AMENDMENT NO. 3 TO AMENDED AND RESTATED CREDIT AGREEMENT
This Amendment No. 3 to Amended and Restated Credit
Agreement (this "Amendment Agreement") is entered into as of July
14, 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 and February
28, 1999 (the "Credit Agreement"); and
WHEREAS, a Default exists under Sections 6.28.3 and 6.28.4
for the Borrower's Fiscal Quarter ending May 31, 1999 (the
"Subject Defaults"); and
WHEREAS, the Borrower, the Lenders and the Agent have agreed
to waive the Subject Defaults and 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.
a. Article I of the Credit Agreement is hereby amended by
adding the following definitions in the proper
alphabetical order:
"Borrower Intellectual Property Assignment" means that
certain Intellectual Property Assignment of Security
Interest, dated as of July 14, 1999, by and between Borrower
and the Agent, as the same may be amended, supplemented or
otherwise modified from time to time.
"Borrower Mortgage" means, collectively, the mortgages,
deeds of trust and similar instruments from time to time
duly executed and delivered by the Borrower in favor of the
Agent, on behalf of the Lenders, pledging real property of
the Borrower, as the same may be amended, supplemented or
otherwise modified from time to time.
"Borrower Pledge Agreement" means that certain Pledge
Agreement, dated as of July 14, 1999, duly executed and
delivered by the Borrower pledging certain stock of its
Subsidiaries to the Agent, on behalf of the Lenders, as the
same may be amended, supplemented or otherwise modified from
time to time.
"Borrower Security Agreement" means that certain Pledge and
Security Agreement, dated as of July 14, 1999, duly executed
and delivered by the Borrower in favor of the Agent, on
behalf of the Lenders, as the same may be amended,
supplemented or otherwise modified from time to time.
"Borrower Security Documents" means the Borrower Security
Agreement, the Borrower Mortgage, the Borrower Pledge
Agreement, the Borrower Intellectual Property Assignment
and any other agreements, documents or instruments at any
time securing or guaranteeing the Obligations.
"Borrowing Base" means, at any time, an amount equal to the
sum of (a) 80% of the book value of Borrower's accounts
receivable, net of allowance, (b) 50% of the book value of
Borrower's inventory, and (c) 30% of the book value of
Borrower's net property, plant and equipment, in each case
determined from a consolidated balance sheet of the Borrower
prepared in accordance with Agreement Accounting Principles.
"Subsidiary Security Documents" means, at any time, all
agreements, documents and instruments from time to time duly
executed and delivered to the Agent, on behalf of the
Lenders, by Rawlings Canada, Incorporated securing or
guaranteeing the Obligations.
b. The definition of "Loan Documents" set forth in Article
I of the Credit Agreement is hereby amended to insert
", Borrower Security Documents, Subsidiary Security
Documents" immediately after the term "Reimbursement
Agreements."
2.3 Section 2.1(a) of the Credit Agreement is hereby
amended by adding at the end thereof the following:
"Notwithstanding the foregoing or Section 2.20.1, no
additional Advances under this Section 2.1(a) or Facility
Letters of Credit under Section 2.20.1 shall be permitted
after July 14, 1999 until the Lenders have received a
borrowing base certificate in accordance with Section 6.1(m)
for the month of June, 1999, and thereafter the aggregate
principal balance of all Loans plus the aggregate Facility
Letter of Credit Obligations outstanding at any time during
any calendar month, after giving effect to any Advances or
Facility Letters of Credit at the time requested by the
Borrower under this Section 2.1(a) or Section 2.20.1, shall
not be permitted to exceed the Borrowing Base as in effect
at the end of the calendar month for which the most recent
borrowing base certificate has been delivered to the Lenders
pursuant to Section 6.1(m)."
2.4 Clause (iii) of Section 2.20.1 of the Credit Agreement
is hereby amended by adding immediately after the phrase
"Facility Letter of Credit Sublimit" appearing therein the phrase
"or the limitations set forth in the last sentence of Section
2.1(a)".
2.5 Section 2.3 of the Credit Agreement is hereby amended
by adding at the end thereof ", provided that on and after July
14, 1999, the Borrower shall not be permitted to incur Eurodollar
Advances, to convert Floating Rate Advances into Eurodollar
Advances or continue any then outstanding Eurodollar Advances
beyond the Interest Periods then in effect.
2.6 Section 2.7(a) of the Credit Agreement is hereby
amended by deleting the date "September 1, 1999" appearing
therein and substituting in lieu thereof the date "July 14,
1999".
2.7 Section 2.20.6 is hereby amended by deleting the
percentage ".50%" appearing therein and substituting in lieu
thereof the percentage "1.00%."
2.8 Section 6.1(a) of the Credit Agreement is hereby
amended to add at the end thereof the following:
"In addition to the foregoing, not later than September 30 ,1999
the Borrower shall deliver to the Agent and the Lenders its
unaudited balance sheet and related statements of income and cash
flows for its Fiscal Year ended August 31, 1999, prepared in
accordance with Agreement Accounting Principles on a consolidated
and consolidating basis, and, notwithstanding Section 7.4 to the
contrary, failure to deliver such statements by such date shall
constitute an immediate Default without any requirement of notice
to Borrower or passage of time after such date."
2.9 Section 6.1 of the Credit Agreement is hereby amended
to add at the end thereof the following:
"(m) As soon as practicable and in any event not later than
15 days after the end of each calendar month, commencing
with the month of June, 1999, a certificate in the form of
Exhibit A to Amendment No. 3 to the Agreement signed by the
Borrower's chief financial officer setting forth the
calculation of the Borrowing Base as of the end of such
month and the Borrower's compliance with Section 6.32."
2.10 Article VI of the Credit Agreement shall be amended
hereby by adding at the end thereof the following additional
Sections:
"6.31. BANK ACCOUNTS. The Borrower will not, nor permit
its Subsidiaries to (i) permit remittances of accounts or
other customer receivables to be made other than to
lockboxes maintained with the Agent at its main office in
Chicago, Illinois, or (ii) maintain any deposit accounts,
cash or Investments with any Person or at any location other
than with the Agent at its main office in Chicago, Illinois,
provided that the Borrower may maintain deposit accounts
with local banks in the ordinary course of business and
consistent with past practice as long as the aggregate
balance in all such accounts does not exceed at any time (x)
$100,000 for accounts maintained in the United States, and
(y) $750,000 for accounts maintained in Canada.
6.32 BORROWING BASE. On and after delivery of the first
borrowing base certificate required by Section 6.1(m), the
Borrower will not cause or permit the aggregate outstanding
principal balance of the Loans plus the aggregate
outstanding amount of all Facility Letter of Credit
Obligations at any time to exceed the Borrowing Base as in
effect at the end of the calendar month for which the most
recent such certificate has been delivered to the Lenders
pursuant to Section 6.1(m).
6.33 ADDITIONAL COLLATERAL. As soon as practicable and in
any event not later than July 30, 1999, the Borrower shall
have (i) pledged to the Agent, for the benefit of the Agent
and Lenders, a first and prior lien and security interest in
all right, title and interest of the Borrower in and to all
real property owned by it, including, without limitation,
its facilities located in Licking, Missouri; Dolgeville, New
York; Tullahoma, Tennessee; and Springfield, Missouri, all
in form and substance satisfactory to Agent, (ii) caused
Rawlings Canada, Incorporated to guaranty the Obligations
and to secure such guaranty granted (y) to the Agent, for
the benefit of the Agent and Lenders, a first and prior
mortgage and security interest in all real and personal
property of Rawlings Canada, Incorporated located in the
Province of Ontario and (z) to a financial institution
acceptable to Agent, as trustee for the benefit of the Agent
and the Lenders a first and prior moveable and immovable
hypothec in all moveable and immovable property of Rawlings
Canada, Incorporated located in the Province of Quebec,
including, without limitation, its facilities in
Daveluyville, Quebec, and (iii) in connection with the
foregoing, delivered to the Agent such additional documents,
instruments and agreements, including certified directors
resolutions, title policies, surveys and counsel opinions,
requested by Agent and as are customary in connection with
obtaining and maintaining such security in all such
property .
6.34 LANDLORD WAIVERS. The Borrower shall use its best
efforts to deliver to the Agent for each location leased by
the Borrower and at which the Borrower maintains inventory
or equipment, an agreement with the landlord of such
premises, in form and substance satisfactory to Agent,
acknowledging Agent's Lien on Borrower's property,
subordinating such landlord's rent claims to such Lien, and
permitting Agent access to such premises after the
occurrence of a Default for purposes of enforcing such Lien.
6.35 RAWLINGS MISSOURI. Borrower shall not permit Rawlings
Sporting Goods Company of Missouri, a Missouri corporation,
to engage in any business, own any property or incur or
suffer to exist any Indebtedness."
2.11 Section 7.4 of the Credit Agreement shall be amended by
inserting at the end thereof ", or the occurrence of any
'Default' as defined in any Loan Document other than this
Agreement."
2.12 The first sentence of Section 9.7 of the Credit
Agreement shall be amended by restating the same in full as
follows:
"The Borrower shall reimburse the Agent for any reasonable
costs, internal charges and out-of-pocket expenses
(including attorneys' fees and time charges of attorneys for
the Agent, which attorneys may be employees of the Agent,
and customary charges of the Agent's internal auditors) paid
or incurred by the Agent in connection with the preparation,
negotiation, execution, delivery, review, amendment,
modification and administration (including any inspection of
books and records pursuant to Section 6.9) of the Loan
Documents."
3. WAIVER. Upon the effectiveness of this Amendment Agreement,
the Agent and the Lenders hereby waive the Subject Defaults.
Such waiver shall extend solely to the Subject Defaults and
shall not be deemed a waiver of any subsequent breach of
Sections 6.28.3 or 6.28.4 for financial reporting periods
occurring after May 31, 1999.
4. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
a. 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).
b. The Borrower hereby certifies that, after giving effect
to this Amendment Agreement, 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, and no Default or Unmatured Default
exists and is continuing.
5. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT.
a. 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.
b. 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.
c. Except as expressly set forth herein, 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.
6. 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.
7. 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.
8. 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
Borrower shall have delivered to Agent, in form and
substance satisfactory to Agent:
(a) counterparts of this Amendment Agreement duly executed
by the Borrower and the Lenders;
(b) the Borrower Security Agreements (other than the
Borrower Mortgage) in form and substance satisfactory to
Agent, together with such UCC financing statements as may be
requested by Agent and all stock certificates pledged under
the Borrower Pledge Agreement with appropriate undated stock
powers endorsed in blank;
(c) certified copies of its Board of Directors resolutions
authorizing this Amendment Agreement and the Borrower
Security Documents;
(d) a certificate of its chief financial officer stating
that, after giving effect to the Amendment Agreement, no
Default or Unmatured Default exists;
(e) a written opinion of counsel to Borrower regarding the
Amendment Agreement and Borrower Security Documents; and
(f) the Borrower shall have paid all legal fees and expenses
of the Agent invoiced to Borrower.
9. 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: Chief Financial Officer
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
By: /s/ Nathan Block
Title: First Vice President
THE BANK OF NEW YORK
By: /s/ David Shedd
Title: Vice President
COMERICA BANK
By: /s/ Jeffrey Peck
Title: Vice President
MERCANTILE BANK NATIONAL
ASSOCIATION
By: /s/ David Dains
Title: Vice President
NATIONSBANK, N.A.
By: /s/ Keith Schmelder
Title: Senior Vice President