall mean the sum of Twenty-Five
Million Dollars ($25,000,000.00).
"Type" shall mean, with respect to any (i) Revolving Loan,
whether such Revolving Loan is a LIBOR Rate Revolving Loan or a Prime
Rate Revolving Loan and (ii) Term Loan, whether any portion thereof
is a LIBOR Rate Term Loan or a Prime Rate Term Loan.
B. Accounting Terms and Definitions. Unless otherwise
defined or specified herein, all accounting terms used in this
Agreement shall be construed in accordance with GAAP, applied on a
basis consistent in all material respects with the financial
statements delivered by Borrower to LaSalle on or before the Closing
Date. All accounting determinations for purposes of determining
compliance with the financial covenants contained in paragraph 14.L
shall be made in accordance with GAAP as in effect on the Closing
Date and applied on a basis consistent in all material respects with
the audited financial statements delivered to LaSalle by Borrower on
or before the Closing Date. The audited financial statements
required to be delivered hereunder from and after the Closing Date,
and all financial records, shall be maintained in accordance with
GAAP, and the annual financial statements and all monthly financial
statements prepared as of the end of each Fiscal Quarter shall comply
in all respects with the requirements of the Securities and Exchange
Commission. If GAAP shall change from the basis used in preparing
the audited financial statements delivered to LaSalle by Borrower on
or before the Closing Date, the certificates required to be delivered
pursuant to paragraph 11.I demonstrating compliance with the
covenants contained herein shall include, at the election of Borrower
or upon the request of LaSalle, calculations setting forth the
adjustments necessary to demonstrate how Borrower is in compliance
with the financial covenants based upon GAAP as in effect on the
Closing Date.
2. REVOLVING LOANS AND LETTERS OF CREDIT.
A. Revolving Loans. Subject to the terms and conditions of
this Agreement and the Other Agreements, during the Original Term and
any Renewal Term, absent the existence of a continuing Default:
(1) LaSalle shall make such revolving loans and advances
(the "Revolving Loans") to Borrower as Borrower shall from time to
time request, in accordance with the terms of paragraph 5.A hereof.
The aggregate unpaid principal amount of all Revolving Loans
outstanding at any one time made to Borrower shall not exceed the
lesser of: (a) the Borrowing Base, minus one hundred percent (100%)
of the Letter Of Credit Obligations for stand-by Letters Of Credit,
forty percent (40%) of the Letter Of Credit Obligations for
documentary Letters Of Credit issued for the purchase of Eligible
Finished Goods, and sixty percent (60%) of the Letter Of Credit
Obligations for documentary Letters Of Credit issued for the purchase
of Eligible Raw Materials, or (b) the Revolving Loan Commitment,
minus the outstanding Letter Of Credit Obligations, and minus the
outstanding principal balance under the Term Loan. All Revolving
Loans shall be repaid in full upon the earlier to occur of (i) the
end of the Original Term or any Renewal Term, if either LaSalle or
Borrower elects to terminate this Agreement as of the end of any such
term, and (ii) the acceleration of the Obligations pursuant to
paragraph 17.A of this Agreement. If at any time the aggregate
outstanding principal balances of the Revolving Loans made to
Borrower exceeds (a) the Borrowing Base, minus one hundred percent
(100%) of the Letter Of Credit Obligations for stand-by Letters Of
Credit and minus forty percent (40%) of the Letter Of Credit
Obligations for documentary Letters Of Credit issued for the purchase
of Eligible Finished Goods, and sixty percent (60%) of the Letter Of
Credit Obligations for documentary Letters Of Credit issued for the
purchase of Eligible Raw Materials, or (b) the Revolving Loan
Commitment, minus the outstanding Letter Of Credit Obligations, and
minus the outstanding principal balance under the Term Loan, then
Borrower shall immediately, and without the necessity of a demand by
LaSalle, pay to LaSalle such amount as may be necessary to eliminate
such excess, and LaSalle shall apply such payment against the
aggregate outstanding principal balances of the Revolving Loans. In
addition, if at any time the sum of (i) the outstanding aggregate
principal balances of the Loans plus (ii) the outstanding Letter Of
Credit Obligations exceeds the Total Credit Facility, Borrower shall
immediately and without the necessity of a demand by LaSalle pay to
LaSalle such amount as may be necessary to eliminate such excess, and
LaSalle shall apply such payment against the outstanding principal
balance of the Revolving Loans. Borrower hereby authorizes LaSalle
to charge any of Borrower's accounts to make any payments of
principal or interest required by this Agreement, and LaSalle will
advise Borrower promptly after charging each such payment to
Borrower's accounts. All Revolving Loans shall, in LaSalle's sole
discretion, be evidenced by one or more promissory notes in form and
substance satisfactory to LaSalle. However, if any Revolving Loans
are not so evidenced, such Revolving Loans may be evidenced solely by
entries upon the books and records maintained by LaSalle.
(2) LaSalle shall make Revolving Loans to Borrower up to the
lesser of the following amounts:
(a) an amount equal to the sum of: (i) eighty-five
percent (85%) of the face amount of Eligible Accounts and all
Eligible Foreign Accounts, plus, (ii) the lesser of (x) sixty
percent (60%) of the value of Eligible Finished Goods and forty
percent (40%) of the value of Eligible Raw Materials,
calculated on the basis of the lower of cost or market value on
a first-in, first-out basis, or (y) Fifteen Million Dollars
($15,000,000.00),(collectively, the "Borrowing Base"), minus
one hundred percent (100%) of the Letter Of Credit Obligations
for stand-by Letters Of Credit, forty percent (40%) of the
Letter Of Credit Obligations for documentary Letters Of Credit
issued for the purchase of Eligible Finished Goods and sixty
percent (60%) of the Letter Of Credit Obligations for
documentary Letters Of Credit issued for the purchase of
Eligible Raw Materials; or
(b) the Revolving Loan Commitment, minus the
outstanding amount of all Letter Of Credit Obligations, minus
the outstanding principal balance under the Term Loan, and
minus the outstanding principal balance under the Capital
Expenditure Loan.
LaSalle shall have the right to deduct from the Borrowing Base such
reserves as LaSalle deems appropriate from time to time in the
exercise of LaSalle's reasonable credit judgment, which shall be
determined in a manner consistent with LaSalle's past practices.
B. Letters Of Credit. Subject to the terms and conditions of
this Agreement, and the Other Agreements, during the Original Term or
any Renewal Term, LaSalle shall, absent the existence of a continuing
Default, from time to time cause the issuance of and co-sign for,
upon Borrower's request, Letters Of Credit, provided that the
aggregate undrawn amount of all such Letters Of Credit shall at no
time exceed Five Million Dollars ($5,000,000.00), and provided
further that no Letter Of Credit shall have an expiry date (1) more
than 365 days from the date of issuance or (2) beyond five (5) days
prior to the expiration of the Original Term or any Renewal Term, as
the case may be. Borrower's reimbursement obligation to LaSalle in
respect of the Letters Of Credit shall automatically reduce the
amount which Borrower may borrow based upon the Revolving Loan
Commitment and the Borrowing Base, by one hundred percent (100%) of
the Letter Of Credit Obligations for each stand-by Letter Of Credit,
forty percent (40%) of the Letter Of Credit Obligations for each
documentary Letter Of Credit issued for the purchase of Eligible
Finished Goods, and sixty percent (60%) of the Letter Of Credit
Obligations for each documentary Letter Of Credit issued for the
purchase of Eligible Raw Materials. Any payment made by LaSalle to
any Person pursuant to the terms of any Letter Of Credit shall
constitute a Revolving Loan hereunder. Borrower agrees to reimburse
LaSalle and pay to LaSalle all sums or payments made by LaSalle to
any Person on account of any Letter Of Credit. At no time shall the
aggregate sum of direct Revolving Loans by LaSalle to Borrower plus
the contingent liability of LaSalle under the outstanding Letters Of
Credit be in excess of the Revolving Loan Commitment, and at no time
shall the aggregate sum of direct Revolving Loans by LaSalle to
Borrower, plus (i) one hundred percent (100%) of the contingent
liability of LaSalle under stand-by Letters Of Credit, (ii) forty
percent (40%) of the contingent liability of LaSalle under
documentary Letters Of Credit issued for the purchase of Eligible
Finished Goods, and (iii) sixty percent (60%) of the contingent
liability of LaSalle under documentary Letters Of Credit issued for
the purchase of Eligible Raw Materials, be in excess of the Borrowing
Base.
3. TERM LOAN AND CAPITAL EXPENDITURE LOAN.
A. Existing Term Loan. LaSalle has made a term loan to
Borrower ("Term Loan") in the original principal amount equal to Two
Million Five Hundred Thousand Dollars ($2,500,000.00), and the
outstanding principal balance on the date of this Agreement of One
Million Six Hundred Twenty-Five Thousand Dollars ($1,625,000.00).
The Term Loan shall be evidenced by, and repayable in accordance
with, the Term Note, provided, however, that the entire unpaid
principal balance of the Term Loan shall be due and payable in full
upon the expiration of the Original Term of this Agreement, and
provided further that in the event that the Original Term of this
Agreement is initially or subsequently renewed in accordance with
paragraph 12.A hereof, then Borrower shall continue to make monthly
payments in accordance with the terms of the Term Note, with a final
installment equal to the unpaid principal balance and any other
amounts outstanding due and payable upon the expiration of the
Renewal Term. Notwithstanding anything hereinabove to the contrary,
the entire unpaid principal balance of the Term Loan, and any accrued
and unpaid interest thereon, shall be immediately due and payable
upon the earlier to occur of (a) the last day of the Original Term or
the last day of any Renewal Term, if either LaSalle or Borrower
elects to terminate this Agreement as of the end of any such Original
or Renewal Term and (b) the acceleration of the Obligations pursuant
to paragraph 17.A of this Agreement.
B. Capital Expenditure Loan. Borrower has requested that
LaSalle extend to Borrower a line of credit for the acquisition of
Capital Expenditures. In the event that LaSalle in its sole
discretion agrees to extend such financing to Borrower, then Borrower
shall execute and deliver to LaSalle a promissory note in the form of
the Capital Expenditure Loan Note attached hereto as Exhibit B
("Capital Expenditure Loan Note"), and subject to the terms and
conditions of this Agreement and the Other Agreements, during the
period set forth below, absent the continuing existence of an Event
of Default, LaSalle shall thereafter make one or more advances to
Borrower in the maximum aggregate principal amount of up to Three
Million Dollars ($3,000,000.00) ("Capital Expenditure Loan") upon the
request of Borrower, for the acquisition of Eligible Capital
Expenditures. Principal payable on account of the Capital
Expenditure Loan shall be payable in accordance with the terms of the
Capital Expenditure Loan Note. Notwithstanding anything herein above
to the contrary, the entire unpaid principal balance of the Capital
Expenditure Loan, and any accrued and unpaid interest thereon, shall
be immediately due and payable upon the earlier to occur of (i) the
last day of the Original Term or the last day of any Renewal Term, if
either LaSalle or Borrower elects to terminate this Agreement as of
the end of the Original or any Renewal Term, or (ii) the acceleration
of the Obligations pursuant to paragraph 18 of this Agreement. If
LaSalle agrees to extend the Capital Expenditure Loan to Borrower,
then advances under the Capital Expenditure Loan shall be made during
the Original Term, for the acquisition of Eligible Capital
Expenditures, the receipt by LaSalle of a written request for such
advance together with invoices to evidence the cost of the capital
asset for which the advance is being requested, and such other
information as LaSalle may request. LaSalle shall have no obligation
to advance to Borrower more than eighty percent (80%) of the net
invoice cost (less the value of all rebates, trade-ins, taxes, labor,
and shipping and installation charges) of any Eligible Capital
Expenditure.
4. INTEREST, FEES AND CHARGES.
A. Interest Payment Dates. Interest accrued on each of the
Revolving Loans, the Term Loan and, if extended to Borrower by
LaSalle, the Capital Expenditure Loan, shall be due on the earliest
of (1) in the case of a LIBOR Rate Loan, at the end of the Interest
Period applicable thereto and in the case of a Prime Rate Loan, the
first day of each month (for the immediately preceding month),
computed through the last calendar day of the preceding month, (2)
the occurrence and continuance of an Event Of Default in consequence
of which LaSalle elects to accelerate the maturity and payment of the
Obligations, or (3) termination of this Agreement pursuant to
paragraph 12.A hereof.
B. Interest Rates. At Borrower's election, except as
otherwise provided in paragraph 5.C hereof, interest shall accrue
upon: (1) the aggregate unpaid principal balance of the Revolving
Loans outstanding at the end of each day at (a) a fluctuating rate
per annum equal to three-quarters of one per cent (0.75%) above the
Prime Rate or (b) a fixed rate per annum equal to the LIBOR Rate plus
two hundred fifty (250) Basis Points; and (2) the unpaid principal
balance of the Term Loan outstanding at the end of each day at (a) a
fluctuating rate per annum equal to three-quarters of one per cent
(0.75%) above the Prime Rate or (b) a fixed rate per annum equal to
the LIBOR Rate plus two hundred fifty (250) Basis Points. The above-
described rates upon which interest is to accrue upon the Revolving
Loans and the Term Loan shall each be reduced by twenty-five (25)
Basis Points at such time as: (a) there are no Defaults; and (b) the
audited financial statements of Borrower for Borrower's most recent
fiscal year reflect that Borrower and its Subsidiaries achieved net
income before taxes for such fiscal year in an amount equal to or
greater than One Million Dollars ($1,000,000.00). The interest rate
reduction described in the immediately preceding sentence shall not
become effective or be applied to the accrual of interest until the
first day of the month in which LaSalle receives the internally-
prepared year-end financial statements of Borrower for the applicable
fiscal year, demonstrating that Borrower has achieved the above-
described net income before taxes. The adjustment provided herein
shall be subject to the receipt and review by LaSalle of Borrower's
audited financial statements for the applicable fiscal year. In the
event that Borrower's audited financial statements for such fiscal
year end indicate that Borrower did not achieve net income before
taxes in the required amount, the interest rate applicable to the
Loans shall be increased, retroactive to the date of adjustment to
the lower rates, to the original interest rates provided for in this
paragraph.
C. Changes In Prime Rate; Default Interest Rate. The rate of
interest payable on Prime Rate Loans shall increase or decrease by an
amount equal to any increase or decrease in the Prime Rate, effective
as of the beginning of business on the day that any such change in
the Prime Rate occurs. Upon and after the occurrence of an Event Of
Default, and during the continuation thereof, the unpaid principal
balances of each of the Loans shall bear interest on demand at a rate
per annum equal to the rate or rates of interest otherwise then in
effect plus an additional two hundred (200) Basis Points.
D. Computation of Interest and Fees. Interest and collection
charges hereunder shall be calculated daily and shall be computed on
the actual number of days elapsed over a year consisting of three
hundred and sixty (360) days.
E. Maximum Interest. It is the intent of the parties that
the rate of interest and the other charges to Borrower under this
Agreement shall be lawful; therefore, if for any reason the interest
or other charges payable under this Agreement are found by a court of
competent jurisdiction, to exceed the limit which LaSalle may
lawfully charge Borrower, then the obligation to pay interest and
other charges shall automatically be reduced to such limit and, if
any amount in excess of such limit shall have been paid, then such
amount shall be refunded to Borrower.
F. Letter Of Credit Fees. Borrower shall remit to LaSalle a
Letter Of Credit fee equal to one percent (1.0%) per annum on the
aggregate undrawn face amount of all outstanding Letters Of Credit
issued for the account of Borrower, which fee shall be payable
monthly in arrears on each day that interest is payable hereunder.
Borrower shall also pay on demand the normal and customary
administrative charges for issuance, amendment, negotiation, renewal
or extension of any Letter Of Credit imposed by the bank (including
but not limited to the Bank) issuing such Letter Of Credit. Upon the
occurrence and during the continuance of an Event Of Default, all
Letter Of Credit fees shall be payable at a rate equal to three
percent (3.0%) per annum on the aggregate undrawn face amount
thereof.
G. Servicing Fee. Borrower shall pay to LaSalle a servicing
fee, payable monthly in arrears on the first calendar day of each
month commencing September 1, 1997, each such payment to be in an
amount equal to One Thousand Dollars ($1,000.00).
H. Unused Line Fee. Borrower shall pay to LaSalle at the end
of each month, in arrears, an unused line fee equal to one-quarter of
one percent (0.25%) per annum on the daily average amount by which
the sum of Seventeen Million Five Hundred Thousand Dollars
($17,500,000.00) exceeds the sum of: (1) the outstanding aggregate
principal balances of the Revolving Loans and the Term Loan, and (2)
the outstanding Letter Of Credit Obligations. The unused line fee
shall accrue from the Closing Date until the last day of the Original
Term, and if applicable, from the first day to the last day of each
Renewal Term.
I. Examination and Appraisal Fees. In addition to the costs
and expenses described in paragraph 14.M hereof, Borrower shall pay
to LaSalle an examination fee of $450.00 per auditor-day for each
examination performed by or at LaSalle's direction of the Borrower's
Books and the Collateral and such other matters as LaSalle shall deem
appropriate in its commercially reasonable judgment, each such fee to
be paid upon the completion of each such examination. Borrower shall
not be charged for the cost of more than two (2) such examinations
per year, except to the extent that at the time of any examination
there existed a Default.
5. LOAN ADMINISTRATION.
A. Revolving Loan Requests. A request for a Revolving Loan
shall be made or shall be deemed to be made, each in the following
manner: (1) Borrower shall give LaSalle same day notice, no later
than 10:30 A.M. (Chicago time) of such day, of its intention to
borrow a Prime Rate Revolving Loan, and at least one (1) Business
Day's prior notice of its intention to borrow a LIBOR Rate Revolving
Loan, in which notice Borrower shall specify the amount of the
proposed borrowing and the proposed borrowing date, provided,
however, that no such request may be made at a time when there exists
a Default; and (2) the coming due of any amount required to be paid
under this Agreement or any Note, whether on account of interest or
for any other Obligation, shall be deemed irrevocably to be a request
for a Prime Rate Revolving Loan on the due date thereof in the amount
required to pay such interest or other Obligation. As an
accommodation to Borrower, LaSalle may permit telephone requests for
Revolving Loans and electronic transmittal of instructions,
authorizations, agreements or reports to LaSalle by Borrower. Unless
Borrower specifically directs LaSalle in writing not to accept or act
upon telephonic or electronic communications from Borrower, LaSalle
shall have no liability (except in the event of gross negligence or
wilful misconduct on the part of LaSalle) to Borrower for any loss or
damage suffered by Borrower as a result of LaSalle's honoring of any
requests, execution of any instructions, authorizations or agreements
or reliance on any reports communicated to it telephonically or
electronically and purporting to have been sent to LaSalle by an
authorized officer of Borrower (including, without limitation,
Borrower's Controller) and LaSalle shall have no duty to verify the
origin of any such communication or the authority of the Person
sending it. Each notice of borrowing shall be irrevocable by and
binding on Borrower, and if such notice requests the borrowing of a
LIBOR Rate Revolving Loan, such notice shall state the Interest
Period with respect thereto. Borrower, at its option, may choose
Prime Rate Revolving Loans or LIBOR Rate Revolving Loans, provided
that any LIBOR Rate Revolving Loan shall be in a minimum amount of
$1,000,000, and provided further that the right of Borrower to choose
any LIBOR Rate Loan is subject to the provisions of paragraph 5.C
hereof.
B. Disbursements. Borrower hereby irrevocably authorizes
LaSalle to disburse the proceeds of each Revolving Loan requested by
Borrower, or deemed to be requested by Borrower, as follows: (1) the
proceeds of each Revolving Loan requested under paragraph 5.A.(1)
shall be disbursed by LaSalle in lawful money of the United States of
America in immediately available funds, in the case of the initial
borrowing, in accordance with the terms of the written disbursement
letter from Borrower, and in the case of each subsequent borrowing,
by depositing the sums to be advanced into Borrower's operating
account with the Bank or by wire transfer to such bank account as may
be agreed upon by Borrower and LaSalle from time to time, or
elsewhere if pursuant to a written direction from Borrower; and (2)
the proceeds of each Revolving Loan requested under paragraph 5.A.(2)
shall be disbursed by LaSalle by way of direct payment of the
relevant interest or other Obligation.
C. Notice of Continuation and Notice of Conversion.
(1) Subject to the provisions of clause (3) hereof,
Borrower may elect to maintain any borrowing by it consisting of
the same Kind of LIBOR Rate Loans, or any portion thereof, as a
LIBOR Rate Loan by selecting a new Interest Period for such
borrowing, which new Interest Period shall commence on the last
day of the then existing Interest Period. Each selection of a new
Interest Period (a "Continuation") shall be made on one (1)
Business Day prior notice, given by Borrower to LaSalle not later
than 10:30 A.M. (Chicago time) on the first Business Day preceding
the date of any proposed Continuation. If Borrower elects to
maintain more than one borrowing consisting of LIBOR Rate Loans of
the same Kind by combining such borrowings into one borrowing and
selecting a new Interest Period pursuant to this clause, each of
the borrowings so combined shall consist of Loans of the same Kind
having Interest Periods ending on the same date. If Borrower
shall fail to select a new Interest Period for any borrowing by it
consisting of LIBOR Rate Loans of the same Kind in accordance with
this clause, such LIBOR Rate Loans will automatically convert into
Prime Rate Loans.
(2) Subject to the provisions of clause (3) hereof,
Borrower may on one (1) Business Day prior notice given to LaSalle
convert the entire amount of or a portion of all Loans of the same
Kind and Type into Loans of the same Kind and another Type (a
"Conversion"); provided that no Default shall have occurred and be
continuing, and provided further that any Conversion of any LIBOR
Rate Loans into Prime Rate Loans may only be made on the last day
of the Interest Period for such LIBOR Rate Loans, and upon
Conversion of any Prime Rate Loans into LIBOR Rate Loans, Borrower
shall pay accrued interest to the date of Conversion on the
principal amount converted on the first day of the following
month. Each such notice shall be given not later than 10:30 A.M.
(Chicago time) on the first Business Day preceding the date of any
proposed Conversion. Each Conversion shall be in an aggregate
amount of not less than $1,000,000. Borrower may elect to convert
the entire amount of or a portion of all Loans made to Borrower of
the same Kind and Type comprising more than one borrowing into
Loans of the same Kind and another Type by combining such
borrowings into one borrowing consisting of Loans of the same Kind
and another Type; provided, however, that if the borrowings so
combined consist of LIBOR Rate Loans, such LIBOR Rate Loans shall
have Interest Periods ending on the same date.
(3) Notwithstanding anything contained in paragraph 5.A
hereof or contained in clauses (1) and (2) above to the contrary:
(a) if LaSalle is unable to determine the LIBOR Rate
for LIBOR Rate Loans comprising any requested borrowing,
Continuation or Conversion, the right of Borrower to select or
maintain LIBOR Rate Loans for such borrowing or any subsequent
borrowing shall be suspended until LaSalle shall notify
Borrower that the circumstances causing such suspension no
longer exist, and each Loan comprising such borrowing shall be
automatically converted into a Prime Rate Loan;
(b) any LIBOR Rate Term Loan shall be in a minimum
amount equal to the lesser of (i) $1,000,000 or (ii) the
outstanding principal amount of the applicable Loan, less any
principal sums to be paid on such Loan during the Interest
Period selected; and
(c) the amount of interest payable by Borrower at the
end of any Interest Period shall be calculated on the full
amount of each LIBOR Rate Loan borrowed by Borrower at the
commencement of the applicable Interest Period, regardless of
any reductions in the principal amount of such LIBOR Rate Loan
which occur during such Interest Period, and Borrower shall
not be credited for any part of such interest until such
interest is actually paid by Borrower. To the extent the
aggregate repayments of principal on Revolving Loans received
by LaSalle during the pendency of an Interest Period
applicable to a then outstanding LIBOR Rate Revolving Loan
exceed the aggregate unpaid principal amount of all Prime Rate
Revolving Loans outstanding during such Interest Period,
LaSalle shall, to the extent of such excess, credit to an
interest-bearing special suspense account the amount of such
repayments received during such Interest Period, and at the
expiration of such Interest Period, LaSalle shall apply all
such amounts credited to such account against the unpaid
principal balance of the LIBOR Rate Revolving Loans then
outstanding.
(4) Each notice of Continuation or Conversion shall be
irrevocable and binding on Borrower. In the case of (a) any
borrowing of a Loan, Continuation, or Conversion that the related
notice of borrowing, notice of Continuation or notice of
Conversion specifies is to be comprised of LIBOR Rate Loans, or
(b) any payment of principal of, or Conversion or Continuation of,
any LIBOR Rate Loan made other than on the last day of the
Interest Period for such Loan as a result of a payment,
prepayment, Conversion or Continuation of such Loan or
acceleration of the maturity of any of the Obligations pursuant to
paragraph 17 hereof, or for any other reason, then in any such
case, upon LaSalle's demand, Borrower shall pay to LaSalle and
indemnify LaSalle from and against the following (collectively
"Breakage Costs"): (i) any loss, cost or expense incurred by
LaSalle as a result of any failure to fulfill, on or before the
date for such borrowing, Continuation or Conversion, the
applicable conditions set forth in paragraph 15 hereof, and (ii)
any additional losses, costs or expenses which it may reasonably
incur as a result of such payment, including, without limitation
in each such case, any loss (excluding loss of anticipated
profits), cost or expense incurred by reason of the liquidation or
redeployment of deposits or other funds acquired by LaSalle to
fund the Loan to be made as part of such borrowing, Continuation
or Conversion.
6. GRANT OF SECURITY INTEREST TO LASALLE.
X. Xxxxx Of Security Interest. As security for the payment
of all Loans now or in the future made by LaSalle to Borrower
hereunder and for the payment, performance and satisfaction of all
other Obligations, Borrower hereby ratifies and continues the
existing continuing security interest granted to LaSalle, and in
confirmation thereof Borrower hereby assigns to LaSalle and grants to
LaSalle a continuing security interest in and to all of the assets of
Borrower, including but not limited to the following property of
Borrower, whether now or hereafter owned, existing, acquired or
arising and wherever now or hereafter located: (1) all Accounts
(whether or not Eligible Accounts); (2) all Inventory; (3) all
Equipment; (4) all General Intangibles; (5) all deposits and cash and
any other property owned by Borrower now or hereafter in the
possession, custody or control of LaSalle or any agent or any parent,
affiliate or subsidiary of LaSalle or any participant with LaSalle in
the Loans for any purpose (whether for safekeeping, deposit,
collection, custody, pledge, transmission or otherwise); (6) all
Negotiable Collateral; (7) all of Borrower's Books; and (8) all
additions and accessions to, substitutions for, and replacements,
products and proceeds of the foregoing property, including, without
limitation, proceeds of all insurance policies insuring the foregoing
property.
B. Mortgage. As security for the payment and performance of
the Loans and of all Obligations, Borrower shall grant to a trustee
for the benefit of LaSalle a Mortgage upon each parcel of the
Property and all improvements thereon. The Mortgage shall establish
a first priority mortgage lien against the Property and all
improvements thereon.
7. PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY
INTERESTS THEREIN.
Borrower shall, at LaSalle's reasonable request, at any time
and from time to time, execute and deliver to LaSalle such financing
statements, documents and other agreements and instruments (and pay
all reasonable out-of-pocket costs and expenses incurred by LaSalle
in connection with filing or recording the same in all public offices
deemed reasonably necessary by LaSalle) and do such other acts and
things as LaSalle may deem reasonably necessary in order to establish
and maintain a valid, attached and perfected security interest in the
Collateral in favor of LaSalle (free and clear of all other liens,
claims and rights of third parties whatsoever, whether voluntarily or
involuntarily created, except Permitted Liens) to secure payment of
the Obligations, and in order to facilitate the collection of the
Collateral. Borrower irrevocably hereby makes, constitutes and
appoints LaSalle (and all Persons designated by LaSalle for that
purpose) as Borrower's true and lawful attorney and agent-in-fact to
execute such financing statements, documents and other agreements and
instruments and do such other acts and things as may be necessary to
preserve and perfect LaSalle's security interest in the Collateral.
Borrower further agrees that a carbon, photographic, photostatic or
other reproduction of this Agreement or of a financing statement
shall be sufficient as a financing statement.
8. POSSESSION OF COLLATERAL AND RELATED MATTERS.
Until a Default has occurred, Borrower shall have the right,
except as otherwise provided in this Agreement, in the ordinary
course of Borrower's business, to: (1) sell, lease or furnish under
contracts of service any of Borrower's Inventory normally held by
Borrower for any such purpose, and (2) use and consume any raw
materials, work in process or other materials normally held by
Borrower for such purpose, provided, however, that a sale in the
ordinary course of business shall not include any transfer or sale in
satisfaction, partial or complete, of a debt owed by Borrower.
9. DISPOSITION OF EQUIPMENT, PROPERTY OR FIXTURES.
If Borrower sells or alienates any Equipment, Property or
Fixtures, in whole or in part, or if any of the Equipment, Property
or Fixtures, is damaged, destroyed or taken by condemnation, Borrower
shall pay to LaSalle, unless otherwise specifically provided herein
or otherwise agreed to by LaSalle, as and when received by Borrower
and as a mandatory prepayment of the Term Loans (in such proportions
and to such Term Loans as selected by LaSalle), to be applied against
the last maturing installments of principal thereof, in the inverse
order thereof (or, at LaSalle's option, such of the other Obligations
of Borrower as LaSalle may elect), a sum equal to the proceeds
received by Borrower from such sale, provided, however, that without
LaSalle's consent, unless and until a Default has occurred and is
continuing, obsolete or worn out Equipment may be sold or otherwise
disposed of by Borrower and the proceeds thereof may be retained by
Borrower, so long as the fair market value of any such Equipment sold
or otherwise disposed of in any single transaction is less than
$25,000.00, and the fair market value, in the aggregate, of all such
Equipment sold or otherwise disposed of by Borrower during any
twelve-month period is less than $100,000.00.
10. COLLECTIONS.
A. Lock Box. Borrower shall direct all of its Government
Account Debtors to make all payments upon the Government Accounts
directly to a post office box ("Lock Box") with the Bank, in the name
and under the exclusive control of LaSalle. If Borrower, any
Affiliate or Subsidiary of Borrower, or any shareholder, officer,
director, employee or agent of Borrower or any Affiliate or
Subsidiary, or any other Person acting for or in concert with
Borrower shall receive any monies, checks, notes, drafts or other
payments relating to or as proceeds of any Government Accounts,
Borrower and each such Person shall receive all such items in trust
for, and as the sole and exclusive property of, LaSalle and,
immediately upon receipt thereof, shall remit the same (or cause the
same to be remitted) in kind to the Lock Box. Borrower agrees that
all payments made to the Lock Box or otherwise received by LaSalle,
whether with respect to the Government Accounts, as proceeds of other
Collateral, or otherwise, will be applied on account of the
Obligations of Borrower in accordance with the terms of this
Agreement, provided that so long as no Event of Default has occurred
and is continuing, such payments will be applied to the outstanding
principal balance due under the Revolving Loans. Borrower agrees to
pay all fees, costs and expenses which Borrower incurs in connection
with opening and maintaining a Lock Box. All of such fees, costs and
expenses which remain unpaid by Borrower pursuant to any Lock Box
Agreement with Borrower, to the extent same shall have been paid by
LaSalle hereunder, shall constitute Revolving Loans hereunder, and,
until paid, shall bear interest at the rate then applicable to
Revolving Loans hereunder. All checks, drafts, instruments and other
items of payment or proceeds of Collateral delivered to LaSalle in
kind shall be endorsed by Borrower to LaSalle, and, if that endorse-
ment of any such item shall not be made for any reason, LaSalle is
hereby irrevocably authorized to endorse the same on Borrower's
behalf. For the purpose of this paragraph, Borrower irrevocably
hereby makes, constitutes and appoints LaSalle (and all Persons
designated by LaSalle for that purpose) as Borrower's true and lawful
attorney and agent-in-fact (1) to endorse Borrower's name upon such
items of payment and/or proceeds of Collateral of Borrower and upon
any Chattel Paper, Document, Instrument, invoice or similar document
or agreement relating to any Account of Borrower or goods pertaining
thereto; (2) to take control in any manner of any item of payment or
proceeds thereof; (3) to have access to any lock box or postal box
into which any of Borrower's mail is deposited; and (4) open and
process all mail addressed to Borrower and deposited therein,
provided, however, that LaSalle shall not exercise any such powers
described in clauses (1), (2) and (4) unless an Event Of Default has
occurred and is continuing.
B. Collection Rights. LaSalle may, at any time and from time
to time after the occurrence and during the continuance of an Event
Of Default, whether before or after notification to any Account
Debtor and whether before or after the maturity of any of the
Obligations, (1) enforce collection of any of Borrower's Accounts or
contract rights by suit or otherwise; (2) exercise all of Borrower's
rights and remedies with respect to proceedings brought to collect
any Accounts; (3) surrender, release or exchange all or any part of
any Accounts of Borrower, or compromise or extend or renew for any
period (whether or not longer than the original period) any
indebtedness thereunder; (4) sell or assign any Account of Borrower
upon such terms, for such amount and at such time or times as LaSalle
deems advisable; (5) prepare, file and sign Borrower's name on any
proof of claim in bankruptcy or other similar document against any
Account Debtor indebted on an Account of Borrower; and (6) do all
other acts and things which are necessary, in LaSalle's sole discre-
tion, to fulfill Borrower's obligations under this Agreement and to
allow LaSalle to collect the Accounts. Upon the taking of any
actions described in the preceding sentence, LaSalle shall promptly
notify Borrower that it has taken such action. In addition to any
other provision hereof, LaSalle may at any time on or after the
occurrence and during the continuance of an Event Of Default, at
Borrower's expense, notify any parties obligated on any of the
Accounts of Borrower to make payment directly to LaSalle of any
amounts due or to become due thereunder, and in such event LaSalle
shall simultaneously forward copies of such notice to Borrower.
C. Application Of Collections. LaSalle shall, within one (1)
Business Day after receipt by LaSalle at its principal executive
office, currently located in Chicago, Illinois, of cash or other
immediately available funds from collections of items of payment and
proceeds of any Collateral, (i) with respect to collections or
proceeds from Collateral consisting of Equipment, Fixtures, or real
property, apply such proceeds to the sums owed in connection with the
Term Loan, and (ii) with respect to collection or proceeds from any
other Collateral, apply such proceeds to sums owed in connection with
the Revolving Loans, provided that at any time during which an Event
of Default has occurred and is continuing, LaSalle may apply the
whole or any part of such collections or proceeds against the
Obligations in such order as LaSalle shall determine in its sole
discretion.
D. Protection Of Collection Rights. In its reasonable credit
judgment, without waiving or releasing any obligation, liability or
duty of Borrower under this Agreement or the Other Agreements or any
Event Of Default, at any time or times hereafter, LaSalle may (but
shall not be obligated to) pay (except with respect to Permitted
Liens), acquire or accept an assignment of any security interest,
lien, encumbrance or claim asserted by any Person in, upon or against
the Collateral. All sums paid by LaSalle in respect thereof and all
reasonable out-of-pocket costs, fees and expenses (including without
limitation reasonable attorney fees, all court costs and all other
reasonable out-of-pocket charges relating thereto) incurred by
LaSalle shall constitute Revolving Loans, and, until paid, shall bear
interest at the rate then applicable to Revolving Loans hereunder.
E. Delivery Of Collateral. Promptly upon Borrower's receipt
of any portion of the Collateral evidenced by an agreement,
Instrument or Document including, without limitation, any Chattel
Paper, Borrower shall deliver the original thereof to LaSalle
together with an appropriate endorsement or other specific evidence
of assignment thereof to LaSalle (in form and substance acceptable to
LaSalle). If an endorsement or assignment of any such items shall
not be made for any reason, LaSalle is hereby irrevocably authorized,
as Borrower's attorney and agent-in-fact, to endorse or assign the
same on Borrower's behalf.
11. SCHEDULES AND REPORTS. Borrower shall furnish or cause to be
furnished to LaSalle the following:
A. Daily Reports. Borrower shall provide LaSalle with an
executed daily loan report and certificate in LaSalle's then current
form on each day on which Borrower requests a Revolving Loan, and in
any event at least one each week, which shall be accompanied by
copies of Borrower's sales journal, cash receipts journal and credit
memo journal for the relevant period. Such report shall reflect the
activity of Borrower with respect to Accounts for the immediately
preceding week, and shall be in a form and with such specificity as
is satisfactory to LaSalle and shall contain such additional
information as LaSalle may reasonably require concerning Accounts and
Inventory included, described or referred to in such report and any
other documents in connection therewith requested by LaSalle,
including, without limitation, but only if specifically requested by
LaSalle, copies of all invoices prepared in connection with such
Accounts.
B. Monthly Financial Statements. As soon as practicable and
in any event within thirty (30) days following the end of each
calendar month: (1) statements of income of Borrower for each such
month and for the period from the beginning of the then current
fiscal year of Borrower to the end of such month, (2) balance sheet
of Borrower as of the end of such month, and (3) with respect to such
statements of income and balance sheets, in comparative form, figures
for the corresponding periods in the preceding fiscal year of
Borrower, all in reasonable detail and certified by the chief
financial officer of Borrower that such statements fairly present the
financial condition of Borrower in accordance with GAAP, subject to
changes resulting from normal quarter-end and year-end adjustments
and the absence of footnotes, together with detailed computations of
Borrower's compliance with the covenants set forth in this Agreement.
Borrower shall also deliver to LaSalle, together with each monthly
financial statement for the last month of each Fiscal Quarter, a
statement of cash flow of Borrower for such Fiscal Quarter and for
the period from the beginning of the then current fiscal year of
Borrower to the end of such Fiscal Quarter.
C. Monthly Reports. In addition to any other reports, as
soon as practicable and in any event within ten (10) days after the
end of each month: (1) a detailed aged trial balance of Borrower's
accounts, in form and substance reasonably satisfactory to LaSalle,
including, without limitation, the names and addresses of all Account
Debtors of Borrower, (2) a summary and detail of accounts payable
(such Accounts and accounts payable divided into such time intervals
as LaSalle may reasonably require), including a listing of any held
checks, and (3) the general ledger inventory account balance, a
perpetual inventory report and LaSalle's standard form of Inventory
report then in effect, for Borrower by each category of Inventory,
together with a description of the monthly change in each category of
Inventory.
D. Annual Financial Statements. As soon as practicable and
in any event within ninety (90) days after the end of each fiscal
year of Borrower: (1) statements of income of Borrower for such
fiscal year, and a balance sheet of Borrower as of the end of such
fiscal year, and (2) statements of cash flow of Borrower for such
fiscal year, all setting forth in comparative form, corresponding
figures for the period covered by the preceding annual audit and as
of the end of the preceding fiscal year of Borrower, such statements
to be presented in accordance with Borrower's normal method of
accounting for Inventory and (if Borrower uses the LIFO method)
disclosing all LIFO reserves, all in reasonable detail and in scope
in accordance with audits performed for Borrower in prior years and
examined and certified by independent certified public accountants of
recognized national standing selected by Borrower and satisfactory to
LaSalle, whose opinion shall be in scope in accordance with audits
performed for Borrower in prior years, in form and substance
reasonably satisfactory to LaSalle.
E. Annual Projections. As soon as practicable and in any
event prior to the beginning of each fiscal year of Borrower,
projected balance sheets, statements of income and cash flow for
Borrower, for each of the twelve (12) months during such fiscal year,
which shall include the assumptions used therein, together with
appropriate supporting details as requested by LaSalle.
F. Accountant's Reports. As soon as practicable and in any
event within ten (10) days of delivery to Borrower, a copy of any
letter issued by Borrower's independent public accountants with
respect to Borrower's financial or accounting systems or controls,
including all so-called "management letters".
G. Other Information. With reasonable promptness, such other
material business or financial data, reports, appraisals and
projections as LaSalle may reasonably request.
H. Accompanying Certifications. All financial statements
delivered to LaSalle pursuant to the requirements of this paragraph
(except where otherwise expressly indicated) shall be prepared in
accordance with GAAP as provided in this Agreement. Together with
each delivery of financial statements required by paragraphs 11.B and
11.D above, Borrower shall deliver to LaSalle an officer's
certificate in the form attached hereto as Exhibit A, which shall
include a calculation of financial covenants in the schedule attached
to such officer's certificate in form satisfactory to LaSalle.
12. RENEWAL, TERMINATION AND PREPAYMENT.
A. Renewal And Termination. This Agreement shall be in
effect from the date hereof until October 31, 2000 ("Original Term")
and shall automatically renew itself from year to year thereafter
(each such one year renewal being referred to herein as a "Renewal
Term") unless: (1) the due date of the Obligations is accelerated
pursuant to paragraph 17.A hereof; or (2) Borrower elects or LaSalle
elects to terminate this Agreement at the end of the Original Term or
at the end of any Renewal Term by giving the other party written
notice of such election at least ninety (90) days prior to the end of
the Original Term or the then current Renewal Term, in which case
Borrower shall pay all of the Obligations in full on the last day of
such term, or (3) Borrower voluntarily prepays the Obligations in
full and elects to terminate this Agreement on such prepayment date.
If one or more of the events specified in clauses (1), (2) or (3)
occurs, this Agreement shall terminate on the date thereafter that
the Obligations are paid in full, provided, however, that the
security interests and liens created under this Agreement and the
Other Agreements shall not terminate or be considered released until
all of the Obligations have been paid in full. If Borrower is
obtaining new financing from another lender, Borrower shall deliver
such lender's indemnification of LaSalle, in form and substance
reasonably satisfactory to LaSalle, for checks which LaSalle has
credited to Borrower's account, but which subsequently are dishonored
for any reason, for a period of up to sixty (60) days after the date
this Agreement is terminated.
B. Prepayment. Borrower may prepay the Loans, in whole or in
part, at any time, without payment of any prepayment penalty, fee or
additional interest.
13. REPRESENTATIONS AND WARRANTIES.
Borrower hereby represents, warrants and covenants to LaSalle as
follows:
A. Accuracy Of Financial Statements. The financial
statements delivered or to be delivered by Borrower to LaSalle at or
prior to the date of this Agreement and at all times subsequent
thereto accurately reflect the financial condition of Borrower, and
since May 2, 1997, no event or condition has occurred which has had,
or is reasonably likely to have, a Material Adverse Effect.
B. Borrower's Locations. The office where Borrower keeps the
Borrower's Books (or copies thereof) concerning the Collateral, Bor-
rower's principal place of business and all of Borrower's other
places of business, locations of Collateral and post office boxes are
as set forth in Schedule 13.B attached hereto. Borrower shall
promptly (but in no event less than ten (10) days prior thereto)
advise LaSalle in writing of the proposed opening of any new place of
business, the closing of any existing place of business, any change
in the location of Borrower's Books (or copies thereof) or the
opening or closing of any post office box of Borrower.
C. Locations Of Collateral. The Collateral, excluding
Collateral in transit but including without limitation the Equipment
(except any part thereof which prior to the date of this Agreement
Borrower shall have advised LaSalle in writing consists of Collateral
normally used in more than one state) is and shall be kept, or, in
the case of vehicles, based, only at the addresses set forth on
Schedule 13.B attached hereto, and at other locations within the
continental United States of which LaSalle has been advised by
Borrower in writing. Borrower shall immediately give written notice
to LaSalle of any use of any Collateral in any state other than a
state in which Borrower has previously advised LaSalle such
Collateral shall be used, and such Collateral shall not, unless
LaSalle shall otherwise consent in writing, be used outside of the
continental United States.
D. No Other Liens. No security agreement, financing
statement or analogous instrument exists or shall exist with respect
to any of the Collateral other than any security agreement, financing
statement or analogous instrument evidencing Permitted Liens, which
include those existing liens shown on Schedule 13.D attached hereto.
E. Representations Of Eligibility. Each Account or item of
Inventory which Borrower shall, expressly or by implication, request
LaSalle to classify as an Eligible Account or as Eligible Inventory,
respectively, shall, as of the time when such request is made,
conform in all respects to the requirements of such classification as
set forth in the respective definitions of Eligible Account and
Eligible Inventory and as otherwise established by LaSalle from time
to time, in accordance with LaSalle's customary credit policies, and
Borrower shall promptly notify LaSalle in writing if any such
Eligible Account or Eligible Inventory shall subsequently become
ineligible. LaSalle shall use its best efforts to communicate to the
Borrower promptly any changes in its credit policies that will have a
material effect upon Borrower's availability under the Revolving
Loans.
F. Ownership Of Collateral. Borrower is and shall at all
times during the Original Term or any Renewal Term be the lawful
owner of all Collateral now purportedly owned or hereafter
purportedly acquired by Borrower, free from all liens, claims,
security interests and encumbrances whatsoever, whether voluntarily
or involuntarily created and whether or not perfected, other than the
Permitted Liens.
G. Authority. Borrower has the right and power and is duly
authorized and empowered to enter into, execute and deliver this
Agreement and the Other Agreements to which Borrower is a party, and
to perform its obligations hereunder and thereunder; Borrower's
execution, delivery and performance of this Agreement and the Other
Agreements does not and shall not conflict with the provisions of any
statute, regulation, ordinance or rule of law, or any agreement,
contract or other document which may now or hereafter be binding on
Borrower, and Borrower's execution, delivery and performance of this
Agreement and the Other Agreements shall not result in the imposition
of any lien or other encumbrance upon any of Borrower's property
under any existing indenture, mortgage, deed of trust, loan or credit
agreement or other material agreement or instrument by which Borrower
or any of its property may be bound or affected.
H. Actions Or Proceedings. There are no actions or
proceedings which are pending or, to the best of Borrower's
knowledge, threatened against Borrower which are reasonably likely to
have a Material Adverse Effect and Borrower shall, promptly upon
becoming aware of any such pending or threatened action or
proceeding, give written notice thereof to LaSalle.
I. Licenses And Authorizations. Borrower has obtained all
licenses, authorizations, approvals and permits, the lack of which
would have a Material Adverse Effect, and Borrower is and shall
remain in compliance in all material respects with all applicable
federal, state, local and foreign statutes, orders, regulations,
rules and ordinances (including, without limitation, statutes,
orders, regulations, rules and ordinances relating to taxes, employer
and employee contributions and similar items, securities, employee
retirement and welfare benefits, employee health and safety or
environmental matters), the failure to comply with which would have a
Material Adverse Effect.
J. Accuracy Of Information. All written information now,
heretofore or hereafter furnished by Borrower to LaSalle is and shall
be true and correct in all material respects as of the date with
respect to which such information was or is furnished (except for
financial projections, which have been prepared in good faith based
upon assumptions which the Borrower believed were reasonable at the
time the projections were submitted to LaSalle).
K. Collateral Not Owned By Affiliates. Borrower is not
conducting, permitting or suffering to be conducted, nor shall it
conduct, permit or suffer to be conducted, any activities pursuant to
or in connection with which any of the Collateral is now, or will
(while any Obligations remain outstanding) be owned by any Affiliate.
Notwithstanding the foregoing, LaSalle acknowledges the existence of
that certain Management Services Agreement, pursuant to which Xxxxxxx
has stored certain of its assets at Borrower's location, which assets
are not owned by Borrower and shall not constitute Collateral.
Promptly upon any amendment or modification of the Management
Services Agreement, Borrower shall advise LaSalle thereof and shall
furnish to LaSalle copies of all documents executed in connection
with such amendment or modification.
L. Other Names. During the five (5) years prior to this
Agreement, Borrower's name has always been as set forth on the first
page of this Agreement and Borrower has used no tradenames or
division names in the operation of its business, except as otherwise
set forth on Schedule 13.L. Borrower shall notify LaSalle in writing
within ten (10) days of the change of its name or the use of any
tradenames or division names not previously disclosed to LaSalle in
writing.
M. Equipment. With respect to Borrower's Equipment: (1)
Borrower has good and merchantable title to all Equipment, subject
only to Permitted Liens; (2) Borrower shall keep and maintain the
Equipment in operating condition and repair and shall make all
necessary replacements thereof and renewals thereto so that the value
and operating efficiency thereof shall at all times be preserved and
maintained, ordinary wear and tear excepted; (3) except in the
ordinary course of Borrower's business, Borrower shall not permit any
such items to become a fixture to real estate (except the Property)
or an accession to other personal property; (4) from time to time
Borrower may sell, exchange or otherwise dispose of obsolete, unused
or worn out Equipment, but only to the extent provided in paragraph 9
hereof; and (5) Borrower, promptly after demand by LaSalle, shall
deliver to LaSalle any and all evidence of ownership of, including,
without limitation, certificates of title and applications of title
to, any of the Equipment.
N. Enforceable Obligations. This Agreement and the Other
Agreements to which Borrower is a party are the legal, valid and
binding obligations of Borrower and are enforceable against Borrower
in accordance with their respective terms, except to the extent that
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
rights of creditors generally.
O. Solvency. Borrower is solvent, is able to pay its debts
as they become due and has capital sufficient to carry on its
business, as of the date hereof owns property having a value both at
fair valuation and at present fair saleable value greater than the
amount required to pay its debts, and will not be rendered insolvent
by the execution and delivery of this Agreement or any of the Other
Agreements or by completion of the transactions contemplated
hereunder or thereunder.
P. Other Obligations. As of the date hereof, Borrower is not
obligated, whether directly or indirectly, for any loans or other
indebtedness for borrowed money other than: (1) the Obligations, (2)
indebtedness disclosed to LaSalle on Schedule 14.G attached hereto,
(3) unsecured indebtedness to trade creditors arising in the ordinary
course of Borrower's business, and (4) unsecured indebtedness arising
from the endorsement of drafts and other instruments for collection,
in the ordinary course of Borrower's business.
Q. No Margin Securities. Borrower does not own any margin
securities, and none of the proceeds of the Loans hereunder shall be
used for the purpose of purchasing or carrying any margin securities
or for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase any margin securities or for any
other purpose not permitted by Regulation G or Regulation U of the
Board of Governors of the Federal Reserve System as in effect from
time to time.
R. Other Relationships. As of the date hereof, Borrower has
no Parents or Subsidiaries, nor is Borrower engaged in any joint
venture or partnership with any other Person, with the exception of
the Subsidiary known as Sport Supply Group International Holdings,
Inc., a Delaware corporation. Such Subsidiary owns no tangible
assets. Borrower covenants and agrees that it will not transfer any
assets to such Subsidiary, and Borrower further covenants and agrees
to dissolve such Subsidiary not later than that date which is one
hundred twenty (120) calendar days after the date of this Agreement.
S. Organization. Borrower is duly organized and in good
standing in its state of organization and Borrower is duly qualified
and in good standing in all states where the nature and extent of the
business transacted by it or the ownership of its assets makes such
qualification necessary, except for such other states in which the
failure to so qualify would not have a Material Adverse Effect.
T. No Defaults. To the best of its knowledge, information
and belief, Borrower is not in default under any material contract,
lease or commitment to which it is a party or by which it is bound,
nor does Borrower know of any dispute regarding any contract, lease
or commitment which is material to the continued operations or
condition (financial or otherwise) of Borrower.
U. No Labor Controversies. There are no controversies
pending or, to the best of Borrower's knowledge, information and
belief, threatened between Borrower and any of its employees, other
than employee grievances arising in the ordinary course of business
which are not, in the aggregate, material to the continued operations
or condition (financial or otherwise) of Borrower, and Borrower is in
compliance in all material respects with all federal and state laws
respecting employment and employment terms, conditions and practices,
except where the failure to so comply would not have a Material
Adverse Effect.
V. Intellectual Properties. To the best of Borrower's
knowledge, information and belief, Borrower possesses, and shall
continue to possess, adequate licenses, patents, patent applications,
copyrights, service marks, trademarks, trademark applications,
tradestyles and tradenames to continue to conduct its business as
heretofore conducted by it. All rights of Borrower as of the date
hereof, whether as owner, licensee, or otherwise, with respect to
patents, patent applications, copyrights, service marks, trademarks,
trademark applications, tradestyles and tradenames are as set forth
on Schedule 13.V attached hereto, and Borrower shall promptly notify
LaSalle or its counsel in writing of its acquiring of any rights in
any such properties after the date hereof.
Borrower represents, warrants and covenants to LaSalle that all
representations, warranties and covenants of Borrower contained in
this Agreement (whether appearing in paragraphs 13 or 14 hereof or
elsewhere) shall be true, accurate and complete in all material
respects at the time of Borrower's execution of this Agreement, shall
survive the execution, delivery and acceptance hereof by the parties
hereto and the closing of the transactions described herein or
related hereto, shall remain true until the repayment in full of all
of the Obligations and termination of this Agreement (except with
respect to representations and warranties expressly made as of a
specific date), and shall be remade by Borrower at the time each
Revolving Loan is made and each Letter Of Credit is issued pursuant
to this Agreement (except with respect to representations and
warranties expressly made as of a specific date).
14. COVENANTS.
Until payment or satisfaction in full of all Obligations and
termination of this Agreement, unless Borrower obtains LaSalle's
prior written consent waiving or modifying any of Borrower's
covenants hereunder in any specific instance, Borrower agrees as
follows:
A. Accurate Books And Records. Borrower shall at all times
keep accurate and complete books, records and accounts with respect
to all of Borrower's business activities, in accordance with sound
accounting practices and GAAP, and shall keep such books, records and
accounts, and any copies thereof, only at the addresses indicated for
such purpose on Schedule 13.B attached hereto.
B. Rights Of Access. LaSalle, or any Persons designated by
it, shall have the right, at any time upon reasonable notice, in the
exercise of its commercially reasonable credit judgment, to call at
Borrower's places of business during Borrower's regular business
hours, and, without hindrance or delay, to inspect the Collateral and
to inspect, audit, check and make extracts from Borrower's Books,
including without limitation Borrower's books, records, journals,
orders, receipts and any correspondence and other data relating to
Borrower's business, the Collateral or any transactions between the
parties hereto, and shall have the right to make such verification
concerning Borrower's business as LaSalle may consider reasonable
under the circumstances. Borrower shall furnish to LaSalle such
information relevant to LaSalle's rights under this Agreement as
LaSalle shall at any time and from time to time reasonably request.
Borrower authorizes LaSalle to discuss the affairs, finances and
business of Borrower with any officers or directors of Borrower or
any Affiliate, or, if an Event of Default has occurred and is
continuing, with those employees of Borrower with whom LaSalle has
determined in its commercially reasonable judgment to be necessary or
desirable to converse, and to discuss the financial condition of
Borrower with Borrower's independent public accountants. Any such
discussions shall be without liability to LaSalle or to such
accountants. Borrower shall pay to or reimburse LaSalle for all
reasonable fees, costs, and out-of-pocket expenses incurred by
LaSalle in the exercise of its rights hereunder (in addition to the
fees payable by Borrower pursuant to paragraph 4.I hereof in
connection with LaSalle's examination of the Borrower's Books and the
Collateral) and all of such costs, fees and expenses shall constitute
Revolving Loans hereunder.
C. Insurance.
(1) Casualty Insurance. Borrower shall keep the
Collateral properly housed and shall keep the Collateral
insured against such risks and in such amounts as are
customarily insured against by Persons engaged in businesses
similar to that of Borrower with such companies, in such
amounts and under policies in such form as shall be reasonably
satisfactory to LaSalle. Originals or certified copies of such
policies of insurance have been or shall be delivered to
LaSalle within fifteen (15) days after the Closing Date,
together with evidence of payment of all premiums therefor, and
shall contain an endorsement, in form and substance acceptable
to LaSalle, showing loss under such insurance policies payable
to LaSalle. Such endorsement, or an independent instrument
furnished to LaSalle, shall provide that the insurance company
shall give LaSalle at least thirty (30) days written notice
before any such policy of insurance is altered or canceled and
that no act, whether willful or negligent, or default of
Borrower or any other Person shall affect the right of LaSalle
to recover under such policy of insurance in case of loss or
damage. Borrower hereby directs all insurers under such
policies of insurance to pay all proceeds payable thereunder
directly to LaSalle. Borrower irrevocably, makes, constitutes
and appoints LaSalle (and all officers, employees or agents
designated by LaSalle) as Borrower's true and lawful attorney
(and agent-in-fact) for the purpose of making, settling and
adjusting claims under such policies of insurance, endorsing
the name of Borrower on any check, draft, instrument or other
item of payment for the proceeds of such policies of insurance
and making all determinations and decisions with respect to
such policies of insurance, provided, however, that LaSalle
shall exercise such rights only upon the occurrence and during
the continuance of an Event of Default. The proceeds of any
insured loss shall be paid to LaSalle and shall be applied by
LaSalle (i) with respect to insurance proceeds from Collateral
consisting of Equipment, Fixtures, or real property, to the
sums owed in connection with the Term Loan, and (ii) with
respect to insurance proceeds from any other Collateral, to
sums owed in connection with the Revolving Loans, provided that
at any time during which an Event of Default has occurred and
is continuing, LaSalle may apply the whole or any part of such
proceeds to the Obligations, in such order of application as
determined by LaSalle, unless LaSalle permits the use thereof
to repair or replace damaged or destroyed Collateral;
(2) Liability Insurance. Borrower shall maintain, at
its expense, such public liability and third party property
damage insurance as is customary for Persons engaged in
businesses similar to that of Borrower with such companies and
in such amounts, with such deductibles and under policies in
such form as shall be reasonably satisfactory to LaSalle and
originals or certified copies of such policies have been or
shall be delivered to LaSalle within fifteen (15) days after
the Closing Date, together with evidence of payment of all
premiums therefor; each such policy shall contain an endorse-
ment showing LaSalle as additional insured thereunder and
providing that the insurance company shall give LaSalle at
least thirty (30) days written notice before any such policy
shall be altered or canceled;
(3) Business Interruption Insurance. Borrower shall
maintain, at its expense, such business interruption insurance
as is customary for Persons engaged in businesses similar to
that of Borrower with such companies and in such amounts, with
such deductibles and under policies in such form as shall be
reasonably satisfactory to LaSalle and originals or certified
copies of such policies (or binders evidencing the existence of
coverage in compliance with this paragraph) have been or shall
be delivered to LaSalle on or before the Closing Date, together
with evidence of payment of all premiums therefor; each such
policy shall contain an endorsement showing LaSalle as
additional insured and loss payee thereunder and providing that
the insurance company shall give LaSalle at least thirty (30)
days written notice before any such policy shall be altered or
canceled; each such policy shall be assigned to LaSalle
pursuant to LaSalle's standard form of assignment; and
(4) Rights Of LaSalle To Obtain Or Maintain Insurance.
If Borrower at any time or times hereafter shall fail to
obtain or maintain any of the policies of insurance required
above or to pay any premium in whole or in part relating
thereto, then LaSalle, without waiving or releasing any
obligation or default by Borrower hereunder, may (but shall be
under no obligation to) obtain and maintain such policies of
insurance and pay such premiums and take such other actions
with respect thereto as LaSalle deems advisable in its
reasonable credit judgment. All reasonable sums disbursed by
LaSalle in connection with any such actions, including, without
limitation, court costs, expenses, other charges relating
thereto and reasonable attorneys' fees, shall constitute
Revolving Loans hereunder and, until paid, shall bear interest
at the highest rate then applicable to Revolving Loans
hereunder.
D. Collateral. Borrower shall not use the Collateral, or any
part thereof, in any unlawful business or for any unlawful purpose or
use or maintain any of the Collateral in any manner that does or
could result in material damage to the environment or a violation of
any applicable environmental laws, rules or regulations; Borrower
shall keep the Collateral in the same condition, repair and order as
of the date hereof, ordinary wear and tear excepted; Borrower shall
not permit all or any material part of the Collateral, to be levied
upon under execution, attachment, distraint or other legal process;
Borrower shall not sell, lease, grant a security interest in or
otherwise dispose of any of the Collateral except as expressly
permitted by this Agreement; and Borrower shall not secrete or
abandon any of the Collateral, or remove or permit removal of any of
the Collateral from any of the locations listed on Schedule 13.B
attached hereto or in any written notice to LaSalle pursuant to
paragraph 13.C hereof, except as expressly permitted herein.
E. Indication Of Security Interests. Borrower shall, within
ten (10) days after the request of LaSalle, indicate on its records
concerning the Collateral a notation, in form satisfactory to
LaSalle, of the security interest of LaSalle hereunder, and Borrower
shall not maintain duplicates or copies of such records at any
address other than Borrower's principal place of business set forth
on the first page of this Agreement; provided, however, that
Borrower, in the ordinary course of its business, may furnish copies
of such records to its accountants, attorneys and other agents or
advisors as it may determine to be necessary or desirable, in the
exercise of its commercially reasonable judgment.
F. Taxes. Borrower shall file all required tax returns and
pay all of its taxes when due, including, without limitation, taxes
imposed by federal, state or municipal agencies, and shall cause any
liens for taxes to be promptly released; provided, that Borrower
shall have the right to contest the payment of such taxes in good
faith by appropriate proceedings so long as: (1) the amount so
contested is shown on Borrower's financial statements, if required by
GAAP, (2) the contesting of any such payment does not give rise to a
lien for taxes of equal or greater priority to LaSalle's liens, (3)
upon the occurrence of an Event Of Default, Borrower at all times has
Excess Availability in an amount which is sufficient to pay such
taxes and any interest or penalties that may accrue thereon, or
LaSalle may establish a reserve against availability under the
Revolving Loans in such amount, and (4) if Borrower fails to
prosecute such contest with reasonable diligence, LaSalle may pay
such taxes on Borrower's behalf and any such sums advanced shall
constitute Revolving Loans hereunder and, until paid, shall bear
interest at the rate then applicable to the Revolving Loans. If
Borrower fails to pay any such taxes and in the absence of any such
contest by Borrower, LaSalle may (but shall be under no obligation
to) advance and pay any sums required to pay any such taxes and/or to
secure the release of any lien therefor, and any sums so advanced by
LaSalle shall constitute Revolving Loans hereunder, and, until paid,
shall bear interest at the rate then applicable to Revolving Loans
hereunder.
G. Other Indebtedness. Borrower shall not: (1) incur,
create, assume or suffer to exist any indebtedness other than (a)
indebtedness arising under this Agreement, (b) unsecured indebtedness
owing in the ordinary course of business to trade suppliers, (c)
indebtedness in effect on the date of this Agreement which has been
disclosed to LaSalle in writing, together with any renewals,
amendments and extensions thereof, (d) subordinated indebtedness
which has been subordinated to the indebtedness arising under this
Agreement pursuant to a written subordination agreement in form and
substance reasonably acceptable to LaSalle, (e) trade credit
financing in an amount not to exceed Two Million Dollars
($2,000,000.00) to be provided by Xxxxxxx or another Affiliate, (f)
senior indebtedness in an amount not to exceed Ten Million Dollars
($10,000,000.00), subject to the terms set forth below, and (g)
subordinated indebtedness in an aggregate amount not to exceed
Twenty-Five Million Dollars ($25,000,000.00) provided that such
indebtedness will not, directly or indirectly, cause or result in the
existence of a Default; or (2) assume, guarantee or endorse, or
otherwise become liable in connection with, the obligations of any
Person, except by endorsement of instruments for deposit or
collection or similar transactions in the ordinary course of
business. With respect to the senior indebtedness described above,
LaSalle will agree to subordinate or release its lien in certain
intangible assets of Borrower (including without limitation all of
Borrower's intellectual property) acceptable to LaSalle, in the event
that (i) Borrower obtains additional financing upon terms acceptable
to LaSalle in the amount of Ten Million Dollars ($10,000,000.00),
(ii) the terms of such financing expressly require LaSalle to
subordinate or release its lien in such assets, (iii) no Default
exists, and (iv) LaSalle receives agreements acceptable to LaSalle
and its counsel that will permit LaSalle to use such intangibles to
the full extent necessary to realize upon the Collateral upon the
occurrence of an Event of Default.
H. Mergers Or Organizational Changes. Borrower shall not
enter into any merger or consolidation, or sell, lease or otherwise
dispose of all or substantially all of its assets. Borrower shall
promptly advise LaSalle in the event that it creates any new
Subsidiary or Affiliate, and Borrower shall not transfer or
contribute any assets to any new Subsidiary or Affiliate in excess of
nominal initial capitalization funds which shall exceed, individually
or in the aggregate, Twenty-Five Thousand Dollars ($25,000.00).
Borrower shall not sell or enter into any contract or agreement
providing for the sale of all or any part of the Collateral, except
for the sale of inventory in the ordinary course of Borrower's
business or as otherwise expressly permitted by the terms of this
Agreement, nor shall Borrower permit the Collateral to be encumbered
or charged with a lien or security interest of any kind or nature,
whether voluntary or involuntary, other than Permitted Liens.
I. Loans And Investments. Without the prior written consent
of LaSalle, which consent will not be unreasonably withheld, Borrower
shall not make any advance, loan, investment or material acquisition
of assets other than: (1) advances made to employees in the ordinary
course of business so long as the aggregate amount of such advances
do not exceed Two Hundred Thousand Dollars ($200,000.00) in the
aggregate outstanding at any time; (2) investments in marketable
securities so long as the aggregate amount of such investments do not
exceed One Hundred Thousand Dollars ($100,000.00) at any time; (3)
investments in short-term direct obligations of the United States
government; (4) investments in negotiable certificates of deposit
issued by a bank satisfactory to LaSalle, payable to the order of
Borrower or to bearer, or (5) investments in commercial paper rated
A-1 or P-1; provided, that with respect to clauses (2), (3), (4), and
(5), Borrower shall assign all such investments in excess of Fifty
Thousand Dollars ($50,000.00) and with a term in excess of ninety
(90) days to LaSalle in form reasonably acceptable to LaSalle.
J. Dividends And Distributions. Borrower shall not: (1)
declare or pay any dividend or other distribution (whether in cash or
in kind) on, purchase, redeem or retire any shares of any class of
its stock, or make any payment on account of, or set apart assets for
the repurchase, redemption, defeasance or retirement of, any class of
its stock, except that (a) Borrower may, from time to time,
repurchase stock at a cost of up to Five Million Dollars
($5,000,000.00) so long as after such purchase Borrower will have
Excess Availability in an amount not less than Four Million Dollars
($4,000,000.00), provided that Borrower may not repurchase stock from
Xxxxxxx or any affiliate or successor of Xxxxxxx, (b) Borrower may
provide its stockholders with a right to acquire additional shares in
the event that Borrower was the target of an acquisition or in the
event of a change in control, and (c) this provision shall not be
construed as a prohibition on pro rata distributions of shares of
Borrower's stock to its stockholders, or on an increase in the total
number of outstanding shares of Borrower accompanied by a
proportionate reduction in par or stated value; or (2) make any
optional payment or prepayment on or redemption (including without
limitation by making payments to a sinking fund or analogous fund)
or, without the prior written consent of LaSalle, repurchase of any
indebtedness for borrowed money other than indebtedness pursuant to
this Agreement.
K. Changes In Organizational Documents Or Fiscal Year.
Borrower shall not amend its organizational documents or change its
fiscal year, except for a change to a calendar year fiscal period.
L. Financial Covenants. Borrower shall maintain and keep in
full force and effect each of the financial covenants set forth
below. The calculation and determination of each such financial
covenant, and all accounting terms contained therein, shall be so
calculated and construed in accordance with GAAP, applied on a basis
consistent with the financial statements of Borrower delivered most
recently before the Closing Date:
(1) Consolidated Tangible Net Worth. Borrower and its
Subsidiaries, on a consolidated basis, shall maintain at all
times a Tangible Net Worth of not less than Twenty-Five Million
Dollars ($25,000,000.00).
(2) EBITDA. Borrower and its Subsidiaries, on a
consolidated basis, shall equal or exceed an EBITDA for the
periods set forth below in the amounts set forth below:
Period Minimum EBITDA
Nine months ending 8/1/97 $1,500,000.00
Eleven months ending 9/26/97 $2,500,000.00
Thereafter, measured quarterly
on a rolling twelve-month basis,
as of the end of each Fiscal
Quarter $3,100,000.00
(3) Consolidated Capital Expenditures. Borrower and
its Subsidiaries, on a consolidated basis, shall not make
Capital Expenditures of an aggregate amount of more than One
Million Dollars ($1,000,000.00) during any fiscal year of
Borrower, without the prior written consent of LaSalle, which
consent will not be unreasonably with held; provided, however,
that so long as no Default has occurred and is continuing,
Borrower may make Capital Expenditure in an aggregate amount
not exceeding Three Million Dollars ($3,000,000.00) during the
Original Term with respect to management information systems,
and such Capital Expenditures shall be in addition to the One
Million Dollars ($1,000,000.00) annual limitations set forth
above.
X. XxXxxxx'x Expenses. Borrower shall reimburse LaSalle for
all reasonable costs and expenses including, without limitation,
legal expenses and reasonable attorneys' fees and expenses of outside
counsel, incurred by LaSalle in connection with the documentation and
consummation of this transaction and any other transactions between
Borrower and LaSalle, including, without limitation, Uniform Commer-
cial Code and other public record searches, lien filings, Federal
Express or similar express or messenger delivery, appraisal costs,
surveys, title insurance and environmental audit or review costs, and
in seeking to collect, protect or enforce any rights in or to the
Collateral or incurred by LaSalle in seeking to collect any
Obligations and to administer and enforce any of LaSalle's rights
under this Agreement. Borrower shall also pay all normal service
charges with respect to accounts maintained by LaSalle for the
benefit of Borrower. All such costs, expenses and charges shall
constitute Revolving Loans hereunder, and, until paid, shall bear
interest at the rate then applicable to Revolving Loans hereunder.
N. Compliance With Assignment Of Claims Act. Upon request
from LaSalle at any time or from to time, Borrower shall take all
action necessary to comply with the Assignment of Claims Act of 1940,
as amended (31 U.S.C. Section 203 et seq.) with respect to any
Government Accounts which qualify for assignment under the provisions
thereof.
O. Maintenance Of Accounts. Except as described in Schedule
14.0 attached hereto, within thirty (30) calendar days after the
Closing Date, Borrower shall transfer all of its operating bank
accounts to, and shall thereafter maintain such accounts with the
Bank in Chicago, Illinois.
15. CONDITIONS PRECEDENT.
A. Conditions Precedent To Closing. The obligation of
LaSalle to fund the initial Revolving Loan, to fund the Term Loan,
and to co-sign as applicant for the initial Letter Of Credit, is
subject to the satisfaction or waiver on or before the Closing Date
of the following conditions precedent:
(1) Receipt of Executed Documents. LaSalle shall have
received each of the documents required to be executed in
connection with the transaction described in this Agreement,
executed by all indicated signatories thereto;
(2) No Material Adverse Event. No event shall have
occurred which has had or could reasonably be expected to have
a Material Adverse Effect;
(3) No Alienation Or Destruction Of Equipment. There
shall have been no sale or other disposition or damage or
destruction of any Equipment, unless such sale or other
disposition or damage or destruction has been fully disclosed
to LaSalle, and LaSalle has in writing agreed to advance the
proceeds of the Term Loan notwithstanding such sale or other
disposition or damage or destruction, provided that in such
event LaSalle, in its sole discretion, may reduce the amount
available to be advanced under the Term Loan by such amount as
LaSalle may deem appropriate;
(4) Receipt Of Opinion Of Counsel. LaSalle shall have
received an opinion of Borrower's general counsel in the form
of Exhibit B attached hereto; and
(5) Execution Of Documentation. The Borrower shall
have executed and delivered to LaSalle all documents which
LaSalle determines are reasonably necessary to consummate the
transactions contemplated hereby.
B. Conditions Precedent To Post-Closing Obligations. After
the Closing Date, the obligation of LaSalle to make any requested
Revolving Loan, or to co-sign as applicant for any requested Letter
Of Credit is subject to the satisfaction of the conditions precedent
set forth below. Each such request shall constitute a representation
and warranty that such conditions are satisfied:
(1) Continuing Accuracy Of Representations And
Warranties. All representations and warranties contained in
this Agreement and the Other Agreements shall be true and
correct in all material respects on and as of the date of such
request, as if then made, other than representations and
warranties that relate solely to an earlier date; and
(2) No Defaults. No Default or Event Of Default shall
have occurred, or would result from the making of the requested
Revolving Loan or the issuance of the requested Letter Of
Credit, which has not been waived;
16. DEFAULT. The occurrence of any one or more of the following
events shall constitute an "Event Of Default" under this Agreement:
A. Failure To Pay. The failure of any Obligor to pay any of
the Obligations when due, declared due, or demanded by LaSalle in
accordance with the terms of this Agreement or any of the Other
Agreements.
B. Failure To Perform. The failure of any Obligor to
perform, keep or observe any of the covenants, conditions, promises,
agreements or obligations of such Obligor under this Agreement or any
of the Other Agreements, which failure continues for ten (10)
Business Days after notice from LaSalle to Borrower, provided that a
failure by Borrower to perform any obligations under any of the
following paragraphs shall constitute an immediate Event of Default
without Borrower having any notice or cure right: paragraph 9, the
last sentence of paragraph 13B, the last sentence of paragraph 00X,
xxxxxxxxx 00X, xxxxxxxxx 14H, paragraph 14J and paragraph 14L.
C. False Representation Or Warranty. The making or
furnishing by any Obligor to LaSalle of any representation, warranty,
certificate, schedule, report or other communication within or in
connection with this Agreement or the Other Agreements or in
connection with any other agreement between such Obligor and LaSalle,
which is untrue or misleading in any material respect, or the failure
of any Obligor to perform, keep or observe any of the covenants,
conditions, promises, agreement of such Obligor under any other
agreement with any Person if such failure has or is reasonably likely
to have a Material Adverse Effect.
D. Other Liens. Except as provided in paragraph 16.G, the
creation (whether voluntary or involuntary) of any lien or other
encumbrance upon any of the Collateral securing an amount in excess
of Two Hundred Fifty Thousand Dollars ($250,000.00), other than the
Permitted Liens, or the making of any levy, seizure or attachment of
any Collateral in connection with a lien or other encumbrance
securing an amount in excess of Two Hundred Fifty Thousand Dollars
($250,000.00).
E. Insolvency Proceedings. The commencement of any
proceedings (1) in bankruptcy by or against Borrower (2) for the
liquidation or reorganization of Borrower, or (3) for the
readjustment or arrangement of Borrower's debts, whether under the
United States Bankruptcy Code or under any other applicable law,
whether state or federal, now or hereafter existing for the relief of
debtors, or the commencement of any analogous statutory or non-
statutory proceedings involving any Obligor; provided, however, that
if such commencement of proceedings against Borrower is involuntary,
such action shall not constitute an Event Of Default unless such
proceedings are not dismissed within sixty (60) days after the
commencement of such proceedings.
F. Receivership Or Other Proceedings. The appointment of a
receiver or trustee for Borrower or for all or any substantial part
of the Collateral, or the institution of any proceedings for the
dissolution, or the full or partial liquidation, or the merger or
consolidation, of Borrower; provided, however, that if such
appointment or commencement of proceedings against Borrower is
involuntary, such action shall not constitute an Event Of Default
unless such appointment is not revoked or such proceedings are not
dismissed within sixty (60) days after the commencement of such
proceedings.
G. Entry Of A Judgment. The entry of any judgment or order
by a court of competent jurisdiction in excess of Five Hundred
Thousand Dollars ($500,000.00) against any Obligor which remains
unsatisfied or undischarged and in effect for sixty (60) days after
such entry without a stay of enforcement or execution, so long as
such creditor has not commenced enforcement or execution upon such
judgment, unless such judgment is insured and the creditor has not
commenced enforcement or execution upon such judgment.
H. Default By Guarantors. The occurrence and continuance of
an event of default, including the expiration of any applicable grace
or cure period, under, or the revocation or termination of, any
agreement, instrument or document executed and delivered by any
Person to LaSalle pursuant to which such Person, with Borrower's
actual knowledge and consent, has guaranteed to LaSalle the payment
of all or substantially all of the Obligations or has granted LaSalle
a security interest in or lien upon some or all of such Person's real
and/or personal property to secure the payment of all or
substantially all of the Obligations.
I. Cross Default. The occurrence and continuance of an event
of default, including the expiration of any applicable grace or cure
period, under any other agreement or instrument evidencing
indebtedness for borrowed money in excess of Two Hundred Fifty
Thousand Dollars ($250,000.00) executed or delivered by Borrower or
pursuant to which agreement or instrument Borrower or its properties
is or may be bound. A Default with respect to any Loan or Letter Of
Credit is a Default with respect to all Loans and all Letters Of
Credit.
J. Occurrence Of Material Adverse Event. The occurrence of
any event or condition which has or is reasonably likely to have a
Material Adverse Effect, as determined by LaSalle in the exercise of
its commercially reasonable judgment.
17. REMEDIES UPON AN EVENT OF DEFAULT.
A. Acceleration. Upon the occurrence of an Event Of Default
described in paragraph 16.E or 16.F above, all of the Obligations
shall immediately and automatically be deemed to have been
accelerated and to be due and payable, without notice of any kind.
Upon the occurrence of any other Event Of Default, including the
expiration of any applicable cure period, all of the Obligations may,
at the option of LaSalle be accelerated for immediate payment, and
without demand, notice or legal process of any kind, be declared, and
immediately shall become, due and payable.
B. Remedies Are Cumulative. Upon the occurrence of an Event
Of Default, LaSalle may exercise from time to time any rights and
remedies available to LaSalle pursuant to the Uniform Commercial Code
and any other applicable law in addition to, and not in lieu of, any
rights and remedies expressly granted in this Agreement or in any of
the Other Agreements and all of LaSalle's rights and remedies shall
be cumulative and non-exclusive to the extent permitted by law.
C. Rights To Manage, Sell And Liquidate Collateral. Upon the
occurrence and during the continuance of an Event of Default, LaSalle
may, without notice, demand or legal process of any kind, take
possession of any or all of the Collateral (in addition to Collateral
of which LaSalle already has possession), wherever it may be found,
and for that purpose may pursue the same wherever it may be found,
and may enter into any of Borrower's premises where any of the
Collateral may be, and search for, take possession of, remove, keep
and store any of the Collateral until the same shall be sold or
otherwise disposed of, and LaSalle shall have the right to store the
same at any of Borrower's premises without cost to LaSalle, subject
to the rights of any landlord. At LaSalle's request, Borrower shall,
at Borrower's expense, assemble the Collateral and make it available
to LaSalle at one or more places to be designated by LaSalle and
reasonably convenient to LaSalle and Borrower. Borrower recognizes
that if Borrower fails to perform, observe or discharge any of its
Obligations under this Agreement or the Other Agreements, no remedy
at law will provide adequate relief to LaSalle, and Borrower agrees
that LaSalle shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual
damages. Any notification of intended disposition of any of the
Collateral required by law will be deemed reasonably and properly
given if given at least ten (10) calendar days before such
disposition. Any proceeds of any disposition by LaSalle of any of
the Collateral may be applied by LaSalle to the payment of reasonable
out-of-pocket expenses in connection with the Collateral including,
without limitation, legal expenses and reasonable attorneys' fees and
any balance of such proceeds may be applied by LaSalle toward the
payment of such of the Obligations, and in such order of application,
as LaSalle may from time to time elect.
18. INDEMNIFICATION.
Borrower agrees to defend (with counsel mutually satisfactory
to Borrower and LaSalle), protect, indemnify and hold harmless
LaSalle, each affiliate or subsidiary of LaSalle, and each of their
respective officers, directors, employees, attorneys and agents (each
an "Indemnified Party") from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature
(including, without limitation, the disbursements and the reasonable
fees of one (1) counsel (or more than one (1) counsel if separate
counsel are determined to be desirable based upon conflict of
interest considerations) for the Indemnified Parties in connection
with any investigative, administrative or judicial proceeding,
whether or not the Indemnified Party shall be designated a party
thereto), which may be imposed on, incurred by, or asserted against,
any Indemnified Party (whether direct, indirect or consequential and
whether based on any federal, state or local laws or regulations
including, without limitation, securities, environmental and
commercial laws and regulations, under common law or in equity, or
based on contract or otherwise) in any manner relating to or arising
out of this Agreement or any Other Agreement, or any act, event or
transaction related or attendant thereto, or the use or intended use
of the proceeds of the Loans or any Letters Of Credit; provided,
however, that Borrower shall not have any obligation hereunder to any
Indemnified Party with respect to, and LaSalle agrees to indemnify
and holds harmless Borrower and each of its officers, directors,
employees, attorneys and agents, for losses incurred by Borrower
from, matters caused by or resulting from the willful misconduct or
gross negligence of any Indemnified Party. To the extent that the
undertaking to indemnify set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy,
Borrower shall satisfy such undertaking to the maximum extent
permitted by applicable law. Any liability, obligation, loss,
damage, penalty, cost or expense covered by this indemnity shall be
paid promptly to each Indemnified Party, and, failing prompt payment,
shall, together with interest thereon at the rate then applicable to
Revolving Loans hereunder from the date incurred by each Indemnified
Party until paid by Borrower, be added to the Obligations of Borrower
and be secured by the Collateral. The provisions of this paragraph
shall survive the satisfaction and payment of the other Obligations
and the termination of this Agreement.
19. NOTICES.
Except as otherwise expressly provided herein, any notice
required or desired to be served, given or delivered hereunder shall
be in the form and manner specified below, and shall be addressed to
the party to the following addresses or to such other address as each
party designates to the other by Notice in the manner herein
prescribed:
If To LaSalle At: LASALLE BUSINESS CREDIT, INC.
000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: J. Xxxxx Xxxxxxxx
First Vice President and
Regional Manager
Facsimile No.: (000) 000-0000
If To Borrower At: SPORT SUPPLY GROUP, INC.
0000 Xxxxxxxx Xxxxx
Xxxxxxx Xxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxx,
Executive Vice President
and Chief Financial Officer
Facsimile No.: (000) 000-0000
With A Copy To:SPORT SUPPLY GROUP, INC.
0000 Xxxxxxxx Xxxxx
Xxxxxxx Xxxxxx, Xxxxx 00000
Attn: General Counsel
Facsimile No.: (000) 000-0000
Notice shall be deemed given hereunder if: (1) delivered personally
or otherwise actually received, (2) sent by overnight delivery
service, (3) mailed by first-class United States mail, postage
prepaid, registered or certified, with return receipt requested, or
(4) sent via telecopy machine with a duplicate signed copy sent on
the same day as provided in clause (2) above. Notice mailed as
provided in clause (3) above shall be effective upon the expiration
of three (3) Business Days after its deposit in the United States
mail, and notice telecopied as provided in clause (4) above shall be
effective upon receipt of such telecopy if the duplicate signed copy
is sent under clause (4) above. Notice given in any other manner
described in this section shall be effective upon receipt by the
addressee thereof; provided, however, that if any notice is tendered
to an addressee and delivery thereof is refused by such addressee,
such notice shall be effective upon such tender unless expressly set
forth in such notice.
20. CHOICE OF GOVERNING LAW AND CONSTRUCTION.
This Agreement and the Other Agreements are submitted by
Borrower to LaSalle for LaSalle's acceptance or rejection at
LaSalle's principal place of business as an offer by Borrower to
borrow monies from LaSalle now and from time to time hereafter, and
shall not be binding upon LaSalle or become effective until accepted
by LaSalle, in writing, at said place of business. If so accepted by
LaSalle, this Agreement and the Other Agreements shall be deemed to
have been made at said place of business. THIS AGREEMENT AND THE
OTHER AGREEMENTS SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL
LAWS OF THE STATE OF MARYLAND AS TO INTERPRETATION, ENFORCEMENT,
VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL OTHER RESPECTS, INCLUDING,
WITHOUT LIMITATION, THE LEGALITY OF THE INTEREST RATE AND OTHER
CHARGES, BUT EXCLUDING PERFECTION OF THE SECURITY INTERESTS IN THE
COLLATERAL, WHICH SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE
RELEVANT JURISDICTION. If any provision of this Agreement shall be
held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision
or remaining provisions of this Agreement.
21. FORUM SELECTION AND SERVICE OF PROCESS.
To induce LaSalle to accept this Agreement, Borrower
irrevocably agrees that, subject to LaSalle's sole and absolute
election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT,
ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT, THE OTHER
AGREEMENTS OR THE COLLATERAL SHALL BE LITIGATED IN COURTS HAVING
SITUS WITHIN THE STATE OF MARYLAND. BORROWER HEREBY CONSENTS AND
SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURTS
LOCATED WITHIN SAID STATE. BORROWER HEREBY WAIVES ANY RIGHT IT MAY
HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT
AGAINST BORROWER BY LASALLE IN ACCORDANCE WITH THIS PARAGRAPH.
22. MODIFICATION AND BENEFIT OF AGREEMENT.
This Agreement and the Other Agreements may not be modified,
altered or amended except by an agreement in writing signed by
Borrower and LaSalle. Neither Borrower nor LaSalle may sell, assign
or transfer this Agreement, or the Other Agreements or any portion
thereof including, without limitation, their respective rights,
titles, interest, remedies, powers or duties thereunder, without the
prior written consent of the other party.
23. HEADINGS OF SUBDIVISIONS.
The headings of subdivisions in this Agreement are for
convenience of reference only, and shall not govern the
interpretation of any of the provisions of this Agreement.
24. POWER OF ATTORNEY.
Borrower acknowledges and agrees that Borrower's appointment
of LaSalle as Borrower's attorney and agent-in-fact for the purposes
specified in this Agreement is an appointment coupled with an
interest and shall be irrevocable until all of the Obligations are
paid in full and this Agreement is terminated.
25. WAIVER OF JURY TRIAL; OTHER WAIVERS; CONFIDENTIALITY.
A. WAIVER OF JURY TRIAL. LASALLE AND BORROWER HEREBY WAIVE
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING WHICH
PERTAINS DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, ANY OF THE OTHER
AGREEMENTS, THE OBLIGATIONS, THE COLLATERAL, ANY ALLEGED TORTIOUS
CONDUCT OF BORROWER OR LASALLE OR WHICH, IN ANY WAY, DIRECTLY OR
INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP BETWEEN
BORROWER AND LASALLE. IN NO EVENT SHALL LASALLE BE LIABLE FOR LOST
PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.
B. WAIVER OF NOTICE OF REPOSSESSION OR REPLEVIN OF
COLLATERAL. BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING
OF ANY KIND PRIOR TO THE EXERCISE BY LASALLE OF ITS RIGHTS TO
REPOSSESS THE COLLATERAL OF BORROWER WITHOUT JUDICIAL PROCESS OR TO
REPLEVY, ATTACH OR LEVY UPON SUCH COLLATERAL WITHOUT PRIOR NOTICE OR
HEARING.
C. Waiver Of Demand, Presentment, Protest And Notice. Except
as expressly required by the terms of this Agreement, Borrower hereby
waives demand, presentment, protest and notice of nonpayment, and
further waives the benefit of all valuation, appraisal and exemption
laws.
D. No Continuing Waivers By LaSalle. LaSalle's failure, at
any time or times hereafter, to require strict performance by
Borrower of any provision of this Agreement or any of the Other
Agreements shall not waive, affect or diminish any right of LaSalle
thereafter to demand strict compliance and performance therewith.
Any suspension or waiver by LaSalle of an Event Of Default under this
Agreement or any default under any of the Other Agreements shall not
suspend, waive or affect any other Event Of Default under this
Agreement or any other default under any of the Other Agreements,
whether the same is prior or subsequent thereto and whether of the
same or of a different kind or character. No delay on the part of
LaSalle in the exercise of any right or remedy under this Agreement
or any Other Agreement shall preclude other or further exercise
thereof or the exercise of any right or remedy. None of the
undertakings, agreements, warranties, covenants and representations
of Borrower contained in this Agreement or any of the Other
Agreements and no Event Of Default under this Agreement or default
under any of the Other Agreements shall be deemed to have been
suspended or waived by LaSalle unless such suspension or waiver is in
writing, signed by a duly authorized officer of LaSalle and directed
to Borrower specifying such suspension or waiver.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement under seal as of the 9th day of September, 1997.
LASALLE BUSINESS CREDIT, INC.
By:____________________________(SEAL)
Name: ______________________
Title: _____________________
SPORT SUPPLY GROUP, INC.
By:/s/ Xxxx X. Xxxxxx (SEAL)
Name: Xxxx X. Xxxxxx
Title: Executive Vice President
and Chief Financial Officer
ACKNOWLEDGMENTS
STATE OF MARYLAND, CITY/COUNTY OF __________________, TO WIT:
I HEREBY CERTIFY that on this ____ day of September, 1997,
before me, the undersigned Notary Public of the State of Maryland, in
and for the City/County of ______________________, personally
appeared ___________________________, and acknowledged himself to be
the ___________________ of LASALLE BUSINESS CREDIT, INC., a Delaware
corporation, and that he, as such ____________________, being
authorized so to do, executed the foregoing instrument for the
purposes therein contained by signing the name of LASALLE BUSINESS
CREDIT, INC., by himself as ____________________.
IN WITNESS MY Hand and Notarial Seal.
___________________________(SEAL)
NOTARY PUBLIC
My Commission Expires:
______________________
STATE OF TEXAS, COUNTY OF DALLAS, TO WIT:
I HEREBY CERTIFY that on this 9th day of September, 1997, before me,
the undersigned Notary Public of the jurisdiction aforesaid,
personally appeared Xxxx X. Xxxxxx, and acknowledged himself
to be the Executive Vice President and Chief Financial Officer of
SPORT SUPPLY GROUP, INC., a Delaware corporation, and that he,
as such Executive Vice President and Chief Financial Officer, being
authorized so to do, executed the foregoing instrument for the
purposes therein contained by signing the name of SPORT SUPPLY
GROUP, INC., by himself as Executive Vice President and Chief
Financial Officer.
IN WITNESS MY Hand and Notarial Seal.
/s/ Xxxxx Xxxxxxx (SEAL)
NOTARY PUBLIC
My Commission Expires:
February 28, 2001
EXHIBIT A
Officer's Certificate
This Certificate is submitted pursuant to paragraph 11.I of the
Second Amended and Restated Loan and Security Agreement dated
_____________ ("Loan Agreement") between LaSalle Business Credit,
Inc. ("LaSalle") and Sport Supply Group, Inc. ("Borrower").
The undersigned, in his capacity as the _______________________
of the Borrower, hereby certifies to LaSalle that as of the date of
this Agreement:
1. The undersigned is the _________________ of the Borrower.
2. To the best of the undersigned's knowledge, information and
belief, there exists no event or circumstance which is or which with
the passage of time, the giving of notice, or both would constitute
an Event Of Default, as that term is defined in the Loan Agreement,
or, if such an event or circumstance exists, a writing attached
hereto specifies the nature thereof, the period of existence thereof
and the action that Borrower has taken or proposes to take with
respect thereto.
3. To the best of the undersigned's knowledge, information and
belief, no material adverse change in the condition, financial or
otherwise, business, property, or results of operations of Borrower
has occurred since _______ or, if such a change has occurred, a
writing attached hereto specifies the nature thereof and the action
that Borrower has taken or proposes to take with respect thereto.
4. All insurance premiums due as of such date have been paid.
5. All taxes due as of such date have been paid or, for those
taxes which have not been paid, or, if any taxes have not been paid,
a writing attached hereto describes the nature and amount of such
taxes, and sets forth Borrower's rationale for not paying such taxes
and the action that Borrower has taken or proposes to take with
respect thereto.
6. To the best of the undersigned's knowledge, after
appropriate inquiry, except as previously disclosed to LaSalle in
writing, no material litigation, investigation or proceeding, or
injunction, writ or restraining order is pending or threatened
against the Borrower, or, if any litigation, investigation or
proceeding, or injunction, writ or restraining order is pending or
threatened against the Borrower, a writing attached hereto specifies
the nature thereof.
7. Borrower is in compliance in all material respects with the
representations, warranties and covenants in the Loan Agreement
(except with respect to represents and warranties which are expressly
given as of a specific date), or, if Borrower is not in compliance in
all material respects with any representations, warranties or
covenants in the Loan Agreement, a writing attached hereto specifies
the nature thereof, the period of existence thereof and the action
that Borrower has taken or proposes to take with respect thereto.
8. Attached hereto is a true and correct calculation of the
financial covenants contained in paragraph 14.L of the Loan
Agreement.
SPORT SUPPLY GROUP, INC.
By:
_______________________(SEAL)
Name: _____________________
Title: _____________________
SCHEDULE 13.B
BORROWER'S LOCATIONS
Location of Books and Records:
Principal Place of Business:
Locations of Collateral:
Post Office Boxes:
SCHEDULE 13.D
EXISTING LIENS
SCHEDULE 13.L
TRADENAMES AND DIVISION NAMES
SCHEDULE 13.V
INTELLECTUAL PROPERTIES
SCHEDULE 14.G
OTHER INDEBTEDNESS
SCHEDULE 14.0
OTHER BANK ACCOUNTS
