PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement is made as of July 14,
1999 by and between Rawlings Sporting Goods Company, Inc., a
Delaware corporation (the "Borrower"), and THE FIRST NATIONAL
BANK OF CHICAGO, as Agent (as hereinafter defined) for the
Lenders (as hereinafter defined).
R E C I T A L S:
a. Pursuant to the Credit Agreement (as hereinafter
defined) the Lenders have agreed to make certain loans
and other financial accommodations to the Borrower; and
b. As a condition to further extensions of credit under
the Credit Agreement, the Agent and the Lenders have
requested that the Borrower grant to the Agent, on
behalf of the Agent and the Lenders, a security
interest in the Collateral (as hereinafter defined);
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
i. DEFINITIONS.
As used in this Pledge and Security Agreement:
"Accounts" means presently existing and hereafter
arising or acquired accounts receivable, notes, drafts,
acceptances, choses in action and other forms of obligations and
receivables relating in any way or arising from the sale of goods
or the rendering of services by the Borrower or howsoever
otherwise arising, including the right to payment of any interest
or finance charges with respect thereto and all proceeds of
insurance with respect thereto, together with all of the
Borrower's rights as an unpaid vendor, all pledged assets and
letters of credit, guaranty claims, liens and security interests
held by or granted to the Borrower to secure payment of any
Accounts and all books, customer lists, ledgers, records and
files (whether written or stored electronically) relating to any
of the foregoing.
"Agent" means The First National Bank of Chicago, a
national banking association, as agent for the Lenders pursuant
to Section 10.1 of the Credit Agreement, and the successors and
assigns thereof as agent for the Lenders.
"Borrower" means Rawling's Sporting Goods Company,
Inc., a Delaware corporation, and its successors.
"Chattel Paper" means any writing or group of writings
which evidences both a monetary obligation and a security
interest in or a lease of specific goods.
"Collateral" means all personal property, wherever
located, in which the Borrower now has or hereafter acquires any
right or interest, and the proceeds, insurance proceeds, unearned
insurance premiums and products thereof and documents of title
evidencing or issued with respect thereto, including, without
limitation, all Accounts, Chattel Paper, Documents, Equipment,
Fixtures, General Intangibles, Instruments, Inventory, Investment
Property, Pledged Deposits, Stock Rights, contract rights,
insurance policies, cash, bank accounts, and special collateral
accounts, and all books and records, customer lists, credit
files, computer files, programs, printouts and other computer
materials and records related to any of the foregoing.
"Credit Agreement" means that certain Amended and
Restated Credit Agreement dated as of September 12, 1997, among
the Borrower, the Agent and the Lenders, as heretofore or
hereafter amended, renewed, modified or supplemented from time to
time.
"Default" means any one or more of the events described
in Section 5 hereof.
"Default Rate" means the rate of interest which may be
due and owing from time to time on any Loan and payable by the
Company under the Credit Agreement pursuant to Section 2.11 of
such agreement.
"Documents" means all documents of title and goods
evidenced thereby, including, without limitation, all bills of
lading, dock warrants, dock receipts, warehouse receipts and
orders for the delivery of goods, and also any other document
which in the regular course of business or financing is treated
as adequately evidencing that the person in possession of it is
entitled to receive, hold and dispose of the document and the
goods it covers.
"Equipment" means all equipment, machinery, furniture
and goods used or useable by the Borrower in its business and all
other tangible personal property (other than Inventory), and all
accessions and additions thereto, including, without limitation,
all Fixtures.
"Fixtures" means all equipment, machinery, furniture
and goods of the Borrower which have been attached to real
property in such a manner that their removal would cause damage
to the realty and which have therefore taken on the character of
real property, including, without limitation, all trade fixtures.
"General Intangibles" means all intangible personal
property including, without limitation, all general intangibles,
contract rights, rights to receive payments of money, choses in
action, judgments, tax refunds and tax refund claims, copyrights,
copyright licenses, patents, patent licenses, trademarks,
trademark licenses, trade names, trade secrets, drawings or plans
with respect to trade secrets, copyrights, licenses, franchises,
leasehold interests in real or personal property, rights to
receive rentals of real or personal property and guarantee
claims.
"Indemnitee" means any Person entitled to be
indemnified by the Borrower pursuant to Section 8 hereof.
"Instruments" means all negotiable instruments (as
defined in Section 3104 of the Uniform Commercial Code),
certificated and uncertificated securities and any replacements
therefor and Stock Rights related thereto and other writings
which evidence a right to the payment of money and which are not
themselves security agreements or leases and are of a type which
in the ordinary course of business are transferred by delivery
with any necessary endorsement or assignment, including, without
limitation, all checks, drafts, notes, bonds, debentures,
government securities, certificates of deposit, letters of
credit, preferred and common stock, options and warrants in which
the Borrower now has or hereafter acquires any rights.
"Inventory" means all inventory, raw materials,
consumable supplies, work in process, finished goods, returned or
repossessed goods, goods held for sale or lease or furnished or
to be furnished under contracts of service and goods released to
the Borrower or to third parties under trust receipts or similar
documents.
"Investment Property" means all investment property of
the Borrower (as defined in Section 9-115 of the Uniform
Commercial Code).
"Lenders" means the financial institutions signatory to
the Credit Agreement and their respective successors and assigns.
"Lien" of a Person means any security interest,
mortgage, pledge, hypothecation, lien, claim, charge,
encumbrance, title retention agreement, or lessor's interest
under a Capitalized Lease, in, of or on any property of such
Person.
"Obligations" means all "Obligations" as defined in the
Credit Agreement.
"Person" means an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization
or association or any other entity or a government or any
department or agency or political subdivision thereof.
"Pledged Deposits" means, collectively, the following
and all proceeds thereof: (a) the cash collateral accounts
referred to in Section 7.2 hereof, and (b) all time deposits of
money, whether or not evidenced by certificates, which the
Borrower may from time to time designate as pledged to the Agent,
on behalf of the Lenders, as security for any Obligation, and all
rights to receive interest on said deposits.
"Receivables" means, collectively, the Accounts,
Chattel Paper, Documents, General Intangibles, Pledged Deposits
and Instruments.
"Section" means a numbered section of this Security
Agreement, unless another document is specifically referenced.
"Security Agreement" means this Pledge and Security
Agreement, as it may be amended, modified or supplemented from
time to time.
"Stock Rights" means any stock, any dividend or other
distribution and any other right or property which the Borrower
shall receive or shall become entitled to receive for any reason
whatsoever with respect to, in substitution for or in exchange
for any shares of stock constituting Collateral and any and all
stock, any right to receive stock and any right to receive
earnings, in which the Borrower now has or hereafter acquires any
right, issued by an issuer of any or all such stock.
"Uniform Commercial Code" means, unless a specific
jurisdiction is referred to, the Uniform Commercial Code as in
effect from time to time in the applicable jurisdiction.
"Unmatured Default" means an event which but for the
lapse of time or the giving of notice, or both, would constitute
a Default.
The foregoing definitions shall be equally applicable
to both the singular and plural forms of the defined terms.
Capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Credit Agreement.
ii. GRANT OF SECURITY INTEREST.
To secure the payment, performance and observance of
the Obligations, the Borrower hereby pledges, grants, assigns and
transfers to the Agent, for the benefit of the Agent and the
ratable benefit of the Lenders, a continuing security interest
in, a right of setoff against, and an assignment to the Agent of,
the Collateral.
iii. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Agent, on
behalf of the Lenders, which representations and warranties shall
survive the execution and delivery of this Security Agreement and
any investigation by or on behalf of the Agent or any Lender, as
follows:
(1) CORPORATE EXISTENCE AND STANDING. The
Borrower is a corporation duly incorporated,
validly existing and in good standing under
the laws of its jurisdiction of incorporation
and is duly qualified and in good standing as
a foreign corporation and is duly authorized
to conduct its business in each jurisdiction
in which its business is conducted or
proposed to be conducted, except where the
failure to be so qualified could not
reasonably be expected to have a Material
Adverse Effect.
(2) AUTHORIZATION AND VALIDITY. The Borrower has
the requisite power and authority (corporate
and otherwise) and legal right to execute and
deliver this Security Agreement and to
perform its obligations hereunder. The
execution and delivery by the Borrower of
this Security Agreement and the performance
of its obligations hereunder have been duly
authorized by proper corporate proceedings,
and this Security Agreement constitutes the
legal, valid and binding obligation of the
Borrower enforceable against the Borrower in
accordance with its terms and creates a
security interest which is enforceable
against the Borrower in all now owned
Collateral and in all hereafter acquired
Collateral at the time the Borrower hereafter
acquires such rights, in each such case
except as enforceability may be limited by
bankruptcy, insolvency or similar laws
affecting the enforcement of creditors'
rights generally and subject also to the
availability of equitable remedies if
equitable remedies are sought.
(3) NO CONFLICT; GOVERNMENT CONSENT. Neither the
execution and delivery by the Borrower of
this Security Agreement, the creation and
perfection of a security interest in the
Collateral as contemplated hereby, nor
compliance with the provisions hereof, will
violate any law, rule, regulation, order,
writ, judgment, injunction, decree or award
binding on the Borrower or the Borrower's
articles of incorporation or by-laws or the
provisions of any indenture, instrument or
agreement to which the Borrower is a party or
is subject, or by which it, or its property,
is bound, or conflict with or constitute a
default thereunder, or result in the creation
or imposition of any Lien (except to the
extent created by this Security Agreement)
in, of or on the property of the Borrower
pursuant to the terms of any such indenture,
instrument or agreement. No authorization,
approval or other action by, and no notice to
or filing with, any governmental authority or
regulatory body is required either for the
execution and delivery by the Borrower of
this Security Agreement or for the
performance by the Borrower of its
obligations under this Security Agreement
except for filings expressly contemplated
hereby.
(4) PRINCIPAL LOCATION. The Borrower's mailing
address, and the location of its chief
executive office and the books and records
relating to the Receivables is disclosed in
Exhibit A hereto. The Borrower has no other
places of business and maintains no tangible
Collateral except as separately set forth in
Exhibit A hereto. None of said places of
business are leased by the Borrower as lessee
except those designated as such in Exhibit A
hereto.
(5) NO OTHER NAMES. Except as set forth in
Exhibit B hereto, since July 1, 1994, the
Borrower has not conducted business under any
name except the name or trade name in which
it has executed this Security Agreement.
(6) NO DEFAULT. No Default or Unmatured Default
exists.
(7) FILING REQUIREMENTS. Except with respect to
vehicles, none of the Equipment owned by the
Borrower is covered by any certificate of
title. None of the Collateral (other than
the Collateral defined in the Intellectual
Property Assignment of Security Interests as
of the date hereof, between Borrower and
Agent) is of a type in which security
interests or liens may be filed under any
federal statute. The legal description and
street address of the property on which any
Fixtures are located is set forth in Exhibit
C hereto, together with the name and common
address of the record owner of each such
property.
(8) NO FINANCING STATEMENTS. No financing
statement describing all or any portion of
the Collateral which has not lapsed or been
terminated naming the Borrower as debtor has
been filed in any jurisdiction except
financing statements in respect of Liens
permitted by Section 6.18 of the Credit
Agreement.
(9) NECESSARY FILINGS. All filings,
registrations and recordings necessary or
appropriate to create, preserve, protect and
perfect the security interest granted by the
Borrower to the Agent, on behalf of the
Lenders, hereby in respect of the Collateral
have been accomplished and the security
interest granted to the Agent, on behalf of
the Lenders, pursuant to this Security
Agreement in and to the Collateral
constitutes a perfected security interest, to
the extent that a security interest may be
obtained by filing, registration or
recording, except for Pledged Deposits with
other institutions not designated therein,
superior and prior to the rights of all other
Persons therein and subject to no other Liens
(except Liens permitted by Section 6.18 of
the Credit Agreement) and is entitled to all
the rights, priorities and benefits afforded
by the Uniform Commercial Code or other
relevant law as enacted in any relevant
jurisdiction which relates to perfected
security interests. Without limiting in any
way the Obligations of the Borrower set forth
herein, if the Agent or any Lender shall
notify the Borrower of any filing required to
be made pursuant to this Section, the
Borrower shall promptly, and in any event
within ten (10) Business Days from such
notice, make any such filing.
(10) TITLE TO COLLATERAL. Except as set forth in
the Credit Agreement, the Borrower has good
and marketable title, free of all Liens other
than those permitted by Section 6.18 of the
Credit Agreement, to all of the properties
and assets reflected in the most recent
balance sheet of the Borrower delivered to
Agent and Lenders pursuant to Section 6.1 of
the Credit Agreement as being owned by it and
to all of the properties and assets acquired
by it after the date thereof, except for
assets sold, transferred or otherwise
disposed of in the ordinary course of
business since the date of such balance sheet
or as permitted by Section 6.13 of the Credit
Agreement.
(11) RECEIVABLES. The names of the obligors,
amounts owing, due dates and other
information with respect to the Receivables
are and will be correctly stated in all
material respects in all records of the
Borrower relating thereto and in all invoices
and reports with respect thereto furnished to
the Agent by the Borrower from time to time.
(12) INSURANCE. Schedule I lists as of the date
hereof all insurance of any nature maintained
for current occurrences of Borrower and its
Subsidiaries, as well as a summary of such
insurance.
b. COVENANTS.
From the date of this Security Agreement, and thereafter
until this Security Agreement is terminated pursuant to Section
9.13:
(1) INSPECTION. The Borrower will permit the
Agent and the Lenders, by their
representatives and agents, to inspect the
Collateral, to examine and make copies of the
records of the Borrower relating thereto, and
to discuss the Collateral and the records of
the Borrower with respect thereto with, and
to be advised as to the same by, the
Borrower's officers and employees and, in the
case of any Receivable, with any person or
entity which is or may be obligated thereon,
all upon reasonable prior notice from the
Agent and at such reasonable times and
intervals as the Agent may determine, all at
the Borrower's expense with the same rights
to, and limited to, expense reimbursement as
provided in accordance with Section [9.7] of
the Credit Agreement or inspections permitted
thereby.
(2) TAXES. The Borrower will pay when due all
taxes, assessments and governmental charges
and levies upon the Collateral, except those
which are being contested in good faith by
appropriate proceedings and with respect to
which adequate reserves under Agreement
Accounting Principles have been established
and to which no material risk of enforcement
exists.
(3) RECORDS AND REPORTS. The Borrower will
maintain satisfactory and appropriate books
and records with respect to the Collateral
and furnish to the Agent, with sufficient
copies for each of the Lenders, such reports
relating to the Collateral as the Agent shall
from time to time reasonably request.
(4) NOTICE OF DEFAULT. The Borrower will give
prompt notice in writing to the Agent and the
Lenders of the occurrence of any Default or
Unmatured Default and of any other
development, financial or other, of which the
Borrower has knowledge and which could
reasonably be expected to have a Material
Adverse Effect.
(5) FINANCING STATEMENTS AND OTHER ACTIONS. The
Borrower will promptly execute and deliver to
the Agent all financing statements and other
documents from time to time requested by the
Agent or any Lender in order to perfect a
security interest or to maintain a perfected
security interest in the Collateral.
(6) DISPOSITION OF COLLATERAL. The Borrower will
not sell, lease or otherwise dispose of the
Collateral except as permitted by the Credit
Agreement.
(7) LIENS. The Borrower will not create, incur,
or suffer to exist any Lien upon the
Collateral except the security interests
created by this Security Agreement and Liens
permitted pursuant to Section 6.18 of the
Credit Agreement.
(8) CHANGE IN LOCATION OR NAME. The Borrower
will not (a) maintain a place of business,
hold tangible Collateral or maintain records
with respect to any Receivable at a location
other than a location specified on Exhibit A
hereto, or maintain Inventory and Equipment
in the State of Tennessee with an aggregate
net book value in excess of $2,000,000, (b)
change its name, or (c) change its mailing
address, unless the Borrower shall have given
the Agent not less than thirty (30) days'
prior written notice thereof, and the Agent
shall have determined that after giving
effect to any such change of name, address or
location, and the making of any additional
filings, registrations or recordings as the
Agent shall determine necessary, the Agent,
for the benefit of the Lenders, shall have a
valid and continuing, first perfected
security interest in the Collateral, except
for Liens permitted pursuant to Section 6.18
of the Credit Agreement.
(9) OTHER FINANCING STATEMENTS. The Borrower
will not SIGN or authorize the signing on its
behalf of any financing statement naming it
as debtor covering all or any portion of the
Collateral, except financing statements
naming the Agent, on behalf of the Lenders,
as secured party and those evidencing Liens
permitted pursuant to Section 6.18 of the
Credit Agreement and covering only property
expressly permitted to be pledged in such
transactions.
(10) PROTECTION OF THE LENDERS' SECURITY. The
Borrower will do nothing to impair the rights
of the Agent or the Lenders in the
Collateral. The Borrower will at all times
keep the Collateral insured in favor of the
Agent and the Lenders in compliance with the
requirements of the Credit Agreement. The
Borrower assumes all liability and
responsibility in connection with the
Collateral acquired by it, and the liability
of the Borrower to pay its Obligations shall
in no way be affected or diminished by reason
of the fact that such Collateral may be lost,
stolen, damaged or for any reason whatsoever
unavailable to the Borrower.
(11) TITLED EQUIPMENT, ETC. The Borrower will
promptly notify the Agent in writing upon (a)
acquiring any interest hereafter in Equipment
covered by any certificate of title, (b)
ACQUIRING any interest hereafter in
Collateral that is of a type where a security
interest or lien may be registered, recorded
or filed under, or notice thereof given
under, any federal statute or regulation and
(c) acquiring any interest hereafter in any
property that constitutes "Collateral" under
the form of Intellectual Property Assignment
attached as Exhibit D hereto.
(12) INSTRUMENTS, CHATTEL PAPER, DOCUMENTS AND
PLEDGED DEPOSITS. Promptly upon request of
the Agent, the Borrower will deliver to the
Agent (a) the originals of all Instruments,
Documents, Chattel Paper and Pledged Deposits
which are evidenced by certificates included
in the Collateral endorsed in blank, marked
with such legends and assigned as the Agent
shall specify, and (b) hold in trust for the
Agent, on behalf of the Lenders, upon receipt
and immediately thereafter deliver to the
Agent, on behalf of the Lenders, any
Instrument or Document evidencing or
constituting Collateral (except, prior to the
occurrence of a Default, ordinary cash
dividends paid with respect to the
Instruments which are stock and the Stock
Rights).
(13) UNCERTIFICATED SECURITIES. The Borrower will
permit the Agent and the Lenders from time to
time to cause the appropriate issuers of
uncertificated securities constituting
Instruments to mark their books and records
with the numbers and face amounts of all
uncertificated securities constituting
Instruments and all rollovers and
replacements therefor to reflect the Lien of
the Agent, on behalf of the Lenders, granted
pursuant to this Security Agreement.
(14) PLEDGED DEPOSITS. The Borrower will not
withdraw all or any portion of any Pledged
Deposit or fail to rollover said Pledged
Deposit without the prior consent of the
Agent.
(15) FEDERAL CLAIMS. The Borrower will notify the
Agent of any Collateral which, to its
knowledge, constitutes a claim against the
United States government or any
instrumentality or agency thereof (except for
claims against any state government, unless
requested by the Agent), the assignment of
which claim is restricted by federal law.
Promptly upon the request of the Agent, the
Borrower will take such steps as may be
necessary to comply with any applicable
federal assignment of claims laws.
(16) MAINTENANCE OF RECORDS. The Borrower will
keep and maintain at its own cost and expense
satisfactory and appropriate records of each
Receivable for at least two (2) years from
the date on which such Receivable comes into
existence, including, without limitation,
records of all payments received, all credits
granted thereon and all other documentation
relating thereto, and the Borrower will make
the same available to the Agent for
inspection, at the Borrower's own cost and
expense, at any and all reasonable times.
Upon the occurrence and during the
continuance of a Default, the Borrower shall,
at its own cost and expense, upon request of
the Agent deliver all tangible evidence of
its Receivables (including, without
limitation, all documents evidencing the
Receivables) and such books and records to
the Agent or to its representatives (copies
of which evidence, books and records may be
retained by the Agent) at any time upon its
demand. At the request of the Agent, the
Borrower shall legend, in form and manner
reasonably satisfactory to the Agent, the
Receivables and other books, records and
documents of the Borrower evidencing or
pertaining to the Receivables with an
appropriate reference to the fact that the
Receivables have been pledged to the Agent
for the benefit of the Lenders and that the
Agent has a security interest therein. The
Borrower expressly agrees that, upon the
occurrence and during the continuance of a
Default, the Agent may transfer a full and
complete copy of the Borrower's books,
records, credit information, reports,
memoranda and all other writings relating to
the Receivables to and for the use by any
Person that has acquired or is contemplating
acquisition of an interest in the Receivables
or the Agent's security interest therein
without the consent of the Borrower.
(17) CERTAIN AGREEMENTS ON RECEIVABLES. The
Borrower will not make or agree to make any
discount, credit, rebate or other reduction
in the original amount owing on a Receivable
or accept in satisfaction of a Receivable
less than the original amount thereof other
than, prior to the occurrence of a Default,
in the ordinary course of business and in
amounts which are not material to the
Borrower.
(18) COLLECTION OF RECEIVABLES. Except as
otherwise provided in this Security
Agreement, the Borrower will collect and
enforce, at the Borrower's sole expense, all
amounts due or hereafter due to the Borrower
under the Receivables.
(19) FURTHER ACTIONS. The Borrower will, at its
own expense, make, execute, endorse,
acknowledge, file and/or deliver to the Agent
from time to time such vouchers, invoices,
schedules, confirmatory assignments,
conveyances, financing statements, transfer
endorsements, powers of attorney,
certificates, reports and other assurances or
instruments and take such further steps
relating to the Receivables and other
property or rights covered by the security
interest hereby granted, as the Agent may
reasonably require.
(20) DISCLOSURE OF COUNTERCLAIM ON RECEIVABLES.
If any discount, credit or agreement to make
a rebate or to otherwise reduce the amount
owing on an individual Receivable in excess
of $100,000 or a group of Receivables at any
time aggregating in excess of $200,000 exists
or if, to the knowledge of the Borrower, any
dispute, setoff, claim, counterclaim or
defense exists or has been asserted or
threatened with respect to an individual
Receivable in excess of $100,000 or a group
of Receivables at any time aggregating in
excess of $200,000 the Borrower will disclose
such fact to the Agent in writing in
connection with the inspection by the Agent
or any Lender of any record of the Borrower
relating to such Receivable and in connection
with any invoice or report furnished by the
Borrower to the Agent relating to such
Receivable or a group of Receivables.
(21) INSTRUMENTS. If any Receivable in excess of
$350,000 becomes evidenced by an Instrument
(other than a check payable to the order of
the Borrower which is promptly cashed by the
Borrower), the Borrower will within ten (10)
days notify the Agent thereof, and upon
request by the Agent promptly deliver such
Instrument to the Agent appropriately
endorsed to the order of the Agent as further
security hereunder.
(22) MAINTENANCE OF GOODS. The Borrower will do
all things necessary to maintain, preserve,
protect and keep the Inventory and the
Equipment in good repair and working and
saleable condition as shall be consistent
with past practice.
(23) INSURANCE. The Borrower will (a) maintain
insurance on the Inventory and Equipment as
required by Section 6.6 of the Credit
Agreement, (b) maintain such other insurance
on the Inventory and Equipment for the
benefit of the Agent and the Lenders as the
Agent shall from time to time request, and
(c) furnish to the Agent, upon the request of
the Agent, from time to time duplicates of
all policies of insurance on the Inventory
and Equipment and certificates with respect
to such insurance.
Without limiting the generality of the foregoing,
Borrower shall deliver to Lender as soon as practicable after the
date hereof but in any event not later than July 30, 1999
certified copies and endorsements to all of its and its
Subsidiaries (a) "All Risk" and business interruption insurance
policies, naming Agent, for the benefit of itself and Lenders,
loss payee, and (b) general liability and other liability
policies naming Agent, for the benefit of itself and Lenders, as
an additional insured. All policies of insurance on real and
personal property will contain an endorsement, in form and
substance acceptable to Agent, showing loss payable to Agent, for
the benefit of itself and Lenders (Form 438 BFU or equivalent)
and extra expense and business interruption endorsements. Such
endorsement, or an independent instrument furnished to Agent,
will provide that the insurance companies will give Agent at
least 30 days prior written notice before any such policy or
policies of insurance shall be altered or canceled and that no
act or default of Borrower or any other Person shall affect the
right of Agent and Lenders to recover under such policy or
policies of insurance in case of loss or damage. Borrower shall
direct all present and future insurers under its "All Risk"
policies of insurance to pay all proceeds payable thereunder
directly to Agent. If any insurance proceeds are paid by check,
draft or other instrument payable to any Borrower and Agent
jointly, Agent may endorse such Borrower's name thereon and do
such other things as Agent may deem advisable to reduce the same
to cash. Agent reserves the right at any time, upon review of
each Borrower's risk profile, to require additional forms and
limits of insurance. Each Borrower shall, on each anniversary of
the date hereof and from time to time at Agent's request, deliver
to Agent a report by a reputable insurance broker, satisfactory
to Agent, with respect to such Person's insurance policies.
(24) TITLED VEHICLES. Upon request, the Borrower
will give the Agent information as to ownership
of any vehicle covered by a certificate of title.
Promptly upon request of the Agent, the Borrower
will deliver any such certificate of title to
the Agent and/or will cause the lien of the Agent,
on behalf of the Lenders, to be noted
thereupon.
v. DEFAULT.
(1) The occurrence of any one or more of the following
events shall constitute a Default:
(a) Any representation or warranty made by or on
behalf of the Borrower to the Agent or the
Lenders under or in connection with this
Security Agreement shall be false in any
material respect as of the date on which
made.
(b) The breach by the Borrower of any of the
terms or provisions of Section 4.4, 4.5, 4.6,
4.7, 4.8, 4.9, 4.12, 4.13, 4.14, 4.21, 7 or
8.1 hereof.
(c) The breach by the Borrower (other than a
breach which constitutes a Default under
Section 5.1.1 or 5.1.2 hereof) of any of the
terms or provisions of this Security
Agreement which is not remedied within twenty
(20) days after the giving of written notice
by the Agent.
(d) Any Collateral shall be transferred or
otherwise disposed of, either voluntarily or
involuntarily, in any manner not permitted by
Section 4.6 or 9.7 hereof or shall be lost,
stolen, damaged or destroyed.
(e) The occurrence of any "Default" under, and as
defined in, the Credit Agreement.
(2) ACCELERATION AND REMEDIES. If any Default
described in Section 7.6 or 7.7 of the Credit
Agreement occurs, the Obligations shall
immediately become due and payable without any
election or action on the part of the Agent or any
Lender. If any other Default occurs, the
Obligations may be declared to be due and payable
in accordance with the Credit Agreement, whereupon
the Obligations shall become immediately due and
payable, without presentment, demand, protest or
notice of any kind, all of which the Borrower
hereby expressly waives.
(3) REMEDIES; OBTAINING THE COLLATERAL UPON DEFAULT.
The Borrower agrees that, if any Default shall
have occurred and be continuing, then and in every
such case, subject to any mandatory requirements
of applicable law then in effect, the Agent may:
(i) personally, or by agents or attorneys,
immediately take possession of the Collateral
or any part thereof, from the Borrower or any
other Person who then has possession of any
part thereof with or without notice or
process of law (unless the same shall be
required by applicable law), and for that
purpose may enter in an orderly and lawful
manner upon the Borrower's premises where any
of the Collateral is located and remove the
same and use in connection with such removal
any and all services, supplies, aids and
other facilities of the Borrower;
(ii) instruct the obligor or obligors on any
contract, agreement, instrument or other
obligation (including, without limitation,
the Receivables) constituting the Collateral
to make any payment required by the terms of
such instrument or agreement directly to the
Agent, on behalf of the Lenders;
(iii) sell or otherwise liquidate, or direct the
Borrower to sell or otherwise liquidate, any
or all investments made in whole or in part
with the Collateral or any part thereof, and
take possession of the proceeds of any such
sale or liquidation;
(iv) with respect to Obligations which are
contingent and cannot be accelerated by their
nature, require the Borrower to deposit cash
or other acceptable collateral in an amount
sufficient to cover principal, interest and
fees which will have accrued by the maturity
date on said Obligations to be held as
security for said Obligations in the special
collateral account referred to in Section 7.2
hereof; and
(v) take possession of the Collateral or any part
thereof, by directing the Borrower in writing
to deliver the same to the Agent, on behalf
of the Lenders, at any reasonable place or
places designated by the Agent, in which
event the Borrower shall at its own expense:
1) forthwith cause the same to be moved to
the place or places so designated by the
Agent and there delivered to the Agent,
on behalf of the Lenders;
2) store and keep any Collateral so
delivered to the Agent, on behalf of the
Lenders, at such place or places pending
further action by the Agent; and
3) while the Collateral shall be so stored
and kept, provide such guards and
maintenance services as shall be
necessary to protect the same and to
preserve and maintain them in good
condition;
it being understood that the Borrower's obligation so to deliver
the Collateral is of the essence of this Security Agreement and
that, accordingly, upon application to a court of equity having
jurisdiction, the Agent, on behalf of the Lenders, shall be
entitled to a decree requiring specific performance by the
Borrower of said obligation.
(4) DISPOSITION OF THE COLLATERAL.
(i) Any Collateral repossessed by the Agent,
on behalf of the Lenders, under or
pursuant to Section 5.3 hereof and any
other Collateral whether or not so
repossessed by the Agent, on behalf of
the Lenders, upon the occurrence of a
Default may be sold, leased or otherwise
disposed of under one or more contracts
or as an entirety and without the
necessity of gathering at the place of
sale the property to be sold, and in
general in such manner, at such time or
times, at such place or places and on
such terms and for such prices as the
Agent may, in compliance with any
mandatory requirements of applicable
law, determine to be commercially
reasonable. Upon the occurrence and
during the continuance of any Default,
the Agent, on behalf of the Lenders,
shall have the power to foreclose the
Borrower's right of redemption in the
Collateral by sale, lease or other
disposition of the Collateral in
accordance with the Uniform Commercial
Code as enacted in each state where the
Collateral is located. Any of the
Collateral may be sold, leased or
otherwise disposed of in the condition
in which the same existed when taken by
the Agent, on behalf of the Lenders, or
after any overhaul or repair which the
Agent shall determine to be commercially
reasonable and the Agent shall be
entitled to reimbursement for the
payment of any costs or expenses of such
overhaul or repair. Any such
disposition which shall be a private
sale or other private proceeding
permitted by the requirements of
applicable law shall be made after
written notice to the Borrower
specifying the time at which such
disposition is to be made and the
intended sale price or other
consideration therefor. Any such
disposition which shall be a public sale
permitted by such requirements of
applicable law shall be made after
written notice to the Borrower
specifying the time and place of such
sale and, in the absence of applicable
requirements of law, shall be by public
auction. To the extent permitted by any
such requirement of law, the Agent, on
behalf of the Lenders, may itself bid
for and become the purchaser of the
Collateral or any item thereof, offered
for sale in accordance with this Section
5.4 without accountability to the
Borrower. In the payment of the
purchase price of the Collateral the
purchaser shall be entitled to have
credit on account of the purchase price
thereof of amounts owing to such
purchaser on account of any of the
Obligations held by such purchaser and
any such purchaser may deliver notes,
claims for interest, or claims for other
payment with respect to such Obligations
in lieu of cash up to the amount which
would, upon distribution of the net
proceeds of such sale, be payable
thereon. Such notes, if the amount
payable hereunder shall be less than the
amount due thereon, shall be returned to
the holder thereof after being
appropriately stamped to show partial
payment. If, under mandatory
requirements of applicable law, the
Agent, on behalf of the Lenders, shall
be required to make disposition of the
Collateral within a period of time which
does not permit the giving of notice to
the Borrower as hereinabove specified,
the Agent need give the Borrower only
such notice of disposition as shall be
reasonably practicable in view of such
mandatory requirements of applicable
law.
(ii) No notification need be given to the
Borrower if it has signed, after an
Unmatured Default or Default, a
statement renouncing or modifying any
right to notification of sale or other
intended disposition. In addition to
the rights and remedies granted to it in
this Security Agreement and in the
Credit Agreement, the Agent, on behalf
of the Lenders, shall have all the
rights and remedies of a secured party
under the Uniform Commercial Code of the
state in which the Collateral is
located.
vi. WAIVERS, AMENDMENTS AND REMEDIES.
No delay or omission of the Agent or any Lender to
exercise any right or remedy granted under this Security
Agreement shall impair such right or remedy or be construed to be
a waiver of any Default or Unmatured Default or an acquiescence
therein, and any single or partial exercise of any such right or
remedy shall not preclude other or further exercise thereof or
the exercise of any other right or remedy, and no waiver,
amendment or other variation of the terms, conditions or
provisions of this Security Agreement whatsoever shall be valid
unless in writing signed by the Agent and the Required Lenders
(if so required by the Credit Agreement), and then only to the
extent specifically set forth in such writing; provided, however,
that any amendment purporting to release all or substantially all
of the Collateral shall be valid only if consented to by each of
the Lenders. All rights and remedies contained in this Security
Agreement or by law afforded shall be cumulative and all shall be
available to the Agent and the Lenders until the Obligations have
been paid in full.
vii. PROCEEDS; COLLECTION OF RECEIVABLES.
(1) COLLECTION OF RECEIVABLES. The Agent may at
any time when a Default has occurred and is
continuing in its sole discretion by giving
the Borrower written notice, elect to require
that the Receivables be paid directly to the
Agent, on behalf of the Lenders. In such
event, the Borrower shall, and shall permit
the Agent to, promptly notify the account
debtors or obligors under the Receivables of
the Agent's and the Lenders' interest therein
and direct such account debtors or obligors
to make payment of all amounts then or
thereafter due under the Receivables directly
to the Agent. Upon receipt of any such
notice from the Agent, the Borrower shall
thereafter hold in trust for the Agent and
the Lenders all amounts and proceeds received
by it with respect to the Receivables and
other Collateral and immediately and at all
times thereafter deliver to the Agent, on
behalf of the Lenders, all such amounts and
proceeds in the same form as so received,
whether by cash, check, draft or otherwise,
with any necessary endorsements. The Agent
shall hold and apply funds so received as
provided by the terms of Sections 7.3 and 7.4
hereof.
(2) SPECIAL COLLATERAL ACCOUNT. The Agent may
require all cash proceeds of the Collateral
received by the Agent, on behalf of the
Lenders, to be deposited in a special
interest bearing cash collateral account with
the Agent and held there as security for the
Obligations. Prior to a Default or Unmatured
Default, the Borrower, upon advance written
notice to the Agent, may direct investment of
the collected balances in said cash
collateral account with the Agent in
investments permitted by Section 6.16 of the
Credit Agreement; provided, however, upon the
occurrence and during the continuance of a
Default or Unmatured Default, the Borrower
shall have no control whatsoever over said
cash collateral account or the investment
thereof. The Agent shall from time to time,
in its sole discretion, either deposit the
collected balances in said cash collateral
account into the Borrower's general operating
account with the Agent or apply the collected
balances in said cash collateral account to
the payment of the Obligations whether or not
the Obligations shall then be due.
(3) APPLICATION OF PROCEEDS. The proceeds of the
Collateral shall be applied by the Agent to
payment of the Obligations in the following
order unless a court of competent
jurisdiction shall otherwise direct:
(i) FIRST, to payment of all reasonable
costs and expenses of the Agent and
the Lenders incurred in connection
with the collection and enforcement
of the Obligations or of the
security interest granted to the
Agent and the Lenders pursuant to
this Security Agreement, including
all costs and expenses of any sale
pursuant to Sections 5.3 and 5.4
hereof, and of any judicial or
private proceedings in which such
sale may be made, and of all other
expenses, liabilities and advances
made or incurred by the Agent, the
Lenders and the agents and
attorneys of each of them, together
with interest at the Default Rate
on such costs, expenses and
liabilities and on all advances
made by the Agent or any Lender
from the date any such cost,
expense or liability is due, owing
or unpaid or any such advance is
made, in each case until paid in
full;
(ii) SECOND, to payment of that portion
of the Obligations constituting
accrued and unpaid interest and
fees, together with interest owing
thereon at the Default Rate from
the date due, owing or unpaid until
paid in full;
(iii) THIRD, ratably to payment (i) of
the principal of the Obligations,
then due, owing or unpaid in
respect of any Advances pursuant to
the Credit Agreement or the Notes
with interest on such unpaid
principal at the Default Rate from
and after the happening of any
Default until paid in full, and
(ii) any Rate Hedging Obligations
due, owing or unpaid to the
Lenders;
(iv) FOURTH, to cash collateralize the
undrawn portion of all Letters of
Credit by deposit with the Agent an
amount equal to 110% of the
aggregate amount thereof;
(v) FIFTH, to payment of any other
Obligations due, owing or unpaid
until paid in full including,
without limitation, any Obligations
incurred pursuant to Section 9.3
hereof; and
(vi) SIXTH, the balance, if any, after
all of the Obligations have been
satisfied, shall be remitted to the
Borrower or as required by law.
(4) REMEDIES CUMULATIVE. Each and every
right, power and remedy hereby
specifically given to the Agent, for the
benefit of the Lenders, shall be in
addition to every other right, power and
remedy specifically given under this
Security Agreement, the Credit Agreement
or any other Loan Document now or
hereafter existing at law or in equity,
or by statute and each and every right,
power and remedy whether specifically
herein given or otherwise existing may
be exercised from time to time or
simultaneously and as often and in such
order as may be deemed expedient by the
Agent. All such rights, powers and
remedies shall be cumulative and the
exercise or the beginning of exercise of
one shall not be deemed a waiver of the
right to exercise any of the others. No
delay or omission of the Agent in the
exercise of any such right, power or
remedy and no renewal or extension of
any of the Obligations shall impair any
such right, power or remedy or shall be
construed to be a waiver of any Default
or an acquiescence therein. In the
event that the Agent or any Lender shall
bring any suit to enforce any of its
rights hereunder and shall be entitled
to judgment, then in such suit the Agent
or such Lender may recover reasonable
expenses, including attorneys' fees,
which attorneys may be employees of the
Agent, and the amounts thereof shall be
included in such judgment.
(5) DISCONTINUANCE OF PROCEEDINGS. In case
the Agent or any Lender shall have
instituted any proceeding to enforce any
right, power or remedy under this
Security Agreement by foreclosure, sale,
entry or otherwise, and such proceeding
shall have been discontinued or
abandoned for any reason or shall have
been determined adversely to the Agent
or such Lender, then and in every such
case the Borrower and the Agent or such
Lender shall be restored to their
respective former positions and rights
hereunder with respect to the
Collateral, and all rights, remedies and
powers of the Agent or such Lender shall
continue as if no such proceeding had
been instituted.
viii. INDEMNITY.
(1) INDEMNITY.
(i) The Borrower agrees to indemnify the
Agent, the Lenders and their respective
successors, assigns, employees, agents
and servants (each an "Indemnitee") as
provided by Section 9.7 of the Credit
Agreement as if such Section 9.7 were
fully set forth herein.
(ii) Without limiting the application of
Section 8.1(a) hereof, the Borrower
agrees to pay, or reimburse the Agent
for any and all reasonable fees
(including, without limitation,
reasonable attorneys' fees, which
attorneys may be employees of the
Agent), costs and expenses of whatever
kind or nature incurred in connection
with the creation, preservation or
protection of the Agent's security
interest in the Collateral, including,
without limitation, all fees and taxes
in connection with the recording or
filing of instruments and documents in
public offices, payment or discharge of
any taxes (excluding income, franchise
taxes or other taxes levied on gross
earnings, profits or the like) or Liens
upon or in respect of the Collateral,
premiums for insurance with respect to
the Collateral (except to the extent
that the Borrower has already paid any
such premiums in compliance with the
Credit Agreement) and all other
reasonable fees, costs and expenses in
connection with preparing, executing,
delivering or administering this
Security Agreement and in connection
with protecting, maintaining or
preserving the Collateral and the
Agent's interest therein, whether
through judicial proceedings or
otherwise, or in defending or
prosecuting any actions, suits or
proceedings arising out of or relating
to the Collateral.
(iii) Without limiting the application of
Section 8.1(a) or (b) hereof, the
Borrower agrees to pay, indemnify and
hold each Indemnitee harmless from and
against any losses, costs, damages and
expenses which such Indemnitee may
suffer, expend or incur as a consequence
or growing out of any misrepresentation
by the Borrower in this Security
Agreement or the Credit Agreement or in
any statement or writing contemplated
by, made or delivered pursuant to or in
connection with this Security Agreement
or the Credit Agreement, except to the
extent that any such loss arises out of
the gross negligence or willful
misconduct of such Indemnitee.
(iv) If and to the extent that the
Obligations of the Borrower under this
Section are unenforceable for any
reason, the Borrower hereby agrees to
make the maximum contribution to the
payment and satisfaction of such
Obligations which is permissible under
applicable law.
(v) The Obligations of the Borrower
contained in this Section 8.1 shall
survive the termination of this Security
Agreement and the discharge of the
Borrower's other Obligations hereunder.
(2) INDEMNITY OBLIGATION SECURED BY COLLATERAL;
SURVIVAL. Any amounts paid by any Indemnitee
as to which such Indemnitee has the right to
reimbursement shall constitute Obligations
secured by the Collateral. The indemnity
obligations of the Borrower contained in this
Security Agreement shall continue in full
force and effect notwithstanding the full
payment of all amounts owing under the Credit
Agreement and all of the other Obligations
and notwithstanding the discharge thereof and
the termination of this Security Agreement.
ix. GENERAL PROVISIONS.
(1) NOTICE OF DISPOSITION OF COLLATERAL. The Borrower
hereby agrees that any notice of the time and
place of any public sale or the time after which
any private sale or other disposition of all or
any part of the Collateral shall be deemed
reasonable if sent to the Borrower, addressed as
set forth in Section 10 hereof, at least ten (10)
days prior to any such public sale or the time
after which any such private sale or other
disposition may be made.
(2) Compromises and Collection of Collateral. The
Borrower, the Agent and the Lenders recognize that
setoffs, counterclaims, defenses and other claims
may be asserted by obligors with respect to
certain of the Receivables, that certain of the
Receivables may be or become uncollectible in
whole or in part and that the expense and
probability of success in litigating a disputed
Receivable may exceed the amount that reasonably
may be expected to be recovered with respect to a
Receivable. In view of the foregoing, the
Borrower agrees that the Agent, on behalf of the
Lenders, may at any time and from time to time, if
a Default has occurred and is continuing,
compromise with the obligor on any Receivable,
accept in full payment of any Receivable such
amount as the Agent in its sole discretion shall
determine or abandon any Receivable, and any such
action by the Agent shall be commercially
reasonable so long as the Agent acts in good faith
based on information known to it at the time it
takes any such action.
(3) SECURED PARTY PERFORMANCE OF BORROWER OBLIGATIONS.
Without having any obligation to do so, upon
either (a) notice to the Borrower or (b) the
occurrence of an Unmatured Default or a Default,
the Agent may perform or pay any obligation which
the Borrower has agreed to perform or pay in this
Security Agreement and the Borrower shall
reimburse the Agent for any amounts paid by the
Agent or such Lender pursuant to this Section 9.3.
The Borrower's obligation to reimburse the Agent
pursuant to the preceding sentence shall be an
Obligation payable on demand.
(4) AUTHORIZATION FOR SECURED PARTY TO TAKE CERTAIN
ACTION. The Borrower irrevocably authorizes the
Agent, at any time and from time to time, in the
sole discretion of the Agent, and appoints the
Agent as its attorney-in-fact to act on behalf of
the Borrower, (a) to execute on behalf of the
Borrower as debtor and to file financing
statements necessary or desirable in the Agent's
sole discretion to perfect and to maintain the
perfection and priority of the Agent's security
interest in the Collateral, on behalf of the
Lenders, (b) to endorse and collect any cash
proceeds of the Collateral, (c) to file a carbon,
photographic or other reproduction of this
Security Agreement or any financing statement with
respect to the Collateral as a financing statement
in such offices as the Agent in its sole
discretion deems necessary or desirable to perfect
and to maintain the perfection and priority of the
Agent's and the Lenders' security interest in the
Collateral, (d) to enforce payment of the
Receivables in the name of the Agent, any Lender
or the Borrower, and (e) to apply the proceeds of
any Collateral received by the Agent to the
Obligations as provided in Section 7 hereof. This
appointment as attorney-in-fact is coupled with an
interest and shall be irrevocable for so long as
any Obligations are outstanding.
(5) SPECIFIC PERFORMANCE OF CERTAIN COVENANTS. The
Borrower acknowledges and agrees that a breach of
any of the covenants contained in Sections 4.1,
4.5, 4.6, 4.12, 4.21, 5.3, 7 and 9.7 hereof will
cause irreparable injury to the Agent and the
Lenders and that the Agent and the Lenders have no
adequate remedy at law in respect of such breaches
and therefore agrees, without limiting the right
of the Agent and the Lenders to seek and obtain
specific performance of other obligations of the
Borrower contained in this Security Agreement,
that the covenants of the Borrower contained in
the Sections referred to in this Section 9.5 shall
be specifically enforceable against the Borrower.
(6) USE AND POSSESSION OF CERTAIN PREMISES. Upon the
occurrence of a Default or Unmatured Default, the
Agent or any Lender shall be entitled to occupy
and use any premises owned or leased by the
Borrower where records relating to the Collateral
are located until the Obligations are paid,
without any obligation to pay the Borrower or any
other Person for such use and occupancy.
(7) DISPOSITIONS NOT AUTHORIZED. The Borrower is not
authorized to sell or otherwise dispose of the
Collateral except as permitted in the Credit
Agreement and notwithstanding any course of
dealing between the Borrower and the Agent or any
Lender or other conduct of the Agent or any
Lender, no authorization to sell or otherwise
dispose of the Collateral (except as set forth in
the Credit Agreement) shall be binding upon the
Agent or any Lender unless such authorization is
in writing signed as required by Section 6 hereof.
(8) DEFINITION OF CERTAIN TERMS. Terms defined in the
Illinois Uniform Commercial Code which are not
otherwise defined in this Security Agreement are
used in this Security Agreement as defined in the
Illinois Uniform Commercial Code as in effect on
the date hereof.
(9) BENEFIT OF AGREEMENT. The terms and provisions of
this Security Agreement shall be binding upon and
inure to the benefit of the Borrower, the Agent
and the Lenders and each such Person's successors
and assigns, except that the Borrower shall not
have the right to assign its rights under this
Security Agreement or any interest herein without
the prior written consent of the Agent.
(10) SURVIVAL OF REPRESENTATIONS. All representations
and warranties of the Borrower contained in this
Security Agreement shall survive the execution and
delivery of this Security Agreement.
(11) TAXES AND EXPENSES. Any taxes (excluding income
taxes, franchise taxes or other taxes levied on
gross earnings, profits or the like) payable or
ruled payable by any Federal or State authority in
respect of this Security Agreement shall be paid
by the Borrower, together with interest and
penalties, if any. The Borrower shall reimburse
the Agent for any and all reasonable outofpocket
expenses and internal charges (including
reasonable attorneys', auditors' and accountants'
fees and reasonable time charges of attorneys,
auditors and accountants who may be employees of
the Agent or the Lenders) paid or incurred by the
Agent in connection with the preparation,
execution, delivery, administration, collection
and enforcement of this Security Agreement and in
the audit, analysis, administration, collection,
preservation or sale of the Collateral (including
the expenses and charges associated with any
periodic or special audit of the Collateral). The
Borrower shall reimburse the other Lenders for any
and all reasonable outofpocket expenses and
internal charges (including reasonable attorneys',
auditors' and accountants' fees and reasonable
time charges of attorneys, auditors and
accountants who may be employees of the Agent or
the Lenders) paid or incurred by any Lender in
connection with the enforcement of this Security
Agreement.
(12) HEADINGS. The title of and section headings in
this Security Agreement are for convenience of
reference only, and shall not govern the
interpretation of any of the terms and provisions
of this Security Agreement.
(13) TERMINATION. This Security Agreement and the
Liens arising hereunder shall continue in effect
(notwithstanding the fact that from time to time
there may be no Obligations or commitments
therefor outstanding) until the payment in full of
the Obligations and the termination of the Credit
Agreement in accordance with its terms and all
commitments of the Lenders thereunder, at which
time the security interests granted hereby shall
terminate and any and all rights to the Collateral
shall revert to the Borrower. Upon such
termination, the Agent shall promptly return to
the Borrower, at the Borrower's expense, such of
the Collateral held by the Agent as shall not have
been sold or otherwise applied pursuant to the
terms hereof. The Agent will promptly execute and
deliver to the Borrower such other documents as
the Borrower shall reasonably request to evidence
such termination.
(14) ENTIRE AGREEMENT. This Security Agreement, the
Credit Agreement and the other Loan Documents
embody the entire agreement and understanding
among the Borrower, the Agent and the Lenders
relating to the Collateral and supersede all prior
written and oral agreements and understandings
among the Borrower, the Agent and the Lenders
relating to the subject matter hereof.
(15) CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS,
WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF
THE STATE OF ILLINOIS, BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
(16) RELEASES. Upon termination of this Security
Agreement in accordance with the provisions of
Section 9.13 hereof, the Agent and the Lenders
shall, at the Borrower's request and expense,
execute such releases as the Borrower may
reasonably request, in form and upon terms
acceptable to the Agent and the Lenders in all
respects.
(17) WAIVERS. Except to the extent expressly otherwise
provided herein or in any other Loan Document, the
Borrower waives, to the extent permitted by
applicable law, (a) any right to require either
the Agent or any Lender to proceed against any
other person, to exhaust its rights in any other
collateral, or to pursue any other right which
either the Agent or any Lender may have, and (b)
with respect to the Obligations, presentment and
demand for payment, protest, notice of protest and
nonpayment, and notice of the intention to
accelerate.
(18) COUNTERPARTS. This Security 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 Security Agreement by signing any
such counterpart. This Security Agreement shall
be effective when it has been executed by the
Borrower and the Agent.
(19) DISTRIBUTION OF REPORTS. The Borrower authorizes
the Agent and each Lender, as the Agent or such
Lender may elect in its sole discretion, to
discuss with and furnish to any other Person
having an interest in the Obligations (whether as
a guarantor, pledgor of collateral, participant or
otherwise) all financial statements, audit reports
and other information pertaining to the Borrower
or the Collateral whether such information was
provided by the Borrower or prepared or obtained
by the Agent or such Lender. Neither the Agent
nor any Lender, nor any of such Person's
employees, officers, directors or agents makes any
representation or warranty regarding any audit
reports or other analyses of the Borrower's
condition which the Agent or such Lender may in
its sole discretion prepare and elect to
distribute, nor shall the Agent or any Lender, nor
any such Person's employees, officers, directors
or agents be liable to any person or entity
receiving a copy of such reports or analyses for
any inaccuracy or omission contained in or
relating thereto.
x. NOTICES.
(1) SENDING NOTICES. Any notice required or permitted
to be given under this Security Agreement shall be
given in accordance with Section 13.1 of the
Credit Agreement.
(2) CHANGE IN ADDRESS FOR NOTICES. Each of the
Borrower and the Agent may change the address for
service of notice upon it by a notice in writing
to the other party hereto.
IN WITNESS WHEREOF, the Borrower has executed this Security
Agreement as of the date first above written.
RAWLING'S SPORTING GOODS
COMPANY, INC.
By:/s/ Rexford K. Peterson
Title: Chief Financial Officer
ACCEPTED AND AGREED TO:
THE FIRST NATIONAL BANK
OF CHICAGO, as Agent for the Lenders
By:/s/ Nathan Block
Title: First Vice President