EXHIBIT 10.9
OFFSET WAIVER AGREEMENT
This Offset Waiver Agreement (the "Agreement") is made and
entered into as of September 5, 2003, by and among ESCALADE, INCORPORATED, an
Indiana corporation ("Escalade"); MARTIN YALE INDUSTRIES, INC., an Indiana
corporation ("Martin Yale"); INDIAN INDUSTRIES, INC., an Indiana corporation
("Indian Industries"); MASTER PRODUCTS MANUFACTURING COMPANY, INC., a Delaware
corporation ("Master Products"); HARVARD SPORTS, INC., a California corporation
("Harvard Sports"); U.S. WEIGHT, INC., an Illinois corporation ("U.S. Weight");
BEAR ARCHERY, Inc., a Florida corporation ("Bear Archery"); INDIAN-MARTIN, INC.,
a Nevada corporation ("Indian-Martin"); and BANK ONE, NATIONAL ASSOCIATION, a
national banking association with its principal office in Indianapolis, Indiana
("Bank").
Recitals
A. Escalade is the sole shareholder of Martin Yale,
Indian Industries and Indian-Martin. Martin Yale is the sole shareholder of
Master Products, and Indian Industries is the sole shareholder of Harvard
Sports, U.S. Weight and Bear Archery. (Hereinafter, Martin Yale, Indian
Industries, Master Products, Harvard Sports, U.S. Weight and Bear Archery shall
be referred to collectively as the "Domestic Subsidiaries," and individually as
a "Domestic Subsidiary.")
B. Indian-Martin and Bank have entered into a Credit
Agreement as of even date (the "Credit Agreement"), that, among other things,
establishes a credit facility for Indian-Martin with the Bank authorizing a loan
to Indian-Martin from Bank of up to the aggregate principal sum of $45,000,000
(the "Loan"). The Loan is secured by the grant of a security interest and
assignment to Bank of all of Indian-Martin's rights, title and interests, now
owned or hereafter acquired by Indian-Martin, in and to that Collateral defined
and described in the Credit Agreement. (Hereinafter, all indebtedness,
Obligations and liabilities and any renewals or extensions thereof owed by
Indian-Martin to Bank under the Credit Agreement and Loan Documents shall be
referred to collectively as the "Indian-Martin/Bank One Obligations.") All
capitalized terms used, but not otherwise defined, herein shall have the
respective meanings ascribed to them in the Credit Agreement.
C. In accordance with those six (6) certain Receivables
Purchase Agreements executed by Indian-Martin and each of the Domestic
Subsidiaries, respectively, before or concurrent with execution of the Credit
Agreement, the other Loan Documents and this Agreement, Indian-Martin shall
purchase certain accounts receivable of the Domestic Subsidiaries. Payment by
Indian-Martin for the purchase of such receivables shall be made with proceeds
of Indian-Martin's borrowings under the Loan. (Hereinafter, all indebtedness,
obligations and liabilities, and any renewals or extensions thereof, owed by
Indian-Martin to the Domestic Subsidiaries, respectively, arising out of the
Receivables Purchase Agreements shall be referred to collectively as the
"Indian-Martin/Domestic Subsidiaries Obligations".)
D. Pursuant to the Receivables Purchase Agreements,
among other things, Indian-Martin shall have and be granted certain indemnities
and rights of limited recourse owing
to it from the Domestic Subsidiaries, respectively, all of which indemnities and
rights are required to and shall be assigned by Indian-Martin to Bank, and Bank
shall be granted a security interest therein, under the Company Security
Agreement (hereinafter, collectively the "Domestic
Subsidiaries/Indian-Martin/Bank One Obligations").
E. The permitted use of the proceeds of the Loan under
the Credit Agreement requires Indian-Martin, on a one time basis, to loan to
Escalade $14,000,000.00, for which Escalade shall issue the Escalade Note
payable to Indian-Martin evidencing such loan (the "Escalade/Indian-Martin
Loan"). The Escalade Note shall be pledged by Indian-Martin to Bank and shall be
a part of the Collateral given to secure the Indian-Martin/Bank One Obligations.
(Hereinafter, all indebtedness, obligations and liabilities, and all renewals
and extensions thereof, owed by Escalade to Indian-Martin arising out of the
Escalade/Indian-Martin Loan shall be referred to collectively as the
"Escalade/Indian-Martin Obligations.")
F. Escalade intends to use the proceeds of the
Escalade/Indian-Martin Loan to repay existing indebtedness to Bank and/or fund
unsecured loans from Escalade to each of the Domestic Subsidiaries,
respectively, to finance their current ongoing operations (the "Domestic
Subsidiaries/Escalade Loans"). (Hereinafter, all indebtedness, obligations and
liabilities, and all renewals and extensions thereof, owed by the Domestic
Subsidiaries, individually and collectively, to Escalade arising out of the
Domestic Subsidiaries/Escalade Loans shall be referred to collectively as the
"Domestic Subsidiaries/Escalade Obligations".)
G. As a condition precedent to execution and delivery of
the Credit Agreement, Bank requires the execution and delivery of this Agreement
whereby Escalade, the Domestic Subsidiaries and Indian-Martin each knowingly,
unconditionally and absolutely waive and terminate all rights of offset and
similar rights which may otherwise exist with respect to those obligations owing
by , to or among each other.
NOW THEREFORE, IN CONSIDERATION OF THE FOREGOING, AND FOR GOOD
AND VALUABLE CONSIDERATIONS, THE RECEIPT, SUFFICIENCY AND MUTUALITY OF WHICH ARE
HEREBY ACKNOWLEDGED, AND IN ORDER TO SATISFY THE CONDITIONS PRECEDENT OF THE
CREDIT AGREEMENT, ESCALADE, THE DOMESTIC SUBSIDIARIES AND INDIAN-MARTIN AGREE
WITH BANK AS FOLLOWS:
1. Until such time as all Indian-Martin/Bank One
Obligations are fully and finally paid, performed and satisfied, and the credit
commitment under the Credit Agreement from Bank to Indian-Martin is no longer of
any force or effect, Indian-Martin hereby knowingly, unconditionally and
absolutely waives all rights, claims or privileges of offset, set off,
counterclaim, recoupment, abatement and any and all other similar rights, claims
or privileges which Indian-Martin may otherwise have, or hereafter claim or
assert, with respect to (i) any or all of the Escalade/Indian-Martin
Obligations, and (ii) any or all of the Indian-Martin/Domestic Subsidiaries
Obligations, whether or not such Indian-Martin/Domestic Subsidiaries Obligations
are assigned, sold or otherwise transferred by the Domestic Subsidiaries to
Escalade.
2. Until such time as all Indian-Martin/Bank One
Obligations are fully and finally paid, performed and satisfied, and the credit
commitment under the Credit Agreement
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from Bank to Indian-Martin is no longer of any force or effect, Escalade hereby
knowingly, unconditionally and absolutely waives all rights, claims or
privileges of offset, set off, counterclaim, recoupment, abatement and any and
all other similar rights, claims or privileges which Escalade may otherwise
have, or hereafter claim or assert, with respect to (i) any or all of the
Escalade/Indian-Martin Obligations, and (ii) any or all of the
Indian-Martin/Domestic Subsidiaries Obligations, whether or not such
Indian-Martin/Domestic Subsidiaries Obligations are assigned, sold or otherwise
transferred by the Domestic Subsidiaries to Escalade.
3. Until such time as all Indian-Martin/Bank One
Obligations are fully and finally paid, performed and satisfied, and the credit
commitment under the Loan Agreement from Bank to Indian-Martin is no longer of
any force or effect, each Domestic Subsidiary hereby knowingly, unconditionally
and absolutely waives all rights, claims or privileges of offset, set off,
counterclaim, recoupment, abatement and any and all other similar rights, claims
or privileges which Domestic Subsidiaries may otherwise have, or hereafter claim
or assert, with respect to (i) any or all of the Indian-Martin/Domestic
Subsidiaries Obligations, whether or not such Indian-Martin/Domestic
Subsidiaries Obligations are assigned, sold or otherwise transferred by the
Domestic Subsidiaries to Escalade, and (ii) any or all of the Domestic
Subsidiaries/Indian-Martin/Bank One Obligations.
4. Each of Indian-Martin, Escalade and the Domestic
Subsidiaries, respectively, hereby acknowledges and consents to the waivers and
agreements of each other as set forth in this Agreement.
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
INDIAN INDUSTRIES, INC., INDIAN-MARTIN, INC.,
an Indiana corporation a corporation organized and existing
under the laws of the State of Nevada
By: __________________________________ By: _________________________________
_____________________________________ _____________________________________
(Printed Name and Title) (Printed Name and Title)
HARVARD SPORTS, INC., ESCALADE, INCORPORATED,
a California corporation an Indiana corporation
By: __________________________________ By: _________________________________
_____________________________________ _____________________________________
(Printed Name and Title) (Printed Name and Title)
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U.S. WEIGHT, INC., an Illinois MARTIN YALE INDUSTRIES, INC., an
corporation Indiana corporation
By: __________________________________ By: _________________________________
______________________________________ _____________________________________
(Printed Name and Title) (Printed Name and Title)
BEAR ARCHERY, INC., MASTER PRODUCTS MANUFACTURING
a Florida corporation COMPANY, INC., a Delaware corporation
By: __________________________________ By: _________________________________
______________________________________ _____________________________________
(Printed Name and Title) (Printed Name and Title)
BANK ONE, NATIONAL ASSOCIATION, a
national banking association
By: _________________________________
_____________________________________
(Printed Name and Title)