AMENDMENT NO. 2 TO AMENDED AND RESTATED CREDIT AGREEMENT
This Amendment No. 2 to Amended and Restated Credit Agreement
(this "Amendment Agreement") is entered into as of February 28,
1999 by and among Rawlings Sporting Goods Company, Inc. (the
"Borrower"), the undersigned lenders (the "Lenders") and The First
National Bank of Chicago, as agent (the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders and the Agent entered into
that certain Amended and Restated Credit Agreement dated as of
September 12, 1997 and amended as of May 31, 1998 (the "Credit
Agreement"); and
WHEREAS, the Borrower, the Lenders and the Agent have agreed
to amend the Credit Agreement on the terms and conditions herein
set forth.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINED TERMS. Capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed to such
terms in the Credit Agreement, as amended hereby.
2. AMENDMENTS TO CREDIT AGREEMENT.
2.1 Article I of the Credit Agreement is hereby amended by
(a) adding the following definitions in the proper alphabetical
order:
"Adjusted EBITDA" means (a) EBITDA, PLUS (b) charges
taken by the Borrower in its 1998 Fiscal Year in connection
with (i) inventory reserves in connection with aluminum
baseball bats and (ii) certain environmental cleanup matters,
PLUS (c) for the purposes of calculations with respect to its
1999 Fiscal Year, restructuring charges taken in the
Borrower's 1999 Fiscal Year in an amount not to exceed
$2,000,000, LESS any amount of the cash portion of such
charges in excess of $500,000.
"Applicable Base Rate Margin" means, subject to the last
sentence of this definition, for any period, the applicable of
the following percentages in effect with respect to such
period as the Average Debt to Adjusted EBITDA Ratio of the
Borrower shall fall within the indicated ranges:
AVERAGE DEBT TO APPLICABLE BASE
ADJUSTED EBITDA RATIO RATE MARGIN
Greater than or Equal to 5.0:1.0 1.25%
Greater than or Equal to 4.0:1.0 but
Less than 5.0:1.0 1.00%
Greater than or Equal to 3.0:1.0 but
Less than 4.0:1.0 0.75%
Greater than or Equal to 2.5:1.0 but
Less than 3.0:1.0 0.50%
Greater than or Equal to 2.0:1.0 but
Less than 2.5:1.0 0.25%
Less than 2.0:1.0 0%
The Average Debt to Adjusted EBITDA Ratio shall be calculated
by the Borrower as of the end of each Fiscal Quarter,
commencing with the Fiscal Quarter ending February 28, 1999,
and shall be reported to the Agent pursuant to a certificate
executed by an Authorized Officer of the Borrower and
delivered in connection with Section 6.1(d) hereof. The
Applicable Base Rate Margin shall be adjusted, if necessary,
beginning on the third Business Day after the delivery of such
certificate; provided, that if such certificate, together with
the financial statements (in the form required by Section
6.1(a) or (b)) to which such certificate relates, is not
delivered to the Agent by the date on which the related
financial statements are due to be delivered to the Agent
pursuant to Section 6.1(a) or (b), as applicable, then the
Applicable Base Rate Margin shall be equal to 1.25% until the
next adjustment date. Until adjusted as provided above, the
Applicable Base Rate Margin shall be equal to 1.25%.
"Applicable Commitment Fee Percentage" means, subject to
the last sentence of this definition, for any period, the
applicable of the following percentages in effect with respect
to such period as the Average Debt to Adjusted EBITDA Ratio of
the Borrower shall fall within the indicated ranges:
AVERAGE DEBT TO APPLICABLE COMMITMENT
ADJUSTED EBITDA RATIO FEE PERCENTAGE
Greater than or Equal to 4.0:1.0 0.50%
Greater than or Equal to 3.0:1.0 but
Less than 4.0:1.0 0.375%
Greater than or Equal to 2.5:1.0 but
Less than 3.0:1.0 0.35%
Less than 2.5:1.0 0.30%
The Average Debt to Adjusted EBITDA Ratio shall be calculated
by the Borrower as of the end of each Fiscal Quarter,
commencing with the Fiscal Quarter ending February 28, 1999,
and shall be reported to the Agent pursuant to a certificate
executed by an Authorized Officer of the Borrower and
delivered in connection with Section 6.1(d) hereof. The
Applicable Commitment Fee Percentage shall be adjusted, if
necessary, beginning on the third Business Day after the
delivery of such certificate; provided, that if such
certificate, together with the financial statements (in the
form required by Section 6.1(a) or (b)) to which such
certificate relates, is not delivered to the Agent by the date
on which the related financial statements are due to be
delivered to the Agent pursuant to Section 6.1(a) or (b), as
applicable, then the Applicable Commitment Fee Percentage
shall be equal to 0.50% until the next adjustment date. Until
adjusted as provided above, the Applicable Commitment Fee
Percentage shall be equal to .50%.
"Applicable Eurodollar Margin" means, subject to the last
sentence of this definition, for any period, the applicable of
the following percentages in effect with respect to such
period as the Average Debt to Adjusted EBITDA Ratio of the
Borrower shall fall within the indicated ranges:
AVERAGE DEBT TO APPLICABLE
ADJUSTED EBITDA RATIO EURODOLLAR MARGIN
Greater than or Equal to 5.0:1.0 2.25%
Greater than or Equal to 4.0:1.0 but
Less than 5.0:1.0 2.00%
Greater than or Equal to 3.0:1.0 but
Less than 4.0:1.0 1.75%
Greater than or Equal to 2.5:1.0 but
Less than 3.0:1.0 1.50%
Greater than or Equal to 2.0:1.0 but
Less than 2.5:1.0 1.25%
Less than 2.0:1.0 1.00%
The Average Debt to Adjusted EBITDA Ratio shall be calculated
by the Borrower as of the end of each Fiscal Quarter,
commencing with the Fiscal Quarter ending February 28, 1999,
and shall be reported to the Agent pursuant to a certificate
executed by an Authorized Officer of the Borrower and
delivered in connection with Section 6.1(d) hereof. The
Applicable Eurodollar Margin shall be adjusted, if necessary,
with respect to each Interest Period beginning on or after the
third Business Day after the delivery of such certificate;
provided, that if such certificate, together with the
financial statements (in the form required by Section 6.1(a)
or (b)) to which such certificate relates, is not delivered to
the Agent by the date on which the related financial
statements are due to be delivered to the Agent pursuant to
Section 6.1(a) or (b), as applicable, then the Applicable
Eurodollar Margin shall be equal to 2.25% until the next
adjustment date. Until adjusted as provided above, the
Applicable Eurodollar Margin shall be deemed equal to 2.25%.
"Average Debt to Adjusted EBITDA Ratio" means, for any
applicable computation period, the ratio of (a) (i) the sum of
the consolidated Debt of the Borrower as at the end of each
Fiscal Quarter in the period of four Fiscal Quarters ending on
the date of determination, DIVIDED by (ii) four, to (b)
Adjusted EBITDA.
"Debt" of a Person means such Person's Indebtedness other
than such person's (a) Rate Hedging Obligations and (b)
Obligations for which such Person is then liable pursuant to
or in respect of a Standby Letter of Credit and the face
amount of any other Letter of Credit which is not a trade or
commercial Letter of Credit.
"Year-End Debt to Adjusted EBITDA Ratio" means, as of the
end of each Fiscal Year, the ratio of (a) the Borrower's
consolidated Debt as of the end of such Fiscal Year to (b)
Adjusted EBITDA for the Fiscal Year then ended.
(b) deleting the definition of "Applicable Margin" in its
entirety, (c) amending the definitions of "Debt to Capitalization
Ratio" and "Fixed Charges" by deleting each reference therein to
"Indebtedness" and replacing it with a reference to "Debt" and (d)
amending the definition of "Fixed Charge Coverage Ratio" by
deleting the reference therein to "EBITDA" and replacing it with a
reference to "Adjusted EBITDA".
2.3 Article II of the Credit Agreement is hereby amended by
deleting the phrase "a commitment fee of thirty basis points (.30%)
per annum" from Section 2.4(a) and inserting in lieu thereof the
phrase "a per annum rate equal to the Applicable Commitment Fee
Percentage".
2.4 Article VI of the Credit Agreement is hereby amended as
follows:
(a) Section 6.20 is hereby amended by deleting the
reference to "$3,000,000" and replacing it with a reference to
"$4,000,000".
(b) Section 6.28 is hereby amended by (i) deleting
Section 6.28.3 in its entirety and replacing it with the following:
6.28.3. FIXED CHARGE COVERAGE RATIO. As of the
end of each Fiscal Quarter, maintain a Fixed Charge
Coverage Ratio for the four Fiscal Quarters then ended of
not less than (a) 1.50 to 1.0 as of the last day of the
Fiscal Quarters ended February 28, 1999, May 31, 1999 and
August 31, 1999 and (b) 1.75 to 1.0 as of the last day of
each Fiscal Quarter thereafter.
and (ii) adding Sections 6.28.4 and 6.28.5 as follows:
6.28.4. AVERAGE DEBT TO ADJUSTED EBITDA RATIO.
Maintain an Average Debt to Adjusted EBITDA Ratio as of
the end of each Fiscal Quarter of not greater than the
following:
PERIOD MAXIMUM RATIO
Fiscal Year 1999 5.5:1.0
Fiscal Year 2000 5.0:1.0
Fiscal Year 2001 4.5:1.0
Fiscal Year 2002 4.0:1.0
6.28.5. YEAR-END DEBT TO ADJUSTED EBITDA RATIO.
Maintain a Year-End Debt to Adjusted EBITDA Ratio as of
the end of each Fiscal Year of not greater than the
following:
MEASUREMENT DATE MAXIMUM RATIO
Fiscal Year End 1999 3.95:1.0
Fiscal Year End 2000 3.50:1.0
Fiscal Year End 2001 3.00:1.0
Fiscal Year End 2002 2.50:1.0
2.5 Exhibit C to the Credit Agreement is hereby amended and
restated in its entirety in the form of the Exhibit C attached as
Annex I hereto.
3. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
3.1 The Borrower represents and warrants that the execution,
delivery and performance by the Borrower of this Amendment
Agreement have been duly authorized by all necessary corporate
action and that this Amendment Agreement is a legal, valid and
binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, except as the enforcement
thereof may be subject to (a) the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors' rights generally and (b) general principles of
equity (regardless of whether such enforcement is sought in a
proceeding in equity or at law).
3.2 The Borrower hereby certifies that each of the
representations and warranties contained in the Credit Agreement is
true and correct in all material respects on and as of the date
hereof as if made on the date hereof, except to the extent that any
such representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty shall
be true and correct on and as of such earlier date.
4. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT.
4.1 Upon the effectiveness of this Amendment Agreement, each
reference in the Credit Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import and each reference to
the Credit Agreement in each Loan Document shall mean and be a
reference to the Credit Agreement as amended hereby.
4.2 Except as specifically amended above, all of the terms,
conditions and covenants of the Credit Agreement and the other Loan
Documents shall remain unaltered and in full force and effect and
shall be binding upon the Borrower in all respects and are hereby
ratified and confirmed.
4.3 The execution, delivery and effectiveness of this
Amendment Agreement shall not operate as a waiver of (a) any right,
power or remedy of any Lender or the Agent under the Credit
Agreement or any of the Loan Documents, or (b) any Default or
Unmatured Default under the Credit Agreement.
5. COSTS AND EXPENSES. The Borrower agrees to pay on demand all
reasonable fees and out-of-pocket expenses of counsel for the Agent
in connection with the preparation, execution and delivery of this
Amendment Agreement.
6. CHOICE OF LAW. THIS AMENDMENT AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF
THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE
TO NATIONAL BANKS.
7. EXECUTION IN COUNTERPARTS; EFFECTIVENESS. This Amendment
Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. This
Amendment Agreement shall become effective as of the date first
above written; provided, that (a) the Agent has received
counterparts of this Amendment Agreement duly executed by the
Borrower and the Required Lenders and (b) the Borrower has paid the
Agent, on behalf of each Lender executing this Amendment and
delivering it to the Agent by April 5, 1999, an amendment fee equal
to .10% of such Lender's Commitment.
8. HEADINGS. Section headings in this Amendment Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Amendment Agreement for any other
purposes.
[signature pages to follow]
IN WITNESS WHEREOF, the Borrower, the Agent and the Lenders
have executed this Amendment Agreement as of the date first above
written.
RAWLINGS SPORTING GOODS COMPANY, INC.
By: /s/ Rexford K. Peterson
Title: Interim Chief Financial Officer
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
By: /s/ Stephen C. Price
Title: First Vice President
THE BANK OF NEW YORK
By: /s/ David Shedd
Title: Vice President
COMERICA BANK
By: /s/ Jeffrey E. Peck
Title: Vice President
MERCANTILE BANK NATIONAL ASSOCIATION
By: /s/ Stephen M. Reese
Title: Senior Vice President
NATIONSBANK, N.A.
By: /s/ Kent M. Schmelder
Title: Senior Vice President