RESTATED REVOLVING CREDIT
AND TERM LOAN AGREEMENT
THIS AGREEMENT, made as of the 28th day of February, 1998, by and between FIRST
TEAM SPORTS, INC., a Minnesota corporation (the "Borrower"), and MARQUETTE
CAPITAL BANK, N.A., a national banking association with its main banking house
located in Minneapolis, Minnesota ("Marquette") and, in its capacity as agent
for the "Banks" (hereinafter defined) (the "Agent") and LASALLE NATIONAL BANK, a
national banking association ("LaSalle") and FIRSTAR BANK MILWAUKEE, N.A., a
national banking association ("Firstar") (Marquette, LaSalle and Firstar are
sometimes referred to herein collectively as the "Banks").
W I T N E S S E T H:
WHEREAS, the Borrower and the Banks previously entered into that certain
Restated Revolving Credit and Term Loan Agreement dated as of March 6, 1995 (the
"Original Loan Agreement"); and
WHEREAS, the Borrower has recently acquired certain subsidiaries who will
benefit from and guarantee the loans described herein; and
WHEREAS, the Borrower and the Banks desire to modify certain terms of the
Original Loan Agreement; and
WHEREAS, this Restated Revolving Credit and Term Loan Agreement constitutes an
amendment and restatement of the Original Loan Agreement; and
WHEREAS, the Borrower has requested and the Banks have agreed to make a
revolving credit facility available to the Borrower, in an aggregate amount not
exceeding $15,000,000 (the "Revolving Loan"); and
WHEREAS, Marquette has also made a term credit facility available to the
Borrower, in an aggregate amount not exceeding $1,000,000 (the "Term Loan") (the
Revolving Loan and the Term Loan are referred to herein collectively as the
"Loans"); and
WHEREAS, the Banks have purchased the following amounts of the "Revolving Loan"
established pursuant to this Credit Agreement:
Bank Amount Percentage
Marquette $6,000,000 40%
LaSalle $6,000,000 40%
Firstar $3,000,000 20%
WHEREAS, the Banks and the Borrower desire to set forth their respective rights
and obligations relating to the Loans in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. DEFINED TERMS. As used in this Agreement, the following terms shall have the
meanings set out respectively after each (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
A. Affiliate: The Guarantors and any other person or entity (i) which
directly or indirectly through one or more intermediaries controls, or
is controlled by, or is under common control with, the Borrower or any
of its subsidiaries, or (ii) five percent (5%) or more of the equity
interest of which is held beneficially or of record by the Borrower or
any of its subsidiaries. Control for purposes of this definition means
the possession, directly or indirectly, of the power to cause the
direction of management and policies of a person or entity, whether
through the ownership of voting securities or otherwise.
B. After-tax Net Income: After-tax earnings from continuing operations.
C. Borrower's Compliance Certificate: The monthly compliance
certificate in the form attached hereto as Exhibit A to be delivered by
the Borrower to the Agent, within thirty (30) days after the end of
each calendar month.
D. Borrower Documents: collectively, this Agreement, the Notes, the
Security Agreement, the Guaranties, the Guarantor Security Agreements
and the Financing Statements, and any and all other documents,
instruments and agreements executed by the Borrower and delivered to
the Banks in connection with the financing transactions contemplated
hereby.
E. Borrower Obligations: collectively, the payment and performance of
the Revolving Notes, the Term Note and any and all other liabilities
and indebtedness of the Borrower to the Banks.
F. Collateral: the collateral as defined in the Security Agreement and
the Guarantor Security Agreements.
G. Events of Default: as defined in Section 10 hereof.
H. Expiration Date: the date that first occurs: (i) July 1, 1999, or
(ii) the occurrence of an Event of Default.
I. Financing Statements: UCC-1 Financing Statements naming the Borrower
and the Guarantors as debtors and the Banks as secured parties and
describing the Collateral as the property covered thereby.
J. Guaranties: collectively, the guaranties of even date herewith
executed by the Guarantors in favor of the Banks pursuant to which the
Guarantors have guaranteed payment of all of the Obligations.
K. Guarantor Security Agreements: collectively, the guarantor security
agreements of even date herewith, executed by the Guarantors, as
debtor, and delivered to the Agent, naming the Banks as secured parties
and Marquette as agent for the Banks, and all exhibits and schedules
attached thereto.
L. Guarantor(s): collectively or individually, as the context requires,
First Team Sports GmbH, Hespeler Hockey Company, Hespeler Hockey
Holding, Inc. and Mothership Distribution, Inc.
M. Indebtedness: collectively, (i) all items which, in accordance with
generally accepted accounting principles, would be included in the
liability side of a balance sheet on the date as of which Indebtedness
is to be determined excluding capital stock, surplus capital and earned
surplus, (ii) all indebtedness secured by any mortgage, pledge,
security interest or lien existing on property owned subject to such
mortgage, pledge, security interest or lien whether or not the
indebtedness secured thereby shall have been assumed, and (iii) all
amounts representing the capitalization of rentals in accordance with
generally accepted accounting principles.
N. Letters of Credit: collectively, any letters of credit issued by the
Banks for the account of the Borrower pursuant to Section 2.A. hereof.
O. Net Worth: Shareholder's equity computed on the basis of generally
accepted accounting principles specifically excluding officer,
director, or shareholder loans and specifically including goodwill and
the value of all license agreements as identified on the Borrower's
financial statements.
P. Notes: collectively, the Revolving Notes and the Term Notes.
Q. Outstanding Indebtedness: the sum of (i) the aggregate outstanding
loan balance under the Revolving Notes plus (ii) the face amount of any
outstanding Letters of Credit.
R. Permitted Interests: those liens and encumbrances listed on Exhibit
B attached hereto.
S. Revolving Commitment of the Banks: the obligation of the Banks to
make loans to the Borrower under Section 2.A. hereof and the Revolving
Notes up to an aggregate principal amount at any one time outstanding
equal to the Revolving Loan Amount.
T. Revolving Loan: the $15,000,000 revolving loan of even date herewith
made by the Banks to the Borrower and evidenced by the Revolving Notes.
U. Revolving Loan Amount: $15,000,000.
V. Revolving Notes: collectively, that certain restated promissory note
of even date herewith, in the original principal amount of $6,000,000
payable to Marquette (the "Marquette Note"), that certain restated
promissory note of even date herewith, in the original principal amount
of $6,000,000 payable to LaSalle (the "LaSalle Note") and that certain
restated promissory note of even date herewith, in the original
principal amount of $3,000,000 payable to Firstar (the "Firstar Note")
each as heretofore and hereinafter amended and extended with a
termination date of July 1, 1999.
W. Security Agreement: the Security Agreement of even date herewith
executed by the Borrower and delivered to the Agent, naming the Banks
as secured parties and Marquette as agent for the Banks, and all
exhibits and schedules attached thereto.
X. Term Loan: the term loans made by Marquette to the Borrower
hereunder in an aggregate amount not to exceed the Term Loan Amount.
Y. Term Loan Amount: up to $1,000,000
Z. Term Notes: collectively or individually, as the context requires,
any promissory note(s) executed by the Borrower in favor of Marquette
evidencing any advance(s) made against the Term Loan pursuant to
Section 2.B.
2. LINES OF CREDIT.
A. Revolving Loan. Subject to and upon the terms, covenants and
conditions hereinafter set forth, the Banks hereby agree to make loans
to the Borrower under this Section 2.A. from time to time until and
including the Expiration Date (and thereafter until and including July
1 of each succeeding calendar year if no "Event of Default" has
occurred and if this Agreement is extended in writing by the Banks and
the Borrower for additional one year period(s) pursuant to Section
13.J. herein), at such time and in such amount as to each loan as the
Borrower shall request, up to but not exceeding in aggregate principal
amount at any one time outstanding the Revolving Loan Amount. In
addition, at the request of Borrower, which request shall be made by
the execution and delivery by Borrower to the Agent of the Banks'
standard form application for letters of credit duly completed to
reflect the letter of credit being requested, the Banks will make
advances pursuant to the Revolving Commitment of the Banks in the form
of a letter of credit, the form and substance of which shall be
determined by the Banks, but without limiting the generality of the
foregoing, the Banks may require a draft thereunder to be accompanied
by such documentation as the Banks may deem necessary. In no event
shall the Banks be required to issue any such letter of credit with a
term extending beyond the Expiration Date. Any and all letters of
credit issued by the Banks shall be treated as an advance under the
Revolving Loan. The obligation of Borrower to reimburse the Banks for
any draft(s) submitted under and paid by the Banks pursuant to any such
letter(s) of credit shall be evidenced by the Revolving Notes. In no
event shall the Banks be required to issue any letter(s) of credit
hereunder in an aggregate amount in excess of $2,000,000.00. Subject to
the foregoing and upon the terms and conditions set forth herein, the
Borrower may borrow, repay and re-borrow within the limit of the
Revolving Loan Amount under this Section 2.A. from the date hereof to
and including the Expiration Date.
B. Term Loan. Subject to and upon the terms, covenants and conditions
hereinafter set forth, Marquette may make loans to the Borrower in
addition to the Revolving Loans, in Marquette's sole and absolute
discretion pursuant to this Section 2.B. from time to time until and
including the Expiration Date, at such time and in such amount as to
each loan as the Borrower may request, up to but not exceeding in
aggregate principal amount the Term Loan Amount.
3. PROMISSORY NOTES.
A. Revolving Notes. The obligation of the Borrower to repay any and all
loans made and/or Letters of Credit issued, drawn upon and paid
pursuant to Section 2.A. hereof shall be evidenced by the Revolving
Notes. Reference is hereby made to the Revolving Notes for the terms
thereof relating to maturity, repayment schedule, interest rate and
other matters governing the repayment of the loans made hereunder.
Notwithstanding any provision of the Revolving Notes, however, interest
shall be payable at the rate provided for therein only on such portion
of the loan proceeds as actually have been disbursed hereunder pursuant
to Section 2.A. hereof and remain unpaid. The Banks' records shall be
conclusive evidence (absent manifest error) as to whether the Borrower
has authorized any advance made by the Banks hereunder pursuant to
Section 2.A. hereof and as to the amount of advances which have been
made hereunder and remain unpaid.
B. Term Notes. The obligation of the Borrower to repay any and all
loans pursuant to Section 2.B. hereof shall be evidenced by the Term
Notes. At the time any loan is made by Marquette to the Borrower
pursuant to Section 2.B. hereof, the Borrower shall execute a Term Note
in the original principal amount equal to the amount of such loan and
payable to Marquette, which Term Note shall be in a form acceptable to
Marquette.
4. MANNER OF BORROWING. Each time the Borrower desires to obtain a loan advance
pursuant to Section 2.A. or 2.B. hereof, any one of the following people shall
request such loan on behalf of the Borrower either orally or in writing: (i)
Xxxx Xxxxx, Xxxxxx Xxxxxx; or (ii) any person designated as the Borrower's agent
by the Board of Directors of the Borrower in a writing delivered to the Agent.
Except as otherwise instructed in writing by such officer, agent or person, the
Banks may disburse loan proceeds by depositing such in the Borrower's account at
Marquette. The Borrower shall be obligated to repay all advances notwithstanding
the fact that the person requesting the same was not in fact authorized to do
so.
5. COLLATERAL. As a condition precedent to the establishment of the Revolving
Commitment of the Banks and the agreement of the Banks to make the Revolving
Loan and of Marquette to make the Term Loan, the Borrower agrees as follows:
A. Security Agreement. The Borrower shall have executed and delivered
to the Agent the Security Agreement pursuant to which the Borrower
shall have granted a valid and perfected first security interest
(except as expressly otherwise provided therein) to the Banks in and to
the Collateral to secure the payment and performance of the Notes and
any and all other liabilities and indebtedness of the Borrower to the
Banks.
B. Guarantor Security Agreements. The Guarantors shall have executed
and delivered to the Agent the Guarantor Security Agreements pursuant
to which the Guarantors shall have granted a valid and perfected first
security interest (except as expressly otherwise provided therein) to
the Banks in and to the Collateral to secure the payment and
performance of the Notes and any and all other liabilities and
indebtedness of the Borrower or the Guarantors to the Banks.
C. Financing Statements. The Borrower and the Guarantors shall have
executed and delivered to the Agent for filing with the Secretary of
State of the State of Minnesota, and the appropriate county office or
offices in Minnesota and each and every other country, state,
jurisdiction and county in which all or any part of the Collateral is
located, UCC-1 Financing Statements (or equivalent documents) naming
the Borrower and the Guarantors as debtors and the Banks as secured
parties (and Marquette as the agent of the Banks) and describing the
Collateral as the property covered thereby, together with any and all
other appropriate UCC-1 Financing Statements and other documents and
instruments as the Banks may request in order to perfect the security
interest granted to it in and to the Collateral pursuant to the
Security Agreement and the Guarantor Security Agreements.
6. BORROWER REPRESENTATIONS. In order to induce the Banks to make advances
hereunder, the Borrower hereby warrants and represents to the Banks as follows:
A. Corporate Existence and Power. The Borrower is a corporation duly
organized and validly existing in the State of Minnesota, and is fully
qualified to do business and in good standing in the State of
Minnesota, and in every other jurisdiction wherein the nature of its
businesses or the character of its properties makes such qualification
necessary, and has all requisite power and authority to carry on its
businesses as now conducted and as presently proposed to be conducted.
B. Corporate Authority. The Borrower has full power and authority to
execute and deliver the Borrower Documents and to incur and perform its
obligations hereunder and thereunder; the execution, delivery and
performance by the Borrower of the Borrower Documents and any and all
other documents and transactions contemplated hereby or thereby have
been duly authorized by all necessary corporate action, will not
violate any provision of law or the Articles of Incorporation or Bylaws
of the Borrower or result in the breach of, constitute a default under,
or create or give rise to any lien under, any indenture or other
agreement or instrument to which the Borrower is a party or by which
the Borrower or its property may be bound or affected; and the Borrower
Documents have been executed and delivered to the Banks by the
corporate officers of the Borrower who have been authorized by the
Borrower's Board of Directors, and who are authorized by and specified
in the Borrower's Bylaws, to execute and so deliver such agreements.
C. Enforceability. The Borrower Documents each constitute the legal,
valid and binding obligations of the Borrower enforceable in accordance
with their respective terms.
D. Financial Condition. The financial statements of the Borrower
heretofore furnished to the Banks are complete and correct in all
material respects and fairly present the financial condition of the
Borrower at the dates of such statements and the results of its
operations for the period ended on said date, and have been prepared in
accordance with generally accepted accounting principles, consistently
applied. Since the most recent set of financial statements delivered by
the Borrower to the Banks, there have been no material adverse changes
in the financial condition of the Borrower.
E. Litigation. Except as disclosed on Exhibit C hereto, there is no
action, suit or proceeding pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower which, if
adversely determined, would have a material adverse effect on the
condition (financial or otherwise), business, properties or assets of
the Borrower or which would question the validity of the Borrower
Documents or any instrument, document or other agreement related hereto
or required hereby, or impair the ability of the Borrower to perform
its obligations under the foregoing agreements.
F. Licenses and Infringement. Except as disclosed on Exhibit D hereto,
the Borrower possesses adequate licenses, permits, franchises, patents,
copyrights, trademarks and trade names, or rights thereto, to conduct
its respective business substantially as now conducted and as presently
proposed to be conducted. There does not exist and there is no reason
to anticipate that there may exist, any liability to the Borrower with
respect to any claim of infringement regarding any franchise, patent,
copyright, trademark or trade name possessed or used by the Borrower.
G. Default. The Borrower is not in default of a material provision
under any material agreement, instrument, decree or order to which it
is a party or by which it or its respective property is bound or
affected.
H. Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any
governmental authority or any third party is required in connection
with the execution and delivery of the Borrower Documents, or any of
the agreements or instruments herein mentioned to which the Borrower is
a party or the carrying out or performance of any of the transactions
required or contemplated hereby or thereby or, if required, such
consent, approval, order or authorization has been obtained or such
registration, declaration or filing has been accomplished or such
notice has been given prior to the date hereof and the Banks have been
provided with a copy of such consent, approval, order, authorization,
registration, declaration, filing or notice, as the case may be.
I. Taxes. The Borrower has filed all tax returns required to be filed
and either paid all taxes shown thereon to be due, including interest
and penalties, which are not being contested in good faith and by
appropriate proceedings, or provided adequate reserves for payment
thereof, and the Borrower has no any information or knowledge of any
objections to or claims for additional taxes in respect of federal
income or excess profits tax returns for prior years.
J. Titles, etc. The Borrower has good title to all of its properties
and assets, including, without limitation, the Collateral, free and
clear of all mortgages, liens and encumbrances, except the Permitted
Interests and those minor irregularities in title which do not
interfere with the occupation, use and enjoyment by the Borrower of
such properties and assets in the normal course of its businesses as
presently conducted or materially impair the value thereof for such
businesses ("Minor Irregularities"), and except such liens and
encumbrances as may from time to time be consented to in writing by the
Banks. Except for Permitted Interests, the security interest granted to
the Banks by the Borrower pursuant to the Security Agreement
constitutes a valid and perfected first lien in and to the Collateral.
K. Pension Plans. The Borrower has not established or maintained, or
made any contributions to, any employee benefit plan which is subject
to Part 3 of Subtitle B of Title 1 of ERISA or, if such a plan has been
so established, maintained or contributed to, such plan did not have an
"accumulated funding deficiency" (as that term is defined in Section
302 of ERISA) as of the date hereof, and, without limiting the
generality of the foregoing, the Borrower has not incurred any material
liability to the Pension Benefit Guaranty Corporation with respect to
any such plan.
L. Use of Loans. The Borrower is not engaged principally, or as one of
its important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System),
and no part of the proceeds of any loan hereunder will be used to
purchase or carry any such margin stock or to extend credit to others
for the purpose of purchasing or carrying any such margin stock.
Each of the foregoing warranties and representations shall be deemed to be
repeated and reaffirmed on and as of the date any loan is made hereunder by the
Banks to the Borrower pursuant to Section 2 hereof.
7. GUARANTOR REPRESENTATIONS. In order to induce the Banks to make advances
hereunder, each of the Guarantors hereby, jointly and severally, warrants and
represents to the Banks as follows:
A. Corporate Existence and Power.
(i) First Team Sports GmbH, is a corporation duly organized and
validly existing in the Country of Austria, and is fully
qualified to do business and in good standing in the Country
of Austria, the State of Minnesota, and in every other
jurisdiction wherein the nature of its businesses or the
character of its properties makes such qualification
necessary, and has all requisite power and authority to carry
on its businesses as now conducted and as presently proposed
to be conducted.
(ii) Hespeler Hockey Company, is a corporation duly organized and
validly existing in Nova Scotia, and is fully qualified to do
business and in good standing in Nova Scotia, the State of
Minnesota, and in every other jurisdiction wherein the nature
of its businesses or the character of its properties makes
such qualification necessary, and has all requisite power and
authority to carry on its businesses as now conducted and as
presently proposed to be conducted.
(iii) Hespeler Hockey Holding, Inc. is a corporation duly organized
and validly existing in the State of Minnesota, and is fully
qualified to do business and in good standing in the State of
Minnesota, and in every other jurisdiction wherein the nature
of its businesses or the character of its properties makes
such qualification necessary, and has all requisite power and
authority to carry on its businesses as now conducted and as
presently proposed to be conducted.
(iv) Mothership Distribution, Inc. is a corporation duly organized
and validly existing in the State of Minnesota, and is fully
qualified to do business and in good standing in the State of
Minnesota, and in every other jurisdiction wherein the nature
of its businesses or the character of its properties makes
such qualification necessary, and has all requisite power and
authority to carry on its businesses as now conducted and as
presently proposed to be conducted.
B. Corporate Authority. Each of the Guarantors has full power and
authority to execute and deliver the Guaranties and Guarantor Security
Agreements and to incur and perform its obligations hereunder and
thereunder; the execution, delivery and performance by the Guarantor of
the Guaranties and Guarantor Security Agreements and any and all other
documents and transactions contemplated hereby or thereby have been
duly authorized by all necessary corporate action, will not violate any
provision of law or the Articles of Incorporation or Bylaws of the
Guarantor or result in the breach of, constitute a default under, or
create or give rise to any lien under, any indenture or other agreement
or instrument to which the Guarantor is a party or by which the
Guarantor or its property may be bound or affected; and the Guaranties
and Guarantor Security Agreements have been executed and delivered to
the Banks by the corporate officers of the Guarantor who have been
authorized by the Guarantor's Board of Directors, and who are
authorized by and specified in the Guarantor's Bylaws, to execute and
so deliver such agreements.
C. Enforceability. The Guaranties and Guarantor Security Agreements
each constitute the legal, valid and binding obligations of the
Guarantor enforceable in accordance with their respective terms.
D. Financial Condition. The financial statements of the Guarantor
heretofore furnished to the Banks are complete and correct in all
material respects and fairly present the financial condition of the
Guarantor at the dates of such statements and the results of its
operations for the period ended on said date, and have been prepared in
accordance with generally accepted accounting principles, consistently
applied. Since the most recent set of financial statements delivered by
the Guarantor to the Banks, there have been no material adverse changes
in the financial condition of the Guarantor.
E. Litigation. Except as disclosed on Exhibit E hereto, there is no
action, suit or proceeding pending or, to the knowledge of the
Guarantor, threatened against or affecting the Guarantor which, if
adversely determined, would have a material adverse effect on the
condition (financial or otherwise), business, properties or assets of
the Guarantor or which would question the validity of the Guaranties
and Guarantor Security Agreements or any instrument, document or other
agreement related hereto or required hereby, or impair the ability of
the Guarantor to perform its obligations under the foregoing
agreements.
F. Licenses and Infringement. Except as disclosed on Exhibit F hereto,
the Guarantor possesses adequate licenses, permits, franchises,
patents, copyrights, trademarks and trade names, or rights thereto, to
conduct its respective business substantially as now conducted and as
presently proposed to be conducted. There does not exist and there is
no reason to anticipate that there may exist, any liability to the
Guarantor with respect to any claim of infringement regarding any
franchise, patent, copyright, trademark or trade name possessed or used
by the Guarantor.
G. Default. The Guarantor is not in default of a material provision
under any material agreement, instrument, decree or order to which it
is a party or by which it or its respective property is bound or
affected.
H. Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any
governmental authority or any third party is required in connection
with the execution and delivery of the Guaranties and Guarantor
Security Agreements, or any of the agreements or instruments herein
mentioned to which the Guarantor is a party or the carrying out or
performance of any of the transactions required or contemplated hereby
or thereby or, if required, such consent, approval, order or
authorization has been obtained or such registration, declaration or
filing has been accomplished or such notice has been given prior to the
date hereof and the Banks have been provided with a copy of such
consent, approval, order, authorization, registration, declaration,
filing or notice, as the case may be.
I. Taxes. The Guarantor has filed all tax returns required to be filed
and either paid all taxes shown thereon to be due, including interest
and penalties, which are not being contested in good faith and by
appropriate proceedings, or provided adequate reserves for payment
thereof, and the Guarantor has no any information or knowledge of any
objections to or claims for additional taxes in respect of federal
income or excess profits tax returns for prior years.
J. Titles, etc. The Guarantor has good title to all of its properties
and assets, including, without limitation, the Collateral, free and
clear of all mortgages, liens and encumbrances, except the Permitted
Interests and those minor irregularities in title which do not
interfere with the occupation, use and enjoyment by the Guarantor of
such properties and assets in the normal course of its businesses as
presently conducted or materially impair the value thereof for such
businesses, and except such liens and encumbrances as may from time to
time be consented to in writing by the Banks. Except for Permitted
Interests, the security interest granted to the Banks by the Guarantor
pursuant to the Guarantor Security Agreement constitutes a valid and
perfected first lien in and to the Collateral.
K. Pension Plans. The Guarantor has not established or maintained, or
made any contributions to, any employee benefit plan which is subject
to Part 3 of Subtitle B of Title 1 of ERISA or, if such a plan has been
so established, maintained or contributed to, such plan did not have an
"accumulated funding deficiency" (as that term is defined in Section
302 of ERISA) as of the date hereof, and, without limiting the
generality of the foregoing, the Guarantor has not incurred any
material liability to the Pension Benefit Guaranty Corporation with
respect to any such plan.
L. Use of Loans. The Guarantor is not engaged principally, or as one of
its important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System),
and no part of the proceeds of any loan hereunder will be used to
purchase or carry any such margin stock or to extend credit to others
for the purpose of purchasing or carrying any such margin stock.
Each of the foregoing warranties and representations shall be deemed to be
repeated and reaffirmed on and as of the date any loan is made hereunder by the
Banks to the Guarantor pursuant to Section 2 hereof.
8. COVENANTS OF THE BORROWER. On and after the date hereof and until the payment
in full of the Notes and all of the other Borrower's Obligations, and the
performance of all other obligations of the Borrower hereunder, and so long as
any portion of the Revolving Commitment of the Banks or the Term Loan remains in
full force and effect, the Borrower agrees that, unless the Banks shall
otherwise consent in writing:
A. Financial Statements; Other Information. The Borrower shall deliver
to each of the Banks:
(i) as soon as available, and in any event within 90 days
after the end of each fiscal year of the Borrower, a copy of
the annual audit report of the Borrower with the unqualified
opinion of independent certified public accountants selected
by the Borrower and reasonably acceptable to the Banks, which
annual report shall include a consolidated balance sheet of
the Borrower and the Guarantors, and related statements of
income, retained earnings and changes in financial position of
the Borrower and the Guarantors for the fiscal year then
ended, all in reasonable detail and all prepared in accordance
with generally accepted accounting principles applied on a
basis consistent with the accounting practices applied in the
annual financial statements referred to in Section 6.D.,
together with (i) a report signed by such accountants stating
that in making the investigations necessary for such opinion
they obtained no knowledge, except as specifically stated, of
any Event of Default hereunder or of any event or circumstance
which with notice or lapse of time or both would constitute
such an Event of Default and all relevant facts in reasonable
detail to evidence, and the computations as to, whether or not
the Borrower is in compliance with the requirements set forth
in Section 8 hereof; (ii) any management letter(s) prepared by
the Borrower's accountants; and (iii) a certificate of the
chief financial officer of the Borrower in the form attached
hereto as Exhibit G stating that such financial statements
have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with the
accounting practices reflected in the annual financial
statements referred to in Section 6.D. and whether or not he
has knowledge of the occurrence of any Event of Default
hereunder or of any event not theretofore reported and
remedied which with notice or lapse of time or both would
constitute such an Event of Default and, if so, stating in
reasonable detail the facts with respect thereto;
(ii) as soon as available and in any event within thirty (30)
days after the end of each calendar month, individual,
consolidated and consolidating financial statements of the
Borrower and the Guarantors (including balance sheets as of
the end of such month and related statements of income and
retained earnings for such monthly period and for the year to
date), in reasonable detail, all prepared in accordance with
generally accepted accounting principles applied on a basis
consistent with the accounting practices reflected in the
annual financial statements referred to in Section 6.D. and
certified by the chief financial officer of the Borrower;
subject, however, to year-end audit adjustments, and
accompanied by a certificate of said officer stating (i) that
such financial statements have been prepared in accordance
with generally accepted accounting principles applied on a
basis consistent with the accounting practices reflected in
the annual financial statements referred to in Section 6.D.,
and (ii) whether or not he has knowledge of the occurrence of
any Event of Default hereunder or of any event or circumstance
which with notice or lapse of time or both would constitute
such an Event of Default and, if so, stating in reasonable
detail the facts with respect thereto and (iii) all relevant
facts in reasonable detail to evidence, and the computations
as to, whether or not the Borrower is in compliance with the
requirements set forth in Section 8 hereof;
(iii) within thirty (30) days after the end of each calendar
month, a monthly Borrower's Compliance Certificate and a
current "inventory opportunity buy report";
(iv) within fifty-five (55) days after the end of each
calendar quarter, a copy of the quarterly 10-Q Statement filed
by the Borrower with the Securities and Exchange Commission;
(v) prior to each year end, a projection for the following
fiscal year;
(vi) as soon as available, and in any event within one hundred
(100) days after the end of each fiscal year, a copy of the
10-K Statement filed by the Borrower with the Securities and
Exchange Commission and any and all other filings made at any
time by the Borrower with the Securities and Exchange
Commission or any other state or federal agency;
(vii) such other information respecting the financial
condition and results of operations of the Borrower or the
Guarantors as the Banks may from time to time reasonably
request.
B. Taxes and Claims. The Borrower shall pay and discharge all taxes,
assessments and governmental charges or levies imposed upon it or upon
its respective income or profits, or upon any of its assets or
properties, prior to the date on which penalties attach thereto, and
all lawful claims which, if unpaid, might become a lien or charge upon
its respective property or assets; provided, however, that the Borrower
shall not be required to pay any such tax, assessment, charge, levy or
claim the payment of which is being contested in good faith and by
proper proceedings and for which it shall have set aside on its books
adequate reserves therefor.
C. Insurance. The Borrower shall maintain insurance coverage with
responsible insurance companies licensed to do business in the State of
Minnesota (or, in the case of any Collateral located in any other
state, then in such state) in such amounts and against such risks as is
reasonably requested by the Banks or as required by law, including,
without limitation, property, hazard, fire, wind, hail, theft,
collapse, comprehensive general public liability, product liability and
business interruption insurance, and worker's compensation or similar
insurance. The Borrower shall furnish to the Agent full information and
written evidence as to the insurance maintained by the Borrower.
D. Maintenance of Existence; Conduct of Business. The Borrower shall
maintain, its corporate existence and preserve all of its rights,
privileges and franchises necessary in the normal conduct of its
business; conduct its business in an orderly, efficient and regular
manner.
E. Maintenance of Properties. The Borrower shall keep all of the assets
and properties necessary in its respective business, including, without
limitation, any tangible Collateral, in good working order and
condition, ordinary wear and tear and the termination of service of
obsolete or unnecessary equipment excepted.
F. Compliance with Applicable Laws. The Borrower shall comply with the
requirements of all applicable state and federal laws, and of all
rules, regulations and orders of any governmental or other authority or
agency, a breach of which would materially and adversely affect its
respective business or credit, except where contested in good faith and
by proper proceedings.
G. Litigation. The Borrower shall promptly provide the Agent notice in
writing of all litigation and of all proceedings by or before any court
or governmental or regulatory agency affecting the Borrower, except
litigation or proceedings which, if adversely determined, would not
materially affect the financial condition or business of the Borrower.
H. Liens. The Borrower will not create, incur, assume or suffer to
exist any mortgage, lease, deed of trust, pledge, lien, security
interest, or other charge or encumbrance of any nature on any of its
assets, now owned or hereafter acquired, securing any indebtedness or
obligation to the Banks, except (1) the Permitted Interests, and Minor
Irregularities and (2) any security interest granted herein or by any
document related hereto to the Banks or consented to in writing by the
Banks.
I. Access to Books and Inspection. The Borrower shall at all times keep
proper books of record and accounts for itself, and, upon request of
the Banks, the Borrower shall provide any duly authorized
representative of the Banks access during normal business hours to, and
permit such representative to examine, make extracts or a reasonable
number of copies from, any and all books, records and documents in the
Borrower's possession or control relating to the Borrower's affairs, to
conduct collateral audits from time to time and to inspect any of its
facilities and properties; provided, however, that the Banks shall
treat all such books and records as confidential and shall only be
permitted to disclose the information contained therein to their
respective legal counsel, independent public accountants, any other
participating banks, or in connection with any action to collect the
Notes or to enforce this Agreement with the documents related hereto,
or as otherwise permitted or required by law.
J. Collection of Accounts. Upon the request of the Agent or the Banks,
at any time after the occurrence of an Event of Default, the Borrower
shall notify its account debtors and other obligors to make payment
directly to a post office box specified by and under the sole control
of the Agent, and Marquette, for itself and as agent for the Banks,
shall be entitled to take control of any proceeds thereof.
K. Sale of Assets. The Borrower will not sell, lease, assign, transfer
or otherwise dispose of all or a substantial part of its assets
(whether in one transaction or in a series of transactions) to any
other person or entity other than in the ordinary course of business.
L. Consolidation and Merger. The Borrower will not consolidate with or
merge into any person or entity, or permit any other person or entity
to merge into it, or acquire (in a transaction analogous in purpose or
effect to a consolidation or merger) all or substantially all of the
assets of any other person or entity, nor liquidate, dissolve, suspend
business operations or sell all or substantially all of its assets.
M. Benefit to Third Persons. Except for credit sales made in the
ordinary course of business and transactions described on Exhibit H,
the Borrower shall not lend money to or guaranty the payment or
performance of any liabilities of any third person who is a
shareholder, officer, employee or otherwise related to or closely
associated with the Borrower.
N. Equipment and Operating Leases. The Borrower shall not create,
incur, assume, or suffer to exist any equipment or operating lease
obligations other than lease obligations incurred in the ordinary
course of business of the Borrower as such business is presently
conducted.
O. Capital Expenditures. The Borrower and the Guarantors collectively
shall not pay or incur, or commit to pay or incur, any capital
expenditures (including capitalized lease obligations) during any
fiscal year of the Borrower which exceed $2,000,000 in the aggregate.
P. Loans, Guaranties and Investments. Except for the investments in and
loans to the subsidiaries and affiliates described on Exhibit I hereto,
the Borrower shall not assume, guarantee, endorse, contingently agree
to purchase or otherwise become liable (directly or indirectly,
absolutely or contingently) in connection with the obligations of any
other person, firm or corporation, nor shall the Borrower make or
permit to exist any loans or advances by the Borrower to, or purchase
or otherwise acquire all or any substantial portion of the assets of,
or shares of stock or similar interest in or to any other person,
corporation or entity.
Q. Other Borrowings. The Borrower shall not borrow or obtain any loan
or advance from, or otherwise be or become indebted for money borrowed
from, any person, firm, corporation (including, without limitation, the
Banks), partnership, association or other entity, other than (i)
current accounts payable incurred by the Borrower in the ordinary
course of its business, provided that the same shall be paid when due
in accordance with customary trade terms unless contested by
appropriate proceedings; (ii) the endorsement to the Agent of checks
payable to the order of the Borrower in the ordinary course of
business; (iii) capital lease obligations permitted by Section 8.O
hereof; and (iv) and other loans not to exceed a cumulative total of
$50,000.
R. Financial Covenants. The Borrower will maintain on a consolidated
basis:
(i) A ratio of Indebtedness to Net Worth no greater than 1.5:1
at any time during the term of this Agreement.
(ii) At all times the Borrower shall maintain a Net Worth of
at least $29,500,000.
(iii) At the end of each of the fiscal quarters specified
below, a minimum After Tax Net Income, on a cumulative basis
for the applicable fiscal year (March 1 - February 28) as
follows:
as of May 31, 1998 at least $ 500,000
as of August 30, 1998 a cumulative loss no
greater than (250,000)
as of November 30, 1998 a cumulative loss no
greater than (250,000)
as of February 28, 1999 at least $1.00
as of May 31, 1999 at least 500,000
S. Non-Business Assets. The Borrower shall not purchase, lease or
otherwise acquire any right, title or interest in or to, any real or
personal property not directly related to or necessary in connection
with the present operations of the Borrower.
T. Notification. The Borrower shall notify the Agent immediately of a
change in location of any of the Collateral.
U. Redemptions, Dividends. The Borrower shall not purchase or redeem or
agree to purchase or redeem, any of its capital stock nor shall the
Borrower pay or declare any dividends in any calendar year without the
approval of the Banks (other than non-cash dividends) with respect to
any of its capital stock.
V. Access. The Borrower shall grant to the Banks' agents and any entity
authorized by the Banks access to its property at any reasonable time
in order to inspect the Collateral, the Borrower's property and
business.
W. Transfer of the Collateral. The Borrower shall not sell, dispose of,
lease, mortgage, assign, sublet or transfer any of its right, title or
interest in or to the Collateral (other than sales of Collateral
consisting of inventory in the ordinary course of Borrower's business)
without the prior written consent of the Banks.
X. Pension Plans. The Borrower shall maintain any pension plan in
compliance with all material requirements of ERISA, the Internal
Revenue Code, and all other applicable laws, rules, regulations and
rulings.
9. COVENANTS OF THE GUARANTORS. On and after the date hereof and until the
payment in full of the Notes and all of the other Borrower's Obligations, and
the performance of all obligations of each Guarantor hereunder and under the
Guaranties, and so long as any portion of the Revolving Commitment of the Banks
or the Term Loan remains in full force and effect, each Guarantor, jointly and
severally, agrees that, unless the Banks shall otherwise consent in writing:
A. Taxes and Claims. The Guarantor shall pay and discharge all taxes,
assessments and governmental charges or levies imposed upon it or upon
its respective income or profits, or upon any of its assets or
properties, prior to the date on which penalties attach thereto, and
all lawful claims which, if unpaid, might become a lien or charge upon
its respective property or assets; provided, however, that the
Guarantor shall not be required to pay any such tax, assessment,
charge, levy or claim the payment of which is being contested in good
faith and by proper proceedings and for which it shall have set aside
on its books adequate reserves therefor.
B. Insurance. The Guarantor shall maintain insurance coverage with
responsible insurance companies licensed to do business in the
jurisdiction of its incorporation (or, in the case of any Collateral
located in any other state, then in such state) in such amounts and
against such risks as is reasonably requested by the Banks or as
required by law, including, without limitation, property, hazard, fire,
wind, hail, theft, collapse, comprehensive general public liability,
product liability and business interruption insurance, and worker's
compensation or similar insurance. The Guarantor shall furnish to the
Agent full information and written evidence as to the insurance
maintained by the Guarantor.
C. Maintenance of Existence; Conduct of Business. The Guarantor shall
maintain, its corporate existence and preserve all of its rights,
privileges and franchises necessary in the normal conduct of its
business; conduct its business in an orderly, efficient and regular
manner.
D. Maintenance of Properties. The Guarantor shall keep all of the
assets and properties necessary in its respective business, including,
without limitation, any tangible Collateral, in good working order and
condition, ordinary wear and tear and the termination of service of
obsolete or unnecessary equipment excepted.
E. Compliance with Applicable Laws. The Guarantor shall comply with the
requirements of all applicable state and federal laws, and of all
rules, regulations and orders of any governmental or other authority or
agency, a breach of which would materially and adversely affect its
respective business or credit, except where contested in good faith and
by proper proceedings.
F. Litigation. The Guarantor shall promptly provide the Agent notice in
writing of all litigation and of all proceedings by or before any court
or governmental or regulatory agency affecting the Guarantor, except
litigation or proceedings which, if adversely determined, would not
materially affect the financial condition or business of the Guarantor.
G. Liens. The Guarantor will not create, incur, assume or suffer to
exist any mortgage, lease, deed of trust, pledge, lien, security
interest, or other charge or encumbrance of any nature on any of its
assets, now owned or hereafter acquired, securing any indebtedness or
obligation to the Banks, except (1) the Permitted Interests, and Minor
Irregularities and (2) any security interest granted herein or by any
document related hereto to the Banks or consented to in writing by the
Banks.
H. Access to Books and Inspection. The Guarantor shall at all times
keep proper books of record and accounts for itself, and, upon request
of the Banks, the Guarantor shall provide any duly authorized
representative of the Banks access during normal business hours to, and
permit such representative to examine, make extracts or a reasonable
number of copies from, any and all books, records and documents in the
Guarantor's possession or control relating to the Guarantor's affairs,
to conduct collateral audits from time to time and to inspect any of
its facilities and properties; provided, however, that the Banks shall
treat all such books and records as confidential and shall only be
permitted to disclose the information contained therein to their
respective legal counsel, independent public accountants, any other
participating banks, or in connection with any action to collect the
Notes or to enforce this Agreement with the documents related hereto,
or as otherwise permitted or required by law.
I. Collection of Accounts. Upon the request of the Agent or the Banks,
at any time after the occurrence of an Event of Default, the Guarantor
shall notify its account debtors and other obligors to make payment
directly to a post office box specified by and under the sole control
of the Agent, and Marquette, for itself and as agent for LaSalle, shall
be entitled to take control of any proceeds thereof.
J. Sale of Assets. The Guarantor will not sell, lease, assign, transfer
or otherwise dispose of all or a substantial part of its assets
(whether in one transaction or in a series of transactions) to any
other person or entity other than in the ordinary course of business.
K. Consolidation and Merger. The Guarantor will not consolidate with or
merge into any person or entity, or permit any other person or entity
to merge into it, or acquire (in a transaction analogous in purpose or
effect to a consolidation or merger) all or substantially all of the
assets of any other person or entity, nor liquidate, dissolve, suspend
business operations or sell all or substantially all of its assets.
L. Benefit to Third Persons. Except for credit sales made in the
ordinary course of business, the Guarantor shall not lend money to or
guaranty the payment or performance of any liabilities of any third
person who is a shareholder, officer, employee or otherwise related to
or closely associated with the Guarantor.
M. Equipment and Operating Leases. The Guarantor shall not create,
incur, assume, or suffer to exist any equipment or operating lease
obligations other than lease obligations incurred in the ordinary
course of business of the Guarantor as such business is presently
conducted.
N. Capital Expenditures. The Guarantors and the Borrower collectively
shall not pay or incur, or commit to pay or incur, any capital
expenditures (including capitalized lease obligations) during any
fiscal year which exceeds $2,000,000 in the aggregate.
O. Loans, Guaranties and Investments. Except for the investments in and
loans to the subsidiaries and affiliates described on Exhibit J hereto,
the Guarantor shall not assume, guarantee, endorse, contingently agree
to purchase or otherwise become liable (directly or indirectly,
absolutely or contingently) in connection with the obligations of any
other person, firm or corporation, nor shall the Guarantor make or
permit to exist any loans or advances by the Guarantor to, or purchase
or otherwise acquire all or any substantial portion of the assets of,
or shares of stock or similar interest in or to any other person,
corporation or entity.
P. Other Borrowings. The Guarantor shall not borrow or obtain any loan
or advance from, or otherwise be or become indebted for money borrowed
from, any person, firm, corporation (including, without limitation, the
Banks), partnership, association or other entity, other than (i)
current accounts payable incurred by the Guarantor in the ordinary
course of its business, provided that the same shall be paid when due
in accordance with customary trade terms unless contested by
appropriate proceedings; (ii) the endorsement to the Agent of checks
payable to the order of the Guarantor in the ordinary course of
business and (iii) capital lease obligations permitted by Section 9.N
hereof.
Q. Non-Business Assets. The Guarantor shall not purchase, lease or
otherwise acquire any right, title or interest in or to, any real or
personal property not directly related to or necessary in connection
with the present operations of the Guarantor.
R. Notification. The Guarantor shall notify the Agent immediately of a
change in location of any of the Collateral.
S. Redemptions, Dividends. The Guarantor shall not purchase or redeem
or agree to purchase or redeem, any of its capital stock nor shall the
Guarantor pay or declare any dividends in any calendar year without the
approval of the Banks (other than non-cash dividends) with respect to
any of its capital stock.
T. Access. The Guarantor shall grant to the Banks' agents and any
entity authorized by the Banks access to its property at any reasonable
time in order to inspect the Collateral, the Guarantor's property and
business.
U. Transfer of the Collateral. The Guarantor shall not sell, dispose
of, lease, mortgage, assign, sublet or transfer any of its right, title
or interest in or to the Collateral (other than sales of Collateral
consisting of inventory in the ordinary course of Guarantor's business)
without the prior written consent of the Banks.
V. Pension Plans. The Guarantor shall maintain any pension plan in
compliance with all material requirements of ERISA, the Internal
Revenue Code, and all other applicable laws, rules, regulations and
rulings.
10. EVENTS OF DEFAULT AND REMEDIES. Any one or more of the following events and
circumstances shall constitute an Event of Default:
A. the Borrower shall fail to pay any amounts required to be paid by
the Borrower under the Notes, the Borrower Documents or any other
indebtedness of the Borrower to the Banks or any material indebtedness
to any third party whether any such indebtedness is now existing or
hereafter arises and whether direct or indirect, due or to become due,
absolute or contingent, primary or secondary or joint or joint and
several; or
B. any Guarantor shall fail to pay any amounts required to be paid by
the Guarantor under the Guaranty or any other indebtedness of the
Guarantor to the Banks or any material indebtedness to any third party
whether any such indebtedness is now existing or hereafter arises and
whether direct or indirect, due or to become due, absolute or
contingent, primary or secondary or joint or joint and several; or
C. the Borrower or any Guarantor shall fail to observe or perform any
covenant, condition or agreement to be observed or performed by it
under any of the Borrower Documents or any other document related
hereto for a period of thirty (30) days after written notice,
specifying such default and requesting that it be remedied, given to
the Borrower or the Guarantors by the Banks, unless the Banks shall
agree in writing to an extension of such time prior to its expiration,
or for such longer period as may be reasonable necessary to remedy such
default (other than defaults which can be cured by a money payment)
provided that the Borrower and the Guarantors are proceeding with
reasonable diligence to remedy the same; or
D. the Borrower or any Guarantors shall be in default in the
performance of any covenants or obligation under any other document or
instrument heretofore or hereafter executed and delivered to the Banks
by such party in connection with any other loan or credit
transaction(s) and such default is not cured within the period, if any,
allowed by such documents for the cure thereof; or
E. the Borrower or any Guarantor shall file a petition in bankruptcy or
for reorganization or for an arrangement pursuant to any present or
future state or federal bankruptcy act or under any similar federal or
state law, or shall be adjudicated to be bankrupt or insolvent, or
shall make a general assignment for the benefit of its creditors, or
shall be unable to pay its debts generally as they become due; or if an
order for relief under any present or future federal bankruptcy act or
similar state or federal law shall be entered against the Borrower or
any Guarantor; or if a petition or answer requesting or proposing the
entry of such order for relief or the adjudication of the Borrower or
any Guarantor as a debtor or to be bankrupt or its reorganization under
any present or future state or federal bankruptcy act or any similar
federal or state law shall be filed in any court and such petition or
answer shall not be discharged or denied within ninety (90) days after
the filing thereof; or if a receiver, trustee or liquidator of the
Borrower or any Guarantor or of all or substantially all of the assets
of the Borrower or any Guarantor; or the Collateral, or any part
thereof, shall be appointed in any proceeding brought against the
Borrower or any Guarantor and shall not be discharged within ninety
(90) days of such appointment; or if the Borrower or any Guarantor
shall consent to or acquiesce in such appointment; or if any property
of the Borrower or any Guarantor (including, without limitation, the
estate or interest of the Borrower or any Guarantor in the Collateral,
or any part thereof) shall be levied upon or attached in any
proceeding; or
F. final judgment(s) for the payment of money in excess of $100,000 and
not covered by insurance shall be rendered against the Borrower or any
Guarantor and shall remain undischarged for a period of thirty (30)
days during which execution shall not be effectively stayed; or
G. the Borrower or any Guarantor shall be or become insolvent (whether
in the equity or bankruptcy sense); or
H. any representation or warranty made by the Borrower or any Guarantor
herein or in any document related hereto shall prove to be untrue or
misleading in any material respect, or any statement, certificate or
report furnished hereunder or under any of the foregoing documents by
or on behalf of the Borrower or any Guarantor shall prove to be untrue
or misleading in any material respect on the date when the facts set
forth and recited therein are stated or certified; or I. the Borrower
or any Guarantor shall liquidate, wind up, merge, dissolve, terminate
or suspend its respective business operations, or sell all or
substantially all of its respective assets, without the prior written
consent of the Banks; or
J. the Borrower or any Guarantor shall sell, dispose of, lease,
mortgage, assign, sublet or transfer any of its right, title or
interest in or to the Collateral (except as expressly provided herein
or in the Security Agreement or the Guarantor Security Agreements)
without the prior written consent of the Banks; or
K. the Borrower or any Guarantor shall fail to pay, withhold, collect
or remit any tax or tax deficiency when assessed or due or notice of
any state or federal tax lien shall be filed or issued; or
L. any property of the Borrower or any Guarantor (including, without
limitation, the Collateral), shall be garnished or attached in any
proceeding and such garnishment or attachment shall remain undischarged
for a period of thirty (30) days during which execution is not
effectively stayed.
Upon the occurrence of an Event of Default and at any time thereafter, any one
or more of the following remedial steps may be taken by the Agent, on behalf of
the Banks, upon the direction of the Banks:
(a) by written notice to the Borrower and/or any Guarantor, declare all
or part of the principal balance of the Notes plus accrued interest
thereon to be immediately due and payable, whereupon the same shall
become immediately due and payable by the Borrower and the Guarantors;
(b) take whatever action at law or in equity as may appear necessary or
appropriate to collect the amounts then due and thereafter to become
due under the Notes and/or the other Borrower Documents; and
(c) take whatever action in law or in equity as may appear necessary or
appropriate to collect any other amounts then due and thereafter to
become due under this Agreement and the documents related hereto and to
enforce performance and observance of any obligation, agreement or
covenant of the Borrower or the Guarantors thereunder.
11. TERMINATION. Upon the occurrence of an Event of Default, the Revolving
Commitment of the Banks shall terminate without further notice to the Borrower.
12. NOTICES. All notices, consents, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered by mail, postage prepaid, first class, certified or registered mail,
return receipt requested, to the following address or such other address of
which a party subsequently may give notice to all the other parties:
IF TO THE BORROWER OR THE GUARANTORS:
First Team Sports, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxx
IF TO MARQUETTE:
Marquette Capital Bank, N.A.
0000 Xxxx Xxxxxxxx Xxxxx
X.X. Xxx 0000
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxx
IF TO LASALLE:
LaSalle National Bank
000 Xxxxx XxXxxxx Xxxxxx - Financial Institutions Department
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxxxx
IF TO FIRSTAR:
Firstar Bank Milwaukee, N.A.
000 Xxxx Xxxxx Xxxxxx, 0xx Xxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
13. MISCELLANEOUS.
A. Waivers, etc. No failure on the part of the Banks to exercise, and
no delay in exercising, any right or remedy hereunder or under
applicable law or any document or agreement related hereto shall
operate as a waiver thereof; nor shall any single or partial exercise
of any such right or remedy preclude any other or further exercise
thereof or the exercise of any other right or remedy. A waiver of any
of the Banks' rights or remedies hereunder or under applicable law or
any document or agreement related hereto shall be effective only if
such waiver is in a writing signed by the Banks. The remedies herein
provided are cumulative and not exclusive of any remedies provided by
law.
B. Expenses. The Borrower shall reimburse the Banks for any and all
costs and expenses, including, without limitation, reasonable
attorneys' fees, paid or incurred by either of the Banks in connection
with (i) the preparation of the Borrower Documents and any other
document or agreement related hereto or thereto, and the transactions
contemplated hereby, which amount shall be paid prior to the making of
any advance hereunder; (ii) the negotiation of any amendments,
modifications or extensions to or any of the foregoing documents,
instruments or agreements and the preparation of any and all documents
necessary or desirable to effect such amendments, modifications or
extensions; and (iii) enforcement by the Banks during the term hereof
or thereafter of any of the rights or remedies of the Banks under any
of the foregoing documents, instruments or agreements or under
applicable law, whether or not suit is filed with respect thereto and
whether or not such costs are paid or incurred, or to be paid or
incurred, prior to or after the entry of judgment.
C. Amendments, etc. The Borrower Documents may not be amended or
modified, nor may any of their terms (including, without limitation,
terms affecting the maturity of or rate of interest on the Revolving
Notes) be modified or waived, except by written instruments signed by
the Banks and the Borrower. Terms contained in the Borrower Documents
affecting only the maturity of or rate of interest on the Term Notes
may be modified or waived only by written instruments signed by
Marquette and the Borrower.
D. Successors. This Agreement shall be binding upon and inure to the
benefit of the Borrower and the Banks and their respective successors
and assigns; provided, however, that the Borrower may not transfer or
assign its rights to borrow hereunder without the prior written consent
of the Banks.
E. Offsets. Nothing in this Agreement shall be deemed a waiver or
prohibition of the Banks' rights of banker's lien, offset, or
counterclaim, which right the Borrower and the Guarantors hereby grants
to the Banks.
F. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
G. Accounting. Unless otherwise expressly provided herein, or unless
the Banks otherwise consent in writing, all accounting terms used
herein which are not expressly defined in this Agreement shall have the
meanings respectively given to them in accordance with generally
accepted accounting principles and all financial statements and reports
furnished to the Agent hereunder shall be prepared, and all
computations and determinations pursuant hereto shall be made, in
accordance with generally accepted accounting principles and practices,
applied on a basis not materially inconsistent with that applied in
preparing the respective financial statements referred to in Sections
6.D. and 8.A.(i) hereof.
H. Governing Law. The Borrower Documents and all other agreements
related hereto, shall be construed in accordance with and governed by
the laws of the State of Minnesota.
I. Headings. The descriptive headings for the several sections of this
Agreement are inserted for convenience only and shall not define or
limit any of the terms or provisions hereof.
J. Term. Unless sooner terminated by either party pursuant to the
provisions hereof, the original term of this Agreement shall commence
as of the date hereof and continue thereafter until the Notes, and all
other Borrower's Obligations have been paid in full and the Revolving
Commitment of the Banks has expired pursuant to Section 2 hereof, which
term may be extended by written agreement of the parties hereto.
Notwithstanding anything to the contrary contained herein, the Banks
shall not be obligated to extend the term hereof pursuant to this
subsection under any circumstances or conditions whatsoever, and the
Borrower hereby acknowledges that the Banks have not agreed, warranted
or represented in any manner whatsoever that they would extend the
Revolving Commitment of the Banks. The Borrower shall be entitled to
terminate the Revolving Commitment of the Banks at any time the then
outstanding and unpaid balance of the Revolving Notes is zero by giving
written notice of said termination to the Banks. The Borrower may
terminate this Agreement by written notice to the Banks at any time the
then unpaid principal balances of the Notes, and any other Borrower's
Obligations are zero and the Revolving Commitment of the Banks has
either expired or been terminated by either the Banks or the Borrower
pursuant to the provisions hereof.
K. Agent. Borrower hereby acknowledges that, the Banks have appointed
Marquette as Agent to exercise certain rights, remedies and obligations
of the Banks hereunder. The Borrower may rely upon the designations,
appointment and authorization conferred upon the Agent and agrees to
deliver and submit all reports and to make all payments required
hereunder or under any of the Borrower Documents in the manner
designated by the Agent, for the benefit of the Banks. The obligations
of the Banks hereunder are several, and no Bank shall be responsible
for the obligations of the other Bank hereunder, nor will the failure
of any Bank to perform any of its obligations hereunder relieve the
Agent or any Bank from the performance of its obligations hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
FIRST TEAM SPORTS, INC.
By: /s/ Xxxxxx Xxxxxx Xx
Its: Vice President/Chief Financial Officer
And: /s/ Xxxx Xxxxxxx
Its: Vice President Finance
MARQUETTE CAPITAL BANK, N.A.,
individually and as Agent
By: /s/ Xxxx Xxxxxxx
Its: Vice President
LASALLE NATIONAL BANK
By: /s/ Xxx Xxxxxxx
Its: Vice President
FIRSTAR BANK MILWAUKEE, N.A.
By: /s/ Hunt Gildner
Its: Vice President
