EXHIBIT 10.1
CONSENT AND AMENDMENT NO. 10 TO CREDIT AGREEMENT
CONSENT AND AMENDMENT NO. 10 TO CREDIT AGREEMENT (this
"Amendment"), dated as of December 11, 2002 among RAWLINGS SPORTING GOODS
COMPANY, INC., a Delaware corporation ("Borrower"), the other Credit Parties
signatory to the hereinafter defined Credit Agreement; GENERAL ELECTRIC CAPITAL
CORPORATION, a Delaware corporation (in its individual capacity, "GE Capital"),
for itself, as Lender, and as Agent for Lenders ("Agent"), and the other Lenders
signatory to the hereinafter defined Credit Agreement.
WITNESSETH:
WHEREAS, the Borrower, the other Credit Parties, the Agent and
the Lenders are party to that certain Credit Agreement, dated as of December 28,
1999 (as amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement");
WHEREAS, Borrower has informed Agent and Lenders that it
wishes to enter into the Single Customer Credit Approved Receivables Purchasing
Agreement with The CIT Group Commercial Services, Inc. ("CIT") in the form
attached hereto as Exhibit A (the "SCARPA") and that it wishes to enter into a
related Assignment Agreement with CIT and Agent in the form of Exhibit B hereto
(the "Assignment Agreement" and together with the SCARPA, the "CIT Documents");
WHEREAS, on and subject to the terms and conditions hereof,
Borrower and the other Credit Parties have requested that Agent and Lenders, and
Agent and Lenders are willing to, consent to the CIT Documents and amend certain
provisions of the Credit Agreement, as set forth herein;
WHEREAS, this Amendment shall constitute a Loan Document and
these Recitals shall be construed as part of this Amendment; capitalized terms
used herein without definition are so used as defined in Annex A to the Credit
Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, the parties hereto hereby agree as follows:
1. Consent. Subject to the conditions and effectiveness of
this Amendment and otherwise notwithstanding the provisions of any Loan
Document, Agent and Lenders hereby consent to the execution and consummation of
the CIT Documents, and the Lenders hereby direct the Agent to execute the
Assignment Agreement.
2. Amendments.
(a) Section 1.6(a) of the Credit Agreement is amended by
adding the words "or, in the case of Accounts where CIT is the Account Debtor,
pursuant to the SCARPA" at the end of such Section.
(b) Section 1.6(d) of the Credit Agreement is amended by
adding the words "or, in the case of Accounts where CIT is the Account Debtor,
indebtedness incurred pursuant to the SCARPA" at the end of such Section.
(c) Section 1.6(e) of the Credit Agreement is amended by
adding the words "except for Accounts where CIT is the Account Debtor under the
SCARPA, " at the beginning of such Section.
(d) The following new Section 5.12 is added to the Credit
Agreement:
5.12 SCARPA. Borrower will submit its "Request for Payment of
Approved Receivable" pursuant to the SCARPA to CIT, with a copy to Agent, as
soon as permitted under the SCARPA and will deliver all other notices, requests,
certificates and other deliverables to CIT, with a copy to Agent, on the
earliest day permitted under the SCARPA. Borrower will not amend or otherwise
modify the SCARPA.
(e) The following defined terms are added to Annex A to the
Credit Agreement in alphabetical order:
"CIT" means The CIT Group Commercial Services, Inc.
"SCARPA" means that certain Single Customer Credit Approved
Receivables Purchasing Agreement between CIT and Borrower.
(f) The definition of "Seasonal Accounts" contained in Annex A
to the Credit Agreement is amended by adding the following sentence at the end
of such definition:
For the avoidance of doubt, "Seasonal Accounts" shall not
include any Accounts for which CIT is the Account Debtor.
(g) Annex F to the Credit Agreement is amended by adding the
following new Section (h):
(h) To Agent, at the time of delivery to CIT, all information
and reports delivered or required to be delivered to CIT pursuant to or in
connection with the SCARPA.
3. Representations and Warranties of Credit Parties. In order
to induce Agent and Lenders to enter into this Amendment, each Credit Party
hereby jointly and severally represents and warrants to Agent and Lenders that:
(a) Representations and Warranties. After giving effect to
this Amendment, no representation or warranty of any Credit Party contained in
the Credit Agreement or any of the other Loan Documents, including this
Amendment, shall be untrue or incorrect in any material respect as of the date
hereof, except to the extent that such representation or warranty expressly
relates to an earlier date.
-2-
(b) Authorization, etc. Each Credit Party has the power and
authority to execute, deliver and perform this Amendment. Each Credit Party has
taken all necessary action (including, without limitation, obtaining approval of
its stockholders, if necessary) to authorize its execution, delivery and
performance of this Amendment. No consent, approval or authorization of, or
declaration or filing with, any Governmental Authority, and no consent of any
other Person, is required in connection with any Credit Party's execution,
delivery and performance of this Amendment, except for those already duly
obtained. This Amendment has been duly executed and delivered by each Credit
Party and constitutes the legal, valid and binding obligation of each Credit
Party, enforceable against it in accordance with its terms. No Credit Party's
execution, delivery or performance of this Amendment conflicts with, or
constitutes a violation or breach of, or constitutes a default under, or results
in the creation or imposition of any Lien upon the property of any Credit Party
by reason of the terms of (i) any contract, mortgage, lease, agreement,
indenture or instrument to which any Credit Party is a party or which is binding
upon it, (ii) any law or regulation or order or decree of any court applicable
to any Credit Party, or (iii) the certificate or articles of incorporation or
by-laws of any Credit Party.
(c) No Default. No Default or Event of Default has occurred or
is continuing, or would result after giving effect hereto.
4. Conditions to Effectiveness. The effectiveness of this
Amendment is expressly conditioned upon the satisfaction of each condition set
forth in this Section 3 on or prior to the date hereof:
(a) Documentation. Borrower shall have delivered to Agent (on
behalf of itself and Lenders) duly executed originals of this Amendment and the
Assignment Agreement and a certified copy of the SCARPA and any other
agreements, certificates, opinions, and other documents as Agent may reasonably
request to accomplish the purposes of this Amendment.
(b) Fees, Costs and Expenses. Agent shall have received (at
Agent's option, by payment or as a charge against the Revolving Loan)
reimbursement of the amounts payable by Agent to its legal counsel for the
reasonable legal fees of such counsel, and the costs and expenses incurred by
such counsel, in respect of the preparation and negotiation of this Amendment
and the other documents executed in connection herewith.
(c) No Default. No Default or Event of Default shall have
occurred and be continuing, or would result after giving effect hereto.
5. Reference to and Effect on Loan Documents.
(a) Ratification. The Credit Agreement and the other Loan
Documents shall remain in full force and effect and each Credit Party hereby
ratifies and confirms each such Loan Document.
(b) No Waiver. Except as expressly set forth in Section 1 of
this Amendment, the execution, delivery and effectiveness of this Amendment
shall not operate as a waiver or
-3-
forbearance of any right, power or remedy of Agent or any Lender under the
Credit Agreement or any of the other Loan Documents, or constitute a consent,
waiver or modification with respect to any provision of the Credit Agreement or
any of the other Loan Documents. Upon the effectiveness of this Amendment each
reference in (a) the Credit Agreement to "this Agreement," "hereunder,"
"hereof," or words of similar import and (b) any other Loan Document to "the
Agreement" shall, in each case and except as otherwise specifically stated
therein, mean and be a reference to the Credit Agreement as amended hereby.
6. Miscellaneous.
(a) Successors and Assigns. This Amendment shall be binding on
and shall inure to the benefit of the Credit Parties, Agent and Lenders and
their respective successors and assigns, except as otherwise provided herein. No
Credit Party may assign, transfer, hypothecate or otherwise convey its rights,
benefits, obligations or duties hereunder without the prior express written
consent of Agent and Lenders. The terms and provisions of this Amendment are for
the purpose of defining the relative rights and obligations of the Credit
Parties, Agent and Lenders with respect to the transactions contemplated hereby
and there shall be no third party beneficiaries of any of the terms and
provisions of this Amendment.
(b) Entire Agreement. This Amendment, including all schedules
and other documents attached hereto or incorporated by reference herein or
delivered in connection herewith, constitutes the entire agreement of the
parties with respect to the subject matter hereof and supersedes all other
understandings, oral or written, with respect to the subject matter hereof.
(c) Fees and Expenses. As provided in Section 11.3 of the
Credit Agreement, Borrower agrees to pay on demand all fees, costs and expenses
incurred by Agent in connection with the preparation, execution and delivery of
this Amendment. Borrower agrees to pay on demand all legal fees, costs and
expenses incurred by LaSalle Bank National Association, as Lender, in connection
with its review, execution and delivery of this Amendment, in an amount not to
exceed $2,000.
(d) Headings. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
(e) Severability. Wherever possible, each provision of this
Amendment shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Amendment shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Amendment.
(f) Conflict of Terms. Except as otherwise provided in this
Amendment, if any provision contained in this Amendment is in conflict with, or
inconsistent with, any provision in any of the other Loan Documents, the
provision contained in this Amendment shall govern and control.
-4-
(g) Counterparts. This Amendment may be executed in any number
of separate counterparts, each of which shall collectively and separately
constitute one agreement. Delivery of an executed signature page to this
Amendment by telecopy or other electronic transmission shall be effective as
delivery of a manually executed signature page to this Amendment.
(h) Incorporation of Credit Agreement. The provisions
contained in Sections 11.9 and 11.13 of the Credit Agreement are incorporated
herein by reference to the same extent as if reproduced herein in their
entirety, except with reference to this Amendment rather than the Credit
Agreement.
(i) Acknowledgment. Each Credit Party hereby acknowledges its
status as a Credit Party and affirms its obligations under the Credit Agreement
and represents and warrants that there are no liabilities, claims, suits, debts,
liens, losses, causes of action, demands, rights, damages or costs, or expenses
of any kind, character or nature whatsoever, known or unknown, fixed or
contingent (collectively, the "Claims"), which any Credit Party may have or
claim to have against Agent or any Lender, or any of their respective
affiliates, agents, employees, officers, directors, representatives, attorneys,
successors and assigns (collectively, the "Lender Released Parties"), which
might arise out of or be connected with any act of commission or omission of the
Lender Released Parties existing or occurring on or prior to the date of this
Amendment, including, without limitation, any Claims arising with respect to the
Obligations or any Loan Documents. In furtherance of the foregoing, each Credit
Party hereby releases, acquits and forever discharges the Lender Released
Parties from any and all Claims that any Credit Party may have or claim to have,
relating to or arising out of or in connection with the Obligations or any Loan
Documents or any other agreement or transaction contemplated thereby or any
action taken in connection therewith from the beginning of time up to and
including the date of the execution and delivery of this Amendment. Each Credit
Party further agrees forever to refrain from commencing, instituting or
prosecuting any lawsuit, action or other proceeding against any Lender Released
Parties with respect to any and all Claims.
[signature pages follow]
-5-
IN WITNESS WHEREOF, this Consent and Amendment No. 10 has been duly executed and
delivered as of the day and year first above written.
RAWLINGS SPORTING GOODS COMPANY, INC.
By:
-----------------------------------------------
Title:
--------------------------------------------
RAWLINGS CANADA, INCORPORATED
By:
-----------------------------------------------
Title:
--------------------------------------------
RAWLINGS DE COSTA RICA, S.A.
By:
-----------------------------------------------
Title:
--------------------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
By:
-----------------------------------------------
Title: Duly Authorized Signatory
LASALLE BANK NATIONAL ASSOCIATION,
as Lender
By:
-----------------------------------------------
Title:
--------------------------------------------
EXHIBIT A
December 11, 2002
RAWLINGS SPORTING GOODS COMPANY, INC.
1859 INTERTECH DRIVE
FENTON, MISSOURI 63026
SINGLE CUSTOMER CREDIT APPROVED RECEIVABLES PURCHASING AGREEMENT
RE: KMART CORPORATION, AND ANY AND ALL OF ITS TRADE NAMES,
AFFILIATES, DIVISIONS OR SUBSIDIARIES, INCLUDING WITHOUT
LIMITATION KMART FASHIONS (A DIVISION), BUILDERS SQUARE, INC.
(A SUBSIDIARY), AND SOURCING & TECHNICAL SERVICES, INC. (A
SUBSIDIARY), ANY AND/OR ALL AS A DEBTOR AND/OR DEBTORS IN
POSSESSION UNDER THE BANKRUPTCY CODE (COLLECTIVELY THE
"CUSTOMER")
Ladies and Gentlemen:
This agreement, together with the attached Statement of Additional
Procedures, Terms and Conditions and Annex A and B attached thereto (the
"Guide"), which Guide is incorporated herein by reference, will confirm your and
our agreement (the "Agreement") concerning our performance of certain services
and our purchases of certain of your accounts receivable due from the Customer.
Capitalized terms used herein without definition shall have the meanings
ascribed to them in the Guide:
1. CREDIT APPROVAL. Upon execution of this Agreement, we may extend
credit approval ("Credit Approval") as set forth herein, for the purchase of
goods and merchandise from you by the Customer. You shall submit any order from
the Customer for which you seek our Credit Approval (individually "Order" and
collectively "Orders") to our Credit Department either via computer on-line
terminal access or, if you are unable to submit your Orders via computer, then
by telephone or via telecopier (but, in any event, in writing). In addition, our
Credit Approval shall automatically terminate the earlier of: (a) the date an
Insolvency Event (as defined hereafter) of the Customer occurs, (b) any breach
or event of default hereunder, (c) the date of any notice of withdrawal of
credit approval from us, or (d) the order completion/cancellation date
designated in the Order (the "Completion Date"), if the good or services with
respect to such Order have not been shipped or provided by the Completion Date
(the "Required Shipment Date") . For purposes of this Agreement, an "Insolvency
Event" shall occur when: (i) an order with respect to the Customer's Chapter 11
case shall be entered by the bankruptcy court (A) appointing a trustee or
examiner, (B) converting, including pursuant to Section 1112 of the Bankruptcy
Code, such Chapter 11 case to a proceeding under Chapter 7 of the Bankruptcy
Code, (C) confirmation of a plan of reorganization, (D) dismissing the Chapter
11 case, or (E) the Customer's financing under the Chapter 11 Case terminates or
is changed or modified in any material respect, or (ii) with respect to any
Approved Receivable, when any such Approved Receivable is the subject of a
motion, objection or proceeding, setting forth grounds for nonpayment of any
Approved Receivable, whether due to shortages, defects or otherwise, that would
give the Customer a right of setoff against the Approved Receivable and seeking
the disallowance of such Approved Receivable, which motion or proceeding is not
resolved by the allowance of such Approved Receivable as an administrative
expense under Section 503(b) of the Bankruptcy Code (herein a "Disallowed
Claim"), or (iii) the confirmation of a Chapter 11 liquidation plan, including
without limitation (A) requiring the Customer or its successor,
successor-in-interest or representative to sell or transfer all or substantially
all of the Customer's assets, (B) entry of an order in the Bankruptcy Case
authorizing the sale or other transfer of all or substantially all of the
Customer's assets, or (C) entry of any other order in the Bankruptcy Case
that would result in a liquidating Chapter 11, with the Customer ceasing to
transact business as a going concern because of the liquidation, winding down or
dissolution of the Customer.
Our Credit Approval (i) shall apply solely to tendered Approved
Receivables that are or become allowed administrative expenses within the
meaning of Section 503(b) of the Bankruptcy Code, and (ii) may be withdrawn any
time before, but not after, shipment is made. Our credit approval shall be
effective only if shipment is made on or before the Required Shipment Date. If
the respective goods or services are not delivered or performed prior to the
Required Shipment Date, such Order shall no longer have Credit Approval, and you
must resubmit the Order relating to such good or services for Credit Approval
("Resubmitted Order"). Unless the Resubmitted Order receives Credit Approval, it
shall not become an Approved Receivable. Except with respect to shipments made
prior to such date, we shall have the right to adjust the Customer's credit
lines from time to time and shall have no liability whatsoever to you or any
other person, firm or entity for our not approving, or our withdrawal of
approval of, credit to the Customer in the manner provided in this Agreement
(with respect to withdrawal of credit approval prior to shipment).
You have advised us that your selling terms are not in excess of sixty
(60) days. As to any Approved Receivable, you agree that you will not, without
our prior written consent: (i) change these terms from our existing credit
approval, or extend the maturity date of any invoice; (ii) change the amount
(except for credits, chargebacks, allowances, returns or the like, which you may
issue in the normal course of your business and otherwise in accordance with
this Agreement) or shipping dates; or (iii) grant any other indulgence (which
would modify any applicable invoice or Approved Receivable, including for the
amount due, allowances, due date or payment thereof). In the event you were to
do any of these acts without such concurrence by us, any credit approval and
assumption of credit risk by us of the respective Approved Receivable(s) shall
be and become automatically and immediately, and without any further notice or
action by us whatsoever, withdrawn, null, void and of no effect. You also agree
to issue credit memoranda promptly (with duplicates to us) upon accepting
returns or granting allowances in connection with any Approved Receivable.
2. SALE OF APPROVED RECEIVABLES. You hereby sell, assign and transfer
to us as absolute owner all of your Approved Receivables subject to any
Permitted Lien.
3. HANDLING AND COLLECTING RECEIVABLES. You shall continue to collect
payment for each Approved Receivable with payment therefor being remitted
directly to you or as authorized by you and such collections on our behalf
(whether received in your lockbox or otherwise) shall be applied to the Purchase
Price for the Approved Receivables. Upon receipt of the collections and
application thereof to the Purchase Price, such funds shall be your property as
the proceeds of the Purchase Price paid to you by us, free of any interest we
may have in such proceeds. Any Disputes (hereinafter defined) shall also relieve
the amount of the Purchase Price. Our obligation to pay you for any Approved
Receivable shall only be as provided in Paragraph 7 below, and only when all
requirements of this Agreement have been satisfied, as set forth herein. Our
services hereunder will be provided on a non-notification basis; that is, we
will not communicate with your Customer prior to paying you for an Approved
Receivable without your prior approval except as set forth in Paragraphs 2 and 7
of the Guide (see Paragraph 5 of the Guide for information regarding our
collection of Non-Approved Receivables). You will at all times perform your
normal accounts receivable bookkeeping, collection and reporting procedures in
connection with both Approved Receivables and Non-Approved Receivables. In order
to maintain our credit approval in connection with any Approved Receivable
(unless we withdraw or limit our credit approval as permitted by this
Agreement), you also agree to perform the collection and reporting procedures
(to the extent permitted by law) set forth in Paragraph 3 of the Guide. In the
event we are required to commence suit to collect any delinquent Receivable, you
agree to cooperate fully with us and our counsel in prosecuting same.
2
4. FEE. For our services hereunder you agree to pay us a fee of four
percent (4%) of the gross face amount of each Approved Receivable. The fee for
our services under this Agreement shall be earned upon submission or
resubmission of the Order for approval and shall be paid shall be paid by the
10th day of each month for Approved Receivables during the preceding month. In
the event such fees are not paid to us as required, all credit approvals given
by us on all Orders or Approved Receivables for which such applicable fees have
not been paid to us shall automatically, and without any further notice or
action by us whatsoever, be and become withdrawn, null, void and of no effect.
5. REPRESENTATIONS AND WARRANTIES. You hereby make to us the
representations and warranties contained in Paragraph 4 of the Guide. If you
breach any of these representations and warranties, we shall be released from
any credit risk whatsoever on each Approved Receivable which may be involved.
6. REPORTING AND NOTICES. You will maintain, in form acceptable to us
(in our commercially reasonable judgment), a detailed aging of all Receivables,
payments thereon and of all returns, and you will deliver promptly to us the
information and reporting set forth in Paragraph 6 of the Guide. In the event
you fail to provide this information to us within three (3) business days of its
due date, our credit approvals and assumption of credit losses shall, at our
sole option and without the need of any notice, immediately cease and be deemed
to have been thereupon withdrawn, void, null and of no effect as to all Approved
Receivables. You must promptly notify us if any Approved Receivable is not
timely paid or if you receive information of any adverse change in the financial
condition or business prospects of the Customer. You must notify us promptly of
any matters affecting the value, enforceability or collectibility of any
Approved Receivable. Please see Paragraph 8 of the Guide for information
regarding our right to conduct inspections and verifications regarding the
Receivables and returned merchandise.
7. PAYMENT OF APPROVED RECEIVABLES. If any undisputed Approved
Receivable remains unpaid for more than (i) ninety (90) days after its due date
or (ii) fifteen days after the Customer's present proceedings under Chapter 11
are converted to a proceeding under Chapter 7 of the Bankruptcy Code, and you
shall have delivered to us, as further set forth herein, a written Request for
Payment of Approved Receivable in the form of ANNEX B attached to the Guide,
with all of the information and documentation therein specified, requesting that
the purchase price of such overdue and unpaid Approved Receivable be paid to
you, we shall promptly (subject to our verification of any such undisputed
Approved Receivable having been credit approved by us and being overdue and
unpaid) pay to you the Net Amount of such Approved Receivable. You agree that
when you deliver to us a Request for Payment of Approved Receivable, you shall
be deemed to have thereby authorized us to collect all other unpaid Approved
Receivables, in accordance with the terms hereof, including paragraph 7 of the
guide. Approved Receivables that are (i) one hundred fifteen (115) days or more
past the due date or (ii) twenty-five (25) days past the date of conversion of
the Customer's proceeding to Chapter 7 when submitted by you to us on ANNEX B
shall no longer be Approved Receivables hereunder and we are thereupon released
from any liability therefor whatsoever. You may submit Annex B at any time after
the due date of an Approved Receivable or after the date of the conversion of
the Customer's bankruptcy proceeding to Chapter 7.
Our obligation to remit funds to you for the amount of any Approved
Receivable shall only apply to the net amount of an Approved Receivable (a)
which is free of any claims, offsets or liens whatsoever, including any
Permitted Lien (and provided that such Approved Receivables are not and do not
become Disallowed Claims), AND (b) where the inventory and/or service has been
received and accepted by the Customer without return and without dispute or
claim as to price, terms, quality, workmanship, breach of warranty, delivery,
quantity or other offset ("Disputes"), AND (c) where nonpayment by the Customer
is due solely to the Customer's financial inability to pay, AND (d) which you
shall have sold, assigned and transferred to us as absolute owner all of your
right, title and interest
3
thereto and therein, AND (e) net of any permitted allowances or discounts
("Purchase Price"). Please refer to Paragraph 9 of the Guide for additional
information regarding the Customer's financial inability to pay. If an Approved
Receivable for which we have paid you is later determined to have been unpaid by
the Customer for reasons other than solely the Customer's financial inability to
pay, you agree to promptly repurchase such Approved Receivable from us for the
same amount we paid to you therefor (less any remittances we may have received
in connection with such Approved Receivable). After our payment to you of any
Approved Receivable, any and all checks, cash, notes or other instruments or
property received by you with respect to such Approved Receivable shall be held
by you in trust for us, separate from your own property and funds, and promptly
turned over to us. In addition, we shall be entitled in our sole discretion to
re-transfer to you any Receivable which does not comply with your
representations or warranties contained herein, including if it is or becomes a
Disallowed Claim. Upon receipt by you of any retransfer notice, you shall
promptly (but in no event later than ten days from the date of such notice) pay
to us, by wire transfer of immediately available funds to our account (or such
other account as we may specify in writing from time to time), the invoice
amount of any such Disallowed Claims plus interest at the prime rate plus two
percent for the period from and including the date on which payment was made by
us with respect to such Approved Receivable underlying such Disallowed Claim
through the date of such repayment. Please see Paragraph 10 of the Guide for
additional information regarding returned merchandise.
8. SPECIAL CUSTOMER PAYMENT APPLICATIONS. In the event you have shipped
inventory subsequent to the date hereof or in excess of any particular credit
approval or credit line for the Customer set forth in paragraph 1 hereof, all
remittances received from or on behalf of the Customer shall first be applied to
payment of Approved Receivables due from the Customer until paid in cash in
full, and thereafter any excess shall be applied to payment of Non-Approved
Receivables. Subject to the foregoing sentence, (i) in the event an Insolvency
Event occurs, including entry of a conversion order (to Chapter 7 or any
"liquidating 11" order) with respect to the Customer by any applicable
bankruptcy court for any general distribution, insolvency dividend, recovery or
other payment thereafter received from such proceedings shall be applied first
to any Approved Receivables, and (ii) absent an Insolvency Event, pari passu to
payment of Approved Receivables and Non-Approved Receivables due from the
Customer in the ratio that each bears to the aggregate amount of such
distribution, dividend or other recovery payment.
9. TERMINATION. Either you or we may terminate this Agreement at any
time by giving the other written notice of termination stating a termination
date not less than sixty (60) days from the date such notice is delivered. This
Agreement continues uninterrupted unless terminated as herein provided.
Notwithstanding the preceding sentences of this Paragraph, we may terminate this
Agreement immediately upon the occurrence of any of the following events:
cessation of your business or the calling of a meeting of your creditors; your
failure to meet your debts generally as they mature; the commencement by or
against you of any bankruptcy, insolvency, arrangement, reorganization,
receivership or similar proceeding under any foreign, federal or state law;
breach by you of any representation, warranty or covenant contained herein; or
your failure to pay when due any indebtedness or obligation owing by you to us
whether under this Agreement or any other agreement to which you and we are
parties. We may also terminate this Agreement immediately in the event that we
shall reasonably determine that any material provision of this Agreement is not
enforceable under applicable law or would require any filing with, or consent or
approval by, any governmental authority. Any termination of this Agreement,
however, shall not affect obligations of you or us incurred hereunder prior to
such termination including, without limitation, our obligation to pay for
Approved Receivables arising prior to such termination date (provided that our
assumption of credit risks and losses hereunder shall cease upon your failure to
pay our fees when due or to deliver to us the information required by this
Agreement).
4
10. MISCELLANEOUS. You hereby indemnify us and hold us harmless from
any costs, liabilities and expenses related to this Agreement, and you shall pay
to us those attorneys' fees and disbursements incurred by us resulting from our
use of outside counsel or our in-house legal department in connection with any
exercise or enforcement of our rights hereunder, or any modification, waiver,
release or amendment, or any claims or liabilities asserted against us relating
to this Agreement. This provision shall survive any termination of this
Agreement.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, YOU AND WE HEREBY
IRREVOCABLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT. THE VALIDITY,
INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT SHALL BE DETERMINED AND
GOVERNED BY THE LAWS OF THE STATE OF NORTH CAROLINA.
This Agreement can be changed only in writing signed by you and us.
This Agreement shall bind and benefit each of your and our respective successors
and assigns; provided, however, that neither you nor we may assign any rights or
obligations hereunder without the prior written consent of the other. Our
failure or delay to exercise any right or remedy hereunder shall not constitute
a waiver thereof, nor bar us from exercising any of our rights or remedies
hereunder at any time, nor shall any course of dealing between you and us change
or modify this Agreement. This Agreement will become effective as of the date
set forth on the first page hereof but only after this Agreement shall have been
accepted by one of our officers in Charlotte, North Carolina after which we
shall forward to you a fully executed copy for your records. The undersigned has
been duly authorized to sign and deliver this Agreement by all necessary and
appropriate action on behalf of the Company and this Agreement will be binding
upon said Company when so executed and delivered.
This Agreement shall become effective only when accepted below by one
of our officers. This Agreement, when accepted, contains the entire agreement
between you and us. There are no verbal agreements between you and us concerning
this Agreement or the subject matter hereof.
RAWLINGS SPORTING GOODS COMPANY, INC.
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
[SIGNATURES CONTINUED ON PAGE 6]
5
CONSENTED & ACCEPTED this _____ day of
, 2002.
-----------------------
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By:
----------------------------------------
Name: Terry D. Oelschlaeger
Title: Senior Vice President
6
SINGLE CUSTOMER CREDIT APPROVED RECEIVABLES
PURCHASE AGREEMENT
STATEMENT OF ADDITIONAL PROCEDURES, TERMS AND CONDITIONS
1. Definitions.
"Approved Receivable" shall mean each Receivable due from your Customer
which complies with the terms of the Agreement and which has been approved by us
for credit in writing.
"Net Amount" shall mean, with respect to an Approved Receivable, the
gross face amount of such Approved Receivable less any amount in payment of such
Approved Receivable you may have received from or on behalf of the Customer,
less any trade and cash discounts and less any credits or allowances, as further
set forth in the Agreement.
"Non-Approved Receivable" shall mean a Receivable that is not an
Approved Receivable.
"Permitted Lien" shall mean the perfected security interest granted by
you to any bank or other lender as security for loans to you by such bank of
other lender which are or shall be subject to such form of intercreditor
agreement as we may require and request from time to time.
"Receivable" shall mean and include each separately invoiced account
created by, or arising from, your sale of inventory to or performance of
services for (under any of your trade names or styles or through any of your
divisions) the Customer, together with all related instruments, documents,
insurance proceeds and general intangibles (including payment intangibles and
all other rights to payment); all proceeds thereof, including all property
acquired with such proceeds; all of your rights to any merchandise which are
represented thereby; and all your right, title, security, guaranties, supporting
obligations and letter of credit rights with respect to each Receivable,
including all rights to reclamation and stoppage in transit.
2. Communication With the Customer. We may communicate with the Customer only
(a) in connection with a past due Approved Receivables, and/or (b) to obtain
current information on the Customer's financial condition and creditworthiness.
3. Collection and Reporting Procedures.
(i) At least once each month, the Customer on a past due Receivable
shall receive your written statement detailing the delinquency. Each such
statement shall age such past due Receivable(s).
(ii) You shall document all collection related telephonic
communications given to, and responses received from, the Customer concerning
each delinquent Receivable. You also shall initiate telephonic communication to
the Customer before the Receivable becomes thirty (30) days past due, and at
least two (2) such calls shall be required in each subsequent thirty (30) day
period (i.e., 31-60 days past due and 61-90 days past due) until the Receivable
is ninety (90) days past due. All collection calls must involve your authorized
representative speaking with a representative of the delinquent Customer who has
authority to approve payments on behalf of the Customer, recording the name of
such individual, his/her position with the Customer, the date and time of such
call, the reason for the delinquency in payment (e.g., cash flow, dispute,
paperwork, etc.), the commitment to pay date, and a follow-up date.
(iii) In the event that your attempts to communicate telephonically
with the Customer concerning a past due Receivable are to no avail (e.g., the
telephone has been disconnected), your records must so indicate, and you shall
then communicate with the Customer in writing.
(iv) In addition, we shall be entitled in our sole discretion to
re-transfer to you any Approved Receivable for which we have made payment and
with
7
respect to which the Customer asserts any claim or offset. Upon receipt by you
of any retransfer notice, you shall promptly (but in no event latter than ten
days from the date of such notice) pay to us, by wire transfer of immediately
available funds to our account (or such other account as we may specify in
writing from time to time), the price with respect to such Approved Receivables
plus interest at the Chase Bank prime rate plus two percent for the period from
and including the date on which payment was made by us with respect to any such
Approved Receivable through the date of such repayment.
4. Representations and Warranties. You hereby represent and warrant that:
(i) Your legal name is exactly as set forth on the signature page of the
Agreement, and you are duly organized, validly existing and in good standing
under the laws of the state of your incorporation or organization and are duly
qualified to transact business in and are in good standing in all states where
required;
(ii) There are no provisions in your articles of organization or
incorporation or bylaws (or any amendments thereto) or in any of your contracts
or indentures restricting your compliance with, or your undertaking the acts
contemplated by, this Agreement, or requiring the consent or authorization of
any person or entity that has not already been obtained;
(iii) Each Receivable represents an actual and bona fide sale and
delivery of inventory or performance of services in the ordinary course of your
business, and the inventory being sold and the Receivables created therefrom are
your exclusive property;
(iv) As to each Approved Receivable, the Customer is obligated to pay,
in United States Dollars, the full amount stated in the invoice according to its
terms without dispute, offset, deduction, defense or counterclaim;
(v) No inventory sold is subject to any consignment arrangement; all
taxes and fees with regard to any Approved Receivable or the inventory sold or
services performed are solely your responsibility. and
(vi) None of the Approved Receivables represents sales or services to
any subsidiary, parent or affiliated company.
5. Collection of Non-Approved Receivables. You may request that we collect for
you, at your expense, any Non-Approved Receivable in accordance with our usual
practices. In such event, any moneys collected by us on any Non-Approved
Receivables will be promptly remitted to you (or as authorized by you, if
requested in writing), ten (10) days after our receipt of good funds, less any
additional service charge due and payable to us as provided in ANNEX A attached
hereto.
6. Reporting and Other Information.
You shall provide to us:
(i) On the earlier of: (x) ten (10) days after the end of each month,
(y) upon your issuance thereof or (z) at any time at our reasonable request, in
form acceptable to us (in our commercially reasonable judgment), your aged trial
balances of all of your outstanding Receivables owing from the Customer;
(ii) On the earlier of: (x) ten (10) days after the end of each month,
(y) upon your issuance thereof or (z) at any time at our reasonable request, in
form acceptable to us (in our commercially reasonable judgment), your sales
journal of all your outstanding Receivables owing from the Customer;
(iii) Within ten (10) days after the end of each month, without
duplication of the foregoing, your proper reconciliations between your aged
trial balances and your Receivables owing from the Customer, together with a
schedule for the preceding month of each of your Receivables owing from the
Customer which you have recorded and clearly identified as Approved Receivables
(including those under any credit lines we may have established for the
Customer) and their respective sales terms, invoice numbers, dates and amounts;
8
(iv) Within ten (10) days after the end of each month, without
duplication of the foregoing, a proper reconciliation and summarization of the
Orders and the fees paid to us, all in a form that is satisfactory to us;
(v) Prompt notice of any change in your: name, state of incorporation
or registration, location of your chief executive office, place(s) of business,
and legal or business structure.
7. Collection of Approved Receivables. We shall have the right to communicate
with and, if necessary in our discretion, commence collection proceedings with
respect to, the Customer if: (a) any portion of the Customer's Approved
Receivables whatsoever is past due by ten (10) business days or more, or (b) the
Customer has undergone an adverse change in its financial condition or business
prospects, or (c) the occurrence of an Insolvency Event (as defined in paragraph
1 of the Agreement).
Within ten (10) Days of our request to you or from the date of our payment of
the price of any Approved Receivable, you shall deliver to the Customer a notice
of assignment (as we may reasonably request and provide from time to time to
you). At our request, from time to time, you shall use reasonable efforts to
cooperate with us in any attempt to comply with our request to file a proof of
claim, and including pursuant to Rule 3001(e) of the Federal Rules of Bankruptcy
Procedure ("FRBP"), and any additional rules, statutes or orders concerning the
transfer of the Approved Receivable or any portion thereof (collectively,
"Transfer Rules"). Provided that the purchase price applicable thereto has been
received by you, you hereby waive any and all objections to the transfer of the
Approved Receivables and the claims with respect thereto and any right to
receive notice pursuant to FRBP 3001(e) of such transfer.
8. Inspection and Verification. We may (with prior notice to you) at any time
during normal business hours verify and inspect all of your books, accounts,
records, files, orders, correspondence and papers which we may deem to be
reasonably relevant to the Receivables, the Customer, and/or this Agreement, and
your credit and collection procedures and business operations, and we may make
photocopies of or extracts from any of the foregoing and inspect any returned
merchandise.
9. Financial Inability to Pay. The Customer's financial inability to pay any
Approved Receivable does not include any failure (or refusal) to pay arising
from or directly related to (i) changes, of whatever nature, in government or
governmental policy, or (ii) the enactment of laws or regulations or the taking
of any action, of whatever nature including, without limitation, the taking or
nationalizing of private property by any governmental entity whereby payment may
not be made or may be made only upon penalty or (iii) natural disaster or act of
God, uprising, civil war, civil commotion, war, revolution, invasion and other
acts of violence.
10. Returned Merchandise and Approved Receivables. In the event merchandise in
connection with an Approved Receivable is offered to be returned to you by the
Customer solely as a result of the Customer's financial inability to pay for
such merchandise, and for which Approved Receivable we shall have already
remitted funds to you for the amount thereof, or shall be obligated to remit to
you, under this Agreement, then you shall promptly notify us in writing of such
offer with all particulars and, upon our written approval to you of your
acceptance of such offer of return, you may accept the return of such
merchandise, provided such merchandise is returned to you free and clear of all
liens and security interests.
Any merchandise which you may receive in connection with such approval
of return of merchandise under an Approved Receivable, solely as a result of the
Customer's financial inability to pay, shall: (a) be and at all times be deemed
to be our property; (b) at our option, be promptly delivered by you to us at
such place as we shall reasonably specify; or (c) at our option, be retained by
you for resale by you, employing your best efforts, and us at the best
9
available price. In the event of resale of such returned merchandise to another
customer as contemplated by the preceding sentence, (i) if we shall have already
remitted funds to you in accordance with this Agreement for the amount of such
Approved Receivable, then all proceeds of such resale shall be paid to us or be
promptly turned over to us, or (ii) if we shall have not have so remitted to you
the amount of such Approved Receivable but shall be obligated to remit funds to
you for the amount of such Approved Receivable under this Agreement, then all
proceeds of such resale shall be paid to you or be promptly turned over to you,
and the difference (if any) between the invoice amount of such Approved
Receivable and the proceeds of such resale shall be owing by us to you and
promptly remitted by us to you upon the consummation of, and your receipt of the
proceeds of, such resale.
11. Financing Statements. You agree to comply with all applicable laws to
perfect our interest in the Approved Receivables, and to execute such documents
as we may require to effectuate the foregoing and to implement this Agreement.
You irrevocably authorize us to file financing statements and all amendments and
continuations with respect thereto, all in order to create, perfect and maintain
our interest in the Approved Receivables, and you hereby ratify and confirm any
and all financing statements, amendments and continuations with respect thereto
heretofore and hereafter filed by us pursuant to the foregoing authorization.
10
ANNEX A
TO THE SINGLE CUSTOMER CREDIT APPROVED RECEIVABLES PURCHASING AGREEMENT
ADDITIONAL TERMS AND CONDITIONS
As permitted in Paragraph 5 of the Guide, Rawlings Sporting Goods Company, Inc.
(the "Client") hereby agrees that, in the event The CIT Group/Commercial
Services, Inc. ("CIT") collects any Non-Approved Receivable on behalf of the
Client, CIT shall be entitled to receive, and the Client shall pay or cause to
be paid to CIT, the following Collection Processing Charge and Collection
Service Fee in connection with each such Non-Approved Receivable:
COLLECTION PROCESSING CHARGE
There shall be a processing charge of $100 for each Non-Approved Receivable
collection account turned over to CIT by Client for collection processing by
CIT.
COLLECTION SERVICE FEE
CIT shall also be entitled to receive a collection service fee of 10% of all
moneys collected by CIT or the Client, net of attorneys' fees and all other
related costs and expenses incurred by or on behalf of CIT in connection with
collection of any Non-Approved Receivable.
RAWLINGS SPORTING GOODS COMPANY, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
11
ANNEX B
TO THE SINGLE CUSTOMER CREDIT APPROVED RECEIVABLES PURCHASING AGREEMENT
REQUEST FOR PAYMENT OF APPROVED RECEIVABLE(S)
CONFIRMATORY ASSIGNMENT NUMBER_____
To: The CIT Group/Commercial Services, Inc. Date:__________________
Your payment to us for the outstanding past due Approved Receivable account of
___________________________(Customer)________________________________ (Address
of Customer) in the net amount of $___________ is hereby requested pursuant to
the terms of the Single Customer Credit Approved Receivables Purchasing
Agreement (the "Agreement"). We hereby confirm our sale to you of such Approved
Receivable(s) of said Customer pursuant to the terms of the Agreement.
Your obligation to pay us the net amount of such Approved Receivable(s) as the
purchase price thereof arises under your credit approval dated ____________ in
the amount of $___________.
As evidence of each past due Approved Receivable, enclosed are:
A. Two copies of the outstanding invoice and any credit memos;
B. A notarized statement of the Customer's account;
C. One copy of all correspondence to and from the Customer;
D. One copy of our complete collection file on the Customer;
E. All guarantees, collateral documents, and security agreements relative
thereto;
F. Proof of delivery to and/or acceptance by Customer; and
G. Copy of Customer's purchase order and/or our signed confirmation
thereof.
We certify that: (i) the above information and enclosures are true and correct ;
(ii) our Customer (account debtor) named in the invoice(s) is indebted to us in
the net amount(s) shown thereon and is not entitled to credits or counterclaims
except as reflected in the amount demanded by us above; (iii) each Approved
Receivable for which we hereby request payment from you under the Agreement is
free of any claim, offset or lien whatsoever; (iv) nonpayment by the Customer of
the Approved Receivable for which we hereby request payment from you under the
Agreement is due solely to the Customer's financial inability to pay; (v) we
have sold, assigned and transferred to you as absolute owner all of our right,
title and interest in each Approved Receivable for which we hereby request
payment from you under the Agreement and shall have delivered to you those UCC
releases and financing statements as you shall have requested to effect each
such sale and transfer; and (vi) all of our representations and warranties in
the Agreement are true and correct.
RAWLINGS SPORTING GOODS COMPANY, INC.
By:
-------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
12
EXHIBIT B
ASSIGNMENT AGREEMENT FOR PROCEEDS OF SINGLE CUSTOMER CREDIT
APPROVED RECEIVABLES PURCHASING AGREEMENT
THIS ASSIGNMENT AGREEMENT FOR PROCEEDS OF SINGLE CUSTOMER CREDIT
APPROVED RECEIVABLES PURCHASE AGREEMENT ("Agreement"), made this 11th day of
December, 2002, between and among RAWLINGS SPORTING GOODS COMPANY, INC., a
Delaware ("Company"); THE CIT GROUP/COMMERCIAL SERVICES, INC., a New York
corporation ("CIT"); and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation, as Agent for certain lenders under the Lender Documents
(hereinafter defined) ("Lender");
WITNESSETH:
WHEREAS, the Lender and the Company are parties to various agreements
and instruments (such agreements and instruments, as amended, modified or
restated from time to time, being herein called the "Lender Documents"),
pursuant to the terms of which the Lender has agreed to make loans and extend
other credit accommodations to the Company secured by a lien and security
interest in, among other collateral, the Company's accounts receivable, all as
more fully set forth in the Lender Documents;
WHEREAS, the Company proposes to enter or has entered into a Single
Customer Credit Approved Receivable Purchasing Agreement with CIT, dated of even
date (as amended, modified or restated from time to time, being herein called
the "SCARPA"), pursuant to the terms of which CIT shall purchase certain of the
Company's accounts receivable (such purchased accounts receivable being
hereinafter known as the "Purchased Accounts"), all as more fully set forth in
the SCARPA;
WHEREAS, the Lender requires, as a condition to granting its consent to
CIT's purchase of the Company's accounts receivable, the execution of this
Agreement by the Company and CIT establishing certain rights, priorities and
duties with respect to the monies due or to become due to the Company under the
SCARPA and procedures for the payment thereof; and
WHEREAS, the Company and CIT have agreed to execute this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
1. Grant of Security Interest. As security for the obligations,
liabilities and indebtedness of the Company to the Lender under the Lender
Documents, the Company hereby assigns, transfers and sets over unto the Lender,
and hereby grants a security interest to the Lender in, all monies now or
hereafter due or to become due and payable to the Company under the SCARPA.
2. SCARPA. CIT and the Company warrant and represent that a true and
correct copy of the SCARPA, and all amendments thereto, if any, is attached
hereto as Exhibit A and made a part hereof. CIT agrees not to amend the SCARPA
in any material respect after the date hereof that would adversely affect the
interests of the Lender hereunder without the prior written consent of the
Lender. For purposes of this Agreement, but without limiting the foregoing, a
change in the commissions charged by CIT or other economic terms under the
SCARPA shall not be deemed a material term of the SCARPA. As provided in the
SCARPA, payments on Accounts received by the Company on behalf of CIT shall
immediately and automatically be applied and credited as a payment by CIT for
Purchase Price (defined in the SCARPA) of Accounts (defined in the SCARPA) and
upon such immediate application shall become property of the Company and subject
to the security interest of the Lender.
3. Consent to Sale. The Lender agrees that, notwithstanding any
contrary provision contained in the Lender Documents, the Company may sell and
assign the Purchased Accounts to CIT and further agrees that such sale and
assignment shall not constitute a default or event of default by the Company
under the Lender Documents or any related agreement or instrument. CIT confirms
that no assignment, notice of assignment or notice of lien applicable to the
monies assigned to the Lender under this Agreement has been filed with CIT by
any person, firm or corporation.
4. Release of Lender. Upon CIT being required pursuant to the terms and
conditions of the Agreement to pay the purchase price ("Purchase Price") for a
particular Purchased Account ("Paid Account") and CIT paying such Purchase Price
to the Lender pursuant to the terms of this Agreement, Lender releases its
interest in the Paid Account as provided in the form attached hereto as Exhibit
B.
5. Lender's Right to Undertake Requirements of SCARPA. The Lender may
as Company's agent on its behalf undertake acts to comply with any of the terms
and conditions of the SCARPA to meet requirements thereunder in order to perfect
the right of the Company to be paid a Purchase Price by CIT pursuant to the
terms and conditions of the SCARPA.
6. Remittance of Funds. CIT shall remit to the Lender for the account
of the Company all monies due the Company subject to the terms, conditions and
requirements of the SCARPA, and the Company hereby authorizes and directs CIT to
remit all such monies directly to the Lender for the account of the Company. CIT
acknowledges the Company's assignment and authorization herein contained and
agrees and undertakes to remit directly to the Lender, for the account of the
Company, all monies to which the Company is now or may hereafter be entitled
pursuant to the terms of the SCARPA, as and when such monies become due to the
Company under the SCARPA, subject to the (a) payment in full of any and all
obligations of any nature whatsoever owing by the Company to CIT under the terms
of the SCARPA, and (b) the CIT's rights under the SCARPA. All funds to be
remitted by CIT to the Lender shall be sent by federal funds, bank wire transfer
to:
Bank
- --------------------
- --------------------
- ---------, --- ------
2
ABA Route No.:
-------------------
Account No.:
---------------------
For credit to:
-------------------
Reference:
------------------------
Attn:
----------------------------
The Company and Lender affirm that CIT may make payment strictly on the basis of
the account number listed above even if such account number identifies a party
other than the name of the account party listed above. In the event the account
number listed above is incorrect, the Company agrees to be fully liable for any
losses, costs and expenses arising therefrom. The Company shall reimburse CIT
for all bank wire charges incurred or paid by CIT in making remittances pursuant
to this Agreement.
7. Grant of Authority to the Lender. The Company hereby irrevocably
authorizes and empowers the Lender to ask, demand, receive, receipt and give
acquittance for any and all monies hereby assigned, to endorse any checks or
other orders for the payment of monies payable to the Company in payment thereof
and, in its discretion, to file any claims or commence or take any action or
proceeding and make settlements and compromises and grant releases and otherwise
take such other action in its own name or in the name of the Company, or
otherwise, which the Lender may deem necessary or advisable in the premises.
8. Further Assurances. The Company agrees that it will, at the request
of the Lender, make, do and execute any such further acts, agreements,
assurances and other documents or instruments as shall be reasonably required to
enable the Lender to collect all monies due or to become due to the Company
under the SCARPA according to the intent and purpose of this Agreement.
9. Rights Cumulative. The Company agrees that the rights granted herein
to the Lender by the Company are in addition to the rights granted to the Lender
under the Loan Agreement or that are otherwise available to the Lender.
10. Warranties and Representations of the Lender. The Company warrants
and represents to CIT that the assignment, transfer and security interest
granted to the Lender by the Company under this Agreement in the monies due or
to become due to the Company under the SCARPA is a validly perfected security
interest in all respects pursuant to the Uniform Commercial Code or other
applicable law, and the Lender alone is and will be entitled to receive all
amounts otherwise available to the Company under the SCARPA. The Lender agrees
that it shall return to CIT any remittances to Lender by CIT which are
determined by the final order of a court of competent jurisdiction (or otherwise
agreed by Lender) to be payable to another party claiming an interest in the
remitted funds superior (the "Superior Interest") to the interest of the Lender
("Return Agreement"). The return of funds pursuant to the Return Agreement shall
occur upon CIT's certification to the Lender of the amount returned and the
identity of the party holding the Superior Interest and evidence of the payment.
Alternatively, the Lender may resolve the claims of any Superior Interest holder
if a full release of CIT is obtained by the Lender from such party holding the
Superior Interest. The Return Agreement shall not apply to the extent the
Superior Interest arose as a result of action by CIT. Upon service of any
complaint initiating such action for recover, CIT shall promptly notify Lender
of such
3
action and Lender shall have right of first refusal to defend such action to the
extent that such action would require any refund by Lender herein. The Company
hereby agrees to indemnify and to hold CIT harmless from any and all loss,
claim, liability, cost or expense, including reasonable attorneys' fees, which
may be incurred by reason of CIT's recognition of the assignment and security
interest herein contained and its remittances to the Lender as herein provided.
11. Term of Agreement. This Agreement shall continue in full force and
effect until the earliest to occur of the following:
(a) The parties hereto agree in writing to terminate this
Agreement;
(b) The obligations, liabilities and indebtedness of the
Company to the Lender under the Lender Documents are paid and satisfied
in full and the Lender Documents are terminated in writing; or
(c) The SCARPA is terminated and no monies shall any longer be
due or become due to the Company thereunder.
12. Notices. All notices required or permitted hereunder shall be in
writing and shall be made by overnight air courier or certified mail, return
receipt requested, and shall be deemed to have been validly given or delivered
one (1) business day after sending, if sent by overnight air courier, and three
(3) business days after sending, if sent by certified or registered mail,
addressed to the party to be notified as follows:
(a) If to the Company: Rawlings Sporting Goods Company, Inc.
1859 Intertech Drive
Fenton, Missouri 63026
Attn:
----------------------------------
Facsimile No.:
-------------------------
(b) If to the Lender: GE Commercial Finance
500 West Monroe St. - 12th floor
Chicago, IL 60661
Attn: Kristina Miller
Facsimile No.:
-------------------------
(c) If to CIT: The CIT Group/Commercial Services, Inc.
301 South Tryon Street
Charlotte, North Carolina 28202
Attn: Regional Manager
Facsimile No.: 704-339-2894
or such other address as any party may designate for itself by like notice.
4
13. No Waiver. Nothing contained in this Agreement and no act or action
taken or done by the Lender pursuant to the powers and rights granted hereunder
or under any document executed in connection herewith shall be deemed to be a
waiver by the Lender of any of its rights and remedies against the Company in
connection with, or in respect of, any of the obligations, liabilities and
indebtedness of the Company to the Lender under the Lender Documents.
14. Governing Law; Parties. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of North Carolina; and shall
be binding upon the parties hereto and their respective successors and assigns.
15. Severability. If any provision of this Agreement or the application
thereof to any person or circumstances shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provisions
to other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
16. Headings. All headings used herein are for convenience of reference
only and do not constitute a substantive part of this Agreement and shall not
effect its interpretation.
17. Amendment. This Agreement may not be amended or changed in any
respect or in any manner other than by a writing signed by the parties hereto.
18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will constitute an original but all of which taken
together shall constitute one and the same instrument.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
5
19. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, EACH PARTY WAIVES TRIAL BY JURY IN ANY ACTION ARISING OUT OF OR RELATED TO
THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal on the date first above written.
COMPANY:
RAWLINGS SPORTING GOODS COMPANY, INC.
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
LENDER:
GE COMMERCIAL FINANCE
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
THE CIT GROUP/COMMERCIAL SERVICES,
INC.
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
6
EXHIBIT A
SCARPA
See ___________ (___) pages attached hereto
EXHIBIT B
December 11, 2002
(Bank's Name) ("Bank")
Attn:
Re: (Client's Name)-Release and/or Conveyance of Security Interest in
Certain Accounts Receivable
Gentlemen:
The CIT Group/Commercial Services, Inc. ("CIT") has entered into a
Single Customer Credit Approved Receivables Purchasing Agreement dated December
11, 2002 and other related documents (collectively the "SCARPA") with Rawlings
Sporting Goods (the "Client"), pursuant to which the Client sells to CIT, on a
continuing basis, the accounts and contract rights arising from all of its sales
(the "Accounts") to (Customer's Name) Kmart (the "Customer"), all as more fully
set forth in the SCARPA. It is CIT's understanding from the Client that the
Customer has failed to pay some of the Accounts that were credit approved by CIT
due solely to the Customer's financial inability to pay (the "Loss Accounts").
The Loss Accounts are listed on Exhibit A attached hereto and incorporated
herein by reference. Upon the tender to CIT by the Client of certain items
required by the SCARPA and subject to other conditions set forth in the SCARPA,
CIT's obligations under the SCARPA to pay the Client the Purchase Price (as
defined in the SCARPA) for the Loss Accounts matures. A condition precedent to
the payment of the Purchase Price by CIT is that the Bank agree that upon
payment of the Purchase Price to the Bank that the Loss Accounts be free and
clear or released from (as hereinafter provided) of all liens and encumbrances
of the Bank or as otherwise agreed by CIT and the Bank.
CIT understands that, pursuant to a financing agreement between the
Bank and the Client, the Bank has been, or may be, granted a lien on or security
interest in certain of the Client's now owned or hereafter acquired accounts
receivable, contract rights, inventory, goods, documents and/or instruments of
the Client including, without limitation the Loss Accounts, as security for
certain loans or other financial accommodations made by the Bank to the Client.
It is further CIT's understanding that the Bank has properly perfected its
security interest in the its collateral including its interest in the Accounts.
Upon receipt of a fully executed copy of this agreement, CIT shall
transfer to the Bank the Purchase Price for the Loss Accounts the appropriate
wiring instructions for Bank set forth in a duly executed Assignment Agreement
for Proceeds of Single Customer Credit Approved Receivables Purchasing
Agreement. Upon payment of the Purchase Price, the Bank hereby transfers all of
its rights title and interests it may have in the Loss Accounts to CIT and
releases its interest in the Loss Accounts.
The Client warrants and represents that other than the Bank and CIT, no
other party has an interest in the Loss Accounts.
This agreement shall be governed by the laws of the State of North
Carolina, and unless the context of this agreement otherwise requires, all terms
used herein which are defined in the Uniform Commercial Code shall have the
meanings therein stated.
This agreement is solely for the benefit of CIT, the Client and the
Bank, and our respective successors and assigns. No other person, firm, entity
or corporation shall have any right, benefit, priority or interest under, or
because of the existence of this agreement.
If the foregoing is in accordance with each of your understanding,
please sign and return to CIT the enclosed copy of this letter to so indicate.
Very truly yours,
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Read and Agreed to:
(Bank's Name)
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
(Client's Name)
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-9-