SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report(Date of earliest event reported)September 12, 1997
RAWLINGS SPORTING GOODS COMPANY, INC.
(Exact name of Registrant as specified in its charter)
Missouri 0-24450 43-1674348
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification
Incorporation) No.)
1859 Intertech Drive, Fenton, Missouri 63026
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 349-5000
_________________________________________________________________
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS.
On September 12, 1997, Rawlings Sporting Goods Company,
Inc., a Missouri corporation (the "Company") announced the
closing of its acquisition of of USA Skate Co., Inc., including
the Vic, Victoriaville and McMartin brands. In August, the
Company announced its plans to acquire the Victoriaville
business. Jon Hodgins, Victoriaville's President, will manage
the Company's hockey business including the Rawlings, Vic,
Victoriaville and McMartin brands. Victoriaville had
approximately $14.0 million in annual revenues in its most
recently completed fiscal year and has NHL on ice exposure with
well over 150 professional players using Vic equipment.
In connection with the acquisition of USA Skate Co.,
Inc., the Company entered into an Amended and Restated Credit
Agreement dated as of September 12, 1997 among the Company, the
financial institutions named therein and The First National Bank
of Chicago, as Agent (the "Credit Agreement"). The Credit
Agreement provides, among other things, for the increase of the
revolving credit to the Company to an aggregate amount not to
exceed $90 million, and the extention of the maturity date to
September 1, 2002.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(a) and (b) Financial Statements and Pro Forma Financial
Information. None
(c) Exhibits.
2.1 Asset Purchase Agreement, dated
September 10, 1997, among Les
Equipements Sportifs Davtec, Inc., USA
Skate Co., Inc., USA Skate Corporation,
California Pro Sports, Inc., Rawlings
Canada, Inc. and Rawlings Sporting Goods
Company, Inc.
99.1 Amended and Restated Credit Agreement
dated as of September 12, 1997 among the
Company, the financial institutions
named therein and The First National
Bank of Chicago, as Agent.
99.2 Press Release issued September 12, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, hereunto duly authorized.
RAWLINGS SPORTING GOODS
COMPANY, INC.
Date: October 20, 1997 By: /S/ Paul E. Martin
Paul E. Martin,
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description Page
2.1 Asset Purchase Agreement, dated September 10,
1997, among Les Equipements Sportifs Davtec,
Inc., USA Skate Co., Inc., USA Skate
Corporation, California Pro Sports, Inc.,
Rawlings Canada, Inc. and Rawlings Sporting
Goods Company, Inc.
99.1 Amended and Restated Credit Agreement dated
as of September 12, 1997 among the Company,
the financial institutions named therein and
The First National Bank of Chicago, as Agent.
99.2 Press Release issued September 12, 1997.
EXHIBIT 2.1
_____________________________________________
ASSET PURCHASE AGREEMENT
among
LES EQUIPEMENTS SPORTIFS DAVTEC INC.,
USA SKATE CO., INC.,
USA SKATE CORPORATION,
CALIFORNIA PRO SPORTS, INC.,
RAWLINGS CANADA INC.
and
RAWLINGS SPORTING GOODS COMPANY, INC.
September 10, 1997
_____________________________________________
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I - PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES.. .1
1.1 USA Skate Assets. . . . . . . . . . . . . . . . . . . . . .1
1.2 Davtec Assets . . . . . . . . . . . . . . . . . . . . . . .4
1.3 Assumed Liabilities . . . . . . . . . . . . . . . . . . . .6
ARTICLE II - CLOSING . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE III - PURCHASE PRICES. . . . . . . . . . . . . . . . . .7
3.1 USA Skate Purchase Price; Adjustment. . . . . . . . . . . .7
3.2 Davtec Purchase Price; Adjustment . . . . . . . . . . . . .9
3.3 Davtec Intellectual Property Purchase Price . . . . . . . 10
3.4 Determination of Net Assets . . . . . . . . . . . . . . . 11
3.5 Allocation of Purchase Price. . . . . . . . . . . . . . . 12
3.6 Proration of Taxes. . . . . . . . . . . . . . . . . . . . 12
3.7 Transfer Taxes. . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLERS
AND STOCKHOLDER . . . . . . . . . . . . . . . . . . . . . 13
4.1 Organization and Qualification. . . . . . . . . . . . . . 13
4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . 13
4.3 Subsidiaries and Affiliates . . . . . . . . . . . . . . . 14
4.4 Financial Statements. . . . . . . . . . . . . . . . . . . 14
4.5 Absence of Certain Changes or Events. . . . . . . . . . . 15
4.6 Title to Assets . . . . . . . . . . . . . . . . . . . . . 16
4.7 Inventory . . . . . . . . . . . . . . . . . . . . . . . . 18
4.8 Accounts Receivable . . . . . . . . . . . . . . . . . . . 18
4.9 Contracts . . . . . . . . . . . . . . . . . . . . . . . . 18
4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.11 Adequate Facilities and Rights. . . . . . . . . . . . . . 20
4.12 Intellectual Property . . . . . . . . . . . . . . . . . . 20
4.13 No Breach of Statute, Decree, or Order. . . . . . . . . . 20
4.14 Litigation. . . . . . . . . . . . . . . . . . . . . . . . 21
4.15 Employee Benefit Plans. . . . . . . . . . . . . . . . . . 21
4.16 Insurance Policies. . . . . . . . . . . . . . . . . . . . 22
4.17 Product Warranties, Product Return Policies and
Service Warranties . . . . . . . . . . . . . . . . . 22
4.18 Operating Licenses and Permits. . . . . . . . . . . . . . 22
4.19 Assets in Good Repair . . . . . . . . . . . . . . . . . . 23
4.20 Environmental Matters . . . . . . . . . . . . . . . . . . 23
<PAGE>
4.21 Labor Disputes. . . . . . . . . . . . . . . . . . . . . . 27
4.22 Customers and Suppliers . . . . . . . . . . . . . . . . . 27
4.23 Workers' Compensation . . . . . . . . . . . . . . . . . . 27
4.24 Employment Matters. . . . . . . . . . . . . . . . . . . . 27
4.25 Unions and Labor Practices. . . . . . . . . . . . . . . . 28
4.26 Broker for Sellers. . . . . . . . . . . . . . . . . . . . 29
4.27 Organization and Qualification of Guarantors. . . . . . . 29
4.28 Authorization of Guarantors . . . . . . . . . . . . . . . 29
4.29 Accuracy of Statements. . . . . . . . . . . . . . . . . . 30
4.30 Survival. . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYERS . . . . . 30
5.1 Organization and Qualification. . . . . . . . . . . . . . 30
5.2 Authorization . . . . . . . . . . . . . . . . . . . . . . 30
5.3 Due Diligence . . . . . . . . . . . . . . . . . . . . . . 31
5.4 Broker for Buyers . . . . . . . . . . . . . . . . . . . . 31
5.5 Accuracy of Statements. . . . . . . . . . . . . . . . . . 31
5.6 Survival. . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VI - COVENANTS . . . . . . . . . . . . . . . . . . . . 31
6.1 Buyers' Right to Inspect Assets . . . . . . . . . . . . . 31
6.2 Conduct of Sellers Before the Closing . . . . . . . . . . 32
6.3 Bulk Sales Compliance . . . . . . . . . . . . . . . . . . 33
6.4 Confidential Information. . . . . . . . . . . . . . . . . 34
6.5 Agreement Not to Compete. . . . . . . . . . . . . . . . . 34
6.6 Remedy at Law Inadequate. . . . . . . . . . . . . . . . . 34
6.7 Non-Transferred Contracts . . . . . . . . . . . . . . . . 34
6.8 Sellers' Right to Sell Remaining Assets . . . . . . . . . 35
6.9 Buyers' Performance of Assumed Liabilities. . . . . . . . 35
6.10 Access to Books, Records and Documents. . . . . . . . . . 35
ARTICLE VII - TITLE AND SURVEYS. . . . . . . . . . . . . . . . 35
7.1 Title Opinion . . . . . . . . . . . . . . . . . . . . . . 35
7.2 Survey. . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII - BUYERS' CONDITIONS TO CLOSING . . . . . . . . . 36
8.1 Continued Truth of Warranties . . . . . . . . . . . . . . 36
8.2 Performance of Covenants. . . . . . . . . . . . . . . . . 36
8.3 Damages by Casualty or Otherwise. . . . . . . . . . . . . 36
8.4 No Adverse Change . . . . . . . . . . . . . . . . . . . . 37
8.5 Permits . . . . . . . . . . . . . . . . . . . . . . . . . 37
<PAGE>
8.6 Litigation. . . . . . . . . . . . . . . . . . . . . . . . 37
8.7 Security Interests Released . . . . . . . . . . . . . . . 37
8.8 Title to Names. . . . . . . . . . . . . . . . . . . . . . 37
8.9 Insider Loans . . . . . . . . . . . . . . . . . . . . . . 37
8.10 No Legal Hypothecs. . . . . . . . . . . . . . . . . . . . 37
8.11 Release of Payables Owing to Stockholders . . . . . . . . 37
8.12 Transfer of Assets to Davtec. . . . . . . . . . . . . . . 37
8.13 Anjou Sublease. . . . . . . . . . . . . . . . . . . . . . 38
8.14 Due Diligence Investigation . . . . . . . . . . . . . . . 38
8.15 Tax Clearance Certificates. . . . . . . . . . . . . . . . 38
8.16 Section 116 Affidavit . . . . . . . . . . . . . . . . . . 38
8.17 Key Employees . . . . . . . . . . . . . . . . . . . . . . 38
8.18 Estoppel Certificates . . . . . . . . . . . . . . . . . . 38
8.19 Canadian Title Requirements . . . . . . . . . . . . . . . 38
8.20 Escrow Agreement. . . . . . . . . . . . . . . . . . . . . 38
8.21 Lock Box Agreement. . . . . . . . . . . . . . . . . . . . 38
8.22 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . 38
8.23 Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . 38
8.24 Certificate . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX - SELLERS' AND STOCKHOLDERS' CONDITIONS TO CLOSING. 39
9.1 Continued Truth of Warranties . . . . . . . . . . . . . . 39
9.2 Performance of Covenants. . . . . . . . . . . . . . . . . 39
9.3 Permits . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.4 Litigation. . . . . . . . . . . . . . . . . . . . . . . . 39
9.5 Escrow Agreement. . . . . . . . . . . . . . . . . . . . . 39
9.6 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . 39
9.7 Termination of Hodgins Employment Agreement . . . . . . . 39
9.8 Certificate . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE X - ACTIONS TO BE TAKEN AT CLOSING; POST-CLOSING
COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.1 Actions to be taken at Closing by Sellers and
Stockholders . . . . . . . . . . . . . . . . . . . . 40
10.2 Actions to be taken at Closing by Buyer . . . . . . . . . 41
10.3 Post-Closing Cooperation. . . . . . . . . . . . . . . . . 42
ARTICLE XI - INDEMNIFICATION . . . . . . . . . . . . . . . . . 43
11.1 Indemnification . . . . . . . . . . . . . . . . . . . . . 43
11.2 Notice of, and Procedures for, Collecting
Indemnification . . . . . . . . . . . . . . . . . . 46
ARTICLE XII - MISCELLANEOUS. . . . . . . . . . . . . . . . . . 47
12.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 47
<PAGE>
12.2 Amendment . . . . . . . . . . . . . . . . . . . . . . . . 48
12.3 Counterparts. . . . . . . . . . . . . . . . . . . . . . . 48
12.4 Binding on Successors and Assigns . . . . . . . . . . . . 48
12.5 Severability. . . . . . . . . . . . . . . . . . . . . . . 48
12.6 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.7 Publicity . . . . . . . . . . . . . . . . . . . . . . . . 48
12.8 Headings. . . . . . . . . . . . . . . . . . . . . . . . . 49
12.9 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 49
12.10 Sellers Solidarily Liable. . . . . . . . . . . . . . . . 49
12.11 Entire Agreement; Law Governing. . . . . . . . . . . . . 49
EXHIBITS
Exhibit A Escrow Agreement
Exhibit B Sellers' Opinion
Exhibit C Guaranty
Exhibit D Buyers' Opinion
Exhibit E Bill of Sale and Assignment
Exhibit F Deed of Transfer
Exhibit G Assumption Agreement
SCHEDULES
1.1(a)(i) Excluded USA Skate Inventory
1.1(a)(ii) Excluded USA Skate Accounts Receivable
1.1(a)(iii) USA Skate Property, Plant and Equipment
1.1(a)(iv) USA Skate Contracts
1.1(a)(v) USA Skate Software
1.1(a)(vi) USA Skate Intellectual Property
1.2(a)(i) Excluded Davtec Inventory
1.2(a)(ii) Excluded Davtec Accounts Receivable
1.2(a)(iii) Davtec Equipment
1.2(a)(iv) Davtec Vehicles
1.2(a)(v) Daveluyville Property
1.2(a)(vi) Davtec Contracts
1.2(a)(vii) Davtec Software
1.2(c) Davtec Intellectual Property
1.3(a) USA Skate Assumed Liabilities
1.3(b) Davtec Assumed Liabilities
4.1 Foreign Qualifications
4.2 Required Consents
4.4 Financial Statements
4.5 Significant Corporate Events
4.6 Leased Assets
4.6(b) Permitted Encumbrances
<PAGE>
4.7 Inventory On Consignment
4.8 Accounts Receivable in Dispute
4.9 Labor Contracts
4.10 Exceptions to Taxes; Audits
4.13 Breach of Statute, Decree or Order
4.14 Litigation
4.15 Employee Benefits Plans
4.16 Insurance Policies
4.17 Product Warranties, Product Return Policies
and Service Warranties
4.18 Operating Licenses and Permits
4.19 Assets Not in Good Repair
4.20 Environmental Matters
4.22 Material Customers and Suppliers
4.24 Employees
4.25 Unions and Labor Practices
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is
made and entered into this 10th day of September, 1997, by and
among LES EQUIPEMENTS SPORTIFS DAVTEC INC., a Canadian
corporation ("Davtec"), USA SKATE CO., INC., a New York
corporation and a stockholder of Davtec ("USA Skate;" hereinafter
Davtec and USA Skate are sometimes referred to individually as a
"Seller" and collectively as "Sellers"), USA SKATE CORPORATION, a
Delaware corporation and the sole stockholder of USA Skate
("Skate Corp."), CALIFORNIA PRO SPORTS, INC., a Delaware
corporation and the majority stockholder of Skate Corp. ("Cal
Pro;" hereinafter Skate Corp. and Cal Pro are sometimes referred
to individually as a "Stockholder" and collectively as
"Stockholders"), RAWLINGS CANADA INC., a Nova Scotia corporation
("Rawlings Canada"), and RAWLINGS SPORTING GOODS COMPANY, INC., a
Delaware corporation and the sole stockholder of Rawlings Canada
("Rawlings;" hereinafter Rawlings Canada and Rawlings are
sometimes referred to individually as a "Buyer" and collectively
as "Buyers").
WITNESSETH:
WHEREAS, Sellers are in the business of manufacturing,
sourcing and distributing the Victoriaville, Vic and McMartin
product lines of hockey sticks, skates, protective equipment and
other hockey equipment (the "Business"); and
WHEREAS, Sellers desire to sell to Buyers certain of
their properties and assets relating to the Business, and Buyers
desire to purchase such properties and assets, all upon the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
payments, mutual promises, agreements, warranties and covenants
herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES.
1.1 USA SKATE ASSETS.
(a) Subject to the terms and conditions hereof,
including without limitation Section 1.1(b) hereof, and subject
to the representations and warranties made herein, on the Closing
Date, as hereinafter defined, USA Skate shall validly sell,
assign, transfer, grant, bargain, deliver and convey to Rawlings
its entire right, title and interest in and to the following
assets (the "USA Skate Assets"):
(i) All of USA Skate's inventory,
including all raw materials, work in process, finished
goods, packaging and shipping supplies, <PAGE> maintenance
items, spare parts, and all other materials and
supplies on hand at or in transit to USA Skate's
Commack, New York facility (the "New York Facility"),
relating to the Business, other than the inventory set
forth on Schedule 1.1(a)(i) (the "USA Skate
Inventory");
(ii) All of USA Skate's accounts
receivable, trade accounts and other trade debts due
Seller (and the benefit of all liens and litigation
relating thereto) relating to the Business, other than
the accounts receivable set forth on Schedule
1.1(a)(ii) (the "USA Skate Accounts Receivable");
(iii) All of USA Skate's machinery,
equipment, furniture, furnishings, fixtures,
accessories, computers and computing equipment relating
to the Business, including but not limited to the
equipment set forth on Schedule 1.1(a)(iii) and all
equipment located at the New York Facility (the "USA
Skate Property, Plant and Equipment");
(iv) The full benefit of (i) all
purchase orders to USA Skate relating to the Business,
(ii) the contracts, agreements and leases set forth on
Schedule 1.1(a)(iv), and (iii) all of USA Skate's
transferable licenses, quotas, consents, permits and
approvals relating to the Business (the "USA Skate
Contracts");
(v) All copies, both in
machine-readable and (to the extent they exist) in
human-readable form, of all computer programs and
software (whether stored on hard or floppy disks or
other media), and all interests therein or rights
thereto owned by USA Skate or to which it is entitled
by license or otherwise, together with the media on
which such software and programs are stored, and all
documents and information relating to any of the
foregoing, relating to the Business, including but not
limited to the software and other items set forth on
Schedule 1.1(a)(v);
(vi) All of USA Skate's foreign and
domestic patents, patent applications, utility and
design model registrations and applications therefor,
international priority rights, trademarks and service
marks (registered or unregistered), trademark and
service mark applications, trade names, service marks,
trade dress, copyrights, copyright applications,
intellectual designs, formulas, know-how, trade
secrets, technical and manufacturing processes and
information, operating techniques and procedures,
engineering data and plans including mold and
manufacturing drawings, assembly and installation
drawings, blueprints, procurement specifications, and
engineering and performance specifications, as well as
any marketing materials and information including
marketing plans, surveys and strategies, promotional
concepts, artwork, photographs, brochures, print,
television and radio advertising, product packaging and
packaging design and other intellectual property,
together with the benefit of all licenses granted by or
to USA Skate in respect of any of the foregoing and all
rights to sue for past infringement of any of the
foregoing and all goodwill associated with the
foregoing, relating to the Business, including but not
<PAGE>
limited to the patents, trademarks, trade names and
other intellectual property set forth on Schedule
1.1(a)(vi) (the "USA Skate Intellectual Property");
(vii) All of USA Skate's books,
records, books of account, sales and purchase records,
lists of customers and prospects, lists of suppliers,
product information, pricing information, operations
information, government inspection reports, waste
monitoring reports, and all other documents, files,
records and other data and information of USA Skate
(whether stored on hard or floppy disks or other
media), relating to the Business, but excluding all of
USA Skate's tax return files and working papers
relating thereto, corporate minutes, stock records and
related materials, and books and records relating to
USA Skate's assets which are not being purchased
pursuant to this Agreement; and
(viii) Except as specifically
excluded in this Section 1.1(a) or Section 1.1(b)
hereof, all of USA Skate's other property, assets and
rights relating to the Business.
(b) Notwithstanding the provisions of Section
1.1(a) hereof, the USA Skate Assets shall not include the
following assets:
(i) Any and all of USA Skate's cash,
cash-equivalents and investment securities on hand and
in banks and other depositories;
(ii) Any and all capital stock of
Amskate Holding Ltd.;
(iii) Any and all of USA Skate's prepaid
expenses;
(iv) Any and all real property to which
USA Skate holds fee simple title;
(v) Any and all of USA Skate's
contracts, agreements and leases not described in
clauses (i) or (iii) of Section 1.1(a)(iv) or not set
forth on Schedule 1.1(a)(iv) or Schedule 4.9;
(vi) Any and all United States federal or
state income tax refunds to USA Skate attributable to any
period ending on or before the Closing Date; and
(vii) Any and all of USA Skate's legal
defenses, set-offs, and insurance or similar claims
attributable to any period ending on or before the Closing
Date or relating to USA Skate's assets which are not being
purchased pursuant to this Agreement.
1.2 DAVTEC ASSETS
(a) Subject to the terms and conditions hereof,
including without limitation Section 1.2 (b) hereof, and subject
to the representations and warranties made herein, on the Closing
<PAGE>
Date Davtec shall validly sell, assign, transfer, grant, bargain,
deliver and convey to Rawlings Canada its entire right, title and
interest in and to the following assets (the "Davtec Assets"):
(i) All of Davtec's inventory,
including all raw materials, work in process, finished
goods, packaging and shipping supplies, maintenance
items, spare parts, rework shafts and all other
materials and supplies on hand at or in transit to
Davtec's Daveluyville, Quebec, Kirkland, Quebec, Anjou,
Quebec and London, Ontario facilities (the "Canadian
Facilities") relating to the Business, other than the
inventory set forth on Schedule 1.2(a)(i) (the "Davtec
Inventory.;" hereinafter the USA Skate Inventory and
the Davtec Inventory are referred to collectively as
the "Inventory");
(ii) All of Davtec's accounts
receivable, trade accounts and other trade debts due
Seller (and the benefit of all liens and litigation
relating thereto) relating to the Business, other than
the accounts receivable set forth on Schedule
1.2(a)(ii) (the "Davtec Accounts Receivable;"
hereinafter the USA Skate Accounts Receivable and the
Davtec Accounts Receivable are referred to collectively
as the "Accounts Receivable");
(iii) All of Davtec's machinery,
equipment, molds, tools, furniture, furnishings,
fixtures, accessories, computers and computing
equipment relating to the Business, including but not
limited to the equipment set forth on Schedule
1.2(a)(iii) and all equipment located at the Canadian
Facilities (the "Davtec Equipment;" hereinafter the USA
Skate Equipment and the Davtec Equipment are referred
to collectively as the "Equipment");
(iv) Davtec's automobiles, trucks, vans,
trailers and other vehicles and mobile equipment set
forth on Schedule 1.2(a)(iv) (the "Davtec Vehicles");
(v) The real property located in
Daveluyville, Quebec and more particularly described on
Schedule 1.2(a)(v) and all improvements thereon (the
"Daveluyville Property;" hereinafter the Davtec
Equipment, the Davtec Vehicles and Daveluyville
Property are referred to collectively as the "Davtec
Property, Plant and Equipment," and the USA Skate
Property, Plant and Equipment and the Davtec Property,
Plant and Equipment are referred to collectively as the
"Property, Plant and Equipment");
(vi) The full benefit of (i) all
purchase orders to Davtec relating to the Business,
(ii) the contracts, agreements and leases set forth on
Schedule 1.2(a)(vi), and (iii) all of Davtec's
transferable licenses, quotas, consents, permits and
approvals relating to the Business (the "Davtec
Contracts;" hereinafter the USA Skate Contracts and the
Davtec Contracts are referred to collectively as the
"Contracts");
<PAGE>
(vii) All copies, both in
machine-readable and (to the extent they exist) in
human-readable form, of all computer programs and
software (whether stored on hard or floppy disk or
other media) and all interests therein or rights
thereto owned by Davtec or to which it is entitled by
license or otherwise, together with the media on which
such software and programs are stored, and all
documents and information relating to any of the
foregoing, relating to the Business, including but not
limited to the software and other items set forth on
Schedule 1.2(a)(vii);
(viii) All of Davtec's books,
records, books of account, sales and purchase records,
lists of customers and prospects, lists of suppliers,
product information, pricing information, operations
information, government inspection reports, waste
monitoring reports, and all other documents, files,
records and other data and information of Davtec
(whether stored on hard or floppy disks or other
media), relating to the Business, but excluding all of
Davtec's tax return files and working papers relating
thereto, corporate minutes, stock records and related
materials, and books and records relating to Davtec's
assets which are not being purchased pursuant to this
Agreement; and
(ix) Except for the Davtec Intellectual
Property (as hereinafter defined), all of Davtec's
goodwill relating to the Business and as specifically
excluded in Section 1.2(a) or Section 1.2(b) hereof
all of Davtec's other property, assets and rights
relating to the Business.
(b) Notwithstanding the provisions of Section
1.2(a) hereof, the Davtec Assets shall not include the following
assets:
(i) Any and all of Davtec's cash, cash-
equivalents and investment securities on hand and in
banks and other depositories;
(ii) Any and all of Davtec's prepaid
expenses;
(iii) Any and all real property to
which Davtec holds fee simple title, other than the
Daveluyville Property;
(iv) Any and all of Davtec's contracts,
agreements and leases not described in clauses (i) or
(iii) of Section 1.2(a)(vi) or not set forth on
Schedule 1.2(a)(vi) or Schedule 4.9;
(v) Any and all Canadian federal or
provincial research and development refunds to Davtec
attributable to any period ending on or before the
Closing Date;
(vi) Any and all of Davtec's legal
defenses, set-offs, and insurance or similar claims
attributable to any period ending on or before the
Closing <PAGE> Date or relating to Davtec's assets which are
not being purchased pursuant to this Agreement; and
(vii) Any and all capital stock of
811300 Ontario Inc.
(c) Subject to the terms and conditions hereof,
and subject to the representations and warranties made herein, on
the Closing Date Davtec shall validly sell, assign, transfer,
grant, bargain, deliver and convey to Rawlings its entire right,
title and interest in and to all of (i) Davtec's foreign and
domestic patents, patent applications, utility and design model
registrations and applications therefor, international priority
rights, trademarks and service marks (registered or
unregistered), trademark and service mark applications, trade
names, service marks, trade dress, copyrights, copyright
applications, intellectual designs, formulas, know-how, trade
secrets, technical and manufacturing processes and information,
operating techniques and procedures, engineering data and plans
including mold and manufacturing drawings, assembly and
installation drawings, blueprints, procurement specifications,
and engineering and performance specifications, as well as any
marketing materials and information including marketing plans,
surveys and strategies, promotional concepts, artwork,
photographs, brochures, print, television and radio advertising,
product packaging and packaging design, and other intellectual
property, together with the benefit of all licenses granted by or
to Davtec in respect of any of the foregoing and all rights to
sue for past infringement of any of the foregoing and all
goodwill associated with the foregoing, relating to the Business,
including but not limited to the patents, trademarks, trade names
and other intellectual property set forth on Schedule 1.2(c) and
(ii) Davtec's goodwill relating to the Business (the items
described in clauses (i) and (ii) of this Section 1.2(c) are
collectively referred to in this Agreement as the "Davtec
Intellectual Property;" hereinafter the USA Skate Intellectual
Property and the Davtec Intellectual Property are referred to
collectively as the "Intellectual Property" and the USA Skate
Assets, Davtec Assets and Intellectual Property are referred to
collectively as the "Assets").
1.3 ASSUMED LIABILITIES.
(a) Subject to the terms and conditions of this
Agreement, Rawlings shall, as of the Closing Date, assume and
agree to discharge the trade payables of USA Skate on hand at the
Closing Date or received by Buyers within 40 days of the Closing
Date relating to products received by or services performed for
USA Skate before the Closing Date (the "USA Skate Accounts
Payable"), the accrued liabilities of USA Skate set forth in
Schedule 1.3(a) (the "USA Skate Accrued Liabilities"), and the
obligations and liabilities which arise after the Closing Date
and under the USA Skate Contracts which, but for the assignment
of the Contracts to Rawlings pursuant to this Agreement, would
have been obligations or liabilities of USA Skate.
Notwithstanding the foregoing, the USA Skate Accounts Payable and
the USA Skate Accrued Liabilities shall not include any trade
payable or accrued liability to any affiliate or related party of
USA Skate or Davtec, accrued interest or any debit balance with
respect to a payable.
(b) Subject to the terms and conditions of this
Agreement, Rawlings Canada shall, as of the Closing Date, assume
and agree to discharge the trade accounts payable of Davtec on
hand at the Closing Date or received by Buyers within 40 days of
the Closing Date relating to products received by or services
performed for Davtec before the Closing Date (the "Davtec
<PAGE>
Accounts Payable;" hereinafter the USA Skate Accounts Payable and
the Davtec Accounts Payable are referred to collectively as the
"Accounts Payable"), the accrued liabilities of Davtec set forth
of Schedule 1.3(b) (the "Davtec Accrued Liabilities;" hereinafter
the USA Skate Accrued Liabilities and Davtec Accrued Liabilities
are referred to collectively as the "Accrued Liabilities"), and
the obligations and liabilities which arise after the Closing
Date under the Davtec Contracts and which, but for the assignment
of the Davtec Contracts to Rawlings Canada pursuant to this
Agreement, would have been obligations or liabilities of Davtec.
Notwithstanding the foregoing, the Davtec Accounts Payable and
the Davtec Accrued Liabilities shall not include any trade
payable or accrued liability to any affiliate or other related
party of Davtec or USA Skate, accrued interest or any debit
balance with respect to a payable.
(c) Except for the liabilities and obligations
assumed by Buyers pursuant to Sections 1.3(a) and (b)
(collectively, the "Assumed Liabilities"), any and all
obligations and liabilities of Sellers or Stockholders, whether
accrued or contingent or due or not due, shall be and remain the
sole obligations and liabilities of Sellers and Stockholders,
respectively, to pay and discharge, and Buyers shall not be
obligated in any respect therefor.
ARTICLE II
CLOSING
The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at 10:00 a.m. on
September 11, 1997 (the "Closing Date"), at the office of
Stinson, Mag & Fizzell, P.C., 100 South Fourth Street, St. Louis,
Missouri 63102, or at such other time and place as the parties
shall mutually agree upon.
ARTICLE III
PURCHASE PRICES
3.1 USA SKATE PURCHASE PRICE; ADJUSTMENT.
(a) USA Skate Purchase Price. The total
consideration for the USA Skate Assets and the USA Skate Assumed
Liabilities (the "USA Skate Purchase Price"), upon the terms and
subject to the conditions of this Agreement, shall be
$10,140,922, plus or minus the difference between the USA Skate
Net Assets (as defined in Section 3.4) and $3,279,732. At
Closing, as payment of an estimated amount of the USA Skate
Purchase Price, Rawlings shall (i) pay $9,390,922 (the "USA Skate
Closing Consideration") to USA Skate by certified or bank
cashier's check payable to the order of USA Skate or by wire
transfer to the account designated in writing by USA Skate to
Rawlings at least 48 hours before the Closing, (ii) deposit
$250,000 (the "USA Skate Adjustment Deposit") in escrow pursuant
to an escrow agreement in the form of Exhibit A attached hereto
(the "Escrow Agreement") as a source for the payment of any
adjustment to the USA Skate Purchase Price and (iii) deposit
$500,000 in escrow pursuant to the Escrow Agreement as a source
for the payment of any indemnification hereunder. The balance of
the USA Skate Purchase Price, or any refund of the USA Skate
Purchase Price, shall be paid in accordance with Section 3.1(b).
<PAGE>
(b) ADJUSTMENT OF THE USA SKATE PURCHASE PRICE.
(i) As of the close of business on the
day immediately preceding the Closing Date, or at such
other date and time as Rawlings and USA Skate shall
agree upon, Rawlings and USA Skate, or their
representatives, shall commence an accounts receivable
verification, a physical inventory, and such other
audit procedures as they shall agree are appropriate to
determine the USA Skate Net Assets in accordance with
Section 3.4. Rawlings shall not remove any USA Skate
tangible assets from the New York Facility until the
agreed upon audit procedures for such tangible assets
have been completed. Within forty-five (45) days of
the Closing Date, Rawlings or its representatives shall
prepare and deliver to USA Skate a statement, prepared
in accordance with Section 3.4, setting forth its
determination of the USA Skate Net Assets, together
with all of Rawlings' related work papers. If USA
Skate shall disagree in any respect with Rawlings'
determination of the USA Skate Net Assets, it shall
notify Rawlings of the items in dispute and the reasons
therefor within twenty (20) days of the giving by
Rawlings to USA Skate of its determination of the USA
Skate Net Assets, and the parties shall meet promptly
thereafter to resolve any differences. If Rawlings and
USA Skate are unable to resolve any such dispute within
fifteen (15) days of the giving by USA Skate to
Rawlings of notice of the dispute, the disputed items
shall be referred to Price Waterhouse LLP (the "Third
Party Accountants") for an opinion with respect to such
dispute, which opinion shall be delivered to Rawlings
and USA Skate within thirty (30) days of the referral
to the Third Party Accountants and shall be final and
binding on the parties hereto. Rawlings and USA Skate
shall each pay that proportion of the fees and expenses
of the Third Party Accountants as shall equal the
proportion that the aggregate amount in dispute awarded
to it by the Third Party Accountants bears to the
aggregate amount in dispute.
(ii) If the USA Skate Net Assets equal
$3,279,732, then Rawlings and USA Skate shall instruct
the escrow agent under the Escrow Agreement (the
"Escrow Agent") to, first, disburse $238,000 (or such
other amount as Rawlings and USA Skate shall agree to)
to Cortina International and, second, disburse the
balance of the USA Skate Adjustment Deposit, if any, to
USA Skate.
If the USA Skate Net Assets exceed
$3,279,732, then (i) Rawlings and USA Skate shall
instruct the Escrow Agent to, first, disburse $238,000
(or such other amount as Rawlings and USA Skate shall
agree to) to Cortina International and, second,
disburse the balance of the USA Skate Adjustment, if
any, to USA Skate, and (ii) Rawlings shall pay the
difference between the USA Skate Net Assets and
$3,279,732 to USA Skate.
If $3,279,732 exceeds the USA Skate Net
Assets, (i) Rawlings and USA Skate shall instruct the
Escrow Agent to, first, disburse from the USA Skate
Adjustment Deposit the amount by which $3,279,732
exceeds the USA Skate Net Assets to Rawlings and,
second, disburse the balance of the USA Skate
Adjustment <PAGE> Deposit, if any, to USA Skate, and (ii) if
$3,279,732 exceeds the USA Skate Net Assets by more
than the USA Skate Adjustment Deposit, USA Skate also
shall pay to Rawlings the difference between (x) the
amount by which $3,279,732 exceeds the USA Skate Net
Assets less (y) the USA Skate Adjustment Deposit.
(iii) Any instructions to the Escrow
Agent and any payment made pursuant to this Section
3.1(b) shall be given or made within five (5) days of
the determination of the USA Skate Net Assets pursuant
to this Section 3.1(b). Any disbursement by the Escrow
Agent pursuant to this Section 3.1(b) shall include
interest and all other earnings accrued on the
disbursement.
3.2 DAVTEC PURCHASE PRICE; ADJUSTMENT.
(a) Davtec Purchase Price. The total
consideration for the Davtec Assets and the Davtec Assumed
Liabilities (the "Davtec Purchase Price"), upon the terms and
subject to the conditions of this Agreement, shall be
C$5,793,363, plus or minus the difference between the Davtec Net
Assets (as defined in Section 3.4) and C$5,793,363. At Closing,
as payment of an estimated amount of the Davtec Purchase Price,
Rawlings Canada shall (i) pay C$5,446,767 (the "Davtec Closing
Consideration") to Davtec by certified or bank cashier's check
payable to the order of Davtec or by wire transfer to the account
designated in writing by Davtec to Rawlings Canada at least 48
hours before the Closing and (ii) deposit C$346,596 (the "Davtec
Adjustment Deposit") in escrow pursuant to the Escrow Agreement
as a source for the payment of any adjustment to the Davtec
Purchase Price. The balance of the Davtec Purchase Price, or any
refund of the Davtec Purchase Price, shall be paid in accordance
with Section 3.2(b).
(b) ADJUSTMENT OF THE DAVTEC PURCHASE PRICE.
(i) As of the close of business on the
day immediately preceding the Closing Date, or at such
other date and time as Rawlings Canada and Davtec shall
agree upon, Rawlings Canada and Davtec, or their
representatives, shall conduct an accounts receivable
verification, a physical inventory, and such other
audit procedures as they shall agree are appropriate to
determine the Davtec Net Assets in accordance with
Section 3.4. Within forty-five (45) days of the
Closing Date, Rawlings Canada or its representatives
shall prepare and deliver to Davtec a statement,
prepared in accordance with Section 3.4, setting forth
its determination of the Davtec Net Assets, together
with all of Rawlings Canada's related work papers. If
Davtec shall disagree in any respect with Rawlings
Canada's determination of the Davtec Net Assets, it
shall notify Rawlings Canada of the items in dispute
and the reasons therefor within twenty (20) days of the
giving by Rawlings Canada to Davtec of its
determination of the Davtec Net Assets, and the parties
shall meet promptly thereafter to resolve any
differences. If Rawlings Canada and Davtec are unable
to resolve any such dispute within fifteen (15) days of
the giving by Davtec to Rawlings Canada of notice of
the dispute, the disputed items shall be referred to
the Third Party Accountants for an opinion with respect
to such dispute, which opinion shall be delivered to
Rawlings Canada and Davtec within thirty (30) days of
the referral to the <PAGE> Third Party Accountants and shall
be final and binding on the parties hereto. Rawlings
Canada and Davtec shall each pay that proportion of the
fees and expenses of the Third Party Accountants as
shall equal the proportion that the aggregate amount in
dispute awarded to it by the Third Party Accountants
bears to the aggregate amount in dispute.
(ii) If the Davtec Net Assets equal
C$5,793,363, then Rawlings Canada and Davtec shall
instruct the Escrow Agent to, first, disburse $238,000
(or such other amount as Rawlings Canada and Davtec
shall agree to) to Cortina International and, second,
disburse the balance of the Davtec Adjustment Deposit,
if any, to Davtec.
If the Davtec Net Assets exceed
C$5,793,363, then (i) Rawlings Canada and Davtec shall
instruct the Escrow Agent to, first, disburse $238,000
(or such other amount as Rawlings Canada and Davtec
shall agree to) to Cortina International and, second,
disburse the balance of the Davtec Adjustment, if any,
to Davtec, and (ii) Rawlings Canada shall pay the
difference between the Davtec Net Assets and
C$5,793,363 to Davtec.
If C$5,793,363 exceeds the Davtec Net
Assets, (i) Rawlings Canada and Davtec shall instruct
the Escrow Agent to, first, disburse from the Davtec
Adjustment Deposit the amount by which C$5,793,363
exceeds the Davtec Net Assets to Rawlings Canada and,
second, disburse the balance of the Davtec Adjustment
Deposit, if any, to Davtec, and (ii) if C$5,793,363
exceeds the Davtec Net Assets by more than the Davtec
Adjustment Deposit, Davtec also shall pay to Rawlings
Canada the difference between (x) the amount by which
C$5,793,363 exceeds the Davtec Net Assets less (y) the
Davtec Adjustment Deposit.
(iii) Any instructions to the Escrow
Agent and any payment made pursuant to this Section
3.2(b) shall be given or made within five (5) days of
the determination of the Davtec Net Assets pursuant to
this Section 3.2(b). Any disbursement by the Escrow
Agent pursuant to this Section 3.2(b) shall include
interest and all other earnings accrued on the
disbursement.
3.3 DAVTEC INTELLECTUAL PROPERTY PURCHASE PRICE. The
total consideration for the Davtec Intellectual Property, upon
the terms and subject to the conditions of this Agreement, shall
be C$250,000 (the "Davtec Intellectual Property Purchase Price").
At Closing, Rawlings shall pay the Davtec Intellectual Property
Purchase Price to Davtec by certified or bank cashier's check
payable to the order of Davtec or by wire transfer to the account
designated in writing by Davtec to Rawlings at least 48 hours
before the Closing.
3.4 DETERMINATION OF NET ASSETS. As used in this
Agreement,
(a) "USA SKATE NET ASSETS" shall mean the book
value as of the Closing Date of the USA Skate Accounts
Receivable, plus the USA Skate Inventory, plus the USA Skate
<PAGE>
Property, Plant and Equipment, less the USA Skate Accounts
Payable, less the USA Skate Accrued Liabilities, and
(b) "DAVTEC NET ASSETS" shall mean the book value
as of the Closing Date of the Davtec Accounts Receivable, plus
the Davtec Inventory, plus the Davtec Property, Plant and
Equipment, less the Davtec Accounts Payable, less the Davtec
Accrued Liabilities,
all determined in accordance with United States generally
accepted accounting principles, except that:
(i) The value of the Accounts
Receivable (other than Accounts Receivable outstanding
sixty or more days as of the Closing Date which are not
collected by Buyers within the forty days following the
Closing Date (the "Uncollected Receivables")) shall
equal 95% of the book value of such Accounts
Receivable. The value of the Uncollected Receivables
shall be zero. Sellers and Stockholders shall promptly
pay and, with respect to any Account Receivable
received by a lock box maintained on behalf of Sellers
or Stockholders, shall cause their lenders to promptly
pay to the appropriate Buyer any Account Receivable
received by Sellers or Stockholders (including any
Account Receivable received by a lock box maintained on
behalf of Sellers or Stockholders) after the Closing.
On the date(s) the Escrow Agent distributes the USA
Skate Adjustment Deposit and the Davtec Adjustment
Deposit pursuant to the Escrow Agreement, Buyers shall
assign the Uncollected Receivables to USA Skate and
Davtec, as applicable. Buyers shall promptly pay to
the appropriate Seller (i) any account receivable owing
to Sellers collected by Buyers which is not included in
the Accounts Receivable and (ii) any Uncollected
Receivable assigned to Sellers pursuant to this Section
3.4(b)(i).
(ii) The quantity of the Inventory shall
be determined by a physical inventory conducted jointly
by the appropriate Buyer and Seller or their
representatives as of the Closing Date. Inventory
values shall be based upon the lower of cost determined
on the first-in-first-out method or net realizable
value. The net realizable value for rework shafts
(which had a book value of C$138,515 as of June 30,
1997) shall be zero. The net realizable value for any
inventory not in Sellers' current product line will be
cost determined on a first-in-first-out method, except
that the net realizable value of all lacrosse gloves,
in-line skates and golf inventory shall equal 50% of
cost determined on a first-in-first-out method (which
values, as of June 30, 1997, were $7,565, $58,698 and
$17,591 respectively).
(iii) The Property, Plant and
Equipment shall be determined by a physical inventory
of the items listed in Schedules 1.1(a)(iii),
1.1(a)(iv), 1.2(a)(iii) and 1.2(a)(iv) conducted
jointly by the appropriate Buyer and Seller or their
representatives as of the Closing Date. Property,
Plant and Equipment values shall be adjusted from their
book value for a valuation reserve determined in
accordance with SFAS #121.
<PAGE>
(iv) The Accounts Payable shall equal
the unpaid bills on hand at the Closing Date or
received by Buyers within 40 days of the Closing Date
relating to products received by or services performed
for Sellers before the Closing Date, and shall exclude
all accounts payable to any affiliate or related party
of a Seller, all interest payable, all debit balances
with respect to any Account Payable and all other
liabilities not related to the Assets.
(v) The Accrued Liabilities shall equal
the liability as of the Closing Date for each of the
liabilities outlined in Schedule 1.3(a) and Schedule
1.3(b) determined in accordance with generally accepted
accounting principles, applied on a consistent basis.
The Jon Hodgins employment agreement liability shall be
deemed to be $160,000.
3.5 ALLOCATION OF PURCHASE PRICE.
(a) The USA Skate Purchase Price shall be
allocated among the USA Skate Assets and USA Skate's agreement
not to compete in accordance with an appraisal to be obtained by
Rawlings and Section 1060 of the Internal Revenue Code of 1986,
as amended (the "Code"). USA Skate and Rawlings shall provide to
the other all information appropriate to permit any party to
make, in a timely manner, any filing appropriate under Section
1060 of the Code. USA Skate and Rawlings each shall make all
required filings under the Code with respect to the allocation of
the USA Skate Purchase Price.
(b) The Davtec Purchase Price shall be allocated
among the Davtec Assets and Davtec's agreement not to compete in
accordance with an appraisal to be obtained by Rawlings Canada.
Rawlings Canada and Davtec shall each execute and file a joint
election under Section 22 of the Income Tax Act (Canada) and the
corresponding provisions of any other applicable taxing statute
or regulation, within the prescribed time periods, in respect of
the Davtec Accounts Receivable. Buyers and Davtec agree to
prepare and file their respective tax returns in a manner
consistent with such elections and the allocation of the Davtec
Purchase Price determined pursuant to this Section 3.5(b).
Sellers jointly and severally shall indemnify and save harmless
Buyers, and Buyers jointly and severally shall indemnify and save
harmless Sellers, in respect of any liability, loss, cost,
expense, additional tax, interest, penalty or legal or accounting
fees paid or incurred by the indemnified party as a result of the
failure of Sellers or Buyers (as the case may be) to perform
their respective obligations pursuant to this Section.
3.6 PRORATION OF TAXES. Sellers shall pay when due
all sales, use, transfer and similar taxes arising out of the
transactions contemplated hereunder. All other taxes against or
in respect of the Assets, including real and personal property
taxes, for the taxable period which includes the Closing Date
shall be prorated between Buyers and Sellers as of the Closing
Date. In the event the amount of such taxes or assessments
cannot be ascertained as of the Closing Date, proration shall be
made on the basis of the preceding year, and, to the extent that
such proration may be inaccurate, Sellers and Buyers agree to
make such payment to the appropriate party after the tax
statements have been received which are necessary to allocate
such taxes properly between Sellers and Buyers as of <PAGE> the Closing
Date. Sellers agree to pay such taxes and assessments when due,
and Buyers' prorated portion thereof shall be paid by Buyers to
Sellers upon Sellers' request therefor.
3.7 TRANSFER TAXES. Davtec and Rawlings Canada shall
jointly elect to have Section 167(1) of the Goods and Service Tax
levied under Part IX of the Excise Tax Act, R.S.C., 1985, c.E-15
(together with the regulations promulgated thereunder, as amended
or supplemented from time to time, the "Excise Tax Act") and
Section 75.1 of the Act respecting the Quebec Sales Tax, R.S.Q.,
c.T-0.1 (together with the regulations promulgated thereunder, as
amended or supplemented from time to time, the "Quebec Sales Tax
Act") apply to the purchase and sale of the Davtec Assets
pursuant to the provisions of this Agreement. Rawlings Canada
shall file the joint elections in the manner and within the time
prescribed by the Excise Tax Act and the Quebec Sales Tax Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS AND STOCKHOLDERS
Each of Sellers and Stockholders hereby jointly and
severally represent and warrant to Buyers as follows:
4.1 ORGANIZATION AND QUALIFICATION. USA Skate is a
corporation duly organized, validly existing and in good standing
under the laws of the State of New York, Davtec is a corporation
duly organized, validly existing and in good standing under the
laws of Canada, Skate Corp. is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware, and Cal Pro is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware. Sellers have all requisite corporate power and
authority to own, lease and operate their properties and to carry
on the Business as it is now being conducted and are qualified to
do business as a foreign corporation in the jurisdictions set
forth on Schedule 4.1, and there is no other jurisdiction where
the nature of the Business or the ownership or lease of the
Assets requires such qualification, except for those
jurisdictions where the failure to so qualify would not have a
material adverse effect on the Business or the Assets.
4.2 AUTHORIZATION. Sellers and Stockholders have the
full corporate power to enter into this Agreement and to carry
out their obligations hereunder. The execution, delivery and
performance of this Agreement by Sellers and Stockholders have
been duly and effectively authorized and approved by all
requisite corporate action and no other corporate acts or
proceedings are necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement constitutes the
legal, valid and binding obligation of Sellers and Stockholders,
enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to creditors' rights and by general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity). Assuming the
consents set forth on Schedule 4.2 have been obtained, neither
the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby will (i) violate, or
conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under any of the terms,
conditions or provisions <PAGE> of the Certificate or Articles of
Incorporation, By-Laws or other constating document of Sellers or
Stockholders, any Contract, any other note, bond, mortgage,
indenture, deed of trust, lease, license, contract, agreement or
other instrument or obligation by which the Assets are bound or
affected, or any other material note, bond, mortgage, indenture,
deed of trust, lease, license, contract, agreement or other
instrument or obligation by which Sellers or any of their other
properties or assets are bound or affected, (ii) violate any
statute, rule or regulation or, to the best of Seller's and
Stockholders' knowledge, any order, writ, injunction or decree
applicable to Sellers or any of their properties or assets,
(iii) result in the creation of any lien, security interest,
hypothec, prior claim, charge or encumbrance upon the Assets or
(iv) result in the modification, termination or revocation of any
license, permit or right material to the Business. Except as set
forth on Schedule 4.2 hereto, no consent or approval by, notice
to or registration with any natural person, partnership,
corporation, limited liability company, firm, company, trust,
estate, association, government or governmental authority or
other entity ("Person") is required on the part of Sellers or
Stockholders in connection with the execution and delivery of
this Agreement or the consummation by Sellers and Stockholders of
the transactions contemplated hereby.
4.3 SUBSIDIARIES AND AFFILIATES. Cal Pro owns 100% of
the issued and outstanding stock of Skate Corp. Skate Corp. owns
75% of the issued and outstanding stock of USA Skate and 100% of
the issued and outstanding stock of Three R Sales, Inc. Three R
Sales, Inc. owns 25% of the issued and outstanding stock of USA
Skate. USA Skate owns 100% of the issued and outstanding stock
of Amskate Holding Ltd. and one-third of the issued and
outstanding stock of Davtec. Amskate Holding Ltd. owns 100% of
the issued and outstanding stock of 2984334 Canada Ltd., and
2984334 Canada Ltd. owns 38% of the issued and outstanding stock
of Gestion Davtec Inc. and one-third of the issued and
outstanding stock of Davtec. Gestion Pintade Inc., 3102-1983
Quebec Inc., 3102-1991 Quebec Inc. and Gestion Camille Lainesse
Inc. each own 15.5% of the issued and outstanding stock of
Gestion Davtec Inc. 2984334 Canada Ltd. owns 100% of the issued
and outstanding stock of Gestion Pintade Inc., 3102-1983 Quebec
Inc., 3102-1991 Quebec Inc. and Gestion Camille Lainesse Inc.
Gestion Davtec Inc. owns one-third of the issued and outstanding
stock of Davtec, and Davtec owns 100% of the issued and
outstanding stock of 811300 Ontario Inc. Hereinafter Three R
Sales, Inc., Amskate Holding Ltd., 29843334 Canada Ltd., Gestion
Pintade Inc., 3102-1983 Quebec Inc., 3102-1991 Quebec Inc.,
Gestion Camille Lainesse Inc. and Gestion Davtec Inc. are
referred to collectively as the "Guarantors." Except as set
forth in the preceding sentence, Sellers do not, directly or
indirectly, own any subsidiary and there is no Person who is
controlled by Sellers.
4.4 FINANCIAL STATEMENTS. Sellers have delivered to
Buyers true, correct and complete copies of their financial
statements identified on Schedule 4.4 (the "Financial
Statements"), each of which, except as noted on Schedule 4.4, (i)
is accurate and complete in all material respects and presents
fairly in all material respects the financial position and
results of operations of the Seller to which it refers for the
period stated and (ii) has been prepared in accordance with
generally accepted accounting principles consistently applied.
The Financial Statements do not contain any untrue statement of a
material fact or omit to state any material fact necessary to
make the statements therein not misleading. Except as set forth
in the Financial Statements, Sellers have no material
liabilities, absolute or contingent which are required to be
reflected in the Financial Statements in accordance with
generally accepted accounting principles. Included in Schedule
4.4 are true, correct <PAGE> and complete copies of all reports and
correspondence from Sellers' auditors to the officers, directors
or management of Sellers regarding the accounting procedures,
financial controls or management procedures of Sellers.
4.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
set forth on Schedule 4.5, since December 31, 1996, there has not
been:
(a) any change in the financial condition,
assets, operations, properties, liabilities, earnings or business
of Sellers which has been or will be, individually or in the
aggregate with other changes, materially adverse to Sellers or
the Business;
(b) any damage, destruction or casualty loss
(whether or not covered by insurance) materially and adversely
affecting the financial condition, assets, operations,
properties, earnings of Sellers or the Business;
(c) any increase in the compensation payable or
to become payable by Sellers to any director, officer, employee
or agent of Sellers other than routine increases made in the
ordinary course of business consistent with the past practice of
Sellers, or any bonus, incentive compensation, service award or
other like benefit, granted, made or accrued, contingently or
otherwise, to or to the credit of any of such officer, employee
or agent, or any employee welfare, pension, retirement or similar
payment or arrangement made or agreed to by Sellers with respect
to any such officer, employee or agent, except pursuant to the
existing plans and arrangements described in Schedule 4.15;
(d) any labor trouble, or any controversies or
unsettled grievances pending or, to be best of Sellers' and
Stockholders' knowledge, threatened, between Sellers and any of
their employees or a collective bargaining organization
representing or seeking to represent such employees, or any
entrance into any collective bargaining agreement by Sellers with
respect to any such employees;
(e) any addition to, or modification of, any
profit sharing, bonus, deferred compensation, insurance, pension,
retirement or other employee benefit plans, arrangements and
practices described on Schedule 4.15, other than accruals made
for Sellers' fiscal years 1997 in accordance with the normal
practices of Sellers;
(f) any sale, assignment, license or transfer of
any asset, property or right of Sellers or any conduct of the
business of Sellers other than in the ordinary course of
business;
(g) any capital expenditure or commitment to make
a capital expenditure (exclusive of expenditures for repair or
maintenance of equipment in the ordinary course of business) or
the execution of any lease or similar arrangement (except in the
ordinary course of business) with respect to any aspect of the
Business, or any incurring of liability therefor;
(h) any incurring of any extraordinary loss or
the knowing waiver of any right of substantial value by Sellers
in connection with any aspect of the Business;
(i) any cancellation, termination or amendment of
any material contract, agreement, license or other instrument
relating to the Business;
<PAGE>
(j) any change in Sellers' accounting practices;
(k) any failure on the part of Sellers to operate
the Business in the ordinary course so as to preserve their
business organizations intact, including the services of their
present officers and employees and the goodwill of Sellers'
suppliers, customers and others having business relations with
them;
(l) any transaction by Sellers relating to the
Business not in the ordinary course of business;
(m) any agreement by Sellers to do any of the
foregoing; or
(n) any other event or condition of any character
which, in any one case or in the aggregate, has adversely and
materially affected, or any event or condition which might
reasonably be expected, in any one case or in the aggregate, to
adversely and materially affect the financial condition, assets,
operations, properties, liabilities, earnings of Sellers or the
Business.
4.6 TITLE TO ASSETS.
(a) Sellers have, and at the Closing will
transfer to Buyers, good and marketable title to all of the
Assets, except for those Assets identified on Schedule 4.6 as
leased by Davtec or USA Skate or on Schedules 1.1(a)(vi) or
1.2(c)(i) as licensed by Davtec or USA Skate. Except for the
assets and properties identified on Schedule 4.6 as leased by USA
Skate or Davtec or on Schedules 1.1(a)(vi) or 1.2(c)(i) as
licensed by USA Skate or Davtec, all of the assets and properties
used in the Business as it is currently conducted are owned by
Davtec or USA Skate. The leases identified on Schedule 4.6 are
the only leases with respect to the Assets and each such lease is
in full force and effect and constitutes a legal, valid and
binding obligation of the lessor thereunder, enforceable in
accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to creditors' rights generally and by
general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity). There is no default and no event or omission has
occurred which, but for the passing of time or the giving of
notice or both, would be a default on the part of Sellers or, to
the best knowledge of Sellers and Stockholders, any other Person
under any of such leases. With the exception of liens for taxes
accrued but not yet payable, the leases set forth on Schedule 4.6
and the security interests set forth on Schedule 4.6 (all of
which security interests shall be released at the Closing), the
Assets are not subject to any mortgage, pledge, lien, security
interest, claim, hypothec, prior claim, charge or other
encumbrance of any kind ("Encumbrance").
(b) Except as set forth on Schedule 4.6(b) (the
exceptions set forth on Schedule 4.6(b) hereinafter are referred
to as the "Permitted Encumbrances"), the Daveluyville Property
shall be conveyed to Rawlings Canada at and by the Closing with
legal warranty and a good and marketable title in and to such
property, free and clear of all encumbrances, including without
<PAGE>
limitation prior claims, hypothecs, charges and servitudes,
restrictive covenants, encroachments, taxes and other title
defects or charges of any nature whatsoever.
(c) The Daveluyville Property, together with all
immoveable and real property leased by Sellers (the "Properties")
and every improvement, building or structure located thereon (the
"Improvements") are in compliance in all material respects with
all applicable building, zoning, subdivision, and other land use
and similar laws (collectively, "Real Property Laws"), and
Sellers have not received any notice of violation or claimed
violation of any Real Property Law and such Properties and
Improvements and their continued use, occupancy and operation as
currently used, occupied and operated do not constitute a non-
conforming use under any Real Property Law. No dispute currently
exists with any governmental authority having jurisdiction over
any such Properties or Improvement with respect to any Real
Property Law or the application thereof to any such Properties or
Improvement.
(d) None of the Assets is subject to any right of
first refusal, option or other restriction of a similar nature,
or subject to any pending or, to the best of Sellers' and
Stockholders' knowledge, threatened condemnation or similar proceeding.
(e) (i) Sellers are not a party to or bound
by any leases of real or immoveable property other than
the leases described in Schedule 4.6 (the "Leases").
Each of the Leases permits Sellers to carry on the
Business as presently carried on.
(ii) The rent and all other required
payments under each Lease which have become due have
been duly paid and the covenants, obligations and
conditions contained in each Lease have been duly
observed and performed in all material respects by
Sellers.
(iii) There are no work orders
issued to or received by Sellers which are outstanding
against the premises contemplated by the Leases (the
"Leased Premises") and Sellers have received no
deficiency notices, requests or written advice of any
breach of any applicable law in respect of the Leased
Premises which could, if not corrected, become a work
order or could require performance of work or
expenditure of money to correct.
(iv) From the date hereof until the
Closing, Sellers shall use commercially reasonable
efforts to obtain from each lessor of each Lease which
requires consent of the lessor to the assignment
thereof to the Buyers, a consent to the assignment of
such Lease to the relevant Buyer without any conditions
attached to such consent and, after receipt of the
necessary consent, to obtain an estoppel certificate
from the lessor with respect to such Lease, each of
which shall be in form and substance satisfactory to
Buyers, acting reasonably.
(v) In respect of each Lease which does
not require consent of the lessor to the assignment
thereof, Sellers shall use commercially reasonable
<PAGE>
efforts to obtain, prior to Closing, an estoppel
certificate in respect of such Leases, each of which
shall be in form and substance satisfactory to Buyers,
acting reasonably.
4.7 INVENTORY. All pieces of Inventory are carried on
the Financial Statements at the lower of cost (on a first-in-first-
out basis) or market. All pieces of Inventory consist of
pieces purchased or manufactured in the ordinary course of
business. Except for Inventory whose cost, in the aggregate, is
less than $5,000, each piece of Inventory is merchantable in fact
and fit for its intended purpose. Except as set forth on
Schedule 4.7, Sellers do not hold any piece of Inventory on
consignment and no piece of Inventory is in the possession or
control of any Person other than the Sellers.
4.8 ACCOUNTS RECEIVABLE. The Accounts Receivable have
been incurred in the ordinary course of the Business, and to the
best of Stockholders' knowledge, constitute valid claims not
subject to any offset or defense. Except as disclosed in
Schedule 4.8, there is no dispute regarding the amounts billed to
customers in connection with goods delivered or services rendered
by Sellers in the course of its business
4.9 CONTRACTS. Except as disclosed on Schedule 4.9,
neither Seller is a party to or bound by: (i) any employment
contract or agreement, consulting, independent contractor or
other similar agreement or any collective bargaining or labor
agreement or any other agreement or arrangement with any officer,
employee, independent contractor, sales representative or
consultant, advisor or person serving in a similar capacity,
relating to the Business; (ii) any pension, retirement, stock
option, stock purchase, savings, profit-sharing, "401(k)" plan,
deferred compensation, retainer, consultant, bonus, group
insurance, or any vacation pay or severance pay or other
incentive or welfare, contract, plan or so-called fringe benefit
agreement, relating to the Business; (iii) any contract for the
purchase of any materials, supplies, equipment or inventory
relating to the Business, or for the sale of any inventory
relating to the Business, except contracts concluded in the
ordinary course of business, which do not (as to contracts for
purchase by a Seller) either involve an unperformed commitment in
excess of $5,000 or terminate more than one year from the date
hereof; (iv) any lease, license or similar agreement to use any
real or personal property, including but not limited to
intellectual property, relating to the Business; (v) any
contract, agreement or other commitment relating to the Business
requiring a payment by either Seller after the date hereof of
more than $5,000, or (vi) any contract, agreement or other
commitment relating to the Business which is not cancelable by
Sellers on notice of not more than thirty days without liability,
penalty or premium. Sellers have made available for inspection
by Buyers a true, correct and complete copy of each written
Contract. Sellers' purchase commitments for materials, supplies,
raw materials or other items are not, in the aggregate,
materially in excess of the customary requirements of its
business or at a price materially in excess of current market
prices for similar items deliverable at the same time. Sellers
have not breached and are not in default of any Contract, and no
event or omission has occurred which, but for the passing of time
or the giving of notice or both, would constitute a breach of or
default under any Contract on the part of Sellers. To the best
knowledge of Sellers and Stockholders, no other party has
breached or is in default under any Contract, and, to the best
knowledge of Sellers and Stockholders, no event or omission has
occurred which, but for the passing of time or the giving of
notice or both, would constitute a breach of or default under any
Contract on the part of any other party. To the best of Sellers'
and Stockholders' knowledge, each of the <PAGE> Contracts is the legal,
valid and binding obligation of the other party thereto,
enforceable in accordance with its terms.
4.10 TAXES.
(a) Except as set forth on Schedule 4.10, Sellers
have timely filed all United States and Canadian federal, state,
provincial, foreign and local tax returns and tax information
returns required to be filed on or before the date hereof, and
have paid all taxes, interest, payments and penalties due and
payable on or before the date hereof, and Sellers are not
delinquent in the payment of any tax or government charge of any
nature whatsoever, including all sales and use taxes. Except as
set forth on Schedule 4.10, no tax return of Sellers has been
audited, and no audit, examination or investigation is presently
being conducted or, to the best of Sellers' and Stockholders'
knowledge, threatened by any taxing authority. No unpaid tax
deficiency or additional liability of any sort has been proposed
to Sellers by any governmental representative. Sellers have
withheld (and timely paid to the appropriate governmental entity)
proper and accurate amounts from its payrolls for all periods in
compliance in all material respects with all tax withholding
provisions (including, without limitation, income, social
security, Canada Pension Plan, Quebec Pension Plan, and
unemployment tax and withholding for all forms of compensation)
of applicable United States and Canadian federal, foreign, state,
provincial and local laws. Sellers are not liable for any taxes
due and unpaid which might result in a lien or other encumbrance
affecting any of the Assets.
(b) (i) Davtec has charged, collected and
remitted on a timely basis all amounts as required by
applicable law on any sale, supply or delivery
whatsoever, made by Davtec in respect of the Business,
including without limitation sales and goods and
services taxes.
(ii) Davtec is a registrant for the
purposes of the goods and services tax provided for
under the Excise Tax Act and its registration number is
103182481RT. Davtec is a registrant for the purposes
of the taxes provided for under the Quebec Sales Tax
Act and its registration number is 1003258021.
(iii) Davtec has paid all taxes due
under the Retail Sales Tax Act (Ontario) on the
acquisition of its tangible personal property (as
defined in the Retail Sales Tax Act (Ontario))
constituting Davtec Assets. The foregoing is accurate,
mutatis mutandis, with respect to all sales or transfer
taxes imposed under comparable legislation of other
provinces.
(iv) Davtec is not a non-resident of
Canada within the meaning of the Income Tax Act
(Canada).
4.11 ADEQUATE FACILITIES AND RIGHTS. Upon their
conveyance to Buyers, the Assets will permit Buyers to operate
the Business in substantially the same manner as Sellers
currently operate the Business, without violating the rights of
any third parties and without incurring any liability for license
fees, royalties or any claim of infringement of patent, trademark
or similar rights.
<PAGE>
4.12 INTELLECTUAL PROPERTY. Schedules 1.1(a)(vi) and
1.2(c)(i) hereto set forth a list of all patents and applications
therefor, utility and design model registrations and applications
therefor, trademarks, trademark registrations and applications
therefor, trade names, service marks and applications therefor,
copyrights, copyright registrations and applications therefor,
both foreign and domestic, owned, possessed, used or held by or
licensed to Sellers relating to the Business, and a list of all
licenses to or from Sellers respecting any of the Intellectual
Property. Sellers own the entire right, title and interest in
and to the Intellectual Property, together with the goodwill
associated therewith. Sellers have the right to use and are
transferring to Buyers the unrestricted right to use trade
secrets, know-how, formulas, technical and manufacturing
processes and information, testing and operating techniques and
procedures, all engineering data and plans, all marketing
materials and information and all other business data and
information used by Sellers in the Business or which is necessary
for the Business as now conducted. None of the items in the
categories listed in this Section 4.12 are subject to any pending
or, to the best knowledge of Sellers and Stockholders,
threatened challenge or infringement, and no impediment exists as
to Sellers' exclusive ownership and use or validity of any such
item. The Intellectual Property comprises all patents and
applications therefor, utility and design model registrations and
applications therefor, trademarks, trademark registrations and
applications therefor, trade names, service marks and
applications therefor, copyrights and copyright registrations and
applications therefor, both foreign and domestic, necessary to
permit the conduct from and after the Closing Date of the
Business, as the Business is and has normally been conducted.
All acts necessary under all provisions of applicable law to
protect the Intellectual Property, including, without limitation,
the filing of required affidavits of use and incontestability,
applications for renewals of registrations, recordal of
registered user, notice of registration and payment of
maintenance and annuity fees, have been taken by Sellers. All
licenses granted to Sellers by others which are essential or
useful to any part of the Business are assignable to Buyers
without consent of or notice to any Person, without change in the
terms or provisions thereof and without premium. Sellers have
not infringed any unexpired patent, utility or design model
registration, trademark, trademark registration, trade name,
copyright, copyright registration, trade secret or any other
proprietary or intellectual property right of any Person.
4.13 NO BREACH OF STATUTE, DECREE, OR ORDER. Except as
set forth on Schedule 4.13, Sellers have complied in all material
respects, and currently are in compliance in all material
respects, with all applicable statutes, laws, codes, ordinances,
rules, regulations, orders, decrees and other laws of the United
States, Canada, and all state, provincial and local governments,
agencies and courts ("Laws") to which any aspect of the Business
or any part of the Assets are subject. No claim, action or
proceeding is pending or, to the best of Sellers' or
Stockholders' knowledge, threatened against Sellers with respect
to a default under or a violation in respect of any Law. Neither
any of the Assets nor their operation or maintenance as they are
now operated and maintained contravenes any applicable zoning,
building or other law, ordinance, code, rule or other
administrative regulation. No notice from any governmental body
has been served upon Sellers claiming any violation of any Law,
or requiring or calling attention to the need for any work,
repairs, construction, alterations or installation on or in
connection with the Assets or any change in the operations of
Sellers.
4.14 LITIGATION. Except as disclosed on Schedule 4.14,
there is no suit, claim, action, proceeding or, to the best of
Sellers' and Stockholders' knowledge, governmental <PAGE> investigation
against the Sellers which is now pending or, to the best of
Sellers' and Stockholders' knowledge, threatened. There is no
basis (including any condition or set of facts) known to Sellers
or Stockholders for any suit, claim, action, proceeding or
governmental investigation (i) arising out of or relating to any
aspect of the Business or any of the Assets, or (ii) concerning
the transactions contemplated by this Agreement. There is no
decree, injunction or order of any court or governmental
department or agency outstanding against the Sellers relating to
any aspect of the Business or any part of the Assets.
4.15 EMPLOYEE BENEFIT PLANS.
(a) Schedule 4.15 contains a list of all
qualified and nonqualified pension, profit-sharing and other
employee benefit plans of Sellers affecting employees of the
United States domiciled or residing in the United States (the
"U.S. Employee Plans"). The U.S. Employee Plans have been
authorized by the Boards of Directors of Sellers and those U.S.
Employee Plans which are qualified plans are qualified in form
and operation under Sections 401(a) and 501(a) of the Code.
Except as disclosed on Schedule 4.15, all reports, filings and
other documents with respect to the U.S. Employee Plans required
to be filed or distributed under the Employee Retirement Income
Security Act of 1974 ("ERISA"), and regulations promulgated
thereunder, including without limitation all returns and reports
to be filed with the Department of Labor, Internal Revenue
Service and Pension Benefit Guaranty Corporation, and all
distributions to participants, beneficiaries and others, have
been made on a proper and timely basis. Sellers have not
incurred any accumulated funding deficiency within the meaning of
Section 302 of ERISA with respect to any U.S. Employee Plan, or
any material liability to the Pension Benefit Guaranty
Corporation with respect to any U.S. Employee Plan, and there
exists no event or condition which would permit the institution
of proceedings to terminate any U.S. Employee Plan under Section
4042 of ERISA. With respect to each of the U.S. Employee Plans
which is a deferred compensation or pension plan and which is not
subject to the periodic reporting and disclosure requirements of
ERISA, there is included on or attached to Schedule 4.15 a
complete description or copy of the text of the plan, a list of
the individuals covered thereby, the amount of any current
obligations under the plan to each such individual, the amount of
any contingent or deferred obligations under the plan to each
such individual, and the time at which such obligation will, or
is likely to, become payable. None of the U.S. Employee Plans
meet the definition of a "multi-employer plan" under ERISA as
amended by The Multiemployer Pension Plan Amendments Act of 1980,
Pub.L.No. 96-364, as amended. Sellers are not parties to any
pending or threatened action, claim, suit or proceeding by any
person or governmental instrumentality concerning the U.S.
Employee Plans. All payments due from Sellers (on account of
employment contracts or otherwise) for U.S. Employee Plans and
employee health and welfare insurance have been paid.
(b) Schedule 4.15 contains an accurate and
complete description of, and sets forth the annual amount payable
pursuant to, each of the pension, profit sharing, retirement,
death benefit, welfare, severance pay, vacation pay, company
awards, salary continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation, stock
purchase arrangements or policies, life insurance, scholarship or
other employee benefit plan, program, policy or arrangement
maintained by the Sellers or to which the Sellers have any
liability (contingent or <PAGE> otherwise) with respect to employees,
officers, directors or shareholders of the Sellers domiciled or
residing in Canada (the "Canadian Employee Plans"). The
Financial Statements reflect in the aggregate an accrual of all
amounts accrued but unpaid under all the Canadian Employee Plans
as of the dates thereof. Sellers have no commitment, whether
formal or informal, and whether legally binding or not, to create
any additional Canadian Employee Plan. Each of the Canadian
Employee Plans disclosed in Schedule 4.15 is in effect and
Sellers are in compliance with all laws, rules and regulations
applicable thereto. All Canadian Employee Plans have been duly
registered where required by, and are in good standing under, all
applicable legislation and Sellers have fulfilled their funding
obligations under all the Canadian Employee Plans and no past
service funding liabilities exist thereunder. With respect to
each current Canadian Employee Plan or plan under which benefits
may be due to, or liabilities may exist in respect of, current or
former Canadian employees, the Sellers have delivered to the
Buyer accurate and complete copies of (i) all currently
applicable plan texts and agreements; (ii) all summary plan
descriptions and material employee communications; (iii) the most
recent annual report; (iv) the most recent annual and periodic
accounting of plan assets; (v) the most recent actuarial
valuation. Each Canadian Employee Plan has been administered
materially in accordance with its terms. All material reports,
returns and similar documents with respect to the Canadian
Employee Plans required to be filed with any governmental body or
distributed to any Canadian Employee Plan participant has been
duly and timely filed or distributed. There are no pending
investigations by any governmental body, termination proceedings
or other claims (except claims for benefits payable in the normal
operation of the Canadian Employee Plans), suits or proceedings
against or involving any Canadian Employee Plan or asserting any
rights or claims to benefits under any Canadian Employee Plan
that could give rise to any material liability.
4.16 INSURANCE POLICIES. Set forth on Schedule 4.16 is
a list of all insurance policies and bonds in force covering
Sellers and their properties, operations and personnel. Each of
said policies, together with all records and documents relating
to insured losses and claims paid or made during the past two
years have been furnished to Buyers for their review. No notice
has been received from any insurance carrier that Sellers are, or
will prior to the Closing will be, liable, for any material,
retroactive premium adjustments. All policies are valid and
enforceable and in full force and effect and Sellers have not,
since January 1, 1997, received any notice of premium increases
or cancellations with respect to any of its insurance policies
and bonds.
4.17 PRODUCT WARRANTIES, PRODUCT RETURN POLICIES AND
SERVICE WARRANTIES. Except as set forth on Schedule 4.17,
Sellers do not utilize any product warranty, guarantee, product
return policy, service warranty or service policy.
4.18 OPERATING LICENSES AND PERMITS. The lawful
conduct of the Business as presently conducted does not require
any approval, license, consent, permit, franchise or
authorization from any Person material to Sellers or its business
which has not been obtained. Set forth on Schedule 4.18 are all
such approvals, licenses, consents, permits, franchises and
authorizations. The Business as presently conducted in any
jurisdiction meets all applicable legal requirements of each such
jurisdiction, and, to the best of Sellers' and Stockholders'
knowledge, there is no basis for any governmental body to deny or
rescind any approval, license, consent, permit or authorization
appropriate for the conduct of the Business.
<PAGE>
4.19 ASSETS IN GOOD REPAIR. Except as set forth on
Schedule 4.19, the Assets are sufficient in all respects to carry
on the Business as it is now conducted.
4.20 ENVIRONMENTAL MATTERS.
(a) With respect to USA Skate:
(i) Except as set forth on Schedule 4.20,
the properties (including leased properties), assets and
operations of Sellers are in compliance with all applicable
United States federal, state or local and foreign laws,
rules and regulations, orders, decrees, judgments, permits
and licenses relating to public and worker health and safety
and to the protection and clean-up of the natural
environment and activities or conditions related thereto,
including, without limitation, those relating to the
generation, handling, disposal, transportation or release of
hazardous materials (collectively, "Environmental Laws").
With respect to such properties, assets and operations,
including any previously owned, leased or operated
properties, assets or operations, to the best knowledge of
Sellers and Stockholders after due inquiry, there are no
past, present or reasonably anticipated future events,
conditions, circumstances, activities, practices, incidents,
actions or plans of Sellers that may interfere with or
prevent compliance or continued compliance in all respects
with applicable Environmental Laws. The term "hazardous
materials" as used in this Section 4.20(a) shall mean those
substances that are regulated by or form the basis for
liability under any applicable Environmental Laws; and
(ii) Except as set forth on Schedule 4.20,
Sellers are not the subject of any United States federal,
state or local or foreign (including Canadian) investigation
and have not received any notice or claim (and Sellers and
the Stockholders are not aware of any facts that would form
a reasonable basis for any such claim), nor entered into any
negotiations or agreements with any third party, relating to
any material liability or remedial action or potential
material liability or remedial action under Environmental
Laws, nor are there any pending, reasonably anticipated or,
to the best knowledge of Sellers and Stockholders,
threatened actions, suits or proceedings against or
affecting Sellers or its properties, assets or operations in
connection with any such Environmental Laws. Except as set
forth on Schedule 4.20, no underground storage tanks are
located at the New York Facility or the Canadian Facilities.
(b) Sellers are in compliance with, and have not
violated, all Canadian Environmental Laws (as hereinafter
defined) and all judgments, injunctions, notices or demand
letters issued pursuant thereto.
Except as set forth in Schedule 4.20, without
restriction as to the generality of the foregoing, Sellers and
any Person whose liability for Environmental Liabilities (as
hereinafter defined) Sellers have or may have retained or assumed
either contractually or by operation of law:
(i) Have not caused or allowed the
generation, use, treatment, storage, or disposal of any
Hazardous Substance (as hereinafter defined) <PAGE> at, or
transportation from, any site or facility owned, leased
or operated by Sellers except in accordance with all
applicable Canadian Environmental Laws;
(ii) Have not caused or allowed the
release of any Hazardous Substance onto, at, near or
from any site or facility owned, leased or operated by
Sellers, including, without limitation, the Canadian
Facilities;
(iii) Have secured all Environmental
Permits (as hereinafter defined) necessary to the
conduct of the Business and such Environmental Permits
are currently in effect and are listed in Schedule
4.20, and Sellers are in compliance with all terms and
conditions of such Environmental Permits and have not
previously violated any of same;
(iv) Have not received any notice, nor
are aware of any proposal to amend, revoke or replace
any Environmental Permit, or requiring the issuance of
any additional Environmental Permit;
(v) Have not received, nor has there
been issued to or against Sellers, any claim, notice,
citation, summons or order, and no investigation or
review is pending or, to the best of Sellers' and
Stockholders' knowledge, threatened by any authority
with respect to:
(A) any alleged violation by
Sellers of any Canadian Environmental Law;
(B) any alleged failure by Sellers
to hold any Environmental Permit; or
(C) any alleged violation by
Sellers to comply with any such Environmental Permit.
(vi) Have not received any request for
information, notice of claim, demand or other
notification that it is or may be potentially
responsible with respect to any investigation or clean-
up of any threatened or actual release of any Hazardous
Substance and has not received inquiry or notice nor do
they have any reason to suspect or believe they will
receive inquiry or notice of any actual or potential
proceedings, claims, lawsuits or losses related to or
arising under any Environmental Laws;
(vii) Do not own, operate or lease
and did not at any previous time own, operate or lease
any real property, improvements or related assets which
have been subject to the release of any Hazardous
Substance;
(viii) Do not own, operate or lease
and did not at any previous time own, operate or lease
any real property, improvements or related assets
<PAGE>
wherein PCB's, asbestos or urea formaldehyde insulation
is or has been present whether above ground,
underground or within any structure thereon or
contained in any equipment owned, operated or leased by
Sellers; nor are there any underground storage tanks,
active or abandoned, at any property now or previously
owned, operated or leased by Sellers;
(ix) Are not currently operating or
required to be operating under any compliance order,
schedule, decree or agreement, any consent decree,
order or agreement and/or corrective action decree,
order or agreement issued or entered into under any
Canadian federal, provincial, state or municipal
statute, regulation or ordinance regarding the
environment and/or health or safety in the work place;
(x) Have not transported any Hazardous
Substance or arranged for the transportation of any
such substance to any location which is not listed and
duly authorized pursuant to the Environmental Laws or
which is the subject of Canadian federal, provincial,
state or municipal enforcement actions or other
investigations which may lead to claims against Sellers
for clean-up cost, remedial work, damages to natural
resources or for personal injury claims under any
applicable Environmental Law and all Hazardous
Substances transported by or on behalf of Sellers have
been transported in compliance with all applicable
laws, and no Hazardous Substance has been released,
spilled, leaked, discharged, disposed of, pumped,
poured, ignited, emptied, injected, leached, dumped or
allowed to escape at, under or from any property now or
formerly owned, operated or leased by Sellers;
(xi) Are in compliance with all
applicable limitations, restrictions, conditions,
standards, prohibitions, requirements and obligations
established under Environmental Laws and are not
subject to any Environmental Liabilities (as
hereinafter defined);
(xii) Have not conducted or caused
to be conducted any environmental audit of any property
operated, leased or owned by it, nor is it aware of any
such environmental audit conducted by any Person
(including, without restriction, any lender or
potential purchaser) unless in each such case a copy of
every report, memorandum or summary prepared with
respect to such environmental audit has been delivered
to Buyers; and
(xiii) Have not failed to report to
the proper authorities the occurrence of each event
which is required to be so reported by the
Environmental Laws, and have provided Buyers with true
and complete copies of all such reports and all
correspondence relating thereto.
For the purposes of this Section 4.20(b):
<PAGE>
The expression "Canadian Environmental Laws" includes
any Canadian federal, provincial or municipal law, by-law, rule,
regulation, decree, code, guideline, standard, order or ordinance
of any country or political subdivision relating to the
environment including those relating to (i) the control of any
potential pollutant or the protection of the air, water or land,
(ii) solid, gaseous or liquid waste generation, handling,
treatment, storage, disposal or transportation, and (iii)
exposure to hazardous, toxic or other substances considered to be
harmful, or (iv) the release of any Hazardous Substance into the
environment;
The expression "Environmental Conditions" includes any
pollution, contamination, degradation, damage or injury caused
by, related to, or arising from or in connection with the
generation, use, ownership, possession, handling, treatment,
storage, transportation, disposal, discharge, release or emission
of any pollutant, contaminant, or toxic or hazardous substance,
material, or waste, including mixtures thereof with other
materials, and any toxic or hazardous building materials,
including, but not limited to, asbestos and urea formaldehyde
foam insulation;
The expression "Environmental Permit" includes any
permit, license, approval or other authorization with respect to
Sellers or their operations or businesses under any applicable
law, regulation or other requirement of Canada or any other
country or of any province, state, municipality or other
subdivision thereof relating to the control of any pollutant or
protection of health or the environment, including laws,
regulations or other requirements relating to emissions,
discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic materials or wastes into
ambient air, surface water, groundwater or land, or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of chemical
substances, pollutants, contaminants or hazardous or toxic
materials or wastes;
The expression "Environmental Liabilities" includes any
and all liabilities, responsibilities, claims, suits, losses,
costs (including remedial, removal, response, abatement, clean-
up, investigative and/or monitoring costs and any other related
costs and expenses), other causes of action recognized now,
damages, settlements, expenses, charges, assessments, liens,
penalties, fines, pre-judgment and post-judgment interest, legal
fees and costs of court which are incurred by, asserted against,
or imposed upon Sellers or Buyers arising out of or in connection
with Sellers or their business operations pursuant to any
agreement, order, notice of responsibility, directive (including
directives and requirements embodied in Environmental Laws),
injunction, judgment or similar document (including settlements)
issued by a court of competent jurisdiction or any Canadian
federal, provincial or local governmental entity or agency, or
pursuant to any claim by a governmental agency or any person for
personal injury, property damage, damage to natural resources,
remediation, or payment or reimbursement of response costs
required to be incurred or expended by said governmental agency
or person pursuant to common law or statute, arising out of or in
connection with: (i) any violation of or non-compliance with
Environmental Laws (including but not limited to failure to
procure or violation of Environmental Permits), and (ii) any
actual or alleged Environmental Condition (regardless of when
discovered) existing on the Closing Date; and
The expression "Hazardous Substance" includes any
substance, waste, solid, liquid or gaseous matter, petroleum or
petroleum derived substance, micro-organism, sound, vibration,
ray, heat, odor, radiation, energy vector, plasma, organic or
inorganic matter, whether animate or <PAGE> inanimate, transient
reaction intermediate or any combination of the above deemed
hazardous, hazardous waste, solid waste, toxic or pollutant, a
deleterious substance, a contaminant or source of pollution or
contamination under any Environmental Law, or by official act of
any Canadian federal, provincial, state or municipal government,
governmental agency, minister, deputy-minister, governor-in-council,
lieutenant governor-in-council, or any tribunal or board
with proper jurisdiction over the subject in question.
4.21 LABOR DISPUTES. There is not pending or, to the
best knowledge of Sellers and the Stockholders, threatened any
labor dispute, strike or work stoppage with respect to Sellers or
the Business.
4.22 CUSTOMERS AND SUPPLIERS. The ten largest
customers of each Seller in the last fiscal year and the
percentage of the gross revenue of each Seller contributed by
each is set forth on Schedule 4.22 attached hereto (the "Material
Customers"). Except as set forth on Schedule 4.22, no single
supplier (singularly a "Supplier" and collectively "Suppliers")
of raw materials to Sellers is of material importance to Sellers.
The relationships of Seller with the Material Customers and the
Suppliers are good commercial working relationships. Except as
set forth on Schedule 4.22, no Material Customer or Supplier (i)
has canceled or threatened in writing to cancel or otherwise
modify its relationship with Sellers, or (ii) to the best
knowledge of Sellers and Stockholders intends to cancel or
otherwise modify its relationship with Sellers. The acquisition
of the Business by Buyers will not, to the best knowledge of
Sellers and Stockholders, adversely affect the relationship of
Buyers (as successor to the operation of the Business) with any
such Suppliers or Material Customers. Buyers acknowledge that
each customer of Sellers retains the independent right to replace
any vendor, including Sellers, at any time (subject to
contractual commitments).
4.23 WORKERS' COMPENSATION. There are no notices of
assessment, provisional assessment, reassessment, supplementary
assessment, penalty assessment or increased assessment
(collectively, "Assessments") or any other communications related
thereto which Davtec, in respect of the Business, has received
from any workers' compensation board or similar authorities in
any jurisdictions where the Business is carried on, and there are
no Assessments which are due and unpaid on the date hereof or
which will be unpaid at the Closing, and, to the best of Sellers'
and Stockholders' knowledge, there are no facts or circumstances
which may result in a material increase in liability or
Assessments to Davtec relating to the Business from any
applicable workers' compensation legislation, regulations or
rules after the Closing.
4.24 EMPLOYMENT MATTERS. As used in this Agreement,
"Employee" shall mean those individuals who are employed by
Sellers in the Business at the time of Closing on a full-time or
part-time basis (including any such individuals who are absent
from work due to short-term disability, pregnancy, maternity or
parental leave, sick leave, vacation, or any other reasonable
cause). Schedule 4.24 contains:
(a) the names and titles of all existing
Employees of the Business together with the location of their
employment;
(b) the date of hiring of each existing Employee;
<PAGE>
(c) a list of all written employment contracts
between Sellers and their respective Employees in respect of the
Business;
(d) the rate of annual remuneration or of hourly
pay of each existing Employee at the date hereof that is a full-
time or part-time employee, as the case may be, any bonuses paid
since the end of the last completed financial year and all other
bonuses, incentive schemes and benefits to which such employee is
entitled;
(e) the vacation policy of Sellers relating to
the Business and the vacation entitlements of Employees if at
variance to the policy;
(f) the names of any Employees who are absent
from work due to long-term or short-term disability, pregnancy,
maternity or parental leave, vacation, sick leave, workers'
compensation leave, or any other reasonable cause, whether they
are expected to return to work and if so when they are expected
by Sellers to return to work and the nature of the benefits to
which such Employees are entitled from Sellers;
(g) particulars of all other material terms and
conditions of employment or engagement of the Employees and the
positions held by them; and
(h) consulting agreements, confidentiality
agreements and restricted covenants, non-competition and non-
solicitation agreements.
Except for Jon Hodgins, each of the Employees of Sellers is
employed under a contract of indeterminate term that can be
terminated by Sellers with such notice as is required by
applicable law. Sellers are in compliance in all material
respects with all legislation, including without limitation pay
equity, employment standards, human rights, workers compensation,
occupational health and safety and labor relations legislation,
applicable to the Business and its Employees.
4.25 UNIONS AND LABOR PRACTICES. Except as set forth
on Schedule 4.25, no trade union, counsel of trade unions,
employee bargaining agency or affiliated bargaining agent:
(a) holds bargaining rights with respect to any
of the Employees by way of certification, interim certification,
voluntary recognition, designation or successor rights;
(b) has applied to be certified as the bargaining
agent of any of the Employees; or
(c) has applied to have either Seller declared a
related employer pursuant to the provisions of applicable law.
There is no unfair labor practice charge or complaint with
respect to Employees pending before any agency or board, there is
no labor strike, picketing, slowdown or work stoppage or lockout
actually pending or, to the best knowledge of Sellers or
Stockholders, threatened against or affecting Sellers or any of
their operations, and Sellers have not experienced at any time
during the last five years any <PAGE> strike, slowdown or work stoppage,
lockout or other collective labor action by or with respect to
its Employees. There are no charges with respect to or relating
to Sellers before any commission, agency or body responsible for
the prevention of unlawful employment practices. Sellers have
not received any notice from any United States or Canadian
federal, state, provincial, local or other agency responsible for
the enforcement of labor or employment laws of an intention to
conduct an investigation of either Seller or any of their
business or employment practices and no such investigation is in
progress.
4.26 BROKER FOR SELLERS. No Person has acted in the
capacity of broker or finder on behalf of Sellers or Stockholders
to bring about the negotiation or consummation of this Agreement.
4.27 ORGANIZATION AND QUALIFICATION OF GUARANTORS.
Each of the Guarantors is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
in which it was organized.
4.28 AUTHORIZATION OF GUARANTORS. Guarantors have the
full corporate power to enter into the Guaranty and to carry out
their obligations thereunder. The execution, delivery and
performance of the Guaranty by Guarantors have been duly and
effectively authorized and approved by all requisite corporate
action and no other corporate acts or proceedings are necessary
to authorize the Guaranty or the transactions contemplated
thereby. The Guaranty constitutes the legal, valid and binding
obligation of Guarantors, enforceable in accordance with its
terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to
creditors' rights and by general principles of equity (regardless
of whether enforceability is considered in a proceeding at law or
in equity). Assuming the consents set forth on Schedule 4.2 have
been obtained, neither the execution and delivery of the Guaranty
nor the consummation of the transactions contemplated thereby
will (i) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default)
under any of the terms, conditions or provisions of the
Certificate or Articles of Incorporation, By-Laws or other
constating document of Guarantors, or any material note, bond,
mortgage, indenture, deed of trust, lease, license, contract,
agreement or other instrument of obligation by which Guarantors
or any of their other properties or assets are bound or affected,
(ii) violate any statute, rule or regulation or, to the best of
Sellers' and Stockholders' knowledge, any order, writ, injunction
or decree applicable to Guarantors or any of their properties or
assets, (iii) result in the creation of any lien, security
interest, hypothec, prior claim, charge or encumbrance upon the
Assets or (iv) result in the modification, termination or
revocation of any license, permit or right material to the
Business. Except as set forth on Schedule 4.2 hereto, no consent
or approval by, notice to or registration with any Person is
required on the part of Guarantors in connection with the
execution and delivery of the Guaranty or the consummation by
Guarantors of the transactions contemplated thereby.
4.29 ACCURACY OF STATEMENTS. No representation or
warranty of Sellers or Stockholders in this Agreement, any
Schedule hereto or any other agreement, document, instrument or
certificate delivered by Sellers and/or Stockholders pursuant to
this Agreement (including any agreement, document, or other
instrument the form of which is attached hereto as an Exhibit)
contains or will contain any untrue statement of a material fact
or omits or will omit a material fact <PAGE> necessary to make the
statements contained therein not misleading. To the best
knowledge of Sellers and Stockholders, there is no fact which
Sellers or Stockholders have not disclosed in writing to Buyers
which materially adversely affects, or may materially adversely
affect, the Business, its operations or prospects or the Assets.
4.30 SURVIVAL. The representations and warranties made
by the Sellers and Stockholders in this Agreement shall be true
and correct in all respects, and shall not have been violated in
any respect, as of the Closing, except for changes permitted or
contemplated by the terms of this Agreement, with the same effect
as though such representations, warranties and covenants had been
made or given on and as of the Closing. The representations and
warranties made by the Sellers and Stockholders in (i) Sections
4.1, 4.2, 4.6, 4.26, 4.27 and 4.28 shall survive the Closing in
perpetuity and (ii) Sections 4.10, 4.14 and 4.20 shall survive
the Closing until the thirtieth (30th) day following the
expiration of the applicable statute of limitations for each
matter referred to in such Sections. All other representations
and warranties made by the Sellers and Stockholders in this
Agreement shall survive the Closing until the second anniversary
of the Closing Date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYERS
Buyers hereby jointly and severally represent and
warrant to Sellers and Stockholders as follows:
5.1 ORGANIZATION AND QUALIFICATION. Rawlings is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and Rawlings Canada is a
corporation duly organized, validly existing and in good standing
under the laws of the Province of Nova Scotia. Buyers have all
requisite corporate power and authority to own, lease and operate
their properties and to carry on their businesses as they are now
being conducted.
5.2 AUTHORIZATION. Buyers have the full corporate
power to enter into this Agreement and to carry out their
obligations hereunder. The execution, delivery and performance
of this Agreement by Buyers have been duly and effectively
authorized and approved by all requisite corporate action of
Buyers and no other corporate acts or proceedings on the part of
Buyers are necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement constitutes the
legal, valid and binding obligation of Buyers enforceable in
accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to creditors' rights generally and by
general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity). Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will
(i) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default)
under any of the terms, conditions or provisions of the
Certificate of Incorporation, By-Laws or other constating
document of Buyers or any note, bond, mortgage, indenture, deed
of trust, lease, license, contract, agreement or other instrument
or obligation to which Buyers are bound, or by which Buyers or
any of their properties or assets may be bound or affected or
(ii) violate any statute, rule or regulation or, to the best of
<PAGE>
Buyers' knowledge, any order, writ, injunction or decree
applicable to Buyers or any of their properties or assets. No
consent or approval by, notice to or registration with any Person
is required on the part of Buyers in connection with the
execution and delivery of this Agreement or the consummation by
Buyers of the transactions contemplated hereby.
5.3 DUE DILIGENCE. Buyers have been afforded an
opportunity to and have asked questions, received answers to
their satisfaction and otherwise conducted their due diligence
review relative to this transaction and are sophisticated
investors with knowledge and experience in business and financial
matters and able to assess and evaluate the risks inherent in
this transaction.
5.4 BROKER FOR BUYERS. No Person other than Dillon,
Read & Co. Inc. has acted in the capacity of broker or finder on
behalf of Buyers to bring about the negotiation or consummation
of this Agreement.
5.5 ACCURACY OF STATEMENTS. No representation or
warranty of Buyers in this Agreement or any other agreement,
document, instrument or certificate delivered by Buyers pursuant
to this Agreement (including any agreement, document or
instrument the form of which is attached hereto as an Exhibit)
contains or will contain any untrue statement of a material fact
or omits or will omit a material fact necessary to make the
statements contained therein not misleading.
5.6 SURVIVAL. The representations and warranties made
by Buyers in this Agreement shall be true and correct in all
respects, and shall not have been violated in any respect as of
the Closing, except for changes permitted or contemplated by the
terms of this Agreement, with the same effect as though such
representations, warranties and covenants had been made or given
on and as of the Closing. The representations and warranties
made by Buyers in Sections 5.1 and 5.2 of this Agreement shall
survive the Closing in perpetuity. All other representations and
warranties made by Buyers in the Agreement shall survive the
Closing until the second anniversary of the Closing Date.
ARTICLE VI
COVENANTS
6.1 BUYERS' RIGHT TO INSPECT ASSETS. During the
period from the execution of this Agreement to the Closing,
Buyers' officers, employees, consultants, accountants, attorneys,
prospective lenders and other designated agents shall have the
right to inspect all of the Assets, including but not limited to
the books, records, financial statements, contacts, tax returns,
customer and supplier lists and other documents and information
pertaining to the Business and the Assets.
6.2 CONDUCT OF SELLERS BEFORE THE CLOSING. Sellers
covenant, warrant and agree that from the date hereof to the
Closing, except for transactions expressly approved in writing by
Buyers or provided for herein, Sellers shall:
(a) Not mortgage, pledge, hypothecate or subject
to any lien, charge or encumbrance of any kind any of the assets
of Sellers relating to the Business, tangible or intangible,
<PAGE>
exclusive of liens arising as a matter of law in the ordinary
course of business as to which there is no known default;
(b) Not sell or transfer any of the tangible
assets of Sellers relating to the Business other than inventory,
which may be sold in the ordinary course of business;
(c) Not cancel or discount any trade debt or
claim in favor of Sellers relating to the Business, except in the
ordinary course of business;
(d) Not sell, assign, transfer or otherwise
dispose of any patent, trademark, trade name, copyright, license,
customer list, trade secret, purchase option, right of first
refusal or any other similar intangible asset relating to the
Business;
(e) Not knowingly waive any right of value
relating to the Business;
(f) Not modify, amend, alter, or terminate (by
written or oral agreement, or any manner of action or inaction)
any of the executory agreements of Sellers relating to the
Business, except in the ordinary course of business;
(g) Not enter into or amend, renew or extend any
written collective bargaining agreement or union contract
relating to the Business;
(h) Not enter into any transaction material in
nature or amount relating to the Business;
(i) Not undertake any purchase commitment or sale
commitment extending beyond six months relating to the Business;
(j) Keep the properties and assets of Sellers
relating to the Business insured in amounts and with coverage at
least as great as the amounts and coverage in effect on the date
of this Agreement;
(k) Use their best efforts to preserve the
possession and control of all of Seller's assets relating to the
Business, keep in faithful service Seller's present officers and
key employees, preserve the goodwill of its suppliers, customers
and others having business relations with Seller, and do nothing
to impair Buyers' ability to keep and preserve after the Closing
the Business as existing on the date hereof;
(l) Maintain the books, accounts and records of
Sellers in a manner consistent with past practice;
(m) Not change their accounting practices;
<PAGE>
(n) Not extend credit in the sale of any product
or services of Sellers relating to the Business other than in
accordance with credit practices in effect on the date hereof, or
discount any trade payable;
(o) Conduct the Business in such a manner so that
as of the Closing the representations and warranties contained in
this Agreement shall be true in all respects as though such
representations and warranties were made on and as of the
Closing, except for changes permitted or contemplated by the
terms of this Agreement;
(p) Provide Buyers with prompt written notice of
any change in the condition (financial or other), assets,
liabilities, earnings or prospects of the Business which is
material and adverse; and
(q) Cooperate fully, completely and promptly with
Buyers in connection with satisfying any condition precedent to
the sale and purchase of the Assets contemplated by this
Agreement.
6.3 BULK SALES COMPLIANCE.
(a) Buyers hereby waive compliance by Sellers
with the provisions of Article 6 of the Uniform Commercial Code
as in effect in New York and South Carolina and the provisions of
any statute of any other state or jurisdiction regulating bulk
sales or transfers. Sellers and Stockholders jointly and
severally shall indemnify, defend and hold Buyers harmless from
and against any loss, liability, cost, expense or damage
resulting from the assertion of a claim made against the Assets
or Buyers by any creditor of Sellers pursuant to Article 6 of the
Uniform Commercial Code as in effect in New York and South
Carolina or any other applicable law relating to bulk sales or
transfers.
(b) Davtec shall use commercially reasonable
efforts to obtain an order under Section 3 of the Bulk Sales Act
(Ontario) exempting the purchase and sale of the Davtec Assets
from the application of such Act. Such order is herein called
"Bulk Sales Order." Should the Bulk Sales Order not be obtained
by the Closing and in the event Buyers decide in their sole
discretion to waive the relevant conditions precedent, Sellers
and Stockholders shall jointly and severally indemnify and save
Buyers harmless in accordance with Article XI from and against
any claim made by a creditor of Sellers or a governmental agency
against either Buyers or the Assets which is wholly or partially
based on the premise that the sale did not conform in any
particular to the requirements of the Bulk Sales Act (Ontario).
(c) In respect of the Canadian provinces other
than Ontario, Sellers and Stockholders shall jointly and
severally indemnify and save Buyers harmless in accordance with
Article XI from and against any claim made by a creditor of
Sellers or a governmental agency against either Buyers or the
Assets which is wholly or partially based on the premise that the
sale of the Assets did not conform in any particular to the
requirements of the Civil Code of Quebec governing the sale of an
enterprise or any similar legislation of any other province or
jurisdiction.
<PAGE>
6.4 CONFIDENTIAL INFORMATION. Sellers and
Stockholders shall not communicate, divulge or use for the
benefit of any Person any of the trade secrets, business methods,
business records and files, customer lists, promotional
materials, product specifications, drawings and prototypes, price
lists, instruction manuals, reports, or any other confidential or
proprietary information of any type or description being acquired
by Buyers pursuant to this Agreement.
6.5 AGREEMENT NOT TO COMPETE. From the Closing Date
and for a period of two (2) years thereafter Sellers and
Stockholders shall not, directly or indirectly: (i) own or have
any interest in, or act as an employee, agent, representative or
consultant of, or assist in any way, any corporation,
partnership, firm or business enterprise which does business in
the United States or Canada and which is in direct or indirect
competition with Buyers' ice hockey equipment businesses; (ii)
divert or attempt to divert customers of Buyers' ice hockey
equipment businesses; or (iii) entice or induce or in any manner
influence Jon Hodgins, Brad Jansen, Reid Brownell or Michel
Ferland to leave the employment of Buyers or any of their
affiliates for the purpose of engaging in a business which is
owned or controlled, directly or indirectly, by Sellers or
Stockholders or which is in competition with Buyers' ice hockey
equipment businesses.
6.6 REMEDY AT LAW INADEQUATE. Sellers and
Stockholders hereby acknowledge and agree that Buyers' remedy at
law for any breach by any of them of the provisions of Sections
6.4 and 6.5 hereof will be inadequate, and that Buyers, their
successors and assigns shall be entitled to injunctive or other
equitable relief in addition to any other remedy they may have
for a breach of such provisions. If a final judicial
determination is made that any provision of Sections 6.4 and 6.5
hereof constitutes an unreasonable or otherwise unenforceable
restriction against either Seller or Stockholders, such provision
shall be void only to the extent that such judicial determination
finds such provision to be unreasonable or otherwise
unenforceable.
6.7 NON-TRANSFERRED CONTRACTS. Notwithstanding
anything to the contrary in this Agreement, Sellers shall not
assign or transfer any interest in any Contract, and Buyers shall
not assume any liability, obligation or commitment arising
thereunder or resulting therefrom, if an assignment or transfer
or an attempt to make an assignment or transfer of such Contract
without the consent of a third party would constitute a breach or
violation thereof or a violation of law, or affect adversely the
rights of Buyers or Sellers thereunder, until such consent has
been obtained. If any consent necessary to effect the transfer
and assignment of any Contract is not obtained on or prior to the
Closing, each of the parties will, for a period of one year
following the Closing Date, (i) use its reasonable efforts and
take such reasonable actions and cooperate with the others as may
be necessary to effect the transfer and assignment by the
appropriate Seller to the appropriate Buyer of the Contract, and
(ii) cooperate with each other in any lawful and reasonable
arrangement to provide that the appropriate Buyer shall receive
the benefits under any Contract not assigned and transferred at
the Closing by reason of the failure to obtain such consent (a
"Non-Transferred Contract"), including, if necessary, at the
request and expense of the appropriate Buyer, enforcing
performance by any third party of its obligations in respect of
such Non-Transferred Contract. If the consent is received from
the third party within one year following the Closing Date, then
such Non-Transferred Contract shall immediately be assigned by
the appropriate Seller to the appropriate Buyer.
<PAGE>
6.8 SELLERS' RIGHT TO SELL REMAINING ASSETS. Buyers
hereby waive all claims against Sellers for infringement of any
intellectual property right resulting from any sale by Sellers of
any assets owned by Sellers immediately before the Closing and
not sold to Buyers pursuant to this Agreement.
6.9 BUYERS' PERFORMANCE OF ASSUMED LIABILITIES.
After the Closing, Buyers shall pay and otherwise perform all of
the Assumed Liabilities in accordance with their terms, except
for those Assumed Liabilities for which the failure to pay or
otherwise perform is excused by law.
6.10 ACCESS TO BOOKS, RECORDS AND DOCUMENTS. After the
Closing, Sellers and Stockholders, upon reasonable notice and
during normal business hours, shall have the right to inspect and
copy the books, records and other documents (including designs,
catalogues, product descriptions, business records and
transactional documents) purchased by Buyers pursuant to this
Agreement for the purposes of preparing tax returns and defending
any third party claim. Buyers shall use reasonable efforts to
preserve all books, records and documents purchased from Sellers
and, prior to the destruction or disposal thereof, offer the
books, records and documents to Sellers, giving Sellers a
reasonable time to take possession thereof. If Sellers do not
take possession thereof within a reasonable time, Buyers may
destroy or dispose of such books, records and documents.
ARTICLE VII
TITLE AND SURVEYS
7.1 TITLE OPINION. Rawlings Canada shall obtain an
opinion of title from a notary acceptable to it in its
discretion, with respect to the condition of title to the
Daveluyville Property, which opinion shall later be updated to
the Closing Date (said opinion, as updated, is herein the "Title
Opinion"). The Title Opinion shall be in form and substance
reasonably satisfactory to Rawlings Canada and shall show, inter
alia, that title to the Daveluyville Property is held by Davtec,
free from all Encumbrances other than (i) the Permitted
Encumbrances and (ii) those Encumbrances in respect of which
Rawlings Canada has, on the Closing Date, received discharges or
undertakings to discharge (in form satisfactory to it) executed
by the creditors thereof. The parties agree that all documents
executed in connection with the Closing shall be held in escrow
and the Davtec Closing Consideration shall be paid in trust to
Rawlings' counsel until the notary or other legal counsel
providing the Title Opinion confirms, by updated Title Opinion,
that title to the Daveluyville Property has been transferred and
the deed of sale effecting such transfer has been registered in
all appropriate land registries without adverse or conflicting
entries from those set forth in the Title Opinion. No title
searches or opinions rendered, nor the failure of Rawlings Canada
to send any notice to Davtec of any defect, shall have the effect
of waiving, limiting, reducing or otherwise affecting, in any
manner whatsoever, any of Sellers' representations or warranties
given or made hereunder or in connection herewith.
7.2 SURVEY. At least two (2) days prior to Closing,
Davtec shall furnish to Rawlings Canada:
<PAGE>
(a) an up-to-date surveyor's plan and technical
description of the Daveluyville Property. Any such survey shall
show the Daveluyville Property and its current condition, stating
that it is in conformity with all applicable laws and
regulations, that there are no physical encumbrances onto the
Daveluyville Property or from the Daveluyville Property or any
illegal views onto or from the Daveluyville Property and that the
Daveluyville Property is not charged with any servitudes. The
survey shall show the boundaries of the Daveluyville Property,
separate legal descriptions and boundaries for the tracts and the
location of all streets, highways, alleys and public ways
crossing or abutting said Daveluyville Property, all servitudes,
all building lines and all buildings and structures as are
situated thereon as of said date;
(b) all design, engineering or construction
drawings concerning the Daveluyville Property that Sellers have
in their possession;
(c) all title documents such as deeds of purchase
with all title searches and opinions or other information
relating to title to the Daveluyville Property that Sellers have
in their possession; and
(d) copies of all realty tax statements covering
the Daveluyville Property for the current year and the three (3)
prior years.
ARTICLE VIII
BUYERS' CONDITIONS TO CLOSING
The obligations of Buyers to consummate the
transactions contemplated by this Agreement shall be subject to
each of the following express conditions precedent:
8.1 CONTINUED TRUTH OF WARRANTIES. The
representations and warranties of the Sellers herein contained
shall be true in all respects as of the Closing with the same
force and effect as though made as of the Closing, except for any
variations permitted by this Agreement.
8.2 PERFORMANCE OF COVENANTS. Sellers shall have
performed, in all respects, all covenants and obligations and
complied with all conditions required by this Agreement to be
performed or complied with by it on or prior to the Closing.
8.3 DAMAGES BY CASUALTY OR OTHERWISE. The Assets and
the financial condition, operations, properties, earnings and
prospects of the Business shall not have been adversely affected
on or prior to the Closing in any way as a result of any material
accident or other casualty (whether or not covered by insurance),
any labor disturbance, or any Act of God or the public enemy,
occurring after the date hereof.
8.4 NO ADVERSE CHANGE. There shall have been no
material adverse change in the condition (financial or
otherwise), operations, properties, earnings, or prospects of the
Business since December 31, 1996.
<PAGE>
8.5 PERMITS. Any and all permits, consents, orders,
approvals, licenses and clearances from any Person appropriate to
the lawful consummation of the transactions contemplated hereby
and the use by Buyers of the Assets in substantially the same
manner as currently used by Sellers, including the consents of
The First National Bank of Chicago and the lessors under the
Leases, shall have been obtained in form and substance
satisfactory to Buyers.
8.6 LITIGATION. No suit, action, investigation,
inquiry or proceeding shall be pending or, to the best of
Sellers' and Stockholders' knowledge, threatened which (i) might
result in any material adverse change in the condition (financial
or otherwise), operations, properties, earnings or prospects of
the Business, or (ii) questions the validity of any action taken
or to be taken by Sellers or Stockholders in connection with the
provisions of this Agreement.
8.7 SECURITY INTERESTS RELEASED. The Assets shall not
be subject to any mortgage, pledge, lien, security interest,
claim, charge, encumbrance or other adverse interest of any kind
other than the Permitted Encumbrances.
8.8 TITLE TO NAMES. USA Skate shall have good and
marketable title to the trademarks "Victoriaville," "Vic" and
"McMartin," and Buyers shall have received from Warren Amendola
an affidavit, reasonably satisfactory to Buyers, regarding first
use of the trademarks "Vic" and "Victoriaville."
8.9 INSIDER LOANS. Buyers shall have received
evidence satisfactory, to Buyers, full satisfaction of USA
Skate's loans to Cortina, Scott Martin and Kevin Marsh.
8.10 NO LEGAL HYPOTHECS. All delays to register legal
hypothecs against the Daveluyville Property arising out of
construction or renovation shall have expired prior to the
Closing Date and on the Closing Date no such legal hypothecs
shall have been registered or remain unradiated.
8.11 RELEASE OF PAYABLES OWING TO STOCKHOLDERS.
Stockholders and their affiliates shall have released Sellers in
full from all trade payables owing by Sellers to Stockholders or
their affiliates.
8.12 TRANSFER OF ASSETS TO DAVTEC. 811300 Ontario Inc.
shall have transferred to Davtec, pursuant to such documents of
transfer as shall be satisfactory to Buyers, all of its right,
title and interest in and to (i) the name "McMartin Hockey
Protection" and (ii) the Indenture, dated November 16, 1994,
between it and Cinnamon Investments Ltd. All other assets and
properties owned by any Stockholder or Guarantor and used in the
Business shall have been transferred to Davtec or USA Skate,
pursuant to such documents of transfer as shall be satisfactory
to Buyers.
8.13 ANJOU SUBLEASE. Davtec shall have subleased its
facility in Anjou, Quebec to Rawlings Canada pursuant to a
sublease containing such terms and in such form as shall be
satisfactory to Buyers.
<PAGE>
8.14 DUE DILIGENCE INVESTIGATION. The results of
Buyers' due diligence investigation, including the results of its
Phase I environmental audits of the Facilities, shall be
reasonably satisfactory to Buyers in their sole discretion.
8.15 TAX CLEARANCE CERTIFICATES. USA Skate shall have
delivered to Buyers tax clearance letters from the States of New
York and South Carolina (the "Tax Clearance Certificates")
stating that no taxes, penalties or interest are due from USA
Skate.
8.16 SECTION 116 AFFIDAVIT. Davtec shall have
delivered to Buyers an affidavit attesting that Davtec is not a
non-resident of Canada within the meaning of Section 116 of the
Income Tax Act (Canada) (the "Section 116 Certificate").
8.17 KEY EMPLOYEES. Rawlings shall have entered into
employment arrangements with Jon Hodgins, Brad Jansen, Reid
Brownell and Michel Ferland satisfactory to Rawlings.
8.18 ESTOPPEL CERTIFICATES. Buyers shall have obtained
an estoppel certificate from each lessor of each Lease in form
and substance satisfactory to Buyers.
8.19 CANADIAN TITLE REQUIREMENTS. Buyers shall have
obtained (i) the survey in the form and within the time
contemplated by Section 7.2 hereof, and (ii) the Title Opinion in
form and substance satisfactory to Buyers, and (iii) the
discharges and undertakings to discharge contemplated by Section
7.2 hereof.
8.20 ESCROW AGREEMENT. Sellers and the Escrow Agent
shall have duly executed and delivered the Escrow Agreement.
8.21 LOCK BOX AGREEMENT. Buyers, Sellers and all of
Sellers' lenders who require or maintain a lock box for the
benefit of Sellers shall have entered into an agreement,
satisfactory to Buyers, providing for the prompt payment by such
lenders to Buyers of all Accounts Receivable collected by the
lock boxes.
8.22 LEGAL OPINION. Buyer shall have received the
favorable legal opinion of Ross & Hardies, counsel for Sellers
and Stockholders, dated as of the Closing Date and in the form of
Exhibit B attached hereto (the "Sellers' Opinion").
8.23 GUARANTY. Guarantors shall have duly executed and
delivered a Guaranty in the form of Exhibit C attached hereto
(the "Guaranty").
8.24 CERTIFICATE. Unless Sellers shall have executed
and delivered to Buyers a certificate dated the Closing,
certifying that one or more of the conditions set forth in
Sections 8.1 through 8.12 of this Agreement has not been
fulfilled, the Closing shall constitute the joint and several
representation and warranty by Sellers and Stockholders that each
of such conditions has been fulfilled or satisfied.
<PAGE>
Any of the foregoing conditions may be waived, in
writing, in whole or in part, by Buyers.
ARTICLE IX
SELLERS' AND STOCKHOLDERS' CONDITIONS TO CLOSING
The obligation of Sellers and Stockholders to
consummate the transactions contemplated by this Agreement shall
be subject to the following express conditions precedent:
9.1 CONTINUED TRUTH OF WARRANTIES. The
representations and warranties of Buyers herein contained shall
be true in all respects as of the Closing with the same force and
effect as though made as of the Closing, except for any
variations permitted by this Agreement.
9.2 PERFORMANCE OF COVENANTS. Buyers shall have
performed, in all respects, all covenants and obligations and
complied with all conditions required by this Agreement to be
performed or complied with by them on or prior to the Closing.
9.3 PERMITS. Any and all permits, consents, orders,
approvals, licenses and clearances from any Person appropriate to
the lawful consummation of the transactions contemplated hereby
shall have been obtained in form and substance satisfactory to
Sellers and Stockholders.
9.4 LITIGATION. No suit, action, investigation,
inquiry or proceeding shall be pending or, to the best of Buyers'
knowledge, threatened which questions the validity of any action
taken or to be taken by Buyers in connection with the provisions
of this Agreement.
9.5 ESCROW AGREEMENT. Buyers and the Escrow Agent
named therein shall have duly executed and delivered the Escrow
Agreement.
9.6 LEGAL OPINION. Sellers shall have received the
favorable legal opinion of Stinson, Mag & Fizzell, P.C., counsel
for Buyers, dated as of the Closing Date and in the form of
Exhibit D attached hereto (the "Buyers' Opinion").
9.7 TERMINATION OF HODGINS EMPLOYMENT AGREEMENT. The
Employment Agreement, dated September 6, 1996, between Jon
Hodgins and USA Skate shall have been terminated upon such terms
as shall be satisfactory to Sellers and Stockholders.
9.8 CERTIFICATE. Unless the Buyers shall have
executed and delivered to Sellers a certificate dated the
Closing, certifying that one or more of the conditions set forth
in Sections 9.1 through 9.4 hereto has not been fulfilled, the
Closing shall constitute a representation and warranty by Buyers
that each of such conditions has been fulfilled or satisfied.
Any of the foregoing conditions may be waived, in whole
or in part, by Sellers and Stockholders.
<PAGE>
ARTICLE X
ACTIONS TO BE TAKEN AT CLOSING; POST-CLOSING COVENANTS
10.1 ACTIONS TO BE TAKEN AT CLOSING BY SELLERS AND
STOCKHOLDERS.
(a) At Closing, each Seller and each Stockholder
shall:
(i) Deliver to Buyers a good standing
certificate or its equivalent issued by its
jurisdiction of incorporation, dated not less than ten
business days immediately preceding the Closing.
(ii) Deliver to Buyers copies of the
following documents, certified as to accuracy and
completeness as of the Closing by its Secretary or
Assistant Secretary:
(A) Its Articles or Certificate of
Incorporation or other constating document and all
amendments thereto;
(B) Its By-Laws and all amendments
thereto;
(C) The resolutions of its Board
of Directors and, in the case of USA Skate and Davtec,
stockholders authorizing the execution and delivery of
this Agreement and the consummation of the transactions
contemplated herein.
(iii) Deliver to Buyers a
certificate of its Secretary or Assistant Secretary,
dated as of the Closing, (i) setting forth the identity
of its directors and officers and the offices held by
such officers, and (ii) certifying the genuineness of
the signatures of its officers executing this Agreement
and all instruments and certificates delivered on its
behalf to Buyers pursuant hereto.
(iv) Deliver to Buyers the duly executed
Escrow Agreement.
(v) Cause to be delivered to Buyers the
Sellers' Opinion.
(b) At Closing:
(i) USA Skate shall deliver to Rawlings
a Bill of Sale and Assignment in the form of Exhibit E
attached hereto and such other documents and
instruments of sale, assignment, conveyance and
transfer as Rawlings or its counsel may deem
appropriate to sell, assign, convey and transfer to,
and to vest, perfect and confirm in Rawlings all right,
title and interest of USA Skate in and to the USA Skate
Assets.
<PAGE>
(ii) Davtec shall deliver to Rawlings
Canada a Bill of Sale and Assignment in the form of
Exhibit E attached hereto and such other documents and
instruments of sale, assignment, conveyance and
transfer as Rawlings Canada or its counsel may deem
appropriate to sell, assign, convey and transfer to,
and to vest, perfect and confirm in Rawlings Canada all
right, title and interest of Davtec in and to the
Davtec Assets.
(iii) Davtec shall deliver to
Rawlings such documents and instruments of sale,
assignment, conveyance and transfer, as Rawlings or its
counsel may deem appropriate to sell, assign, convey
and transfer to, and to vest, perfect and confirm in
Rawlings all right, title and interest of Davtec in and
to the Davtec Intellectual Property.
(iv) USA Skate shall deliver to Buyers
the Tax Clearance Certificates.
(v) Davtec shall deliver to Buyers the
Section 116 Certificate.
(vi) Davtec shall deliver the Title
Opinion.
(vii) Davtec shall deliver to
Rawlings Canada a Deed of Transfer in respect of the
Daveluyville Property in the form of Exhibit F attached
hereto.
(viii) The Guarantors shall deliver
the Guaranty.
10.2 ACTIONS TO BE TAKEN AT CLOSING BY BUYERS.
(a) At the Closing, each Buyer shall:
(i) Deliver to Sellers and Stockholders
a good standing certificate or its equivalent issued by
its jurisdiction of incorporation, dated not less than
ten business days immediately preceding the Closing.
(ii) Deliver to Sellers and Stockholders
copies of the following documents, certified as to
accuracy and completeness as of the Closing by its
Secretary or Assistant Secretary:
(A) Its Certificate or Articles of
Incorporation or other constating document and all
amendments thereto;
(B) Its By-Laws and all amendments
thereto;
<PAGE>
(C) The resolutions of its Board
of Directors authorizing the execution and delivery of
this Agreement and the consummation of the transactions
contemplated herein.
(iii) Deliver to Sellers a
certificate of its Secretary or Assistant Secretary,
dated as of the Closing (i) setting forth the identity
of its directors and officers, and the offices held by
such officers, and (ii) certifying the genuineness of
the signatures of its officers executing this Agreement
and all instruments and certificates delivered on its
behalf to Sellers or Stockholders pursuant hereto.
(iv) Cause to be delivered to Sellers
and Stockholders the Buyers' Opinion.
(b) At Closing,
(i) Rawlings shall pay the USA Skate
Closing Consideration and the Davtec Intellectual
Property Purchase Price in accordance with Article III.
(ii) Rawlings Canada shall pay the
Davtec Closing Consideration in accordance with Article
III.
(iii) Rawlings and Rawlings Canada
shall deliver to Sellers and Stockholders the duly
executed Escrow Agreement.
(iv) Rawlings shall deliver to USA Skate
an Assumption Agreement in the form of Exhibit G
attached hereto, pursuant to which Rawlings will assume
the USA Skate Accounts Payable and the USA Skate
Accrued Liabilities.
(v) Rawlings Canada shall deliver to
Davtec an Assumption Agreement in the form of Exhibit G
attached hereto, pursuant to which Rawlings Canada will
assume the Davtec Accounts Payable and the Davtec
Accrued Liabilities.
10.3 POST-CLOSING COOPERATION. The parties shall, on
request, at or after the Closing, cooperate with one another by
furnishing any additional information and executing and
delivering any additional documents as may be reasonably
requested by any party hereto (or their respective counsel) to
further perfect or evidence the consummation of, or otherwise
implement, any transaction contemplated by this Agreement.
<PAGE>
ARTICLE XI
INDEMNIFICATION
11.1 INDEMNIFICATION.
(a) INDEMNITY BY SELLERS AND STOCKHOLDERS. In
addition to all other indemnification obligations of Sellers or
Stockholders set forth in this Agreement, Sellers and
Stockholders jointly and severally shall indemnify, defend and
hold harmless Buyers from and against:
(i) any and all losses, liabilities,
costs, expenses or damages (including judgments and
settlement payments) incident to, arising in connection
with or resulting from any misrepresentation, breach,
non-performance or inaccuracy of any representation,
indemnity, warranty, covenant or agreement by Sellers
or Stockholders made or contained in this Agreement or
in any Exhibit, Schedule, certificate or document
executed and delivered by or on behalf of Sellers or
Stockholders pursuant to or in connection with this
Agreement or the transactions contemplated herein;
(ii) all deficiencies, underpayments of
tax, penalties, additions to tax, interest payments,
payments of any taxes including, without limitation,
income, employment, payroll, F.I.C.A., F.U.T.A., sales,
use, goods and services, trust fund taxes and tax
payments to be withheld, and any and all other costs
and expenses relative to examinations, proposed or
final adjustments arising from such examinations and
any assessments relating thereto, contests, claims,
suits or proceedings respecting the determination of
loss, liability or damage resulting from deficiencies
in United States or Canadian federal, state, provincial
or local taxes, with respect to (A) the Assets, for any
period ended on or prior to the Closing, or (B) Sellers
or Stockholders;
(iii) any and all losses,
liabilities, costs, expenses or damages (including
judgments and settlement payments) incident to, arising
in connection with or resulting from (A) the
termination of any employee of Sellers, including but
not limited to any obligation or liability arising
under the Consolidated Omnibus Budget Reconciliation
Act of 1985, or (B) any qualified or nonqualified
pension, profit-sharing or other employee benefit plan
of Sellers, including but not limited to any
accumulated funding deficiency within the meaning of
Section 302 of the Employee Retirement Income Security
Act of 1974, any liability to the Pension Benefit
Guaranty Corporation, or any liability resulting from
the termination of such benefit plans;
(iv) to the extent not described in
clauses (i) through (iii) above, any liability or
obligation not included in the Accounts Payable or the
Accrued Liabilities;
<PAGE>
(v) any and all losses, liabilities,
costs, expenses or damages (including judgments and
settlement payments) incident to, arising in connection
with or resulting from the litigation set forth on
Schedule 4.14; and
(vi) any and all costs, expenses and
other damages incurred by Buyers in claiming,
contesting or remedying any misrepresentation, breach,
non-performance, inaccuracy or other matter described
in clauses (i) through (iv) above or any other
indemnification obligation of Sellers or the
Stockholders set forth in this Agreement, including, by
way of illustration and not limitation, all legal and
accounting fees, other professional expenses and all
filing fees, and collection costs incident thereto and
all such fees, costs and expenses incurred in defending
claims which, if successfully prosecuted, would have
been indemnifiable hereunder.
(b) INDEMNITY BY BUYERS. In addition to all
other indemnification obligations of Buyers set forth in this
Agreement, Buyers jointly and severally shall indemnify, defend
and hold Sellers and Stockholders harmless from and against:
(i) any and all losses, liabilities,
costs, expenses or damages (including judgments and
settlement payments) incident to, arising in connection
with or resulting from any misrepresentation, breach,
non-performance or inaccuracy of any representation,
indemnity, warranty, or any covenant or agreement by
Buyers made or contained in this Agreement or in any
Exhibit, Schedule, certificate or document executed and
delivered by or on behalf of Buyers pursuant to or in
connection with this Agreement or the transactions
contemplated herein; and
(ii) any and all costs, expenses and
other damages incurred by Sellers or Stockholders in
claiming, contesting or remedying any
misrepresentation, breach, non-performance, inaccuracy
or other matter described in clause (i) above or any
other indemnification obligation of Buyers set forth in
this Agreement, including, by way of illustration and
not limitation, all legal and accounting fees, other
professional expenses and all filing fees, and
collection costs incident thereto and all such fees,
costs and expenses incurred in defending claims which,
if successfully prosecuted would have been
indemnifiable hereunder.
(c) DAMAGES. Any and all of the items for which
Buyers or Sellers may be entitled to indemnity pursuant to this
Agreement, including but not limited to subsections (a) or (b) of
this Section 11.1, hereinafter are called "Damages".
(D) LIMITATIONS ON OBLIGATION TO INDEMNIFY.
(i) TIME PERIOD. No party to this Agreement
shall have any claim for indemnification pursuant to
Sections 11.1(a)(i) or 11.1(b)(i) unless such party submits
its Initial Claim Notice (as hereinafter defined) for such
claim within the applicable survival period specified in
Sections 4.28 or 5.6.
<PAGE>
(ii) AMOUNT OF INDEMNIFIED DAMAGES. The
maximum aggregate amount which Buyers shall be entitled to
receive as indemnity for Damages described in Section
11.1(a)(i) (the "Sellers' Capped Damages"), shall be the sum
of the USA Skate Purchase Price and the Davtec Purchase
Price (the "Indemnity Cap"); provided, however, that Cal Pro
shall not be obligated to indemnify Buyers for Sellers'
Capped Damages in excess of 62% of the Indemnity Cap.
Except for Damages resulting from a breach of the
representations and warranties set forth in Sections 4.1,
4.2, 4.6, 4.26, 4.27 and 4.28, Buyers shall not be entitled
to receive any indemnity for the Damages described in
Section 11.1(a) unless and to the extent the aggregate
amount of such Damages exceeds $50,000. The maximum
aggregate amount which Sellers and Stockholders shall be
entitled to receive as indemnity for Damages described in
Section 11.1(b)(i) (the "Buyers' Capped Damages"), shall be
the Indemnity Cap. Except for Damages resulting from a
breach of the representations and warranties set forth in
Sections 5.1, 5.2 and 5.4, Sellers and Stockholders shall
not be entitled to receive any indemnity for the Damages
described in Section 11.1(b)(i), unless and to the extent
the aggregate amount of such Damages exceeds $50,000.
(iii) INDEMNITY LIMITATIONS. Anything to
the contrary in this Agreement notwithstanding, Buyers shall
not be entitled to indemnification for any costs, claims and
expenses for which indemnification is available hereunder:
(A) To the extent it arises out of an
action by a Buyer in bad faith or the failure of a Buyer or
its successors or assigns to exercise its or their duty to
mitigate damages;
(B) For breach of any representation or
warranty only, if the fact, event or circumstances giving
rise to the breach or claim or otherwise relevant thereto is
reasonably disclosed in this Agreement (including the
Schedules and Exhibits hereto) or in the Financial
Statements or is otherwise within the actual knowledge of a
Buyer on the date hereof;
(C) To the extent a Buyer is entitled
to and actually receives indemnity for any loss or damage
suffered by it arising out of the breach or claim under the
terms of any insurance policy then in force; or
(D) Which would not have arisen but for
(or to the extent the same is increased by reason of) a
breach by a Buyer, or its successors or assigns, of its or
their obligations under this Agreement.
Buyers agree that, absent fraud on the part of Sellers or
Stockholders, indemnification pursuant to this Article XI shall
be their sole and exclusive monetary remedy for any claim by
Buyers against Sellers or Stockholders alleging any breach by
Sellers or Stockholders of their obligations, representations,
warranties and/or agreements set forth in, or contemplated by,
this Agreement or any document or instrument delivered pursuant
to this Agreement, and no party hereto shall be entitled to
duplicate monetary damages for the same occurrence.
<PAGE>
11.2 NOTICE OF, AND PROCEDURES FOR, COLLECTING
INDEMNIFICATION.
(a) INITIAL CLAIM NOTICE. When a party becomes
aware of a situation which may result in Damages for which it
would be entitled to be indemnified hereunder, such party (the
"Indemnitee") shall submit a written notice (the "Initial Claim
Notice") to the other party (the "Indemnitor") to such effect
with reasonable promptness after it first becomes aware of such
matter and shall furnish the Indemnitor with such information as
it has available demonstrating its right or possible right to
receive indemnity. If the potential claim is predicated on the
filing by a third party of any action at law or in equity (a
"Third Party Claim"), the Indemnitee shall provide the Indemnitor
with an Initial Claim Notice not later than ten (10) days prior
to the date on which a responsive pleading must be filed, and
shall also furnish a copy of such claim (if made in writing) and
of all documents received from the third party in support of such
claim. Every Initial Claim Notice shall, if feasible, contain a
reasonable estimate by the Indemnitee of the losses, costs,
liabilities and expenses (including, but not limited to, costs
and expenses of litigation and attorneys' fees) which the
Indemnitee may incur. In addition, each Initial Claim Notice
shall name, when known, the Person or Persons making the
assertions which are the basis for such claim. Failure by the
Indemnitee to deliver an Initial Claim Notice or an update
thereof in a timely manner shall not relieve the Indemnitor of
any of its obligations under this Agreement except to the extent
that actual monetary prejudice to the Indemnitor can be
demonstrated.
(b) RIGHTS OF INDEMNITOR. If, prior to the
expiration of thirty (30) days from the mailing of an Initial
Claim Notice (the "Claim Answer Period"), the Indemnitor shall
request in writing that such claim not be paid, the same shall
not be paid, and the Indemnitor shall settle, compromise or
litigate in good faith such claim, and employ attorneys of its
choice to do so; provided, however, that Indemnitee shall not be
required to refrain from paying any claim which has matured by
court judgment or decree, unless appeal is taken therefrom and
proper appeal bond posted by the Indemnitor, nor shall it be
required to refrain from paying any claim where such action would
result in the foreclosure of a lien upon any of its assets or a
default in a lease or other contract except a lease or other
contract which is the subject of the dispute. If the Indemnitor
elects to settle, compromise or litigate such claim, all
reasonable expenses, including but not limited to all amounts
paid in settlement or to satisfy judgments or awards and
reasonable attorney's fees and costs, incurred by the Indemnitor
in settling, compromising or litigating such claim shall be
secured to the reasonable satisfaction of Indemnitee. Indemnitee
shall cooperate fully to make available to the Indemnitor and its
attorneys, representatives and agents, all pertinent information
under its control. Indemnitee shall have the right to elect to
settle or compromise all other contested claims with respect to
which the Indemnitor has not, within the Claim Answer Period,
acknowledged in writing (i) liability therefor (should such claim
ultimately be resolved against Indemnitee), and (ii) its election
to assume full responsibility for the settlement, compromise,
litigation and payment of such claim. Indemnitor shall not
settle or compromise any claim for damages or remedies other than
money damages without the prior written consent of Indemnitee.
(c) FINAL CLAIMS STATEMENT. At such time as
Damages for which the Indemnitor is liable hereunder are incurred
by Indemnitee by actual payment thereof or by entry of a final
judgment, Indemnitee shall forward a Final Claims Statement to
the Indemnitor setting forth the amount of such Damages in
reasonable detail on an itemized basis. Indemnitee shall
supplement <PAGE> the Final Claims Statement with such supporting proof
of loss (e.g. vouchers, canceled checks, accounting summaries,
judgments, settlement agreements, etc.) as the Indemnitor may
reasonably request in writing within thirty (30) days after
receipt of a Final Claims Statement. All amounts reflected on
Final Claims Statements shall be paid promptly by Indemnitor to
Indemnitee.
ARTICLE XII
MISCELLANEOUS
12.1 NOTICES. Any notice or other communication
required or permitted hereunder (including, by way of
illustration and not limitation, any notice permitted or required
under Article XI hereof) to Buyers, Sellers or Stockholders shall
be effective only if it is in writing and (i) delivered in
person, (ii) sent by registered or certified mail, return
receipt requested, postage prepaid, (iii) sent by a nationally
recognized overnight delivery service, with delivery confirmed,
or (iv) sent by facsimile, with receipt confirmed, addressed as
follows:
In the case of Buyers:
Rawlings Sporting Goods Company, Inc.
1859 Intertech Drive
Fenton, Missouri 63026
Attn: Paul E. Martin
Fax: (314) 349-3598
and
Stinson, Mag & Fizzell, P.C.
100 South Fourth Street
St. Louis, Missouri 63102
Attn: John W. Finger, Esq.
Fax: (314) 259-4599
In the case of the Sellers and the Stockholders:
California Pro Sports, Inc.
1221-B South Batesville Road
Greer, South Carolina 29650
Attn: Barry Hollander
Fax: (864) 848-5167
and
<PAGE>
Ross & Hardies
150 North Michigan Avenue
Chicago, IL 60601-7567
Attn: C. Frederick LeBaron, Jr., Esq.
Fax: (312) 750-8600
or such substituted address as any party shall have given notice
to the other parties hereto in writing. Any such notice or
communication shall be deemed to have been given (i) as of the
date when delivered in person, (ii) three days after when so
deposited in the mail properly addressed, (iii) the next day when
delivered during business hours to such overnight delivery
service properly addressed, or (iv) when receipt of a facsimile
is confirmed, unless (in each case) the sending party has actual
knowledge that such notice was not received by the intended
recipient.
12.2 AMENDMENT. This Agreement may be amended or
modified in whole or in part by an agreement in writing executed
in the same manner as this Agreement and making specific
reference thereto.
12.3 COUNTERPARTS. This Agreement may be executed in
two or more counterparts, all of which taken together shall
constitute one and the same instrument.
12.4 BINDING ON SUCCESSORS AND ASSIGNS. This Agreement
shall be binding upon, inure to the benefit of and be enforceable
by and against the parties hereto and their successors and
assigns and shall be assignable only with the prior written
consent of the other parties hereto.
12.5 SEVERABILITY. In the event that any one or more
of the provisions contained in this Agreement or any application
thereof shall be invalid, illegal or unenforceable in any
respect, the validity, legality or enforceability of the
remaining provisions of this Agreement and any other application
thereof shall not in any way be affected or impaired thereby;
provided, however, that to the extent permitted by applicable
law, any invalid, illegal, or unenforceable provision may be
considered for the purpose of determining the intent of the
parties in connection with the other provisions of this
Agreement.
12.6 WAIVERS. The parties may, by written agreement,
(i) extend the time for the performance of any of the obligations
or other acts of the parties hereof, (ii) waive any inaccuracies
in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement,
(iii) waive compliance with or modify any of the covenants or
conditions contained in this Agreement and (iv) waive or modify
performance of any of the obligations of any of the parties
hereto; provided, that neither such an extension or waiver nor
any failure to insist upon strict compliance with any obligation,
covenant, agreement or condition herein shall operate as a waiver
of, or an estoppel with respect to, any subsequent insistence
upon strict compliance.
12.7 PUBLICITY. Except as may be required by law, no
party hereto shall issue any press release or make any public
statement regarding the transactions contemplated by this
Agreement or otherwise disclose any of the terms and conditions
of the transactions contemplated by this Agreement without the
prior written consent of the other parties.
<PAGE>
12.8 HEADINGS. The headings in the sections of this
Agreement are inserted for convenience only and in no way alter,
amend, modify, limit or restrict the contractual obligations of
the parties.
12.9 EXPENSES.
(a) Sellers and Stockholders shall be responsible
for and pay all of the liabilities, obligations, costs, expenses
and fees (including, without limitation, any and all legal,
accounting and other professional fees and expenses) incurred by
them in connection with the negotiation, execution or performance
of this Agreement, and shall jointly and severally indemnify and
hold Buyers harmless from and against all such liabilities,
obligations, costs, expenses and fees.
(b) Buyers shall be responsible for and pay all
of the liabilities, obligations, costs, expenses and fees
(including, without limitation, any and all legal, accounting and
other professional fees and expenses) incurred by Buyers in
connection with the negotiation, execution or performance of this
Agreement, and shall jointly and severally indemnify and hold
Sellers and Stockholders harmless from and against all such
liabilities, obligations, costs, expenses and fees.
12.10 SELLERS SOLIDARILY LIABLE. Each of the
Sellers hereby covenant and agree that, for purposes of the law
of the Province of Quebec, each of them is solidarily liable with
the other for all obligations and liabilities of any of them
under this Agreement and the agreements contemplated hereby, each
of them hereby waiving the benefits of division of discussion.
12.11 ENTIRE AGREEMENT; LAW GOVERNING. All prior
negotiations and agreements between the parties hereto are
superseded by this Agreement, and there are no representations,
warranties, understandings or agreements other than those
expressly set forth herein or in an Exhibit, Schedule,
certificate, agreement or other instrument delivered pursuant
hereto, except as may be modified in writing concurrently
herewith or subsequent hereto. This Agreement shall be governed
and construed and interpreted according to the laws of the State
of Missouri.
LES EQUIPEMENTS SPORTIFS DAVTEC INC.
By /s/ Barry Hollander
Name: Barry Hollander
Title: Authorized Officer
<PAGE>
USA SKATE CO., INC.
By /s/ Barry Hollander
Name: Barry Hollander
Title: Chief Financial Officer
USA SKATE CORPORATION
By /s/ Barry Hollander
Name: Barry Hollander
Title: Chief Financial Officer
CALIFORNIA PRO SPORTS, INC.
By /s/ Barry Hollander
Name: Barry Hollander
Title: Chief Financial Officer
RAWLINGS CANADA INC.
By /s/ Paul E. Martin
Name: Paul E. Martin
Title: Treasurer
RAWLINGS SPORTING GOODS COMPANY, INC.
By /s/ Paul E. Martin
Name: Paul E. Martin
Title: Chief Financial Officer
EXHIBIT 99.1
EXECUTION COPY
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
RAWLINGS SPORTING GOODS COMPANY, INC.,
as Borrower,
THE LENDERS NAMED HEREIN
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
DATED AS OF
SEPTEMBER 12, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II THE CREDITS. . . . . . . . . . . . . . . . . . . . . 17
2.1. Revolving Credit Advances . . . . . . . . . . . . . . . . 17
2.2. Ratable Loans . . . . . . . . . . . . . . . . . . . . . . 18
2.3. Types of Advances . . . . . . . . . . . . . . . . . . . . 18
2.4. Commitment Fee; Reductions in Aggregate Revolving
Credit Commitment. . . . . . . . . . . . . . . . . . 18
2.5. Minimum Amount of Each Advance. . . . . . . . . . . . . . 19
2.6. Optional Principal Payments . . . . . . . . . . . . . . . 19
2.7. Mandatory Commitment Reductions . . . . . . . . . . . . . 19
2.8. Method of Selecting Types and Interest Periods for
New Advances . . . . . . . . . . . . . . . . . . . . 20
2.9. Conversion and Continuation of Outstanding Advances . . . 20
2.10. Changes in Interest Rate, etc. . . . . . . . . . . . . . 21
2.11. Rates Applicable After Default . . . . . . . . . . . . . 21
2.12. Method of Payment. . . . . . . . . . . . . . . . . . . . 22
2.13. Notes; Telephonic Notices. . . . . . . . . . . . . . . . 22
2.14. Interest Payment Dates; Interest and Fee Basis . . . . . 23
2.15. Notification of Advances, Interest Rates,
Prepayments and Commitment Reductions. . . . . . . . 23
2.16. Lending Installations. . . . . . . . . . . . . . . . . . 23
2.17. Non-Receipt of Funds by the Agent. . . . . . . . . . . . 24
2.18. Withholding Tax Exemption. . . . . . . . . . . . . . . . 24
2.19. Agent's Fees . . . . . . . . . . . . . . . . . . . . . . 25
2.20. Facility Letters of Credit . . . . . . . . . . . . . 25
2.20.1 Issuance of Facility Letters of Credit . . . . . . . 25
2.20.2 Participating Interests. . . . . . . . . . . . . . . 26
2.20.3 Facility Letter of Credit
Reimbursement Obligations. . . . . . . . . 26
2.20.4 Procedure for Issuance . . . . . . . . . . . . . . . 28
2.20.5 Nature of the Lenders' Obligations . . . . . . . . . 29
2.20.6 Facility Letter of Credit Fees . . . . . . . . . . . 30
2.21. Swing Line Loans . . . . . . . . . . . . . . . . . . 30
2.21.1 Amount of Swing Line Loans . . . . . . . . . . . . . . 30
2.21.2 Borrowing Notice. . . . . . . . . . . . . . . . . . . . 31
2.21.3 Making of Swing Line Loans . . . . . . . . . . . . . . 31
2.21.4 Repayment of Swing Line Loans . . . . . . . . . . . . . 31
2.21.5 Rate Options for Swing Line Loans . . . . . . . . . . . 32
ARTICLE III CHANGE IN CIRCUMSTANCES . . . . . . . . . . . . . . 32
3.1. Yield Protection. . . . . . . . . . . . . . . . . . . . . 32
3.2. Changes in Capital Adequacy Regulations . . . . . . . . . 33
<PAGE>
3.3. Availability of Types of Advances . . . . . . . . . . . . 33
3.4. Funding Indemnification . . . . . . . . . . . . . . . . . 34
3.5. Lender Statements; Survival of Indemnity. . . . . . . . . 34
ARTICLE IV CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . 34
4.1. Restatement . . . . . . . . . . . . . . . . . . . . . . . 34
4.2. Each Advance and Facility Letter of Credit. . . . . . . . 37
ARTICLE V REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . 37
5.1. Corporate Existence and Standing. . . . . . . . . . . . . 37
5.2. Authorization and Validity. . . . . . . . . . . . . . . . 38
5.3. Compliance with Laws and Contracts. . . . . . . . . . . . 38
5.4. Governmental Consents . . . . . . . . . . . . . . . . . . 39
5.5. Financial Statements. . . . . . . . . . . . . . . . . . . 39
5.6. Material Adverse Change . . . . . . . . . . . . . . . . . 40
5.7. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.8. Litigation and Contingent Obligations . . . . . . . . . . 40
5.9. Capitalization. . . . . . . . . . . . . . . . . . . . . . 40
5.10. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.11. Defaults . . . . . . . . . . . . . . . . . . . . . . . . 42
5.12. Federal Reserve Regulations. . . . . . . . . . . . . . . 42
5.13. Investment Company . . . . . . . . . . . . . . . . . . . 42
5.14. Certain Fees . . . . . . . . . . . . . . . . . . . . . . 42
5.15. Ownership of Properties. . . . . . . . . . . . . . . . . 42
5.16. Indebtedness . . . . . . . . . . . . . . . . . . . . . . 43
5.17. Post-Retirement Welfare Benefits . . . . . . . . . . . . 43
5.18. Employee Controversies . . . . . . . . . . . . . . . . . 43
5.19. Material Agreements. . . . . . . . . . . . . . . . . . . 43
5.20. Acquisition Documents. . . . . . . . . . . . . . . . . . 44
5.21. Environmental Laws . . . . . . . . . . . . . . . . . . . 44
5.22. Insurance. . . . . . . . . . . . . . . . . . . . . . . . 45
5.23. Disclosure . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE VI COVENANTS. . . . . . . . . . . . . . . . . . . . . . 46
6.1. Financial Reporting . . . . . . . . . . . . . . . . . . . 46
6.2. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . 48
6.3. Notice of Default.. . . . . . . . . . . . . . . . . . . . 48
6.4. Conduct of Business . . . . . . . . . . . . . . . . . . . 49
6.5. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.6. Insurance . . . . . . . . . . . . . . . . . . . . . . . . 49
6.7. Compliance with Laws. . . . . . . . . . . . . . . . . . . 49
6.8. Maintenance of Properties . . . . . . . . . . . . . . . . 49
6.9. Inspection. . . . . . . . . . . . . . . . . . . . . . . . 49
6.10. Capital Stock and Dividends. . . . . . . . . . . . . . . 50
6.11. Indebtedness . . . . . . . . . . . . . . . . . . . . . . 50
6.12. Merger . . . . . . . . . . . . . . . . . . . . . . . . . 50
<PAGE>
6.13. Sale of Assets . . . . . . . . . . . . . . . . . . . . . 51
6.14. Sale of Accounts . . . . . . . . . . . . . . . . . . . . 51
6.15. Sale and Leaseback . . . . . . . . . . . . . . . . . . . 51
6.16. Investments and Purchases. . . . . . . . . . . . . . . . 51
6.17. Contingent Obligations . . . . . . . . . . . . . . . . . 52
6.18. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.19. Capital Expenditures . . . . . . . . . . . . . . . . . . 53
6.20. Lease Rentals. . . . . . . . . . . . . . . . . . . . . . 53
6.21. Letters of Credit. . . . . . . . . . . . . . . . . . . . 53
6.22. Affiliates . . . . . . . . . . . . . . . . . . . . . . . 53
6.23. Prepayment of Indebtedness . . . . . . . . . . . . . . . 54
6.24. Rate Hedging Obligations . . . . . . . . . . . . . . . . 54
6.25. Environmental Matters. . . . . . . . . . . . . . . . . . 54
6.26. Change in Corporate Structure; Fiscal Year . . . . . . . 54
6.27. Inconsistent Agreements. . . . . . . . . . . . . . . . . 55
6.28. Financial Covenants. . . . . . . . . . . . . . . . . . . 55
6.28.1. Minimum Tangible Net Worth. . . . . . . . . . . . . . 55
6.28.2. Debt to Capitalization Ratio. . . . . . . . . . . . . 55
6.28.3. Fixed Charge Coverage Ratio . . . . . . . . . . . . . 55
6.29. Tax Consolidation. . . . . . . . . . . . . . . . . . . . 55
6.30. ERISA Compliance55
ARTICLE VII DEFAULTS. . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES . . 58
8.1. Acceleration. . . . . . . . . . . . . . . . . . . . . . . 58
8.2. Amendments. . . . . . . . . . . . . . . . . . . . . . . . 59
8.3. Preservation of Rights. . . . . . . . . . . . . . . . . . 60
ARTICLE IX GENERAL PROVISIONS . . . . . . . . . . . . . . . . . 60
9.1. Survival of Representations . . . . . . . . . . . . . . . 60
9.2. Governmental Regulation . . . . . . . . . . . . . . . . . 60
9.3. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 60
9.4. Headings. . . . . . . . . . . . . . . . . . . . . . . . . 60
9.5. Entire Agreement. . . . . . . . . . . . . . . . . . . . . 61
9.6. Several Obligations; Benefits of this Agreement . . . . . 61
9.7. Expenses; Indemnification . . . . . . . . . . . . . . . . 61
9.8. Numbers of Documents. . . . . . . . . . . . . . . . . . . 61
9.9. Accounting. . . . . . . . . . . . . . . . . . . . . . . . 61
9.10. Severability of Provisions . . . . . . . . . . . . . . . 62
9.11. Nonliability of Lenders. . . . . . . . . . . . . . . . . 62
9.12. CHOICE OF LAW. . . . . . . . . . . . . . . . . . . . . . 62
9.13. CONSENT TO JURISDICTION. . . . . . . . . . . . . . . . . 62
9.14. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . 63
9.15. Disclosure . . . . . . . . . . . . . . . . . . . . . . . 63
9.16. Counterparts . . . . . . . . . . . . . . . . . . . . . . 63
<PAGE>
ARTICLE X THE AGENT . . . . . . . . . . . . . . . . . . . . . . 63
10.1. Appointment . . . . . . . . . . . . . . . . . . . . . . 63
10.2. Powers. . . . . . . . . . . . . . . . . . . . . . . . . 63
10.3. General Immunity. . . . . . . . . . . . . . . . . . . . 64
10.4. No Responsibility for Loans, Recitals, etc. . . . . . . 64
10.5. Action on Instructions of Lenders . . . . . . . . . . . 64
10.6. Employment of Agents and Counsel. . . . . . . . . . . . 64
10.7. Reliance on Documents; Counsel. . . . . . . . . . . . . 65
10.8. Agent's Reimbursement and Indemnification . . . . . . . 65
10.9. Notice of Default . . . . . . . . . . . . . . . . . . . 65
10.10. Rights as a Lender. . . . . . . . . . . . . . . . . . . 65
10.11. Lender Credit Decision. . . . . . . . . . . . . . . . . 66
10.12. Successor Agent . . . . . . . . . . . . . . . . . . . . 66
ARTICLE XI SETOFF; RATABLE PAYMENTS . . . . . . . . . . . . . . 67
11.1. Setoff. . . . . . . . . . . . . . . . . . . . . . . . . 67
11.2. Ratable Payments. . . . . . . . . . . . . . . . . . . . 67
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS . 67
12.1. Successors and Assigns. . . . . . . . . . . . . . . . . 67
12.2. Participations. . . . . . . . . . . . . . . . . . . . . 68
12.2.1. Permitted Participants; Effect. . . . . . . . . . . 68
12.2.2. Voting Rights. . . . . . . . . . . . . . . . . . . . 68
12.2.3. Benefit of Setoff. . . . . . . . . . . . . . . . . . 68
12.3. Assignments . . . . . . . . . . . . . . . . . . . . . . 69
12.3.1. Permitted Assignments. . . . . . . . . . . . . . . . 69
12.3.2. Effect; Effective Date . . . . . . . . . . . . . . . 69
12.4. Dissemination of Information. . . . . . . . . . . . . . 69
12.5. Tax Treatment . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE XIII NOTICES. . . . . . . . . . . . . . . . . . . . . . 70
13.1. Giving Notice . . . . . . . . . . . . . . . . . . . . . 70
13.2. Change of Address . . . . . . . . . . . . . . . . . . . 70
<PAGE>
EXHIBITS
Exhibit A (Section 1) Revolving Credit Note
Exhibit B (Section 1) Swing Line Note
Exhibit C (Section 6.1(d)) Compliance Certificate
Exhibit D (Section 12.3.1) Assignment Agreement
SCHEDULES
Schedule 5.3 - Approvals and Consents
Schedule 5.5 - Pro Forma
Schedule 5.8 - Litigation and Contingent Obligations
Schedule 5.9 - Capitalization
Schedule 5.10 - ERISA
Schedule 5.14 - Brokers' Fees
Schedule 5.15 - Owned and Leased Properties; Intellectual
Property
Schedule 5.16 - Indebtedness
Schedule 5.21 - Environmental
Schedule 5.22 - Insurance
Schedule 6.16 - Investments
Schedule 6.18 - Liens
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
This Amended and Restated Credit Agreement, dated as of
September 12, 1997, is among RAWLINGS SPORTING GOODS COMPANY,
INC., a Delaware corporation, the Lenders and THE FIRST NATIONAL
BANK OF CHICAGO, individually and as Agent.
R E C I T A L S:
WHEREAS, the Borrower, the lenders named therein (the "Prior
Lenders") and the Agent entered into that certain Credit
Agreement dated as of July 8, 1994 and amended as of March 24,
1995, August 31, 1995, September 23, 1996 and May 30, 1997 (the
"Prior Credit Agreement"), pursuant to which such lenders
extended a revolving credit facility to the Borrower;
WHEREAS, as of the date hereof the aggregate of the
revolving credit commitments of the Prior Lenders under the Prior
Credit Agreement is $72,000,000;
WHEREAS, the Borrower has agreed to purchase substantially
all of the assets of USA Skate Company, Inc. (the "Acquisition")
pursuant to the Acquisition Documents; and
WHEREAS, in connection with the Acquisition, the Borrower,
the Lenders and the Agent wish to extend the maturity of the
revolving credit facility to September 1, 2002, to increase the
aggregate revolving credit commitments of the Lenders to
$90,000,000 and, concurrently, to amend and restate the Prior
Credit Agreement in its entirety.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, the Lenders and the Agent hereby
agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Acquisition" is defined in the Recitals to this Agreement.
"Acquisition Documents" means the Purchase Agreement and the
other documents and instruments delivered in connection
therewith.
"Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Loans made on the same Borrowing
Date by the Lenders to the Borrower of the same Type and, in the
case of Eurodollar Advances, for the same Interest Period.
<PAGE>
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control
with such Person. A Person shall be deemed to control another
Person if the controlling Person owns 10% or more of any class of
voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power
to direct or cause the direction of the management or policies of
the controlled Person, whether through ownership of stock, by
contract or otherwise.
"Agent" means First Chicago in its capacity as agent for the
Lenders pursuant to Article X, and not in its individual capacity
as a Lender, and any successor Agent appointed pursuant to
Article X.
"Aggregate Available Commitment" means, at any time, the
Aggregate Revolving Credit Commitment at such time, minus the
Facility Letter of Credit Obligations outstanding at such time,
minus the aggregate principal amount of the Swing Line Loans
outstanding at such time; provided, that prior to any reduction
of the Aggregate Revolving Credit Commitment pursuant to Section
2.7(b)(i), $18,000,000 of such Aggregate Available Commitment
shall be reserved to finance the purchase price for the
Acquisition.
"Aggregate Revolving Credit Commitment" means the aggregate
of the Revolving Credit Commitments of all the Lenders hereunder.
"Agreement" means this Amended and Restated Credit
Agreement, as it may be further amended, modified or restated and
in effect from time to time.
"Agreement Accounting Principles" means generally accepted
accounting principles as in effect from time to time.
"Alternate Base Rate" means, for any day, a rate of interest
per annum equal to the higher of (a) the Corporate Base Rate for
such day, and (b) the sum of the Federal Funds Effective Rate for
such day plus 1/2% per annum.
"Applicable 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 Fixed
Charge Coverage Ratio of the Borrower shall fall within the
indicated ranges:
Applicable
Fixed Charge Coverage Ratio Eurodollar Margin
Less than or Equal to 2.0:1.0 1.0%
Greater than 2.0:1.0 0.75%
<PAGE>
The Fixed Charge Coverage Ratio shall be calculated by the
Borrower as of the end of each Fiscal Quarter, commencing with
the Fiscal Quarter ending August 31, 1997, 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, as applicable. The Applicable 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 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), then the Applicable Margin
shall be equal to 1.0% until the next adjustment date. Until
adjusted as described above, the Applicable Margin shall be equal
to .75%; provided, that if the Borrower's Fixed Charge Coverage
Ratio as of August 31, 1997 is less than or equal to 2.0:1.0,
then the Applicable Margin shall be adjusted to be equal to 1.0%,
retroactive to the Restatement Date.
"Article" means an article of this Agreement unless another
document is specifically referenced.
"Asset Disposition" means any sale, transfer or other
disposition of any asset of the Borrower or any Subsidiary in a
single transaction or in a series of related transactions (other
than the sale of inventory in the ordinary course).
"Asset Transfer Documents" means that certain Assets
Transfer Agreement dated as of July 8, 1994 between Figgie and
the Borrower and the other documents and instruments executed and
delivered in connection therewith.
"Asset Transfers" means the transactions contemplated by the
Asset Transfer Documents.
"Authorized Officer" means any of the chairman, chief
executive officer or chief financial officer of the Borrower, or
another officer of the Borrower designated by any of them in
writing to the Agent, acting singly.
"Bankruptcy Code" means Title 11, United States Code,
sections 1 et seq., as the same may be amended from time to time,
and any successor thereto or replacement therefor which may be
hereafter enacted.
"Borrower" means Rawlings Sporting Goods Company, Inc., a
Delaware corporation, and its successors and assigns.
"Borrowing Date" means a date on which an Advance or a Swing
Line Loan is made or a Facility Letter of Credit is issued
hereunder.
"Borrowing Notice" is defined in Section 2.8.
<PAGE>
"Business Day" means (a) with respect to any borrowing,
payment or rate selection of Eurodollar Advances, a day (other
than a Saturday or Sunday) on which banks generally are open in
Chicago and New York for the conduct of substantially all of
their commercial lending activities and on which dealings in
United States dollars are carried on in the London interbank
market, and (b) for all other purposes, a day (other than a
Saturday or Sunday) on which banks generally are open in Chicago
for the conduct of substantially all of their commercial lending
activities.
"Capital Expenditures" means, without duplication, any
expenditures for any purchase or other acquisition for value of
any asset that is classified on a consolidated balance sheet of
the Borrower with the Subsidiaries prepared in accordance with
Agreement Accounting Principles as a fixed or capital asset.
"Capitalized Lease" of a Person means any lease of Property
by such Person as lessee which would be capitalized on a balance
sheet of such Person prepared in accordance with Agreement
Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount
of the obligations of such Person under Capitalized Leases which
would be shown as a liability on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"Change" is defined in Section 3.2.
"Change in Control" means (a) the acquisition by any Person,
or two or more Persons acting in concert, including without
limitation any acquisition effected by means of any transaction
contemplated by Section 6.12, of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934) of 23% or more of the
outstanding shares of voting stock of the Borrower (other than
any acquisition by an underwriter or underwriters made to
facilitate an underwritten public offering of the Borrower's
common stock in accordance with Section 6.10), or (b) during any
period of 25 consecutive calendar months, commencing on the date
of this Agreement, the ceasing of those individuals (the
"Continuing Directors") who (i) were directors of the Borrower on
the first day of each such period or (ii) subsequently became
directors of the Borrower and whose initial election or initial
nomination for election subsequent to that date was made or
approved by a majority of the Continuing Directors then on the
board of directors of the Borrower, to constitute a majority of
the board of directors of the Borrower; provided, that no such
event or occurrence shall be deemed to be a Change in Control for
the purposes of this Agreement upon the confirmation thereof in
writing to the Borrower by the Required Lenders.
"Closing Date" means July 8, 1994.
<PAGE>
"Closing Transactions" means, collectively, the IPO, the
Asset Transfers, the initial Loans hereunder and the Repayment.
"Code" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Commercial Letter of Credit" means a trade or commercial
Facility Letter of Credit issued by an Issuer pursuant to Section
2.20 hereof.
"Commitment" means, for each Lender, the obligation of such
Lender to make Loans and participate in Facility Letters of
Credit in an aggregate amount not at any time exceeding the
amount set forth opposite its signature below, as such amount may
be modified from time to time pursuant to the terms hereof.
"Condemnation" is defined in Section 7.8.
"Consolidated" or "consolidated", when used in connection
with any calculation, means a calculation to be determined on a
consolidated basis (as determined in accordance with Agreement
Accounting Principles) for the Borrower in accordance with
Agreement Accounting Principles.
"Consolidated Person" means, for the taxable year of
reference, each Person which is a member of the affiliated group
of the Borrower if Consolidated returns are or shall be filed for
such affiliated group for federal income tax purposes or any
combined or unitary group of which the Borrower is a member for
state income tax purposes.
"Contingent Obligation" of a Person means any agreement,
undertaking or arrangement by which such Person assumes,
guarantees, endorses, contingently agrees to purchase or provide
funds for the payment of, or otherwise becomes or is contingently
liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other
financial condition of any other Person, or otherwise assures any
creditor of such other Person against loss, including, without
limitation, any operating agreement or take-or-pay contract or
application for a Letter of Credit.
"Controlled Group" means all members of a controlled group
of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the
Borrower or any of its Subsidiaries and after giving effect to
the Closing Transactions, are treated as a single employer under
Section 414 of the Code.
"Conversion/Continuation Notice" is defined in Section 2.9.
"Corporate Base Rate" means a rate per annum equal to the
corporate base rate of interest announced by First Chicago from
<PAGE>
time to time, changing when and as said corporate base rate
changes. The Corporate Base Rate is a reference rate and does
not necessarily represent the lowest or best rate of interest
actually charged to any customer. First Chicago may make
commercial loans or other loans at rates of interest at, above or
below the Corporate Base Rate.
"Debt to Capitalization Ratio" means, at any time, the ratio
of (a) the consolidated Indebtedness of the Borrower at such time
to (b) the sum of the consolidated Indebtedness of the Borrower
plus the Borrower's Shareholders' Equity at such time.
"Default" means an event described in Article VII.
"EBITDA" means, for any applicable computation period, the
Borrower's Net Income from continuing operations, plus (a) income
and franchise taxes paid or accrued during such period, (b)
interest expenses paid or accrued during such period, and (c)
amortization and depreciation deducted in determining Net Income
for such period, determined in each case on a consolidated basis.
"Environmental Laws" is defined in Section 5.21.
"Environmental Permits" is defined in Section 5.21.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Eurodollar Advance" means an Advance which bears interest
at a Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar
Advance for the relevant Interest Period, the rate determined by
the Agent to be the rate at which deposits in U.S. dollars are
offered by First Chicago to first-class banks in the London
interbank market at approximately 11 a.m. (London time) two
Business Days prior to the first day of such Interest Period, in
the approximate amount of First Chicago's relevant Eurodollar
Advance and having a maturity approximately equal to such
Interest Period.
"Eurodollar Rate" means, with respect to a Eurodollar
Advance for the relevant Interest Period, the sum of (a) the
quotient of (i) the Eurodollar Base Rate applicable to such
Interest Period, divided by (ii) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest
Period, plus (b) the Applicable Margin. The Eurodollar Rate
shall be rounded to the next higher multiple of 1/16 of 1% if the
rate is not such a multiple.
"Facility Letter of Credit" means a Letter of Credit issued
pursuant to Section 2.20.
<PAGE>
"Facility Letter of Credit Obligations" means, as at the
time of determination thereof, the sum of (a) the Reimbursement
Obligations then outstanding and (b) the aggregate then undrawn
face amount of the then outstanding Facility Letters of Credit.
"Facility Letter of Credit Sublimit" means an aggregate
amount of $25,000,000, of which not more than $3,000,000 at any
one time outstanding shall be used by the Borrower for Standby
Letters of Credit.
"Facility Termination Date" means September 1, 2002.
"Federal Funds Effective Rate" means, for any day, an
interest rate per annum equal to the weighted average of the
rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such
day, as published for such day (or, if such day is not a Business
Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the
quotations at approximately 10 a.m. (Chicago time) on such day on
such transactions received by the Agent from three Federal funds
brokers of recognized standing selected by the Agent in its sole
discretion.
"Figgie" means Figgie International Inc., a Delaware
corporation.
"Financial Statements" is defined in Section 5.5.
"First Chicago" means The First National Bank of Chicago in
its individual capacity, and its successors.
"Fiscal Quarter" means one of the four three month
accounting periods in each Fiscal Year.
"Fiscal Year" means the twelve month accounting period
ending on August 31 of each year.
"Fixed Charge Coverage Ratio" means, for any applicable
computation period, the ratio of (a) the aggregate of (i) EBITDA
plus (ii) Rentals paid or accrued, including without limitation
lease rentals on Capitalized Leases of less than one year, plus
(iii) Minimum Royalty Payments accrued in such period to (b)
Fixed Charges.
"Fixed Charges" means, with respect to the Borrower and its
Subsidiaries on a consolidated basis, for any applicable
computation period, the sum of (a) interest expenses paid or
accrued on outstanding Indebtedness, (b) Minimum Royalty Payments
accrued in such period, (c) Rentals paid or accrued, including
without limitation lease rentals on Capitalized Leases of less
than one year and (d) principal payments with respect to
Indebtedness set forth on Schedule 5.16 or incurred pursuant to
Section 6.11(d).
<PAGE>
"Floating Rate" means, for any day, a rate per annum equal
to the Alternate Base Rate for such day, changing when and as the
Alternate Base Rate changes.
"Floating Rate Advance" means an Advance which bears
interest at the Floating Rate.
"Hazardous Materials" is defined in Section 5.21.
"Indebtedness" of a Person means such Person's (a)
obligations for borrowed money, (b) obligations representing the
deferred purchase price of Property or services (other than
accounts payable arising in the ordinary course of such Person's
business payable on terms reasonably believed by the Borrower to
be customary in the trade), (c) obligations, whether or not
assumed, secured by Liens or payable out of the proceeds or
production from Property now or hereafter owned or acquired by
such Person, (d) obligations which are evidenced by notes,
acceptances, or other instruments, (e) Capitalized Lease
Obligations, (f) Rate Hedging Obligations, (g) Contingent
Obligations, (h) obligations for which such Person is then liable
pursuant to or in respect of a Facility Letter of Credit and the
face amount of any other Letter of Credit and (i) repurchase
obligations or liabilities of such Person with respect to
Accounts or notes receivable sold by such Person. Indebtedness
shall not include any liability to Figgie pursuant to the Tax
Sharing Agreement.
"Interest Period" means, with respect to a Eurodollar
Advance, a period of one, two, three or six months commencing on
a Business Day selected by the Borrower pursuant to this
Agreement. Such Interest Period shall end on (but exclude) the
day which corresponds numerically to such date one, two, three or
six months thereafter; provided, however, that if there is no
such numerically corresponding day in such next, second, third or
sixth succeeding month, such Interest Period shall end on the
last Business Day of such next, second, third or sixth succeeding
month. If an Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall end on the next
succeeding Business Day; provided, however, that if said next
succeeding Business Day falls in a new calendar month, such
Interest Period shall end on the immediately preceding Business
Day.
"Investment" of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees
made in the ordinary course of business), extension of credit
(other than accounts receivable arising in the ordinary course of
business on terms customary in the trade), deposit account or
contribution of capital by such Person to any other Person or any
investment in, or purchase or other acquisition of, the stock,
partnership interests, notes, debentures or other securities of
any other Person made by such Person.
<PAGE>
"IPO" means the initial public offering of the common shares
of the Borrower by Figgie.
"Issuance Request" is defined in Section 2.20.4.
"Issuer" means the Lender which has been requested by the
Borrower to act as the issuer of a Facility Letter of Credit.
"Lenders" means the lending institutions listed on the
signature pages of this Agreement and their respective successors
and assigns.
"Lending Installation" means, with respect to a Lender or
the Agent, any office, branch, subsidiary or affiliate of such
Lender or the Agent.
"Letter of Credit" of a Person means a letter of credit or
similar instrument which is issued upon the application of such
Person or upon which such Person is an account party or for which
such Person is in any way liable.
"Letter of Credit Cash Collateral Account" is defined in
Section 8.1. Such account and the related cash collateralization
shall be subject to documentation satisfactory to the Agent.
"Lien" means any lien (statutory or other), mortgage,
pledge, hypothecation, assignment, deposit arrangement,
encumbrance or preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever
(including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other
title retention agreement).
"Loan" means, with respect to a Lender, such Lender's
portion of any Advance and "Loans" means, with respect to the
Lenders, the aggregate of all Advances.
"Loan Documents" means this Agreement, the Notes, the
Reimbursement Agreements and the other documents and agreements
contemplated by the Prior Credit Agreement or hereby and executed
by the Borrower in favor of the Agent or any Lender.
"Margin Stock" has the meaning assigned to that term under
Regulation U.
"Material Adverse Effect" means a material adverse effect on
(a) the business, Property, condition (financial or other),
performance, results of operations, or prospects of the Borrower
and its Subsidiaries taken as a whole, (b) the ability of the
Borrower or any Subsidiary to perform its obligations under the
Loan Documents, or (c) the validity or enforceability of any of
the Loan Documents or the rights or remedies of the Agent or the
Lenders thereunder.
<PAGE>
"Minimum Royalty Payments" means, for any applicable
computation period, the minimum payments required to be made
under the royalty and licensing agreements of the Borrower and
its Subsidiaries in such period.
"Multiemployer Plan" means a Plan coming within Section
4001(a)(3) of ERISA.
"Net Available Proceeds" means (a) with respect to any Asset
Disposition, the sum of cash or readily marketable cash
equivalents received (including by way of a cash generating sale
or discounting of a note or receivable, but excluding any other
consideration received in the form of assumption by the acquiring
Person of debt or other obligations relating to the properties or
assets so disposed of or received in any other non-cash form)
therefrom, whether at the time of such disposition or subsequent
thereto, or (b) with respect to any sale or issuance of common
stock of the Borrower or any Subsidiary, cash or readily
marketable cash equivalents received (but excluding any other
non-cash form) therefrom, whether at the time of such
disposition, sale or issuance or subsequent thereto, net, in
either case, of all legal, title and recording tax expenses,
commissions and other fees and all costs and expenses incurred
and all federal, state, local and other taxes required to be
accrued as a liability as a consequence of such transactions and,
in the case of an Asset Disposition, net of all payments made by
the Borrower or any of its Subsidiaries on any Indebtedness which
is secured by such assets pursuant to a permitted Lien upon or
with respect to such assets or which must by the terms of such
Lien, or in order to obtain a necessary consent to such Asset
Disposition, or by applicable law be repaid out of the proceeds
from such Asset Disposition.
"Net Income" means, for any computation period, with respect
to the Borrower on a consolidated basis with its Subsidiaries
(other than any Subsidiary which is restricted from declaring or
paying dividends or otherwise advancing funds to its parent
whether by contract or otherwise), cumulative net income earned
during such period in accordance with Agreement Accounting
Principles.
"Note" means any one or more of the Revolving Credit Notes
or the Swing Line Notes.
"Notice of Assignment" is defined in Section 12.3.2.
"Obligations" means all unpaid principal of and accrued and
unpaid interest on the Notes, the Facility Letter of Credit
Obligations and all other liabilities (if any), whether actual or
contingent, of the Borrower with respect to Facility Letters of
Credit, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower
to the Lenders or to any Lender, the Agent or any indemnified
party hereunder arising under any of the Loan Documents and any
Rate <PAGE> Hedging Obligations or foreign exchange contracts of the
Borrower owing to the Agent or any Lender.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last day of each February, May,
August and November.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"Person" means any natural person, corporation, firm, joint
venture, partnership, association, enterprise, trust or other
entity or organization, or any government or political
subdivision or any agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan, as defined in
Section 3(2) of ERISA, as to which the Borrower or any member of
the Controlled Group may have any liability.
"Prior Credit Agreement" is defined in the Recitals to this
Agreement.
"Prior Lenders" is defined in the Recitals to this
Agreement.
"Property" of a Person means any and all property, whether
real, personal, tangible, intangible, or mixed, of such Person,
or other assets owned, leased or operated by such Person.
"Pro Forma" is defined in Section 5.5(b).
"pro-rata" means, when used with respect to a Lender, and
any described aggregate or total amount, an amount equal to such
Lender's pro-rata share or portion based on its percentage of the
Aggregate Revolving Credit Commitment or if the Aggregate
Revolving Credit Commitment has been terminated, its percentage
of the aggregate principal amount of outstanding Obligations.
"Purchase" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement,
by which the Borrower or any of its Subsidiaries (a) acquires any
going business or all or substantially all of the assets of any
firm, corporation or division thereof, whether through purchase
of assets, merger or otherwise, or (b) directly or indirectly
acquires (in one transaction or as the most recent transaction in
a series of transactions) at least a majority (in number of
votes) of the securities of a corporation which have ordinary
voting power for the election of directors (other than securities
having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the
outstanding partnership interests of a partnership.
<PAGE>
"Purchase Agreement" means that certain Asset Purchase
Agreement dated September 10, 1997 among Les Equipements Sportifs
Davtec Inc., USA Skate Co., Inc., USA Skate Corporation,
California Pro Sports, Inc., Rawlings Canada, Inc. and the
Borrower.
"Purchasers" is defined in Section 12.3.1.
"Rate Hedging Obligations" of a Person means any and all
obligations of such Person, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and
substitutions therefor), under (a) any and all agreements,
devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange
rates or forward rates applicable to such party's assets,
liabilities or exchange transactions, including, but not limited
to, dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate
cap or collar protection agreements, forward rate currency or
interest rate options, puts and warrants, and (b) any and all
cancellations, buybacks, reversals, terminations or assignments
of any of the foregoing.
"Rate Swap Agreements" means interest rate swap, exchange,
cap, hedging or similar interest rate protection agreements
permitted or required by Section 6.24 in form and substance and,
where applicable with swap parties, acceptable to the Agent.
"Rawlings Business" means the Borrower's predecessor
business consisting of Rawlings Sporting Goods Company, a
division of Figgie, and certain related assets of other
subsidiaries of Figgie.
"Regulation D" means Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect and
any successor thereto or other regulation or official
interpretation of said Board of Governors relating to reserve
requirements applicable to depositary institutions.
"Regulation G" means Regulation G of the Board of Governors
of the Federal Reserve System as from time to time in effect and
shall include any successor or other regulation or official
interpretation of said Board of Governors relating to the
extension of credit by Persons other than banks, brokers and
dealers for the purpose of purchasing or carrying margin stocks
applicable to such Persons.
"Regulation T" means Regulation T of the Board of Governors
of the Federal Reserve System as from time to time in effect and
shall include any successor or other regulation or official
interpretation of such Board of Governors relating to the
extension of credit by securities brokers and dealers for the
purpose of purchasing or carrying margin stocks applicable to
such Persons.
<PAGE>
"Regulation U" means Regulation U of the Board of Governors
of the Federal Reserve System as from time to time in effect and
any successor or other regulation or official interpretation of
said Board of Governors relating to the extension of credit by
banks for the purpose of purchasing or carrying margin stocks
applicable to such Persons.
"Regulation X" means Regulation X of the Board of Governors
of the Federal Reserve System as from time to time in effect and
shall include any successor or other regulation or official
interpretation of said Board of Governors relating to the
extension of credit by the specified lenders for the purpose of
purchasing or carrying margin stocks applicable to such Persons.
"Reimbursement Agreement" means a letter of credit
application and reimbursement agreement in such form as the
Issuer may from time to time employ in the ordinary course of
business.
"Reimbursement Obligations" means, at any time, the
aggregate (without duplication) of the Obligations of the
Borrower to the Lenders, the Issuer and/or the Agent in respect
of all unreimbursed payments or disbursements made by the
Lenders, the Issuer and/or the Agent under or in respect of draws
made under the Facility Letters of Credit.
"Release" is defined in the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, 42 U.S.C.
39601 et seq.
"Rentals" of a Person means the aggregate fixed amounts
payable by such Person under any lease of Property including
without limitation Capitalized Leases having an original term
(including any required renewals or any renewals at the option of
the lessor or lessee) of one year or more.
"Repayment" means the repayment on the Closing Date of that
certain $35,000,000 Note dated July 8, 1994 by the Borrower to
Figgie.
"Reportable Event" means a reportable event as defined in
Section 4043 of ERISA and the regulations issued under such
section, with respect to a Plan, excluding, however, such events
as to which the PBGC has by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event; provided, that a failure to meet
the minimum funding standard of Section 412 of the Code and of
Section 302 of ERISA shall be a Reportable Event regardless of
the issuance of any such waiver of the notice requirement in
accordance with Section 4043(a) of ERISA.
"Required Lenders" means Lenders in the aggregate having at
least 66-2/3% of the Aggregate Revolving Credit Commitment or, if
the Aggregate Revolving Credit Commitment has been terminated,
<PAGE>
Lenders in the aggregate holding at least 66-2/3% of the sum of
(a) the aggregate unpaid principal amount of the outstanding
Loans plus (b) the aggregate amount of the outstanding Facility
Letter of Credit Obligations.
"Reserve Requirement" means, with respect to an Interest
Period, the maximum aggregate reserve requirement (including all
basic, supplemental, marginal and other reserves) which is
imposed under Regulation D on new non-personal time deposits of
$100,000 or more with a maturity equal to that of such Interest
Period.
"Restatement Date" means September 12, 1997.
"Restatement Documents" means the Acquisition Documents and
this Agreement and the other documents delivered in connection
therewith.
"Restatement Transactions" is defined in Section 4.1(d).
"Revolving Credit Advance" means an Advance made by the
Lenders to the Borrower pursuant to Section 2.1.
"Revolving Credit Commitment" means, for each Lender, the
obligation of such Lender to make Loans to the Borrower pursuant
to Section 2.1 in an aggregate amount at any one time outstanding
not exceeding the amount set forth opposite its name under the
heading "Revolving Credit Commitment" on the signature page
hereto, as such amount may be modified or reduced from time to
time pursuant to the terms of this Agreement.
"Revolving Credit Loan" means, with respect to a Lender,
such Lender's pro-rata portion of all Revolving Credit Advances.
"Revolving Credit Note" means a promissory note in
substantially the form of Exhibit A hereto, with appropriate
insertions, duly executed and delivered to the Agent by the
Borrower and payable to the order of a Lender in the amount of
its Revolving Credit Commitment, including any amendment,
modification, renewal or replacement of such promissory note.
"Risk-Based Capital Guidelines" is defined in Section 3.2.
"Section" means a numbered section of this Agreement, unless
another document is specifically referenced.
"Shareholders' Equity" means aggregate shareholders' equity
of the Borrower determined in accordance with Agreement
Accounting Principles.
"Single Employer Plan" means a Plan subject to Title IV of
ERISA, other than a Multiemployer Plan.
<PAGE>
"Solvent" means, when used with respect to a Person, that
(a) the fair saleable value of the assets of such Person is in
excess of the total amount of the present value of its
liabilities (including for purposes of this definition all
liabilities (including loss reserves as determined by the
Borrower), whether or not reflected on a balance sheet prepared
in accordance with Agreement Accounting Principles and whether
direct or indirect, fixed or contingent, secured or unsecured,
disputed or undisputed), (b) such Person is able to pay its debts
or obligations in the ordinary course as they mature and (c) such
Person does not have unreasonably small capital to carry out its
business as conducted and as proposed to be conducted.
"Solvency" shall have a correlative meaning.
"Standby Letter of Credit" means a Facility Letter of Credit
which is not a Commercial Letter of Credit.
"Subsidiary" of a Person means (a) any corporation more than
50% of the outstanding securities having ordinary voting power of
which shall at the time be owned or controlled, directly or
indirectly, by such Person or by one or more of its Subsidiaries
or by such Person and one or more of its Subsidiaries, or (b) any
partnership, association, joint venture or similar business
organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references
herein to a "Subsidiary" shall mean a Subsidiary of the Borrower.
"Substantial Portion" means, with respect to the Property of
the Borrower and its Subsidiaries, Property which (a) represents
more than 10% of the consolidated assets of the Borrower, as
would be shown in the consolidated financial statements of the
Borrower as at the end of the Fiscal Quarter next preceding the
date on which such determination is made, or (b) is responsible
for more than 10% of the consolidated net sales or of the Net
Income of the Borrower for the 12-month period ending as of the
end of the Fiscal Quarter next preceding the date of
determination.
"Swing Line Bank" means First Chicago or any other Lender as
a successor Swing Line Bank.
"Swing Line Commitment" means the obligations of the Swing
Line Bank to make Swing Line Loans up to a maximum principal
amount of $5,000,000 at any one time outstanding.
"Swing Line Loan" means a swing line loan made available to
the Borrower by the Swing Line Bank pursuant to Section 2.21
hereof.
"Swing Line Note" means a promissory note, in substantially
the form of Exhibit B hereto, duly executed by the Borrower and
payable to the order of the Swing Line Bank in the amount of its
<PAGE>
Swing Line Commitment, including any amendment, restatement,
modification, renewal or replacement of such Swing Line Note.
"Tangible Net Worth" means at any date (a) the consolidated
common stockholders' equity of the Borrower determined in
accordance with Agreement Accounting Principles but including
preferred stock and excluding any reductions therein resulting
from non-cash losses from discontinued operations, less (b) the
amount of the unamortized debt discount and expense, unamortized
deferred charges, goodwill, patents, trademarks, service marks,
trade names, copyrights, organization or developmental expenses
and other intangible items of the Borrower and its Subsidiaries,
other than goodwill acquired by the Borrower pursuant to the
Acquisition in an amount not to exceed $8,000,000.
"Tax Sharing Agreement" means that certain Tax Sharing and
Separation Agreement dated as of July 8, 1994 between Figgie and
the Borrower.
"Termination Event" means, with respect to a Plan which is
subject to Title IV of ERISA, (a) a Reportable Event, (b) the
withdrawal of the Borrower or any other member of the Controlled
Group from such Plan during a plan year in which the Borrower or
any other member of the Controlled Group was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA or was deemed
such under Section 4066 of ERISA, (c) the termination of such
Plan or the filing of a notice of intent to terminate such Plan
under Section 4041 of ERISA, or (d) the institution by the PBGC
of proceedings to terminate such Plan or the occurrence of any
event or condition which constitutes grounds under Section 4042
of ERISA for the termination of, or appointment of a trustee to
administer, such Plan.
"Total Capitalization" means, at any time, the sum of the
Borrower's consolidated Indebtedness and its Shareholders Equity
at such time, in each case determined in accordance with
Agreement Accounting Principles.
"Total Liabilities" means all liabilities of the Borrower,
on a consolidated basis, reflected on a balance sheet prepared in
accordance with Agreement Accounting Principles, including,
without limitation, all Indebtedness.
"Transaction Documents" means the Prior Credit Agreement,
the documents and instruments delivered in connection therewith
and the Asset Transfer Documents.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Advance, its nature as a
Floating Rate Advance or Eurodollar Advance.
<PAGE>
"Unfunded Liability" means the amount (if any) by which the
present value of all vested and unvested accrued benefits under a
Single Employer Plan exceeds the fair market value of assets
allocable to such benefits, all determined as of the then most
recent valuation date for such Plan using PBGC actuarial
assumptions for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse
of time or the giving of notice, or both, would constitute a
Default.
"Wholly-Owned Subsidiary" of a Person means (a) any
Subsidiary all of the outstanding voting securities of which
shall at the time be owned or controlled, directly or indirectly,
by such Person or one or more Wholly-Owned Subsidiaries of such
Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (b) any partnership, association,
joint venture or similar business organization 100% of the
ownership interests having ordinary voting power of which shall
at the time be so owned or controlled.
The foregoing definitions shall be equally applicable to
both the singular and plural forms of the defined terms.
ARTICLE II
THE CREDITS
2.1. Revolving Credit Advances. From and including the
date hereof to but excluding the Facility Termination Date, each
Lender severally (and not jointly) agrees, on the terms and
conditions set forth in this Agreement, to make Revolving Credit
Advances to the Borrower from time to time in amounts not to
exceed in the aggregate at any one time outstanding the amount of
its pro-rata share of the Aggregate Available Commitment existing
at such time. Subject to the terms of this Agreement, the
Borrower may borrow, repay and reborrow Revolving Credit Advances
at any time prior to the Facility Termination Date.
(b) The Borrower hereby agrees that if at any time the
aggregate balance of the Revolving Credit Loans, the Swing Line
Loans and the Facility Letter of Credit Obligations exceeds the
Aggregate Revolving Credit Commitment (whether as a result of
reductions in the Aggregate Revolving Credit Commitment pursuant
to Section 2.4(b) or Section 2.7 or otherwise), the Borrower
shall repay immediately its then outstanding Revolving Credit
Loans in such amount as may be necessary to eliminate such
excess; provided, that if an excess remains after repayment of
all outstanding Revolving Credit Loans, then the Borrower shall
cash collateralize the Facility Letter of Credit Obligations by
depositing into the Letter of Credit Cash Collateral Account such
amount as may be necessary to eliminate such excess.
<PAGE>
(c) The Borrower's obligation to pay the principal of,
and interest on, the Revolving Credit Loans shall be evidenced by
the Revolving Credit Notes. Although the Revolving Credit Notes
shall be dated the date of the initial Revolving Credit Advance,
interest in respect thereof shall be payable only for the periods
during which the Revolving Credit Loans evidenced thereby are
outstanding and, although the stated amount of each Revolving
Credit Note shall be equal to the applicable Lender's Revolving
Credit Commitment, each Revolving Credit Note shall be
enforceable, with respect to the Borrower's obligation to pay the
principal amount thereof, only to the extent of the unpaid
principal amount of the Revolving Credit Loan at the time
evidenced thereby.
(d) Each Revolving Credit Advance included in the
Revolving Credit Loan shall mature, and the principal amount
thereof and the unpaid accrued interest thereon shall be due and
payable, on the Facility Termination Date.
2.2. Ratable Loans. Each Advance hereunder shall consist of
Loans made from the several Lenders ratably in proportion to the
ratio that their respective Revolving Credit Commitments bear to
the Aggregate Revolving Credit Commitment.
2.3. Types of Advances. The Advances may be Floating Rate
Advances or Eurodollar Advances, or a combination thereof,
selected by the Borrower in accordance with Sections 2.8 and 2.9.
2.4. Commitment Fee; Reductions in Aggregate Revolving
Credit Commitment. The Borrower agrees to pay to the Agent for
the account of each Lender a commitment fee of thirty basis
points (.30%) per annum on such Lender's pro-rata share of (i)
the Aggregate Revolving Credit Commitment, minus (ii) the sum of
the outstanding balance of the Revolving Credit Loans and the
Facility Letter of Credit Obligations, calculated on a daily
basis from the date hereof to and including the Facility
Termination Date, payable on each Payment Date hereafter and on
the Facility Termination Date. All accrued commitment fees shall
be payable on the effective date of any termination of the
obligations of the Lenders to make Loans hereunder.
(b) The Borrower may permanently reduce the Aggregate
Revolving Credit Commitment in whole, or in part ratably among
the Lenders in a minimum aggregate amount of $1,000,000 or any
integral multiple of $100,000 in excess thereof, upon at least
three (3) Business Days' written notice to the Agent, which
notice shall specify the amount of any such reduction; provided,
however, that the amount of the Aggregate Revolving Credit
Commitment may not be reduced below the sum of (i) the aggregate
principal amount of the outstanding Revolving Credit Advances,
plus (ii) the aggregate amount of the outstanding Facility Letter
of Credit Obligations, plus (iii) the aggregate principal amount
of the outstanding Swing Line Loans. Such reductions shall be in
addition to reductions occurring pursuant to Section 2.7.
<PAGE>
2.5 Minimum Amount of Each Advance. Each Eurodollar
Advance shall be in the minimum amount of $1,000,000 (and in
multiples of $250,000 if in excess thereof), and each Floating
Rate Advance shall be in the minimum amount of $250,000 (and in
multiples of $100,000 if in excess thereof); provided, however,
that (a) any Floating Rate Advance may be in the amount of the
unused Aggregate Revolving Credit Commitment and (b) in no event
shall more than eight (8) Eurodollar Advances be permitted to be
outstanding at any time.
2.6 Optional Principal Payments. The Borrower may from
time to time pay, without penalty or premium, all outstanding
Floating Rate Advances, or, in a minimum aggregate amount of
$250,000 or any integral multiple of $100,000 in excess thereof,
any portion of the outstanding Floating Rate Advances upon two
Business Days' prior notice to the Agent. A Eurodollar Advance
may not be paid prior to the last day of the applicable Interest
Period.
2.7 Mandatory Commitment Reductions. The Aggregate
Revolving Credit Commitment shall be automatically and
permanently reduced by the following amounts on the following
dates:
Date Reduction Amount
September 1, 1998 $ 4,000,000
September 1, 1999 $ 5,000,000
September 1, 2000 $ 6,000,000
September 1, 2001 $ 7,000,000
September 1, 2002 $68,000,000 or such other
amount as shall
then be
outstanding
(b) The Aggregate Revolving Credit Commitment shall also be
automatically and permanently reduced in the amounts and at the
times set forth below:
(i) in the amount of $18,000,000, (A) in the event
that the Acquisition is not consummated by the close of
business on December 31, 1997, as of such date, or (B) in
the event that the Purchase Agreement is terminated prior to
December 31, 1997, as of the date of such termination;
(ii) within two (2) Business Days after the end of each
Fiscal Quarter, in an amount equal to 100% of the aggregate
Net Available Proceeds realized upon all Asset Dispositions
made by the Borrower or any Subsidiary; provided, that no
such reduction shall occur with respect to amounts less than
or equal to $500,000 in the aggregate in each Fiscal Year;
and
(iii) within two (2) Business Days after the receipt
thereof by the Borrower, in an amount equal to 100% of the
aggregate Net Available Proceeds realized upon all issuances
<PAGE>
of common stock of the Borrower or any Subsidiary, except to
the extent made pursuant to clause (i) or (ii) of Section
6.10.
(c) Mandatory commitment reductions under this Section
2.7 shall be cumulative and in addition to reductions occurring
pursuant to Section 2.4(b). Any mandatory commitment reductions
under Section 2.7(b) or voluntary commitment reduction pursuant
to Section 2.4(b) shall be applied to the mandatory commitment
reductions required to be made pursuant to Section 2.7(a) in the
inverse order of maturity.
(d) Any reduction in the Aggregate Revolving Credit
Commitment pursuant to this Section 2.7 or otherwise shall
ratably reduce the Revolving Credit Commitment of each Lender.
2.8 Method of Selecting Types and Interest Periods for New
Advances. The Borrower shall select the Type of Advance and, in
the case of each Eurodollar Advance, the Interest Period
applicable to each Advance from time to time. The Borrower shall
give the Agent irrevocable notice (a "Borrowing Notice") not
later than 10:00 a.m. (Chicago time) at least one (1) Business
Day before the Borrowing Date of each Floating Rate Advance and
at least three (3) Business Days before the Borrowing Date for
each Eurodollar Advance, specifying:
(a) the Borrowing Date, which shall be a Business Day,
of such Advance;
(b) the aggregate amount of such Advance;
(c) the Type of Advance selected; and
(d) in the case of each Eurodollar Advance, the
Interest Period applicable thereto, which shall end on or prior
to the Facility Termination Date.
Not later than noon (Chicago time) on each Borrowing Date, each
Lender shall make available its Loan or Loans, in funds
immediately available in Chicago, to the Agent at its address
specified pursuant to Article XIII. The Agent will make the
funds so received from the Lenders available to the Borrower at
the Agent's aforesaid address.
2.9 Conversion and Continuation of Outstanding Advances.
Floating Rate Advances shall continue as Floating Rate Advances
unless and until such Floating Rate Advances are converted by the
Borrower into Eurodollar Advances. Each Eurodollar Advance of
any Type shall continue as a Eurodollar Advance of such Type
until the end of the then applicable Interest Period therefor, at
which time such Eurodollar Advance shall be automatically
converted into a Floating Rate Advance unless the Borrower shall
have given the Agent a Conversion/Continuation Notice requesting
that, at the end <PAGE> of such Interest Period, such Eurodollar Advance
continue as a Eurodollar Advance of such Type for the same or
another Interest Period. Subject to the terms of Section 2.5,
the Borrower may elect from time to time to convert all or any
part of an Advance of any Type into any other Type or Types of
Advances; provided, however, that any conversion of any
Eurodollar Advance shall be made on, and only on, the last day of
the Interest Period applicable thereto. The Borrower shall give
the Agent irrevocable notice (a "Conversion/Continuation Notice")
of each conversion of a Floating Rate Advance or continuation of
a Eurodollar Advance not later than 10:00 a.m. (Chicago time) at
least one (1) Business Day, in the case of a conversion into a
Floating Rate Advance, or at least three (3) Business Days, in
the case of a conversion into or continuation of a Eurodollar
Advance, prior to the date of the requested conversion or
continuation, specifying:
(a) the requested date which shall be a Business Day,
of such conversion or continuation;
(b) the aggregate amount and Type of the Advance which
is to be converted or continued; and
(c) the amount and Type(s) of Advance(s) into which
such Advance is to be converted or continued and, in the
case of a conversion into or continuation of a Eurodollar
Advance, the duration of the Interest Period applicable
thereto, which shall end on or prior to the Facility
Termination Date.
2.10 Changes in Interest Rate, etc. Each Floating Rate
Advance shall bear interest at the Floating Rate from and
including the date of such Advance or the date on which such
Advance was converted into a Floating Rate Advance to (but not
including) the date on which such Floating Rate Advance is paid
or converted to a Eurodollar Advance. Changes in the rate of
interest on that portion of any Advance maintained as a Floating
Rate Advance will take effect simultaneously with each change in
the Alternate Base Rate. Each Eurodollar Advance shall bear
interest from and including the first day of the Interest Period
applicable thereto to, but not including, the last day of such
Interest Period at the interest rate determined as applicable to
such Eurodollar Advance. No Interest Period may end after the
Facility Termination Date. The Borrower shall select Interest
Periods so that it is not necessary to repay any portion of a
Eurodollar Advance prior to the last day of the applicable
Interest Period in order to make a mandatory repayment required
pursuant to Section 2.1(b) in respect of a reduction in the
Aggregate Revolving Credit Commitment pursuant to Section 2.7(a).
2.11 Rates Applicable After Default. Notwithstanding
anything to the contrary contained in Section 2.8 or 2.9, no
Advance may be made as, converted into or continued as a
Eurodollar Advance (except with the consent of the Agent and the
Required Lenders) when any Default or Unmatured Default or Change
in Control <PAGE> has occurred and is continuing. During the
continuance of a Default and following the occurrence of a Change
in Control, the Required Lenders may, at their option, by notice
to the Borrower (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 8.2
requiring unanimous consent of the Lenders to changes in interest
rates), declare that after a Default has occurred and for the
duration of time during which such Default shall be continuing or
after the occurrence of a Change in Control, each Eurodollar
Advance and Floating Rate Advance shall bear interest at a rate
per annum equal to the rate otherwise applicable plus three
percent (3%) per annum.
2.12 Method of Payment. All payments of the Obligations
hereunder shall be made, without setoff, deduction or
counterclaim, in immediately available funds to the Agent at the
Agent's address specified pursuant to Article XIII, or at any
other Lending Installation of the Agent specified in writing by
the Agent to the Borrower, by noon (Chicago time) on the date
when due and shall be applied ratably by the Agent among the
Lenders. If the Borrower shall be required by law to deduct any
such amounts from or in respect of any sum payable hereunder to
the Agent or any Lender, then the sum payable hereunder shall be
increased so that, after making all required deductions, the
Agent or such Lender receives an amount equal to the sum it would
have received had no such deduction been made, and the Borrower
shall indemnify the Agent and such Lender for taxes, assessments
and governmental charges imposed by any jurisdiction on account
of amounts paid or payable pursuant to this sentence. Within 30
days after the date of any payment of any such amount withheld by
the Borrower in respect of any payment to the Agent or any
Lender, the Borrower shall furnish to the Agent or such Lender
the original or certified copy of a receipt evidencing payment
thereof. Each payment delivered to the Agent for the account of
any Lender shall be delivered promptly by the Agent to such
Lender in the same type of funds that the Agent received at its
address specified pursuant to Article XIII or at any Lending
Installation specified in a notice received by the Agent from
such Lender. The Agent is hereby authorized to charge the
account of the Borrower which is designated by the Borrower
maintained with First Chicago for each payment of principal,
interest and fees as it becomes due hereunder; provided, that
after a Default has occurred and is continuing or after the
occurrence of a Change in Control, the Agent may so charge any
account of the Borrower without such designation. So long as (a)
no Default shall have occurred and be continuing or (b) no Change
in Control has occurred, the Borrower may designate how each
payment is to be applied.
2.13 Notes; Telephonic Notices. Each Lender is hereby
authorized to record the principal amount of each of its Loans
and each repayment on the schedule attached to its Revolving
Credit Note; provided, however, that neither the failure to so
record nor any error in such recordation shall affect the
Borrower's obligations under such Note. The Borrower hereby
authorizes the <PAGE> Lenders and the Agent to extend, convert or
continue Advances, effect selections of Types of Advances and to
transfer funds based on telephonic notices made by any person or
persons the Agent or any Lender in good faith believes to be
acting on behalf of the Borrower. The Borrower agrees to deliver
promptly to the Agent a written confirmation, if such
confirmation is requested by the Agent or any Lender, of each
telephonic notice signed by an Authorized Officer. If the
written confirmation differs in any material respect from the
action taken by the Agent and the Lenders, the records of the
Agent and the Lenders shall govern absent manifest error.
2.14 Interest Payment Dates; Interest and Fee Basis.
Interest accrued on each Floating Rate Advance shall be payable
on each Payment Date, commencing with the first such date to
occur after the date hereof, on any date on which a Floating Rate
Advance is prepaid, whether due to acceleration or otherwise, and
at maturity. Interest accrued on that portion of the outstanding
principal amount of any Floating Rate Advance converted into a
Eurodollar Advance on a day other than a Payment Date shall be
payable on the next Payment Date. Interest accrued on each
Eurodollar Advance shall be payable on the last day of its
applicable Interest Period, on any date on which the Eurodollar
Advance is prepaid, whether by acceleration or otherwise, and at
maturity. Interest accrued on each Eurodollar Advance having an
Interest Period longer than three months shall also be payable on
the last day of each three-month interval during such Interest
Period. Interest and commitment fees shall be calculated for
actual days elapsed on the basis of a 360-day year. Interest
shall be payable for the day an Advance is made but not for the
day of any payment on the amount paid if payment is received
prior to noon (Chicago time) at the place of payment. If any
payment of principal of or interest on an Advance shall become
due on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day and, in the case of a
principal payment, such extension of time shall be included in
computing interest in connection with such payment.
2.15 Notification of Advances, Interest Rates, Prepayments
and Commitment Reductions. Promptly after receipt thereof, the
Agent will notify each Lender of the contents of each Aggregate
Revolving Credit Commitment reduction notice, Borrowing Notice,
Conversion/Continuation Notice, Issuance Request and repayment
notice received by it hereunder. The Agent will notify each
Lender of the interest rate applicable to each Eurodollar Advance
promptly upon determination of such interest rate and will give
each Lender prompt notice of each change in the Alternate Base
Rate.
2.16 Lending Installations. Each Lender may book its Loans
at any Lending Installation selected by such Lender and may
change its Lending Installation from time to time. All terms of
this Agreement shall apply to any such Lending Installation and
the Notes shall be deemed held by each Lender for the benefit of
such <PAGE> Lending Installation. Each Lender may, by written or
telecopy notice to the Agent and the Borrower, designate a
Lending Installation through which Loans will be made by it and
for whose account Loan payments are to be made.
2.17 Non-Receipt of Funds by the Agent. Unless the Borrower
or a Lender, as the case may be, notifies the Agent prior to the
date on which it is scheduled to make payment to the Agent of (a)
in the case of a Lender, the proceeds of a Loan, or (b) in the
case of the Borrower, a payment of principal, interest or fees to
the Agent for the account of the Lenders, that it does not intend
to make such payment, the Agent may assume that such payment has
been made. The Agent may, but shall not be obligated to, make
the amount of such payment available to the intended recipient in
reliance upon such assumption. If the Borrower has not in fact
made such payment to the Agent, the Lenders shall, on demand by
the Agent, repay to the Agent the amount so made available
together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available
by the Agent until the date the Agent recovers such amount at a
rate per annum equal to the Federal Funds Effective Rate for such
day. If any Lender has not in fact made such payment to the
Agent, such Lender or the Borrower shall, on demand by the Agent,
repay to the Agent the amount so made available together with
interest thereon in respect of each day during the period
commencing on the date such amount was so made available by the
Agent until the date the Agent recovers such amount at a rate per
annum equal to (a) in the case of payment by a Lender, the
Federal Funds Effective Rate for such day, or (b) in the case of
payment by the Borrower, the interest rate applicable to the
relevant Loan.
2.18 Withholding Tax Exemption. At least five Business Days
prior to the first date on which interest or fees are payable
hereunder for the account of any Lender, each Lender that is not
incorporated under the laws of the United States of America, or a
state thereof, agrees that it will deliver to each of the
Borrower and the Agent two duly completed copies of United States
Internal Revenue Service Forms 1001 or 4224 and W-8, certifying
in either case that such Lender is entitled to receive payments
under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes. Each
Lender which so delivers a Form 1001 or 4224 and Form W-8 further
undertakes to deliver to each of the Borrower and the Agent two
additional copies of such form (or a successor form) on or before
the date that such form expires (currently, three successive
calendar years for Form 1001, one calendar year for Form 4224) or
becomes obsolete or after the occurrence of any event requiring a
change in the most recent forms so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be
reasonably requested by the Borrower or the Agent, in each case
certifying that such Lender is entitled to receive payments under
this Agreement and the Notes without deduction or withholding of
any United States federal income taxes, unless an event
(including, without limitation, any change in <PAGE> treaty, law or
regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Lender from duly
completing and delivering any such form with respect to it and
such Lender advises the Borrower and the Agent that it is not
capable of receiving payments without any deduction or
withholding of United States federal income tax.
2.19 Agent's Fees. The Borrower shall pay to the Agent
those fees, in addition to the commitment fees referenced in
Section 2.4(a), in the amounts and at the times separately agreed
to between the Agent and the Borrower.
2.20 Facility Letters of Credit.
2.20.1 Issuance of Facility Letters of Credit.
From and after the date hereof, the Issuer agrees, upon the
terms and conditions set forth in this Agreement, to issue
at the request and for the account of the Borrower, one or
more Facility Letters of Credit; provided, however, that the
Issuer shall not be under any obligation to issue, and shall
not issue, any Facility Letter of Credit if (i) any order,
judgment or decree of any governmental authority or other
regulatory body with jurisdiction over the Issuer shall
purport by its terms to enjoin or restrain such Issuer from
issuing such Facility Letter of Credit, or any law or
governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law) from any
governmental authority or other regulatory body with
jurisdiction over the Issuer shall prohibit, or request that
the Issuer refrain from, the issuance of Facility Letters of
Credit in particular or shall impose upon the Issuer with
respect to any Facility Letter of Credit any restriction or
reserve or capital requirement (for which the Issuer is not
otherwise compensated) or any unreimbursed loss, cost or
expense which was not applicable, in effect and known to the
Issuer as of the date of this Agreement and which the Issuer
in good faith deems material to it; (ii) one or more of the
conditions to such issuance contained in Section 4.2 is not
then satisfied; or (iii) after giving effect to such
issuance, the aggregate outstanding amount of the Facility
Letter of Credit Obligations would exceed the Facility
Letter of Credit Sublimit; provided, further, that if any
circumstance set forth in clause (i) is applicable, then, at
the Borrower's request, another Lender may serve as Issuer
and issue Facility Letters of Credit so long as none of
clauses (i), (ii), or (iii) shall be applicable at the time
of each such issuance by such Issuer.
(b) In no event shall: (i) the aggregate amount of
the Facility Letter of Credit Obligations at any time exceed
the Facility Letter of Credit Sublimit; (ii) the aggregate
amount of Facility Letter of Credit Obligations in respect
of Standby <PAGE> Letters of Credit exceed $3,000,000; (iii) the
sum at any time of (A) the aggregate amount of Facility
Letter of Credit Obligations, (B) the aggregate principal
balance of outstanding Revolving Credit Advances and (C) the
aggregate principal balance of Swing Line Loans exceed the
amount of the Aggregate Revolving Credit Commitment; or (iv)
the expiration date of any Facility Letter of Credit
(including, without limitation, Facility Letters of Credit
issued with an automatic "evergreen" provision providing for
renewal absent advance notice by the applicable Borrower or
the Issuer), or the date for payment of any draft presented
thereunder and accepted by the Issuer, be later than
September 1, 2002.
2.20.2 Participating Interests. Immediately upon
the issuance by the Issuer of a Facility Letter of Credit in
accordance with Section 2.20.4, each Lender shall be deemed
to have irrevocably and unconditionally purchased and
received from the Issuer, without recourse, representation
or warranty, an undivided participation interest equal to
its pro-rata share of the Aggregate Revolving Credit
Commitment of the principal amount of such Facility Letter
of Credit and each draw paid by the Issuer thereunder. Each
Lender's obligation to pay its proportionate share of all
draws under the Facility Letters of Credit, absent gross
negligence or willful misconduct by the Issuer in honoring
any such draw, shall be absolute, unconditional and
irrevocable and in each case shall be made without
counterclaim or set-off by such Lender.
2.20.3 Facility Letter of Credit Reimbursement
Obligations. (a) The Borrower agrees to pay to the Issuer
of a Facility Letter of Credit (i) on each date that any
amount is drawn under each Facility Letter of Credit a sum
(and interest on such sum as provided in clause (ii) below)
equal to the amount so drawn plus all other charges and
expenses with respect thereto specified in Section 2.20.6 or
in the applicable Reimbursement Agreement and (ii) interest
on any and all amounts remaining unpaid under this Section
2.20.3 until payment in full at the Floating Rate plus the
margin specified in Section 2.11. The Borrower agrees to
pay to the Issuer the amount of all Facility Letter of
Credit Reimbursement Obligations owing in respect of any
Facility Letter of Credit immediately when due, under all
circumstances, including, without limitation, any of the
following circumstances: (a) any lack of validity or
enforceability of this Agreement or any of the Loan
Documents; (b) the existence of any claim, set-off, defense
or other right which the Borrower may have at any time
against a beneficiary named in a Facility Letter of Credit,
any transferee of any Facility Letter of Credit (or any
Person for whom any such transferee may be acting), any
Lender or any other Person, whether in connection with this
Agreement, any Facility Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including
any underlying <PAGE> transaction between the Borrower and the
beneficiary named in any Facility Letter of Credit); (c) the
validity, sufficiency or genuineness of any document which
the Issuer has determined in good faith complies on its face
with the terms of the applicable Facility Letter of Credit,
even if such document should later prove to have been
forged, fraudulent, invalid or insufficient in any respect
or any statement therein shall have been untrue or
inaccurate in any respect; or (d) the surrender or
impairment of any security for the performance or observance
of any of the terms hereof.
(b) Notwithstanding any provisions to the contrary in
any Reimbursement Agreement, the Borrower agrees to
reimburse the Issuer for amounts which the Issuer pays under
such Facility Letter of Credit no later than the time
specified in this Agreement. If the Borrower does not pay
any such Facility Letter of Credit Reimbursement Obligations
when due, the Borrower shall be deemed to have immediately
requested that the Lenders make a Floating Rate Advance
under this Agreement in a principal amount equal to such
unreimbursed Facility Letter of Credit Reimbursement
Obligations. The Agent shall promptly notify the Lenders of
such deemed request and, without the necessity of compliance
with the requirements of Sections 2.5 and 4.2, each Lender
shall make available to the Agent its Loan in the manner
prescribed for Floating Rate Advances. The proceeds of such
Loans shall be paid over by the Agent to the Issuer for the
account of the Borrower in satisfaction of such unreimbursed
Facility Letter of Credit Reimbursement Obligations, which
shall thereupon be deemed satisfied by the proceeds of, and
replaced by, such Floating Rate Advance.
(c) If the Issuer makes a payment on account of any
Facility Letter of Credit and is not concurrently reimbursed
therefor by the Borrower and if for any reason a Floating
Rate Advance may not be made pursuant to paragraph (b)
above, then as promptly as practical during normal banking
hours on the date of its receipt of such notice or, if not
practicable on such date, not later than noon (Chicago time)
on the Business Day immediately succeeding such date of
notification, each Lender shall deliver to the Agent for the
account of the Issuer, in immediately available funds, the
purchase price for such Lender's interest in such
unreimbursed Facility Letter of Credit Obligations, which
shall be an amount equal to such Lender's pro-rata share of
such payment. Each Lender shall, upon demand by the Issuer,
pay the Issuer interest on such Lender's pro-rata share of
such draw from the date of payment by the Issuer on account
of such Facility Letter of Credit until the date of delivery
of such funds to the Issuer by such Lender at a rate per
annum, computed for actual days elapsed based on a 360-day
year, equal to the Federal Funds Effective Rate for such
period; provided, that such payments shall be made by the
Lenders only in the event and to the extent that <PAGE> the Issuer
is not reimbursed in full by the Borrower for interest on
the amount of any draw on the Facility Letters of Credit.
(d) At any time after the Issuer has made a payment on
account of any Facility Letter of Credit and has received
from any other Lender such Lender's pro-rata share of such
payment, such Issuer shall, forthwith upon its receipt of
any reimbursement (in whole or in part) by the Borrower for
such payment, or of any other amount from the Borrower or
any other Person in respect of such payment (including,
without limitation, any payment of interest or penalty fees
and any payment under any collateral account agreement of
the Borrower or any Loan Document but excluding any transfer
of funds from any other Lender pursuant to Section
2.20.3(b)), transfer to such other Lender such other
Lender's ratable share of such reimbursement or other
amount; provided, that interest shall accrue for the benefit
of such Lender from the time such Issuer has made a payment
on account of any Facility Letter of Credit; provided,
further, that in the event that the receipt by the Issuer of
such reimbursement or other amount is found to have been a
transfer in fraud of creditors or a preferential payment
under the United States Bankruptcy Code or is otherwise
required to be returned, such Lender shall promptly return
to the Issuer any portion thereof previously transferred by
the Issuer to such Lender, but without interest to the
extent that interest is not payable by the Issuer in
connection therewith.
2.20.4 Procedure for Issuance. Prior to the
issuance of each Facility Letter of Credit, and as a
condition of such issuance, the Borrower shall deliver to
the Issuer (with a copy to the Agent) a Reimbursement
Agreement signed by such Borrower, together with such other
documents or items as may be required pursuant to the terms
thereof, and the proposed form and content of such Facility
Letter of Credit shall be reasonably satisfactory to the
Issuer. Each Facility Letter of Credit shall be issued no
earlier than two (2) Business Days after delivery of the
foregoing documents, which delivery may be by the Borrower
to the Issuer by telecopy, telex or other electronic means
followed by delivery of executed originals within five (5)
days thereafter. The documents so delivered shall be in
compliance with the requirements set forth in Section
2.20.1(b), and shall specify therein (i) the stated amount
of the Facility Letter of Credit requested, (ii) the
effective date of issuance of such requested Facility Letter
of Credit, which shall be a Business Day, (iii) the date on
which such requested Facility Letter of Credit is to expire,
which shall be a Business Day prior to September 1, 2002,
(iv) the entity for whose benefit the requested Facility
Letter of Credit is to be issued, which shall be the
Borrower or a Subsidiary (v) whether the requested Facility
letter of Credit is a Standby Letter of Credit or Commercial
Letter of <PAGE> Credit, and (vi) the aggregate amount of Facility
Letter of Credit Obligations in respect of Standby Letters
of Credit and Commercial Letters of Credit which are
outstanding and which will be outstanding giving effect to
the requested Facility Letter of Credit issuance. The
delivery of the foregoing documents and information shall
constitute an "Issuance Request" for purposes of this
Agreement. Subject to the terms and conditions of Section
2.20.1 and provided that the applicable conditions set forth
in Section 4.2 hereof have been satisfied, the Issuer shall,
on the requested date, issue a Facility Letter of Credit on
behalf of the Borrower in accordance with the Issuer's usual
and customary business practices. In addition, any
amendment of an existing Facility Letter of Credit shall be
deemed to be an issuance of a new Facility Letter of Credit
and shall be subject to the requirements set forth above.
The Issuer shall give the Agent prompt written notice of the
issuance of any Facility Letter of Credit.
2.20.5 Nature of the Lenders' Obligations. (a) As
between the Borrower and the Lenders, the Borrower assumes
all risks of the acts and omissions of, or misuse of the
Facility Letters of Credit by, the respective beneficiaries
of the Facility Letters of Credit. In furtherance and not
in limitation of the foregoing, the Lenders shall not be
responsible for (i) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application
for an issuance of a Facility Letter of Credit, even if it
should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Facility
Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) the failure of
the beneficiary of a Facility Letter of Credit to comply
fully with conditions required to be satisfied by any Person
other than the Issuer in order to draw upon such Facility
Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise; (v) errors in the
interpretation of technical terms; (vi) the misapplication
by the beneficiary of a Facility Letter of Credit of the
proceeds of any drawing under such Facility Letter of
Credit; or (vii) any consequences arising from causes beyond
control of the Issuer.
(b) In furtherance and extension and not in limitation
of the specific provisions hereinabove set forth, any action
taken or omitted by the Issuer under or in connection with
the Facility Letters of Credit or any related certificates,
if taken or omitted in good faith, shall not put the Agent
or any Lender under any resulting liability to the Borrower
or <PAGE> relieve the Borrower of any of its obligations hereunder
to the Issuer or any such Person.
2.20.6 Facility Letter of Credit Fees. The Borrower
hereby agrees to pay to the Agent for the account of the
Issuer or the Lenders, as applicable, a letter of credit fee
with respect to each Facility Letter of Credit from and
including the date of issuance thereof until the date such
Facility Letter of Credit is fully drawn, cancelled or
expired, (a) for the account of the Issuer, computed at such
rate as may be agreed upon between the Issuer and the
Borrower, on the aggregate initial face amount of such
Facility Letter of Credit payable on the date of issuance,
and (b) for the ratable account of the Lenders, equal to (i)
in the case of Commercial Letters of Credit, .50% of the
aggregate initial face amount of such Commercial Letter of
Credit, payable upon the date of issuance thereof, and (ii)
in the case of Standby Letters of Credit, the Applicable
Margin times the aggregate amount from time to time
available to be drawn on such Facility Letter of Credit,
calculated with respect to actual days elapsed on the basis
of a 360-day year and payable quarterly in arrears on each
Payment Date in each year (with such amount to be paid by
the Agent to each Lender within 15 days after such Payment
Date) and upon the expiration, cancellation or utilization
in full of such Facility Letter of Credit. In addition to
the foregoing, the Borrower agrees to pay the Issuer any
other fees customarily charged by it in respect of standby
or commercial Letters of Credit issued by it.
2.21. Swing Line Loans.
2.21.1 Amount of Swing Line Loans. Subject to
the terms and conditions set forth in this Agreement, at any
time prior to the earlier of (x) the Facility Termination
Date and (y) the termination of the obligation of the
Lenders to make Loans hereunder, the Swing Line Bank agrees
to make swing line loans to the Borrower from time to time,
in a minimum amount of $100,000 and in increments of $25,000
in excess thereof and in an aggregate amount not to exceed
the Swing Line Commitment (each, individually, a "Swing Line
Loan" and collectively, the "Swing Line Loans"); provided,
however, that at no time shall the sum of (a) the principal
amount of outstanding Revolving Credit Loans, plus (b) the
outstanding Facility Letter of Credit Obligations, plus (c)
the principal amount of outstanding Swing Line Loans exceed
the Aggregate Revolving Credit Commitment. Subject to the
terms of this Agreement, the Borrower may borrow, repay and
reborrow Swing Line Loans at any time prior to the earlier
of (x) the Facility Termination Date and (y) the termination
of the obligation of the Lenders to make Loans hereunder.
<PAGE>
2.21.2 Borrowing Notice. The Borrower shall give
the Agent and the Swing Line Bank telephonic notice, not
later than 11:00 a.m. (Chicago time) on the Borrowing Date
of each Swing Line Loan, specifying (a) the applicable
Borrowing Date (which shall be a Business Day), and (b) the
aggregate amount of the requested Swing Line Loan.
2.21.3 Making of Swing Line Loans. Not later
than 1:30 p.m. (Chicago time) on the applicable Borrowing
Date, the Swing Line Bank shall make available its Swing
Line Loan, in funds immediately available in Chicago, to the
Agent at its address specified on the signature pages to
this Agreement; provided, that each of the conditions set
forth in Section 4.2 shall be satisfied (with the making of
a Swing Line Loan deemed to be an Advance for the purposes
of such Section 4.2). The Agent will promptly make the
funds so received from the Swing Line Bank available to the
Borrower at the Agent's aforesaid address.
2.21.4 Repayment of Swing Line Loans. The
Borrower may at any time pay, without penalty or premium,
all outstanding Swing Line Loans upon notice to the Agent
and the Swing Line Bank. In addition, the Agent (a) may at
any time in its sole discretion with respect to any
outstanding Swing Line Loan, or (b) shall on the fifth
Business Day after the Borrowing Date of any Swing Line Loan
which, after giving effect thereto, caused the aggregate
principal amount of all outstanding Swing Line Loans to be
greater than $500,000, require the Lenders (including the
Swing Line Bank) to make Revolving Loans pursuant to Section
2.1 hereof to repay such outstanding Swing Line Loans. Not
later than 1:30 p.m. (Chicago time) on the date of any
notice received pursuant to this Section 2.21.4, each Lender
shall make available its required Revolving Loan in funds
immediately available in Chicago to the Agent at its address
specified on the signature pages to this Agreement. Unless
a Lender shall have notified the Swing Line Bank, prior to
its making any Swing Line Loan, that any applicable
condition precedent set forth in Section 4.1 or 4.2 had not
then been satisfied, such Lender's obligation to make
Revolving Loans pursuant to this Section 2.21.4 to repay
Swing Line Loans shall be unconditional, continuing,
irrevocable and absolute and shall not be affected by any
circumstance, including, without limitation, (i) any set-off,
counterclaim, recoupment, defense or any other rights
which such Lender may have against the Agent, the Swing Line
Bank or any other Person, (ii) the occurrence or continuance
of a Default or Unmatured Default or any termination of the
obligation of the Lenders to make Revolving Loans pursuant
to Section 7.2 hereof or otherwise, (iii) any adverse change
in the condition (financial or otherwise) of the Borrower,
or (iv) any other circumstance, happening or event
whatsoever. In the event that any Lender fails to make
payment to the Agent of any amount due under this Section
2.21.4, the Agent <PAGE> shall be entitled to receive, retain and
apply against such obligation the principal and interest
otherwise payable to such Lender hereunder until the Agent
received such payment from such Lender or such obligation is
otherwise fully satisfied. In addition to the foregoing, if
for any reason any Lender fails to make a Revolving Loan
required to be made by it pursuant to this Section 2.21.4,
such Lender shall be deemed, at the option of the Agent, to
have unconditionally and irrevocably purchased from the
Swing Line Bank, without recourse or warranty, an undivided
interest and participation in the applicable Swing Line Loan
in the amount of such Revolving Loan, and such interest and
participation may be recovered from such Lender together
with interest thereon at the Federal Funds Effective Rate
for each day during the period commencing on the date of
demand and ending on the date such amount is received. On
the Facility Termination Date, the Borrower shall repay in
full the outstanding principal balance of the Swing Line
Loans.
2.21.5 Rate Options for Swing Line Loans. The
Swing Line Loans shall at all times bear interest at the
Floating Rate.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1 Yield Protection. If, after the Closing Date, the
adoption or any change in any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law), or any
interpretation thereof, or the compliance of any Lender
therewith,
(a) subjects any Lender or any applicable Lending
Installation to any tax, duty, charge or withholding on or
from payments due from the Borrower (excluding taxation of
the overall net income of any Lender or applicable Lending
Installation imposed by the jurisdiction in which such
Lender or Lending Installation is incorporated or has its
principal place of business), or changes the basis of
taxation of principal, interest or any other payments to any
Lender or Lending Installation in respect of its Loans, its
interest in the Facility Letters of Credit or other amounts
due it hereunder, or
(b) imposes or increases or deems applicable any
reserve, assessment, insurance charge, special deposit or
similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender or any
applicable Lending Installation (other than reserves and
assessments taken into account in determining the interest
rate applicable to Eurodollar Advances), or
<PAGE>
(c) imposes any other condition the result of which is
to increase the cost to any Lender or any applicable Lending
Installation of making, funding or maintaining loans or
issuing Facility Letters of Credit or reduces any amount
receivable by any Lender or any applicable Lending
Installation in connection with Loans or Facility Letters of
Credit, or requires any Lender or any applicable Lending
Installation to make any payment calculated by reference to
the amount of Loans held, Facility Letters of Credit issued
or participated in, or interest received by it, by an amount
deemed material by such Lender,
then, within 15 days of demand by such Lender, the Borrower shall
pay such Lender that portion of such increased expense incurred
or resulting in an amount received which such Lender determines
is attributable to making, funding and maintaining its Loans, its
interest in the Facility Letters of Credit, and its Commitment.
3.2 Changes in Capital Adequacy Regulations. If a Lender
determines the amount of capital required or expected to be
maintained by such Lender, any Lending Installation of such
Lender or any corporation controlling such Lender is increased as
a result of a Change, then, within 15 days of demand by such
Lender, the Borrower shall pay such Lender the amount necessary
to compensate for any shortfall in the rate of return on the
portion of such increased capital which such Lender determines is
attributable to this Agreement, its Loans, its interest in the
Facility Letters of Credit, or its obligation to make Loans or
participate in or issue Facility Letters of Credit hereunder
(after taking into account such Lender's policies as to capital
adequacy). "Change" means (a) any change after the Closing Date
in the Risk-Based Capital Guidelines, or (b) any adoption of or
change in any other law, governmental or quasi-governmental rule,
regulation, policy, guideline, interpretation, or directive
(whether or not having the force of law) after the Closing Date
which affects the amount of capital required or expected to be
maintained by any Lender or any Lending Installation or any
corporation controlling any Lender. "Risk-Based Capital
Guidelines" means (a) the risk-based capital guidelines in effect
in the United States on the Closing Date, including transition
rules, and (b) the corresponding capital regulations promulgated
by regulatory authorities outside the United States implementing
the July 1988 report of the Basle Committee on Banking Regulation
and Supervisory Practices entitled "International Convergence of
Capital Measurements and Capital Standards," including transition
rules, and any amendments to such regulations adopted prior to
the Closing Date.
3.3 Availability of Types of Advances. If any Lender
determines that maintenance of its Eurodollar Advances at a
suitable Lending Installation would violate any applicable law,
rule, regulation, or directive, whether or not having the force
of law, or if the Required Lenders determine that (a) deposits of
a type and maturity appropriate to match fund Eurodollar Advances
are not available, or (b) the interest rate applicable to a Type
of <PAGE> Advance does not accurately or fairly reflect the cost of
making or maintaining such Advance, then the Agent shall suspend
the availability of the affected Type of Advance and require any
Eurodollar Advances of the affected Type to be repaid.
3.4 Funding Indemnification. If any payment of a
Eurodollar Advance occurs on a date which is not the last day of
the applicable Interest Period, whether because of acceleration,
prepayment or otherwise, or a Eurodollar Advance is not made on
the date specified by the Borrower for any reason other than
default by the Lenders, the Borrower will indemnify the Agent and
each Lender for any loss or cost incurred by it resulting
therefrom, including, without limitation, any loss or cost in
liquidating or employing deposits acquired to fund or maintain
the Eurodollar Advance.
3.5 Lender Statements; Survival of Indemnity. To the extent
reasonably possible, each Lender shall designate an alternate
Lending Installation with respect to its Eurodollar Advances to
reduce any liability of the Borrower to such Lender under
Sections 3.1 and 3.2 or to avoid the unavailability of a Type of
Advance under Section 3.3, so long as such designation is not
disadvantageous to such Lender. Each Lender shall deliver a
written statement of such Lender to the Borrower (with a copy to
the Agent) as to the amount due, if any, under Sections 3.1, 3.2
or 3.4. Such written statement shall set forth in reasonable
detail the calculations upon which such Lender determined such
amount and shall be final, conclusive and binding on the Borrower
in the absence of manifest error. Determination of amounts
payable under such Sections in connection with a Eurodollar
Advances shall be calculated as though each Lender funded its
Eurodollar Advances through the purchase of a deposit of the type
and maturity corresponding to the deposit used as a reference in
determining the Eurodollar Rate applicable to such Loan, whether
in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the written statement of any
Lender shall be payable on demand after receipt by the Borrower
of the written statement. The obligations of the Borrower under
Sections 3.1, 3.2 and 3.4 shall survive payment of the
Obligations and termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Restatement. This Agreement shall not be effective
until the Borrower has furnished to the Agent with sufficient
copies for the Lenders and the other conditions set forth below
have been satisfied:
(a) Charter Documents. Copies of the certificate of
incorporation of the Borrower, together with all amendments,
certified by the Secretary of State of Delaware, together
with a <PAGE> good standing certificate issued by the Secretary of
State of Delaware and such other jurisdictions as shall be
requested by the Agent.
(b) By-Laws and Resolutions. Copies, certified by the
Secretary or Assistant Secretary of the Borrower, of its
by-laws and of its Board of Directors' resolutions
authorizing the execution, delivery and performance of the
Loan Documents to which the Borrower is a party and the
consummation of the other Closing Transactions.
(c) Secretary's Certificate. An incumbency
certificate, executed by the Secretary or Assistant
Secretary of the Borrower, which shall identify by name and
title and bear the signature of the officers of the Borrower
authorized to sign the Loan Documents and to make borrowings
hereunder, upon which certificate the Agent and the Lenders
shall be entitled to rely until informed of any change in
writing by the Borrower.
(d) Officer's Certificate. A certificate, dated the
Restatement Date, signed by an Authorized Officer of the
Borrower, in form and substance satisfactory to the Agent,
to the effect that: (i) on the Restatement Date (both
before and after giving effect to the execution and delivery
of this Agreement, the making of the Loans hereunder and the
consummation of the Acquisition and the other transactions
contemplated hereby (collectively, the "Restatement
Transactions"), no Default or Unmatured Default has occurred
and is continuing; (ii) no injunction or temporary
restraining order which would prohibit the making of the
Loans, the issuance of any Facility Letter of Credit or the
consummation of any of the other Restatement Transactions,
or other litigation which could reasonably be expected to
have a Material Adverse Effect is pending or, to the best of
such Person's knowledge, threatened; (iii) all orders,
consents, approvals, licenses, authorizations, or
validations of, or filings, recordings or registrations
with, or exemptions by, any governmental or public body or
authority, or any subdivision thereof, required to make or
consummate the Restatement Transactions have been or, prior
to the time required, will have been, obtained, given, filed
or taken and are or will be in full force and effect (or the
Borrower has obtained effective judicial relief with respect
to the application thereof) and that all applicable waiting
periods have expired; (iv) the Acquisition is being
consummated contemporaneously with the effectiveness of this
Agreement in accordance with the terms of the Purchase
Agreement, the Restatement Documents are in full force and
effect and no term or condition thereof has been amended,
modified or waived after the execution thereof except with
the written consent of the Agent; (v) neither the Borrower
nor any Subsidiary has failed to perform any material
obligation or covenant required in connection with any
Restatement Transaction to be performed or complied with by
it on or before the Restatement Date; (vi) each of the
representations and warranties set forth in Article V of
this Agreement is true and correct on and as of the date
hereof; and <PAGE> (vii) no event or change has occurred since
August 31, 1996 that has caused or evidences a Material
Adverse Effect.
(e) Legal Opinions. (i) A written opinion of Stinson,
Mag and Fizzell, P.C., counsel to the Borrower, addressed to
the Agent and the Lenders and in form and substance
acceptable to the Agent and its counsel, and (ii)
confirmation from counsel to each party to the Purchase
Agreement that the Agent and the Lenders may rely upon its
opinions delivered pursuant to the Purchase Agreement.
(f) Notes. Revolving Credit Notes payable to the
order of each of the Lenders and a Swing Loan Note payable
to the order of the Swing Line Lender duly executed by the
Borrower.
(g) Restatement Documents. Executed originals of this
Agreement and each of the Restatement Documents, which shall
be in full force and effect, together with all schedules,
exhibits, certificates, instruments, opinions, documents and
financial statements required to be delivered pursuant
hereto and thereto.
(h) Money Transfer Instructions. Written money
transfer instructions with respect to the Advances to be
made on the Restatement Date addressed to the Agent and
signed by an Authorized Officer, together with such other
related money transfer authorizations as the Agent may have
reasonably requested.
(i) Purchase Agreement. A copy of the Purchase
Agreement and any amendments, supplements and modifications
thereto.
(j) Solvency Certificate. A written solvency
certificate from the chief financial officer of the Borrower
in form and content satisfactory to the Agent, dated the
initial Borrowing Date, with respect to the value, Solvency
and other factual information of, or relating to, as the
case may be, the Borrower on a consolidated basis, both
before and after giving effect to the Restatement
Transactions.
(k) Financial Statements. The Agent and the Lenders
shall have received (i) unaudited pro forma opening
financial statements giving effect to the Acquisition which
must not be materially less favorable, in the Agent's and
the Lenders' reasonable judgment, than the projections and
unaudited pro forma financial statements previously provided
to them and which must demonstrate, in their reasonable
judgment, together with all other information then available
to the Agent and the Lenders, that the Borrower (both
individually and together with its Subsidiaries on a
consolidated basis) can repay its debts and satisfy its
other obligations as and when due and can comply with the
financial covenants set forth herein and (ii) such
information as the Agent or any Lender may reasonable
request to confirm the tax, legal and business assumptions
made in such pro forma financial statements.
<PAGE>
(l) Lien Searches. Copies of searches of financing
statements filed under the Uniform Commercial Code, together
with tax lien and judgment searches, with respect to the
assets of USA Skate Company, Inc., in such jurisdictions as
the Agent may request.
(m) Other. Such other documents as the Agent, any
Lender or their counsel may have reasonably requested.
4.2 Each Advance and Facility Letter of Credit. The
Lenders shall not be required to make any Advance and the Issuer
shall not be obligated to issue any Facility Letter of Credit,
unless on the applicable Borrowing Date:
(a) There exists no Default or Unmatured Default and
none would result from such Advance or the issuance of such
Facility Letter of Credit;
(b) No Change in Control has occurred;
(c) The representations and warranties contained in
Article V are true and correct as of such Borrowing Date
except to the extent 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;
(d) A Borrowing Notice or Issuance Request shall have
been properly submitted; and
(e) All legal matters incident to the making of such
Advance or issuance of such Facility Letter of Credit shall
be satisfactory to the Lenders and their counsel.
Each Borrowing Notice with respect to each such Advance and
each Issuance Request with respect to each Facility Letter of
Credit shall constitute a representation and warranty by the
Borrower that the conditions contained in Section 4.2 have been
satisfied. Any Lender may require a duly completed compliance
certificate in substantially the form of Exhibit C hereto as a
condition to making an Advance or the issuance of a Facility
Letter of Credit.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that,
both before and after giving effect to the Restatement
Transactions:
5.1 Corporate Existence and Standing. Each of the Borrower
and each Subsidiary is a corporation duly incorporated, validly
<PAGE>
existing and in good standing under the laws of its respective
jurisdiction of incorporation and is duly qualified and in good
standing as a foreign corporation and is duly authorized to
conduct its business in each jurisdiction in which its business
is conducted or proposed to be conducted where the failure to be
so qualified or authorized could reasonably be expected to have a
Material Adverse Effect.
5.2 Authorization and Validity. Each of the Borrower and
each Subsidiary has all requisite power and authority (corporate
and otherwise) and legal right to execute and deliver (or file,
as the case may be) each of the Loan Documents and the other
Restatement Documents and Transaction Documents to which it is a
party and to perform its obligations thereunder. The execution
and delivery (or filing, as the case may be) by the Borrower and
each Subsidiary of the Loan Documents and the other Restatement
Documents to which it is a party and the performance of its
obligations thereunder have been duly authorized by proper
corporate proceedings and the Loan Documents and the other
Restatement Documents constitute legal, valid and binding
obligations of the Borrower or such Subsidiary, as applicable,
enforceable against the Borrower or such Subsidiary, as
applicable, in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights
generally.
5.3 Compliance with Laws and Contracts. Each of the
Rawlings Business and the Borrower and its Subsidiaries have
complied in all material respects with all applicable statutes,
rules, regulations, orders and restrictions of any domestic or
foreign government or any instrumentality or agency thereof,
having jurisdiction over the conduct of their respective
businesses or the ownership of their respective properties,
except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect. Neither the execu-
tion and delivery by the Borrower of the Loan Documents, the
application of the proceeds of the Loans, the consummation of the
Closing Transactions, the Restatement Transactions or any other
transaction contemplated in the Loan Documents or the other
Restatement Documents, nor compliance with the provisions of the
Loan Documents or the other Restatement Documents, will, or at
the relevant time did, (a) violate any law, rule, regulation
(including Regulations G, T, U or X), order, writ, judgment,
injunction, decree or award binding on the Borrower or any
Subsidiary or the Borrower's or any Subsidiary's charter,
articles or certificate of incorporation or by-laws, (b) violate
the provisions of or require the approval or consent of any party
to any indenture, instrument or agreement to which the Borrower
or any Subsidiary is a party or is subject, or by which it, or
its property, is bound, or conflict with or constitute a default
thereunder, or result in the creation or imposition of any Lien
(other than Liens permitted by the Loan Documents) in, of or on
the property of the Borrower or any Subsidiary pursuant to the
terms of any such indenture, instrument <PAGE> or agreement, or (c)
require any consent of the stockholders of any Person; except for
(x) approvals or consents which have been obtained on or before
the initial Advance and are disclosed on Schedule 5.3, and (y)
any violations or failures to obtain approvals and consents that
could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
5.4 Governmental Consents. No order, consent, approval,
qualification, license, authorization, or validation of, or
filing, recording or registration with, or exemption by, or other
action in respect of, any court, governmental or public body or
authority, or any subdivision thereof, any securities exchange or
other governmental Person is or at the relevant time was required
to authorize, or is or at the relevant time was required in
connection with the execution, delivery, consummation or
performance of, or the legality, validity, binding effect or
enforceability of, any of the Loan Documents or the other
Restatement Documents, the application of the proceeds of the
Loans or the consummation of any of the Closing Transactions or
Restatement Transactions, except where the failure to obtain such
action could not reasonably be expected to have a Material
Adverse Effect. Neither the Borrower nor any Subsidiary is in
default under or in violation of any foreign, federal, state or
local law, rule, regulation, order, writ, judgment, injunction,
decree or award binding upon or applicable to the Borrower or
such Subsidiary, in each case the consequences of which default
or violation could reasonably be expected to have a Material
Adverse Effect.
5.5 Financial Statements. (a) The Borrower has furnished
to each of the Lenders (i) the August 31, 1996 audited
consolidated financial statements of the Borrower and its
Subsidiaries and (ii) the unaudited consolidated financial
statements of the Borrower and its Subsidiaries through May 31,
1997 (collectively, the "Financial Statements"). Each of the
Financial Statements was prepared in accordance with generally
accepted accounting principles and fairly presents the
consolidated financial condition and operations of the Borrower
and its Subsidiaries at such dates and the consolidated results
of their operations for the respective periods then ended
(except, in the case of such unaudited statements, for normal
year-end audit adjustments).
(b) The unaudited pro forma consolidated balance sheet at
May 31, 1997 and unaudited pro forma consolidated income
statement for the period ended May 31, 1997 of the Borrower and
its Subsidiaries (the "Pro Forma") is attached hereto as Schedule
5.5. As of the date of this Agreement, the Pro Forma is complete
and accurate and fairly represents the Borrowers' and the
Subsidiaries' assets, liabilities, financial condition and
results of operations on a consolidated basis in accordance with
Agreement Accounting Principles, consistently applied, and taking
into account the Restatement Transactions and the other
transactions and actions contemplated by this Agreement, the
other Loan Documents and the other Restatement Documents.
<PAGE>
5.6 Material Adverse Change. No event or change has
occurred since August 31, 1996 that has caused or evidences a
Material Adverse Effect.
5.7 Taxes. The Borrower and its Subsidiaries have filed or
caused to be filed on a timely basis and in correct form all
United States federal and applicable foreign, state and local tax
returns and all other tax returns which are required to be filed,
except for such returns (other than federal tax returns) as to
which the failure to file could not reasonably be expected to
have a Material Adverse Effect in the aggregate, and have paid
all taxes due pursuant to said returns or pursuant to any
assessment received by the Borrower or any Subsidiary, except (a)
such taxes, if any, as are being contested in good faith and as
to which adequate reserves have been provided in accordance with
Agreement Accounting Principles and as to which no Lien exists
and (b) such foreign, state and local taxes which could not
reasonably be expected to have a Material Adverse Effect in the
aggregate. The United States income tax returns of the Borrower
on a consolidated basis have never been audited by the Internal
Revenue Service and there are no pending audits or investigations
regarding the Borrower's or its Subsidiaries' federal, foreign,
state or local tax returns. No tax liens have been filed and no
claims are being asserted with respect to any such taxes which
could reasonably be expected to have a Material Adverse Effect.
The charges, accruals and reserves on the books of the Borrower
and its Subsidiaries in respect of any taxes or other
governmental charges are in accordance with Agreement Accounting
Principles.
5.8 Litigation and Contingent Obligations. There is no
litigation, arbitration, proceeding, inquiry or governmental
investigation (including, without limitation, by the Federal
Trade Commission) pending or, to the knowledge of any of their
officers, threatened against or affecting the Rawlings Business,
the Borrower or any Subsidiary or any of their respective
properties (a) as of the date of this Agreement, except as set
forth on Schedule 5.8, and no such matter set forth therein could
reasonably be expected to have a Material Adverse Effect or to
prevent, enjoin or unduly delay the making of the Loans or
Advances under this Agreement or (b) after the date of this
Agreement which could reasonably be expected to have a Material
Adverse Effect or to prevent, enjoin or unduly delay the making
of the Loans or Advances under this Agreement. As of the date of
this Agreement, neither the Borrower nor any Subsidiary has any
material contingent obligations except as set forth on Schedule
5.8.
5.9 Capitalization. Schedule 5.9 hereto contains (a) an
accurate description of the Borrower's capitalization and (b) an
accurate list of all of the existing Subsidiaries setting forth
their respective jurisdictions of incorporation and the
percentage of their capital stock owned by the Borrower or other
Subsidiaries, in each case as of the date of this Agreement after
giving effect to the Restatement Transactions. All of the issued
and outstanding <PAGE> shares of capital stock of the Borrower and of
each Subsidiary have been duly authorized and validly issued and
are fully paid and non-assessable, and all such shares of each
Subsidiary are free and clear of all Liens, other than the Liens
created by the Loan Documents. Except as set forth in Schedule
5.9, as of the date of this Agreement, no authorized but unissued
or treasury shares of capital stock of the Borrower or any
Subsidiary are subject to any option, warrant, right to call or
commitment of any kind or character. Except as set forth on
Schedule 5.9, as of the date of this Agreement, neither the
Borrower nor any Subsidiary has any outstanding stock or
securities convertible into or exchangeable for any shares of its
capital stock, or any right issued to any Person (either
preemptive or other) to subscribe for or to purchase, or any
options for the purchase of, or any agreements providing for the
issuance (contingent or otherwise) of, or any calls, commitments
or claims of any character relating to any of its capital stock
or any stock or securities convertible into or exchangeable for
any of its capital stock other than as expressly set forth in the
certificate or articles of incorporation of the Borrower or such
Subsidiary. Neither the Borrower nor any Subsidiary is subject
to any obligation (contingent or otherwise) as of the date of
this Agreement, to repurchase or otherwise acquire or retire any
shares of its capital stock or any convertible securities, rights
or options of the type described in the preceding sentence except
as otherwise set forth on Schedule 5.9.
5.10 ERISA. Except as disclosed on Schedule 5.10, after
giving effect to the Restatement Transactions, as of the date of
this Agreement (a) neither the Borrower nor any other member of
the Controlled Group maintains a Single Employer Plan, (b) no
Single Employer Plan has any Unfunded Liability and (c) neither
the Borrower nor any other member of the Controlled Group
maintains, or is obligated to contribute to, any Multiemployer
Plan or has incurred, or is reasonably expected to incur, any
withdrawal liability to any Multiemployer Plan. Each Plan
complies in all material respects with all applicable
requirements of ERISA, the Code and the regulations arising
thereunder. Neither the Borrower nor any member of the
Controlled Group has, with respect to any Plan, failed to make
any contribution required under Section 412 of the Code or
Section 302 of ERISA or pay any amount required under the terms
of such Plan. There are no pending or, to the knowledge of the
Borrower, threatened claims, actions, investigations or lawsuits
against any Plan, any fiduciary thereof, or the Borrower or any
member of the Controlled Group with respect to a Plan. Neither
the Borrower nor any other member of the Controlled Group has
engaged in any prohibited transaction (as defined in Section 4975
of the Code or Section 406 of ERISA) in connection with any Plan
which would subject any such Person to any material liability.
Within the last five years neither the Borrower nor any member of
the Controlled Group has engaged in a transaction which resulted
in a Single Employer Plan with an Unfunded Liability being
transferred out of the Controlled Group. No Termination Event
has occurred or <PAGE> is reasonably expected to occur with respect to
any Plan which is subject to Title IV of ERISA. After giving
effect to the Restatement Transactions, neither the Borrower nor
any member of the Controlled Group has any liability in respect
of any employee benefit plan, as defined in Section 3(2) of
ERISA, maintained by any Person not in the Controlled Group.
5.11 Defaults. No Default or Unmatured Default has occurred
and is continuing.
5.12 Federal Reserve Regulations. Neither the Borrower nor
any Subsidiary is engaged, directly or indirectly, principally,
or as one of its important activities, in the business of
extending, or arranging for the extension of, credit for the
purpose of purchasing or carrying Margin Stock. No part of the
proceeds of any Loan will be used in a manner which would
violate, or result in a violation of, Regulation G, Regulation T,
Regulation U or Regulation X. Neither the making of any Advance
hereunder, the use of the proceeds thereof, nor any other aspect
of the financing of the Acquisition, will violate or be
inconsistent with the provisions of Regulation G, Regulation T,
Regulation U or Regulation X. Less than 25% of the value (as
determined by any reasonable method) of the assets of the
Borrower and its Subsidiaries which are subject to any limitation
on sale, pledge, or other restriction hereunder taken as a whole
have been, and will continue to be, represented by Margin Stock.
5.13 Investment Company. Neither the Borrower nor any
Subsidiary is, or after giving effect to any Advance will be, an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of
1940, as amended.
5.14 Certain Fees. Other than as disclosed on Schedule
5.14, no broker's or finder's fee or commission was, is or will
be payable by the Borrower or any Subsidiary with respect to any
of the transactions contemplated by this Agreement or the
Restatement Documents. The Borrower hereby agrees to indemnify
the Agent and the Lenders against and agrees that it will hold
each of them harmless from any claim, demand or liability for
broker's or finder's fees or commissions alleged to have been
incurred by the Borrower in connection with any of the
transactions contemplated by this Agreement and any expenses
(including, without limitation, attorneys' fees and time charges
of attorneys for the Agent or any Lender, which attorneys may be
employees of the Agent or any Lender) arising in connection with
any such claim, demand or liability. No other similar fee or
commissions will be payable by the Borrower or any Subsidiary for
any other services rendered to the Borrower or any Subsidiary
ancillary to any of the transactions contemplated by this
Agreement or the Restatement Documents.
5.15 Ownership of Properties. Except as set forth on
Schedule 5.15 hereto, the Borrower and its Subsidiaries have a
<PAGE>
subsisting leasehold interest in, or good and marketable title,
free of all Liens, other than those permitted by Section 6.18 or
by any of the other Loan Documents, to all of the Properties and
assets reflected in the Financial Statements as being owned by
it, except for assets sold, transferred or otherwise disposed of
in the ordinary course of business since the date thereof.
Schedule 5.15 hereto contains a true, complete and accurate list
of all real property owned or leased by the Borrower as of the
date of this Agreement and indicates whether such property is
owned or leased. To the knowledge of the Borrower, there are no
actual, threatened or alleged defaults with respect to any leases
of real property under which the Borrower or any Subsidiary is
lessee or lessor which could reasonably be expected to have a
Material Adverse Effect. Except as set forth on Schedule 5.15,
the Borrower and its Subsidiaries own or possess rights to use
all licenses, patents, patent applications, copyrights, service
marks, trademarks and trade names necessary to continue to
conduct their business as heretofore conducted, and no such
license, patent or trademark has been declared invalid, been
limited by order of any court or by agreement or is the subject
of any infringement, interference or similar proceeding or
challenge, except for challenges which could not reasonably be
expected to have a Material Adverse Effect.
5.16 Indebtedness. Attached hereto as Schedule 5.16 is a
complete and correct list of all Indebtedness of the Borrower and
its Subsidiaries outstanding on the date of this Agreement (other
than Indebtedness in a principal amount not exceeding $100,000
for a single item of Indebtedness and $500,000 in the aggregate
for all such Indebtedness not listed), showing the aggregate
principal amount which was outstanding on such date after giving
effect to the making of the Loans. The Borrower has delivered or
caused to be delivered to the Lenders a true and complete copy of
each instrument evidencing any Indebtedness listed on Schedule
5.16 and of each document pursuant to which any of such
Indebtedness was issued.
5.17 Post-Retirement Welfare Benefits. As of the date of
this Agreement, the present value of the expected cost of post-
retirement medical and insurance benefits payable by the Borrower
and its Subsidiaries to its employees, as estimated by the
Borrower in accordance with procedures and assumptions deemed
reasonable by the Agent, is zero.
5.18 Employee Controversies. There are no strikes, work
stoppages or controversies pending or, to the knowledge of the
Borrower or any Subsidiary, threatened between the Borrower or
any Subsidiary and any of its employees, other than employee
grievances arising in the ordinary course of business, which, in
the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
5.19 Material Agreements. Neither the Borrower nor any
Subsidiary is a party to any agreement or instrument or subject
to <PAGE> any charter or other self-imposed corporate restriction which
could reasonably be expected to have a Material Adverse Effect.
Neither the Borrower nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement to which it is
a party, which default could reasonably be expected to have a
Material Adverse Effect.
5.20 Acquisition Documents. The Borrower has delivered to
each of the Lenders true, complete and correct copies of the
Acquisition Documents (including all schedules, exhibits,
annexes, amendments, supplements, modifications and all other
documents delivered pursuant thereto or in connection therewith).
The Acquisition Documents as originally executed and delivered by
the parties thereto have not been amended, waived, supplemented
or modified without the consent of the Agent. Each of the
representations and warranties of the Borrower and its
Subsidiaries and, to its knowledge, all other parties thereto is
true and correct in all material respects as of the date hereof.
Neither the Borrower nor any of its Subsidiaries nor, to the
Borrower's knowledge, any other party thereto is in default in
the performance of or compliance with any provision thereof. The
Acquisition is being consummated contemporaneously with the
effectiveness of this Agreement in accordance with applicable
laws and regulations, and no condition to closing by the Borrower
set forth in the Acquisition Documents has been waived.
5.21 Environmental Laws. Except as described on Schedule
5.21:
(a) there are no claims, investigations, litigation,
administrative proceedings, notices, requests for
information, whether pending or threatened, or judgments or
orders asserting violations of applicable federal, state and
local environmental, health and safety statutes,
regulations, ordinances, codes, rules, orders, decrees,
directives and standards ("Environmental Laws") or relating
to any toxic or hazardous waste, substance or chemical or
any pollutant, contaminant, chemical or other substance
defined or regulated pursuant to any Environmental Law,
including, without limitation, asbestos, petroleum, crude
oil or any fraction thereof ("Hazardous Materials") asserted
against the Borrower or any of its Subsidiaries which could
reasonably be expected to have a Material Adverse Effect in
the aggregate;
(b) none of the Rawlings Business, the Borrower or any
Subsidiary has caused or permitted any material amount of
Hazardous Materials to be released, either on or under real
property, currently or formerly, legally or beneficially
owned or operated by the Rawlings Business, the Borrower or
any Subsidiary or on or under real property to which the
Rawlings Business, the Borrower or any of its Subsidiaries
transported, arranged for the transport or disposal of, or
disposed of Hazardous Materials;
<PAGE>
(c) no real property currently or formerly owned or
operated by the Rawlings Business, the Borrower or any
Subsidiary has ever been used as a dump or disposal site, or
as a treatment or storage site, for a material amount of
Hazardous Materials;
(d) the Rawlings Business, the Borrower and each
Subsidiary have obtained and are in compliance with all
permits, certificates, licenses, approvals and other
authorizations ("Environmental Permits") required for the
operation of their business and have filed all required
notifications or reports relating to chemical substances,
air emissions, effluent discharges and the storage,
treatment, transport and disposal of Hazardous Materials,
except such which could not reasonably be expected to have a
Material Adverse Effect in the aggregate;
(e) no material amount of asbestos containing
materials or polychlorinated biphenyls are or have been
located in, on or under real property owned or operated by
the Rawlings Business, the Borrower or any Subsidiary and
there have been no material Releases of Hazardous Materials
from underground storage tanks on such real property;
(f) there are no material Liens arising under
Environmental Laws threatened or attached to real property
owned or operated by the Borrower or any of its
Subsidiaries;
(g) as of the date hereof, the Borrower and its
Subsidiaries do not have liabilities with respect to
compliance with applicable Environmental Laws and
Environmental Permits or related to the generation,
treatment, storage, disposal, release, investigation or
cleanup of Hazardous Materials which could reasonably be
expected to have a Material Adverse Effect in the aggregate,
and no facts or circumstances exist which could give rise to
liabilities with respect to compliance with applicable
Environmental Laws and Environmental Permits and the
generation, treatment, storage, disposal, release,
investigation or cleanup of Hazardous Materials which could
reasonably be expected to have a Material Adverse Effect in
the aggregate; and
(h) the operation and production of the Borrower and
its Subsidiaries will not be impacted or affected by the
compliance by any such Person with applicable Environmental
Laws and Environmental Permits or related to the generation,
treatment, storage, disposal, release, investigation or
cleanup of Hazardous Materials in a manner which could
reasonably be expected to have a Material Adverse Effect.
5.22 Insurance. Schedule 5.22 completely and accurately
summarizes the property and liability insurance in existence and
carried by the Borrower and its Subsidiaries as of the date of
this Agreement, and such insurance is in such amounts and
covering such risks as is consistent with sound business
practice. The summary on Schedule 5.22 includes the insurer's or
insurers' name(s), <PAGE> expiration date(s), amount(s) of coverage,
type(s) of coverage, material exclusion(s), and deductibles.
This summary also includes similar information, and describes any
reserves, relating to any self-insurance program that is in
effect.
5.23 Disclosure. None of the (a) information, exhibits or
reports furnished or to be furnished by the Borrower or any
Subsidiary to the Agent or to any Lender in connection with the
negotiation of the Loan Documents, or (b) representations or
warranties of the Borrower contained in this Agreement, the other
Loan Documents, the Transaction Documents, the Restatement
Documents or any other document, certificate or written statement
furnished to the Agent or the Lenders by or on behalf of the
Borrower or any Subsidiary for use in connection with the
transactions contemplated by this Agreement contained, contains
or will contain any untrue statement of a material fact or
omitted, omits or will omit to state a material fact necessary in
order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were
made. The Pro Forma is based upon good faith estimates and
assumptions believed by the Borrower to be reasonable at the time
made. There is no fact known to the Borrower (other than matters
of a general economic or political nature) that has had or could
reasonably be expected to have a Material Adverse Effect and that
has not been disclosed herein or in such other documents,
certificates and statements furnished to the Lenders for use in
connection with the transactions contemplated by this Agreement.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required
Lenders shall otherwise consent in writing:
6.1 Financial Reporting. The Borrower will maintain, for
itself and each Subsidiary, a system of accounting established
and administered in accordance with generally accepted accounting
principles, consistently applied, and furnish to the Lenders:
(a) As soon as practicable and in any event within
five (5) days after its filing with the Securities and
Exchange Commission (but not more than 120 days after the
close of each of its Fiscal Years), an unqualified audit
report certified by independent certified public accountants
(which shall be a "Big Six" accounting firm, or another
accounting firm acceptable to the Lenders), prepared in
accordance with Agreement Accounting Principles on a
consolidated and consolidating basis (consolidating
statements need not be certified by such accountants),
including balance sheets as of the end of such period and
related statements of income and cash flows, accompanied by
(i) any management letter prepared by said accountants, (ii)
a certificate of said <PAGE> accountants that, in the course of the
examination necessary for their certification of the
foregoing, they have obtained no knowledge of any Default or
Unmatured Default, or if, in the opinion of such
accountants, any Default or Unmatured Default shall exist,
stating the nature and status thereof, and (iii) a letter
from said accountants addressed to the Lenders acknowledging
that the Lenders are extending credit in primary reliance on
such financial statements and authorizing such reliance.
The Borrower hereby authorizes the Agent to communicate
directly with such accountants following the occurrence of a
Default or Change in Control.
(b) As soon as practicable and in any event within
five (5) days after its filing with the Securities and
Exchange Commission (but not more than 65 days after the
close of the first three quarterly periods of each of its
Fiscal Years), consolidated and consolidating unaudited
balance sheets as at the close of each such period and
consolidated and consolidating statements of income and cash
flows for the period from the beginning of such Fiscal Year
to the end of such quarter, all certified by its chief
financial officer.
(c) As soon as available, but in any event not later
than 15 days before the end of each Fiscal Year, beginning
with Fiscal Year 1998, a copy of the plan and forecast
(including a projected consolidated and consolidating
balance sheet, income statement and cash flow statement) of
the Borrower for the next Fiscal Year.
(d) Together with the financial statements required by
clauses (a) and (b) above, a compliance certificate in
substantially the form of Exhibit C hereto signed by its
chief financial officer showing the calculations necessary
to determine compliance with this Agreement and stating that
no Default or Unmatured Default exists and no Change in
Control has occurred, or if any Default or Unmatured Default
exists, stating the nature and status thereof.
(e) Within 270 days after the close of each Fiscal
Year, a statement of the Unfunded Liabilities of each Single
Employer Plan, certified by an actuary enrolled under ERISA.
(f) As soon as possible and in any event within 10
days after the Borrower knows that any event has occurred
which is a Termination Event with respect to any Plan which
is subject to Title IV of ERISA, a statement, signed by the
chief financial officer of the Borrower, describing said
Termination Event and any action which the Borrower proposes
to take with respect thereto.
(g) As soon as possible and in any event within 10
days after receipt by the Borrower, a copy of (i) any
notice, claim, complaint or order to the effect that the
Borrower or any of its Subsidiaries is or may be liable to
any Person as a result of the <PAGE> release by the Borrower, any
of its Subsidiaries, or any other Person of any Hazardous
Materials into the environment or requiring that action be
taken to respond to or clean up a Release of Hazardous
Materials into the environment, and (ii) any notice,
complaint or citation alleging any violation of any
Environmental Law or Environmental Permit by the Borrower or
any of its Subsidiaries. Within ten days of the Borrower or
any Subsidiary having knowledge of the proposal, enactment
or promulgation of any Environmental Law which could
reasonably be expected to have a Material Adverse Effect,
the Borrower shall provide the Agent with written notice
thereof.
(h) Promptly upon the furnishing thereof to the
shareholders of the Borrower, copies of all financial
statements, reports and proxy statements so furnished.
(i) Promptly upon the filing thereof, copies of all
registration statements and annual, quarterly, monthly or
other regular reports which the Borrower or any of its
Subsidiaries files with the Securities and Exchange
Commission.
(j) Promptly and in any event within ten (10) days
after learning thereof, notification of (i) any tax
assessment, demand, notice of proposed deficiency or notice
of deficiency received by the Borrower or any other
Consolidated Person or (ii) the filing of any tax Lien or
commencement of any judicial proceeding by or against any
such Consolidated Person, if any such assessment, demand,
notice, Lien or judicial proceeding relates to tax
liabilities in excess of ten percent (10%) of the net worth
(determined according to generally accepted accounting
standards and without reduction for any reserve for such
liabilities) of the Borrower and its Subsidiaries taken as a
whole.
(k) Within thirty (30) days after the close of each
Fiscal Year, a summary of the property and liability
insurance carried by the Borrower and its Subsidiaries and
including the information specified in Section 5.22.
(l) Such other information (including non-financial
information) as the Agent or any Lender may from time to
time reasonably request.
6.2 Use of Proceeds. The Borrower will, and will cause
each Subsidiary to, use the proceeds of the Revolving Advances to
meet the working capital needs of the Borrower and its
Subsidiaries; provided, that up to $18,000,000 of proceeds of the
Revolving Advances may be used to finance the Acquisition. The
Borrower will not, nor will it permit any Subsidiary to, use any
of the Facility Letters of Credit or the proceeds of the Advances
to purchase or carry any "margin stock" (as defined in Regulation
U).
6.3 Notice of Default. The Borrower will, and will cause
each Subsidiary to, give prompt notice in writing to the Lenders
of <PAGE> the occurrence of any Default or Unmatured Default or Change
in Control and of any other development relating to the Borrower
or any Subsidiary, financial or other, which could reasonably be
expected to have a Material Adverse Effect.
6.4 Conduct of Business. The Borrower will, and will cause
each Subsidiary to, carry on and conduct its business in
generally the same manner and in generally the same fields of
enterprise as it is presently conducted and to do all things
necessary to remain duly incorporated, validly existing and in
good standing as a domestic corporation in its jurisdiction of
incorporation and, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect,
maintain all requisite authority to conduct its business in each
jurisdiction in which its business is conducted.
6.5 Taxes. The Borrower will, and will cause each
Subsidiary to, timely file complete and correct United States
federal and applicable foreign, state and local tax returns
required by applicable law and pay when due all taxes,
assessments and governmental charges and levies upon it or its
income, profits or Property, except those which are being
contested in good faith by appropriate proceedings and with
respect to which adequate reserves have been set aside.
6.6 Insurance. The Borrower will, and will cause each
Subsidiary to, maintain with financially sound and reputable
insurance companies insurance on all their Property in such
amounts and covering such risks as is consistent with sound
business practice, and the Borrower will furnish to the Agent and
any Lender upon request full information as to the insurance
carried.
6.7 Compliance with Laws. The Borrower will, and will
cause each Subsidiary to, comply with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or
awards to which it may be subject, the failure to comply with
which could reasonably be expected to have a Material Adverse
Effect.
6.8 Maintenance of Properties. The Borrower will, and will
cause each Subsidiary to, do all things necessary to maintain,
preserve, protect and keep its Property in good repair, working
order and condition, and make all necessary and proper repairs,
renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times.
6.9 Inspection. The Borrower will, and will cause each
Subsidiary to, permit the Agent and the Lenders, by their
respective representatives and agents, to inspect any of the
Property, corporate books and financial records of the Borrower
and each Subsidiary, to examine and make copies of the books of
accounts and other financial records of the Borrower and each
Subsidiary, and to discuss the affairs, finances and accounts of
the Borrower and each Subsidiary with, and to be advised as to
the <PAGE> same by, their respective officers at such reasonable times
and intervals as the Lenders may designate; provided, that so
long as no Default or Change in Control has occurred and is
continuing, no such action shall unreasonably interfere with the
normal business operations of the Borrower and its Subsidiaries.
The Borrower will keep or cause to be kept, and cause each
Subsidiary to keep or cause to be kept, appropriate records and
books of account in which complete entries are to be made
reflecting its and their business and financial transactions,
such entries to be made in accordance with Agreement Accounting
Principles consistently applied.
6.10 Capital Stock and Dividends. The Borrower will not,
nor will it permit any Subsidiary to, (a) issue any preferred
stock, other capital stock or any debt or equity securities of
any kind, or (b) declare or pay any dividends or make any
distributions on its capital stock (other than dividends payable
in its own capital stock) or redeem, repurchase or otherwise
acquire or retire any of its capital stock at any time
outstanding, except that (i) any Subsidiary may declare and pay
dividends or make distributions to the Borrower, (ii) the
Borrower may make distributions of its equity securities in
accordance with its shareholder rights plan and employee benefit
plans, (iii) the Borrower may issue common shares and warrants or
options to purchase common shares from time to time, and (iv) so
long as no Default or Unmatured Default or Change in Control is
pending before or after giving effect to the payment of such
dividends, the Borrower may declare and pay dividends on its
common stock in any Fiscal Year of up to an amount not to exceed
fifty percent (50%) of the Borrower's Net Income for the
preceding Fiscal Year.
6.11 Indebtedness. The Borrower will not, nor will it
permit any Subsidiary to, create, incur or suffer to exist any
Indebtedness, except:
(a) the Loans;
(b) Indebtedness existing on the date of this
Agreement and described in Schedule 5.16 hereto;
(c) Rate Hedging Obligations related to the Loans; and
(d) additional Indebtedness with an aggregate
principal amount not to exceed $3,000,000 in the aggregate at any
one time outstanding.
6.12 Merger. The Borrower will not, nor will it permit any
Subsidiary to, merge or consolidate with or into any other
Person, except that (a) a Subsidiary may merge into the Borrower
or any Wholly-Owned Subsidiary of the Borrower and (b) another
Person may merge with or consolidate into the Borrower or any
Subsidiary so long as (i) no Default or Unmatured Default shall
have occurred and be continuing either before <PAGE> or after giving
effect to such transaction, (ii) no Change in Control shall have
occurred before or after giving effect to such transaction and
(iii) the Borrower or such Subsidiary is the surviving Person.
6.13 Sale of Assets. The Borrower will not, nor will it
permit any Subsidiary to, lease, sell, transfer or otherwise
dispose of its Property, to any other Person except for (a) sales
of inventory in the ordinary course of business,(b) the sale of
the Borrower's facility located in Dolgeville, New York, (c)
subject to Section 6.16, other leases, sales, transfers and
dispositions of its Property (other than any patent, trademark,
copyright, license or other item of intellectual property) that,
together with all other Property of the Borrower and its
Subsidiaries previously leased, sold, transferred, or disposed of
(other than property sold pursuant to clause (a) or (b) above) as
permitted by this Section 6.13 since the Closing Date do not
constitute a Substantial Portion of the Property of the Borrower
and its Subsidiaries and (d) the Borrower may exchange immaterial
items of equipment subject to an operating lease for other
similar items subject to an operating lease, subject to Section
6.20; provided, that the Borrower may transfer all or any portion
of its intellectual property to a direct domestic Wholly-Owned
Subsidiary so long as after any such transfer or transfers, (i)
all of the capital stock of such Subsidiary shall continue to be
held directly by the Borrower free and clear of any Liens and
(ii) such Subsidiary shall engage in no activity other than the
ownership of such intellectual property and the lease thereof to
the Borrower and shall incur no obligations except pursuant to
such lease arrangements.
6.14 Sale of Accounts. The Borrower will not, nor will it
permit any Subsidiary to, sell or otherwise dispose of any notes
receivable or accounts receivable, with or without recourse.
6.15 Sale and Leaseback. The Borrower will not, nor will
it permit any Subsidiary to, sell or transfer any of its Property
in order to concurrently or subsequently lease as lessee such or
similar Property, except for (a) up to $500,000 of equipment in
the aggregate and (b) any intellectual property transferred in
accordance with the proviso to Section 6.13.
6.16 Investments and Purchases. The Borrower will not, nor
will it permit any Subsidiary to, make or suffer to exist any
Investments (including, without limitation, loans and advances
to, and other Investments in, Subsidiaries), or commitments
therefor, or to create any Subsidiary or to become or remain a
partner in any partnership or joint venture, or to make any
Purchases of any Person, except:
(a) Obligations with a term of one year or less of, or
fully guaranteed by, the United States of America;
(b) Commercial paper rated A-l or better by Standard
and Poor's Corporation or P-l or better by Moody's Investors
Service, Inc.;
<PAGE>
(c) Demand deposit accounts maintained in the ordinary
course of business;
(d) Certificates of deposit issued by and time
deposits with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000;
(e) Repurchase agreements issued by any commercial
bank or trust company organized under the laws of the United
States or any state thereof having capital and surplus in
excess of $100,000,000 and whose commercial paper (or that
of its parent corporation) is rated A-1 or better by
Standard & Poor's Ratings Group or P-1 or better by Moody's
Investors Service, Inc.;
(f) Investments in existence on the date hereof and
described in Schedule 6.16 hereto, including without
limitation such Investments in partnerships, joint ventures
and Subsidiaries; and
(g) Investments consisting of transfers of
intellectual property made in accordance with the proviso to
Section 6.13.
6.17 Contingent Obligations. The Borrower will not, nor
will it permit any Subsidiary to, make or suffer to exist any
Contingent Obligation (including, without limitation, any
Contingent Obligation with respect to the obligations of a
Subsidiary), except (a) by endorsement of instruments for deposit
or collection in the ordinary course of business and (b)
Contingent Obligations in respect of Facility Letters of Credit.
6.18 Liens. The Borrower will not, nor will it permit any
Subsidiary to, create, incur, or suffer to exist any Lien in, of
or on the Property of the Borrower or any of its Subsidiaries,
except:
(a) Liens for taxes, assessments or governmental
charges or levies on its Property if the same shall not at
the time be delinquent or thereafter can be paid without
penalty, or are being contested in good faith and by
appropriate proceedings and for which adequate reserves in
accordance with generally accepted principles of accounting
shall have been set aside on its books;
(b) Liens imposed by law, such as carriers',
warehousemen's and mechanics' liens and other similar liens
arising in the ordinary course of business which secure
payment of obligations not more than 60 days past due or
which are being contested in good faith by appropriate
proceedings and for which adequate reserves shall have been
set aside on its books;
(c) Liens arising out of pledges or deposits under
worker's compensation laws, unemployment insurance, old age
pensions, or other social security or retirement benefits,
or similar legislation;
<PAGE>
(d) Utility easements, building restrictions and such
other encumbrances or charges against real property as are
of a nature generally existing with respect to properties of
a similar character and which do not in any material way
affect the marketability of the same or interfere with the
use thereof in the business of the Borrower or the
Subsidiaries;
(e) Liens existing on the date of this Agreement and
described in Schedule 6.18 hereto; and
(f) Additional Liens securing Indebtedness of not more
than $500,000 in the aggregate.
6.19 Capital Expenditures. The Borrower will not, nor will
it permit any Subsidiary to, expend, or be committed to expend,
for Capital Expenditures (including, without limitation, for the
acquisition of fixed assets) on a non-cumulative basis in the
aggregate for the Borrower and its Subsidiaries more than
$3,000,000 during the 1997 Fiscal Year, more than $3,500,000
during the 1998 Fiscal Year or more than $3,000,000 during any
Fiscal Year thereafter.
6.20 Lease Rentals. The Borrower will not, nor will it
permit any Subsidiary to, create, incur or suffer to exist
obligations for Rentals in excess of $3,000,000 during any one
Fiscal Year on a non-cumulative basis in the aggregate for the
Borrower and its Subsidiaries.
6.21 Letters of Credit. The Borrower will not, nor will it
permit any Subsidiary to, apply for or become liable upon any
Letter of Credit except the Facility Letters of Credit; provided,
that if no Lender may act as Issuer because of the applicability
of clause (i) of Section 2.20.1(a), then the Borrower may apply
or become liable for Letters of Credit other than Facility
Letters of Credit with an aggregate face amount not to exceed
$2,000,000, notwithstanding Section 6.11 hereof, plus such
additional amount which may be permitted from time to time
pursuant to Section 6.11(d).
6.22 Affiliates. The Borrower will not, and will not
permit any Subsidiary to, enter into any transaction (including,
without limitation, the purchase or sale of any Property or
service) with, or make any payment or transfer to, any Affiliate
except (a) where expressly permitted under Section 6.10 or 6.16,
(b) the transfer and lease of items of intellectual property in
accordance with the proviso to Section 6.13 or (c) in the
ordinary course of business and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and
upon fair and reasonable terms no less favorable to the Borrower
or such Subsidiary than the Borrower or such Subsidiary would
obtain in a comparable arms-length transaction.
<PAGE>
6.23 Prepayment of Indebtedness. The Borrower will not,
and will not permit any Subsidiary to, directly or indirectly
voluntarily prepay, defease or in substance defease, purchase,
redeem, retire or otherwise acquire, any Indebtedness other than
(a) the Obligations; (b) the Indebtedness listed in Schedule
5.16; and (c) Indebtedness incurred pursuant to Section 6.11(c).
6.24 Rate Hedging Obligations. The Borrower will continue
to maintain an interest rate exchange or insurance agreement or
agreements with one or more financial institutions acceptable to
the Agent in its reasonable discretion, providing for a fixed
rate of interest on a notional amount of at least $20,000,000,
bearing interest at an all-in fixed rate not in excess of ten
percent (10%) per annum and having a term of at least two (2)
years upon each renewal thereof.
6.25 Environmental Matters. The Borrower shall and shall
cause each of its Subsidiaries to (a) at all times materially
comply with all applicable Environmental Laws and (b) take any
and all remedial actions as are required by Environmental Laws in
response to the Release of any Hazardous Materials on, under or
about any real property owned, leased or operated by the Borrower
or any of its Subsidiaries. In the event that the Borrower or
any Subsidiary undertakes any remedial action with respect to any
Hazardous Material on, under or about any real property, the
Borrower or such Subsidiary shall conduct and complete such
remedial action in compliance with all applicable Environmental
Laws, except when the Borrower's or such Subsidiary's liability
for such Release of any Hazardous Material is being contested in
good faith by the Borrower or such Subsidiary and appropriate
reserves therefor have been established. If the Agent or any
Lender at any time has a reasonable basis to believe that there
may be a material violation of any Environmental Law by the
Borrower or any of its Subsidiaries, a Release of a material
amount of Hazardous Materials on any real property owned, leased
or operated by the Borrower or any of its Subsidiaries or a
Release of a material amount of Hazardous Materials from such
real property onto real property adjacent to such real property,
then the Borrower shall, upon the request of the Agent or such
Lender, provide the Agent and each Lender with all such reports,
certificates, engineering studies and other written material or
data relating thereto as the Agent or any Lender may reasonably
require which shall be maintained as confidential by the Agent
and the Lenders to the fullest extent authorized by law.
6.26 Change in Corporate Structure; Fiscal Year. The
Borrower shall not, nor shall it permit any Subsidiary to, (a)
permit any amendment or modification to be made to its
certificate of incorporation or by-laws which is materially
adverse to the interests of the Lenders (provided that the
Borrower shall notify the Agent of any other amendment or
modification thereto as soon as practicable thereafter) or (b)
change its Fiscal Year to end on any date other than August 31 of
each year.
<PAGE>
6.27 Inconsistent Agreements. The Borrower shall not, nor
shall it permit any Subsidiary to, enter into any material
indenture, agreement, instrument or other arrangement which, (a)
directly or indirectly prohibits or restrains, or has the effect
of prohibiting or restraining, or imposes materially adverse
conditions upon, the incurrence of the Obligations, the granting
of Liens to secure the Obligations, or the amending of the Loan
Documents or (b) contains any provision which would be violated
or breached by the making of Advances or by the performance by
the Borrower of any of its obligations under any Loan Document.
6.28 Financial Covenants. The Borrower on a consolidated
basis with its Subsidiaries shall:
6.28.1. Minimum Tangible Net Worth. At all times
after the date hereof, determined as of the end of each Fiscal
Quarter, maintain a minimum Tangible Net Worth at least equal to
the sum of (a) $34,000,000 plus (b) 50% of the sum of the
Borrower's positive Net Income, if any, for each Fiscal Year
ending on or after August 31, 1998 and on or prior to the time of
determination.
6.28.2. Debt to Capitalization Ratio. Maintain a Debt
to Capitalization Ratio as of the end of each Fiscal Quarter of
not greater than the following:
Maximum
Measurement Date Ratio
As of each February 28 and November 30 65%
As of each May 31 and August 31 60%
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 1.75 to 1.0.
For the purposes of calculating the Fixed Charge Coverage Ratio,
there shall be added back to EBITDA non-cash charges associated
with the closing of the Borrower's Adirondack, New York facility
or the write-down of assets located at such facility in an amount
not to exceed $1,500,000 in the aggregate.
6.29 Tax Consolidation. The Borrower will not and will not
permit any of its Subsidiaries to (a) file or consent to the
filing of any consolidated, combined or unitary income tax return
with any Person other than the Borrower and its Subsidiaries,
except as may be required by any state taxing authority, or (b)
amend, terminate or fail to enforce the Tax Sharing Agreement.
6.30 ERISA Compliance.
With respect to any Plan, neither the Borrower nor any
Subsidiary shall:
<PAGE>
(a) engage in any "prohibited transaction" (as such
term is defined in Section 406 of ERISA or Section 4975 of
the IRC) for which a civil penalty pursuant to Section
502(i) of ERISA or a tax pursuant to Section 4975 of the IRC
in excess of $100,000 could be imposed;
(b) incur any "accumulated funding deficiency" (as
such term is defined in Section 302 of ERISA) in excess of
$1,000,000, whether or not waived, or permit any Unfunded
Liability in excess of $1,000,000 to exist for more than 30
days after learning thereof;
(c) permit the occurrence of any Termination Event
which could result in a liability to the Borrower or any
other member of the Controlled Group in excess of $100,000;
(d) fail to make any contribution or payment to any
Multiemployer Plan which the Borrower or any other member of
the Controlled Group may be required to make under any
agreement relating to such Multiemployer Plan or Title IV of
ERISA which results in or could reasonably be expected to
result in a liability in excess of $100,000; or
(e) permit the establishment or amendment of any Plan
or fail to comply with the applicable provisions of ERISA
and the IRC with respect to any Plan which could result in
liability to the Borrower or any other member of the
Controlled Group which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse
Effect.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events
shall constitute a Default:
7.1 Any representation or warranty made or deemed made by
or on behalf of the Borrower or any of its Subsidiaries to the
Lenders or the Agent under or in connection with this Agreement,
any Loan, any Facility Letter of Credit, or any certificate or
information delivered in connection with this Agreement or any
other Loan Document shall be false in any material respect on the
date as of which made.
7.2 Nonpayment of (a) principal of any Note or any
Reimbursement Obligation when due, or (b) interest upon any Note
or any commitment fee or other fee or obligations under any of
the Loan Documents within five (5) days after the same becomes
due.
<PAGE>
7.3 The breach by the Borrower of any of the terms or
provisions of Section 6.2, 6.3 or Sections 6.10 through 6.30.
7.4 The breach by the Borrower (other than a breach which
constitutes a Default under Section 7.1, 7.2 or 7.3) of any of
the terms or provisions of this Agreement which is not remedied
within thirty (30) days after written notice to the Borrower from
the Agent or any Lender.
7.5 The default by the Borrower or any of its Subsidiaries
in the performance of any term, provision or condition contained
in any agreement or agreements under which any Indebtedness
aggregating in excess of $1,000,000 was created or is governed,
or the occurrence of any other event or existence of any other
condition, the effect of any of which is to cause, or to permit
the holder or holders of such Indebtedness to cause, such
Indebtedness to become due prior to its stated maturity; or any
such Indebtedness of the Borrower or any of its Subsidiaries
shall be declared to be due and payable or required to be prepaid
(other than by a regularly scheduled payment) prior to the stated
maturity thereof.
7.6 The Borrower or any of its Subsidiaries shall (a) have
an order for relief entered with respect to it under the Federal
bankruptcy laws as now or hereafter in effect, (b) make an
assignment for the benefit of creditors, (c) apply for, seek,
consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for
it or any Substantial Portion of its Property, (d) institute any
proceeding seeking an order for relief under the Federal
bankruptcy laws as now or hereafter in effect or seeking to
adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment
or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or
fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (e) take any
corporate action to authorize or effect any of the foregoing
actions set forth in this Section 7.6, (f) fail to contest in
good faith any appointment or proceeding described in Section 7.7
or (g) become unable to pay, not pay, or admit in writing its
inability to pay, its debts generally as they become due.
7.7 Without the application, approval or consent of the
Borrower or any of its Subsidiaries, a receiver, trustee,
examiner, liquidator or similar official shall be appointed for
the Borrower or any of its Subsidiaries or any Substantial
Portion of its Property, or a proceeding described in Section
7.6(d) shall be instituted against the Borrower or any of its
Subsidiaries, and such appointment continues undischarged or such
proceeding continues undismissed or unstayed for a period of
ninety (90) consecutive days.
<PAGE>
7.8 Any court, government or governmental agency shall
condemn, seize or otherwise appropriate, or take custody or
control of (each a "Condemnation"), all or any portion of the
Property of the Borrower and its Subsidiaries which, when taken
together with all other Property of the Borrower and its
Subsidiaries so condemned, seized, appropriated, or taken custody
or control of, during the twelve-month period ending with the
month in which any such Condemnation occurs, constitutes a
Substantial Portion.
7.9 The Borrower or any of its Subsidiaries shall fail
within thirty days to pay, bond or otherwise discharge any
judgment or order for the payment of money in excess of $250,000
(or multiple judgments or orders for the payment of an aggregate
amount in excess of $1,000,000), which is not stayed on appeal or
otherwise being appropriately contested in good faith.
7.10 Nonpayment by the Borrower of any Rate Hedging
Obligation or the breach by the Borrower of any term, provision
or condition contained in any agreement, device or arrangement
giving rise to any Rate Hedging Obligation within five (5) days
after the same becomes due.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1 Acceleration. If any Default described in Section 7.6
or 7.7 occurs with respect to the Borrower, the obligations of
the Lenders to make Loans or to issue Facility Letters of Credit
hereunder shall automatically terminate and the Obligations shall
immediately become due and payable without any election or action
on the part of the Agent or any Lender. If (a) any other Default
or (b) any Change in Control occurs, the Required Lenders (or the
Agent with the consent of the Required Lenders) may terminate or
suspend the obligations of the Lenders to make Loans or to issue
Facility Letters of Credit hereunder, or declare the Obligations
to be due and payable, or both, whereupon the Obligations shall
become immediately due and payable, without presentment, demand,
protest or notice of any kind, all of which the Borrower hereby
expressly waives. In addition to the foregoing, following the
occurrence and during the continuance of a Default or any Change
in Control, so long as any Facility Letter of Credit has not been
fully drawn and has not been cancelled or expired by its terms,
upon demand by the Agent the Borrower shall deposit in an account
(the "Letter of Credit Cash Collateral Account") maintained with
First Chicago in the name of the Agent, for the ratable benefit
of the Lenders and the Agent, cash in an amount equal to the
aggregate undrawn face amount of all outstanding Facility Letters
of Credit and all fees and other amounts due or which may become
due with respect thereto. The Borrower shall have no control
over funds in the Letter of Credit Cash Collateral Account, which
funds shall be invested by <PAGE> the Agent from time to time in its
discretion in certificates of deposit of First Chicago having a
maturity not exceeding thirty days. Such funds shall be promptly
applied by the Agent to reimburse the Issuer for drafts drawn
from time to time under the Facility Letters of Credit. Such
funds, if any, remaining in the Letter of Credit Cash Collateral
Account following the payment of all Obligations in full or the
earlier termination of all Defaults or the waiver of any Change
in Control shall, unless the Agent is otherwise directed by a
court of competent jurisdiction, be promptly paid over to the
Borrower.
If, within ten Business Days after acceleration of the
maturity of the Obligations or termination of the obligations of
the Lenders to make Loans hereunder as a result of any Default
(other than any Default as described in Section 7.6 or 7.7 with
respect to the Borrower) or Change in Control and before any
judgment or decree for the payment of the Obligations due shall
have been obtained or entered, all of the Lenders (in their sole
discretion) shall so direct, the Agent shall, by notice to the
Borrower, rescind and annul such acceleration and/or termination.
8.2 Amendments. Subject to the provisions of this Article
VIII, the Required Lenders (or the Agent with the consent in
writing of the Required Lenders) and the Borrower may enter into
agreements supplemental hereto for the purpose of adding or
modifying any provisions to the Loan Documents or changing in any
manner the rights of the Lenders or the Borrower hereunder or
waiving any Default or Change in Control hereunder; provided,
however, that no such supplemental agreement shall, without the
consent of each Lender affected thereby:
(a) Extend the final maturity of any Loan or Note or
reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest or fees thereon;
(b) Reduce the percentage specified in the definition
of Required Lenders;
(c) Reduce the amount or extend the payment date for
the mandatory payments required under Section 2.1 or 2.7, or
increase the amount of the Commitment of any Lender
hereunder (other than an increase in the Revolving Credit
Commitment of any Lender as a result of an assignment
consummated between such Lender and another Lender pursuant
to Section 12.3.1 hereof);
(d) Extend the Facility Termination Date or permit any
Facility Letter of Credit to have an expiry date beyond
September 1, 2002;
(e) Amend this Section 8.2; or
(f) Permit any assignment by the Borrower of its
Obligations or its rights hereunder.
<PAGE>
No amendment of any provision of this Agreement relating to the
Agent shall be effective without the written consent of the
Agent. The Agent may waive payment of the fee required under
Section 12.3.2 without obtaining the consent of any other party
to this Agreement.
8.3 Preservation of Rights. No delay or omission of the
Lenders or the Agent to exercise any right under the Loan
Documents shall impair such right or be construed to be a waiver
of any Default or Change in Control or an acquiescence therein,
and the making of a Loan notwithstanding the existence of a
Default or Change in Control or the inability of the Borrower to
satisfy the conditions precedent to such Loan shall not
constitute any waiver or acquiescence. Any single or partial
exercise of any such right shall not preclude other or further
exercise thereof or the exercise of any other right, and no
waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless
in writing signed by such number of Lenders as is required
pursuant to Section 8.2, and then only to the extent in such
writing specifically set forth. All remedies contained in the
Loan Documents or by law afforded shall be cumulative and all
shall be available to the Agent and the Lenders until the
Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1 Survival of Representations. All representations and
warranties of the Borrower contained in this Agreement or of the
Borrower or any Subsidiary contained in any Loan Document shall
survive delivery of the Notes and the making of the Loans herein
contemplated.
9.2 Governmental Regulation. Anything contained in this
Agreement to the contrary notwithstanding, no Lender shall be
obligated to extend credit to the Borrower in violation of any
limitation or prohibition provided by any applicable statute or
regulation.
9.3 Taxes. Any stamp, recording, documentation or other
similar taxes, assessments or charges payable or ruled payable by
any governmental authority in respect of the Loan Documents shall
be paid by the Borrower, together with interest and penalties, if
any.
9.4 Headings. Section headings in the Loan Documents are
for convenience of reference only, and shall not govern the
interpretation of any of the provisions of the Loan Documents.
<PAGE>
9.5 Entire Agreement. The Loan Documents embody the entire
agreement and understanding among the Borrower, the Agent and the
Lenders and supersede all prior agreements and understandings
among the Borrower, the Agent and the Lenders relating to the
subject matter thereof other than the fee letter dated August 8,
1997 in favor of First Chicago.
9.6 Several Obligations; Benefits of this Agreement. The
respective obligations of the Lenders hereunder are several and
not joint and no Lender shall be the partner or agent of any
other (except to the extent to which the Agent is authorized to
act as such). The failure of any Lender to perform any of its
obligations hereunder shall not relieve any other Lender from any
of its obligations hereunder. This Agreement shall not be
construed so as to confer any right or benefit upon any Person
other than the parties to this Agreement and their respective
successors and assigns.
9.7 Expenses; Indemnification. 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) paid or incurred by the Agent in
connection with the preparation, negotiation, execution,
delivery, review, amendment, modification, and administration of
the Loan Documents. The Borrower also agrees to reimburse the
Agent and the Lenders for any costs, internal charges and
out-of-pocket expenses (including attorneys' fees and time
charges of attorneys for the Agent and the Lenders, which
attorneys may be employees of the Agent or the Lenders) paid or
incurred by the Agent or any Lender in connection with the
collection and enforcement of the Loan Documents. The Borrower
further agrees to indemnify the Agent and each Lender, its
directors, officers and employees against all losses, claims,
damages, penalties, judgments, liabilities and expenses
(including, without limitation, all expenses of litigation or
preparation therefor whether or not the Agent or any Lender is a
party thereto) which any of them may pay or incur arising out of
or relating to this Agreement or the other Loan Documents, the
transactions contemplated hereby or thereby or the direct or
indirect application or proposed application of the proceeds of
any Loan hereunder or the use or intended use of any Facility
Letter of Credit except to the extent that they arise out of the
gross negligence or willful misconduct of the party seeking
indemnification. The obligations of the Borrower under this
Section shall survive the termination of this Agreement.
9.8 Numbers of Documents. All statements, notices, closing
documents, and requests hereunder shall be furnished to the Agent
with sufficient counterparts so that the Agent may furnish one to
each of the Lenders.
9.9 Accounting. Except as provided to the contrary herein,
all accounting terms used herein shall be interpreted and all
<PAGE>
accounting determinations hereunder shall be made in accordance
with Agreement Accounting Principles.
9.10 Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable, or
invalid in any jurisdiction shall, as to that jurisdiction, be
inoperative, unenforceable, or invalid without affecting the
remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan
Documents are declared to be severable.
9.11 Nonliability of Lenders. The relationship between the
Borrower and the Lenders and the Agent shall be solely that of
borrower and lender. Neither the Agent nor any Lender shall have
any fiduciary responsibilities to the Borrower on account of this
Agreement. Neither the Agent nor any Lender undertakes any
responsibility to the Borrower to review or inform the Borrower
of any matter in connection with any phase of the Borrower's
business or operations. The Borrower agrees that neither the
Agent nor any Lender shall have liability to the Borrower
(whether sounding in tort, contract or otherwise) for losses
suffered by the Borrower in connection with, arising out of, or
in any way related to, the transactions contemplated and the
relationship established by the Loan Documents, or any act,
omission or event occurring in connection therewith, unless it is
determined by a court of competent jurisdiction by final and non-
appealable judgment that such losses resulted from the gross
negligence or willful misconduct of the party from which recovery
is sought. Neither the Agent nor any Lender shall have any
liability with respect to, and the Borrower hereby waives,
releases and agrees not to sue for, any special, indirect or
consequential damages suffered by the Borrower in connection
with, arising out of, or in any way related to the Loan Documents
or the transactions contemplated thereby.
9.12 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS, WITHOUT REGARD TO
CONFLICT OF LAWS PROVISIONS, OF THE STATE OF ILLINOIS, BUT GIVING
EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
9.13 CONSENT TO JURISDICTION. THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO
IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY
LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT
THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST
THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY <PAGE> THE BORROWER AGAINST THE AGENT OR ANY
LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT
ONLY IN A COURT IN CHICAGO, ILLINOIS; PROVIDED, THAT SUCH
PROCEEDINGS MAY BE BROUGHT IN OTHER COURTS IF JURISDICTION MAY
NOT BE OBTAINED IN A COURT IN CHICAGO, ILLINOIS.
9.14 WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND
EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING
IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
9.15 Disclosure. The Borrower and each Lender hereby (a)
acknowledge and agree that First Chicago and/or its Affiliates
from time to time may hold other investments in, make other loans
to or have other relationships with the Borrower, including,
without limitation, in connection with any interest rate hedging
instruments or agreements or swap transactions, and (b) waive any
liability of First Chicago or such Affiliate to the Borrower or
any Lender, respectively, arising out of or resulting from such
investments, loans or relationships other than liabilities
arising out of the gross negligence or willful misconduct of
First Chicago or its Affiliates.
9.16 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall
constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the
Borrower, the Agent and the Lenders and each party has notified
the Agent by telex or telephone, that it has taken such action.
ARTICLE X
THE AGENT
10.1 Appointment. First Chicago is hereby appointed Agent
hereunder and under each other Loan Document, and each of the
Lenders authorizes the Agent to act as the agent of such Lender.
The Agent agrees to act as such upon the express conditions
contained in this Article X. The Agent shall not have a
fiduciary relationship in respect of the Borrower or any Lender
by reason of this Agreement.
10.2 Powers. The Agent shall have and may exercise such
powers under the Loan Documents as are specifically delegated to
the Agent by the terms of each thereof, together with such powers
as are reasonably incidental thereto. The Agent shall have no
<PAGE>
implied duties to the Lenders, or any obligation to the Lenders
to take any action thereunder, except any action specifically
provided by the Loan Documents to be taken by the Agent.
10.3 General Immunity. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to any
Lender for any action taken or omitted to be taken by it or them
hereunder or under any other Loan Document or in connection
herewith or therewith except for its or their own gross
negligence or willful misconduct.
10.4 No Responsibility for Loans, Recitals, etc. Neither
the Agent nor any of its directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire
into, or verify (a) any statement, warranty or representation
made in connection with any Loan Document or any borrowing
hereunder, (b) the performance or observance of any of the
covenants or agreements of any obligor under any Loan Document,
including, without limitation, any agreement by an obligor to
furnish information directly to each Lender; (c) the satisfaction
of any condition specified in Article IV, except receipt of items
required to be delivered to the Agent and not waived at closing,
or (d) the validity, effectiveness, sufficiency or,
enforceability or genuineness of any Loan Document or any other
instrument or writing furnished in connection therewith. The
Agent shall have no duty to disclose to the Lenders information
that is not required to be furnished by the Borrower to the Agent
at such time, but is voluntarily furnished by the Borrower to the
Agent (either in its capacity as Agent or in its individual
capacity).
10.5 Action on Instructions of Lenders. The Agent shall in
all cases be fully protected in respect of the Lenders in acting,
or in refraining from acting, hereunder and under any other Loan
Document in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or
failure to act pursuant thereto shall be binding on all of the
Lenders and on all holders of Notes. The Agent shall be fully
justified in failing or refusing to take any action hereunder and
under any other Loan Document unless it shall first be
indemnified to its satisfaction by the Lenders pro rata against
any and all liability, cost and expense that it may incur by
reason of taking or continuing to take any such action.
10.6 Employment of Agents and Counsel. The Agent may
execute any of its duties as Agent hereunder and under any other
Loan Document by or through employees, agents and
attorneys-in-fact and shall not be answerable to the Lenders,
except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Agent
shall be entitled to advice of counsel concerning all matters
pertaining to the agency hereby created and its duties hereunder
and under any other Loan Document.
<PAGE>
10.7 Reliance on Documents; Counsel. The Agent shall be
entitled to rely upon any Note, notice, consent, certificate,
affidavit, letter, telegram, statement, paper or document
believed by it to be genuine and correct and to have been signed
or sent by the proper person or persons, and, in respect to legal
matters, upon the opinion of counsel selected by the Agent, which
counsel may be employees of the Agent.
10.8 Agent's Reimbursement and Indemnification. The
Lenders agree to reimburse and indemnify the Agent ratably in
proportion to their respective Commitments (or, if the
Commitments have been terminated, in proportion to their
Commitments immediately prior to such termination) (a) for any
amounts not reimbursed by the Borrower for which the Agent is
entitled to reimbursement by the Borrower under the Loan
Documents, (b) for any other expenses incurred by the Agent on
behalf of the Lenders, in connection with the preparation,
execution, delivery, administration and enforcement of the Loan
Documents, and (c) for any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of the Loan Documents or any other
document delivered in connection therewith or the transactions
contemplated thereby, or the enforcement of any of the terms
thereof or of any such other documents; provided, that no Lender
shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the Agent.
The obligations of the Lenders under this Section 10.8 shall
survive payment of the Obligations and termination of this
Agreement.
10.9 Notice of Default. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or
Unmatured Default hereunder or of any Change in Control unless
the Agent has received written notice thereof from a Lender or
the Borrower referring to this Agreement describing such Default
or Unmatured Default or Change in Control and stating that such
notice is a "notice of default" or "notice of a Change in
Control", as applicable. In the event that the Agent receives
such a notice, the Agent shall give prompt notice thereof to the
Lenders.
10.10 Rights as a Lender. In the event the Agent is a
Lender, the Agent shall have the same rights and powers hereunder
and under any other Loan Document as any Lender and may exercise
the same as though it were not the Agent, and the term "Lender"
or "Lenders" shall, at any time when the Agent is a Lender,
unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend
money to, and generally engage in any kind of trust, debt, equity
or other transaction, in addition to those contemplated by this
Agreement or any other Loan Document, with the Borrower or any of
its Subsidiaries in which the Borrower or such Subsidiary is not
<PAGE>
restricted hereby from engaging with any other Person. The
Agent, in its individual capacity, is not obligated to remain a
Lender.
10.11 Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon the Agent or
any other Lender and based on the financial statements prepared
by the Borrower and such other documents and information as it
has deemed appropriate, made its own credit analysis and decision
to enter into this Agreement and the other Loan Documents. Each
Lender also acknowledges that it will, independently and without
reliance upon the Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not
taking action under this Agreement and the other Loan Documents.
10.12 Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower,
such resignation to be effective upon the appointment of a
successor Agent or, if no successor Agent has been appointed,
forty-five days after the retiring Agent gives notice of its
intention to resign. Upon any such resignation, the Required
Lenders shall have the right to appoint, on behalf of the
Borrower and the Lenders, a successor Agent. If no successor
Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within thirty days after the
resigning Agent's giving notice of its intention to resign, then
the resigning Agent may appoint, on behalf of the Borrower and
the Lenders, a successor Agent. If the Agent has resigned and no
successor Agent has been appointed, the Lenders may perform all
the duties of the Agent hereunder and the Borrower shall make all
payments in respect of the Obligations to the applicable Lender
and for all other purposes shall deal directly with the Lenders.
No successor Agent shall be deemed to be appointed hereunder
until such successor Agent has accepted the appointment. Any
such successor Agent shall be a commercial bank having capital
and retained earnings of at least $250,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the
resigning Agent. Upon the effectiveness of the resignation of
the Agent, the resigning Agent shall be discharged from its
duties and obligations hereunder and under the Loan Documents.
After the effectiveness of the resignation of an Agent, the
provisions of this Article X shall continue in effect for the
benefit of such Agent in respect of any actions taken or omitted
to be taken by it while it was acting as the Agent hereunder and
under the other Loan Documents.
<PAGE>
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1 Setoff. In addition to, and without limitation of,
any rights of the Lenders under applicable law, if any Default or
Unmatured Default or Change in Control occurs, any and all
deposits (including all account balances, whether provisional or
final and whether or not collected or available) and any other
Indebtedness at any time held or owing by any Lender to or for
the credit or account of the Borrower may be offset and applied
toward the payment of the Obligations owing to such Lender,
whether or not the Obligations, or any part hereof, shall then be
due.
11.2 Ratable Payments. If any Lender, whether by setoff or
otherwise, has payment made to it upon its Loans (other than
payments received pursuant to Sections 3.1, 3.2 or 3.4) in a
greater proportion than its pro-rata share of such Loans, such
Lender agrees, promptly upon demand, to purchase a portion of the
Loans held by the other Lenders so that after such purchase each
Lender will hold its ratable proportion of Loans. If any Lender,
whether in connection with setoff or amounts which might be
subject to setoff or otherwise, receives collateral or other
protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to their Loans.
In case any such payment is disturbed by legal process, or
otherwise, appropriate further adjustments shall be made. If an
amount to be setoff is to be applied to Indebtedness of the
Borrower to a Lender, other than Indebtedness evidenced by any of
the Notes held by such Lender, such amount shall be applied
ratably to such other Indebtedness and to the Indebtedness
evidenced by such Notes.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1 Successors and Assigns. The terms and provisions of
the Loan Documents shall be binding upon and inure to the benefit
of the Borrower and the Lenders and their respective successors
and assigns, except that (a) the Borrower shall not have the
right to assign its rights or obligations under the Loan
Documents, and (b) any assignment by any Lender must be made in
compliance with Section 12.3. Notwithstanding clause (b) of this
Section, any Lender may at any time, without the consent of the
Borrower or the Agent, assign all or any portion of its rights
under this Agreement and its Notes to a Federal Reserve Bank;
provided, however, that no such assignment to a Federal Reserve
Bank shall release the transferor Lender from its obligations
hereunder. The Agent may <PAGE> treat the payee of any Note as the
owner thereof for all purposes hereof unless and until such payee
complies with Section 12.3 in the case of an assignment thereof
or, in the case of any other transfer, a written notice of the
transfer is filed with the Agent. Any assignee or transferee of
a Note agrees by acceptance thereof to be bound by all the terms
and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or
giving such authority or consent is the holder of any Note, shall
be conclusive and binding on any subsequent holder, transferee or
assignee of such Note or of any Note or Notes issued in exchange
therefor.
12.2 Participations.
12.2.1. Permitted Participants; Effect. Any Lender
may, in the ordinary course of its business and in accordance
with applicable law, at any time sell to one or more banks or
other entities ("Participants") participating interests in any
Loan owing to such Lender, any Note held by such Lender, any
Lender's interest in any Facility Letter of Credit Obligation,
any Commitment of such Lender or any other interest of such
Lender under the Loan Documents. In the event of any such sale
by a Lender of participating interests to a Participant, such
Lender's obligations under the Loan Documents shall remain
unchanged, such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations,
such Lender shall remain the holder of any such Note for all
purposes under the Loan Documents, all amounts payable by the
Borrower under this Agreement shall be determined as if such
Lender had not sold such participating interests, and the
Borrower and the Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and
obligations under the Loan Documents.
12.2.2. Voting Rights. Each Lender shall retain the
sole right to approve, without the consent of any Participant,
any amendment, modification or waiver of any provision of the
Loan Documents other than any amendment, modification or waiver
which effects any of the modifications referenced in clauses (a)
through (f) of Section 8.2.
12.2.3. Benefit of Setoff. The Borrower agrees that
each Participant shall be deemed to have the right of setoff
provided in Section 11.1 in respect of its participating interest
in amounts owing under the Loan Documents to the same extent as
if the amount of its participating interest were owing directly
to it as a Lender under the Loan Documents; provided, that each
Lender shall retain the right of setoff provided in Section 11.1
with respect to the amount of participating interests sold to
each Participant. The Lenders agree to share with each
Participant, and each Participant, by exercising the right of
setoff provided in Section 11.1, agrees to share with each
Lender, any amount received pursuant to the exercise of its right
of setoff, such amounts to be <PAGE> shared in accordance with Section
11.2 as if each Participant were a Lender.
12.3 Assignments.
12.3.1. Permitted Assignments. Any Lender may, in the
ordinary course of its business and in accordance with applicable
law, at any time assign to one or more banks or other entities
("Purchasers") all or any part of its rights and obligations
under the Loan Documents in an amount equal to or greater than
$5,000,000. Such assignment shall be substantially in the form
of Exhibit D hereto or in such other form as may be agreed to by
the parties thereto, the Agent and the Borrower. The consent of
the Agent and, so long as no Default or Unmatured Default has
occurred and is continuing, the Borrower, shall be required prior
to an assignment becoming effective with respect to a Purchaser
which is not a Lender or an Affiliate thereof. Such consent
shall not be unreasonably withheld. In the case of any
assignment, the assigning Lender shall surrender its Note to the
Borrower prior to the assignment becoming effective and the
Borrower shall, simultaneously with such surrender, reissue and
deliver a new Note or Notes in the same aggregate outstanding
principal amount as the surrendered Note in the name of such
holders as requested by the assigning Lender.
12.3.2. Effect; Effective Date. Upon (a) delivery to
the Agent of a notice of assignment, substantially in the form
attached as Exhibit I to Exhibit D hereto (a "Notice of
Assignment"), together with any consents required by Section
12.3.1, and (b) payment of a $3,500 fee to the Agent for
processing such assignment, such assignment shall become
effective on the effective date specified in such Notice of
Assignment. On and after the effective date of such assignment,
(a) such Purchaser shall for all purposes be a Lender party to
this Agreement and any other Loan Document executed by the
Lenders and shall have all the rights and obligations of a Lender
under the Loan Documents, to the same extent as if it were an
original party hereto, and (b) the transferor Lender shall be
released with respect to the percentage of the Aggregate
Revolving Credit Commitment and Loans assigned to such Purchaser
without any further consent or action by the Borrower, the
Lenders or the Agent. Upon the consummation of any assignment to
a Purchaser pursuant to this Section 12.3.2, the transferor
Lender, the Agent and the Borrower shall make appropriate
arrangements so that replacement Notes are issued to such
transferor Lender and new Notes or, as appropriate, replacement
Notes, are issued to such Purchaser, in each case in principal
amounts reflecting their Commitment, as adjusted pursuant to such
assignment.
12.4 Dissemination of Information. The Borrower authorizes
each Lender to disclose to any Participant or Purchaser or any
other Person acquiring an interest in the Loan Documents by
operation of law (each a "Transferee") and any prospective
<PAGE>
Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its
Subsidiaries.
12.5 Tax Treatment. If any interest in any Loan Document
is transferred to any Transferee which is organized under the
laws of any jurisdiction other than the United States or any
State thereof, the transferor Lender shall cause such Transferee,
concurrently with the effectiveness of such transfer, to comply
with the provisions of Section 2.18.
ARTICLE XIII
NOTICES
13.1 Giving Notice. Except as otherwise permitted by
Section 2.15 with respect to borrowing notices, all notices and
other communications provided to any party hereto under this
Agreement or any other Loan Document shall be in writing, by
facsimile, first class U.S. mail or overnight courier and
addressed or delivered to such party at its address set forth
below its signature hereto or at such other address as may be
designated by such party in a notice to the other parties.
Unless otherwise provided in this Agreement, any notice, if
mailed and properly addressed with first class postage prepaid,
return receipt requested, shall be deemed given three (3)
Business Days after deposit in the U.S. mail; any notice, if
transmitted by facsimile, shall be deemed given when transmitted;
and any notice given by overnight courier shall be deemed given
one (1) Business Day after such notice is deposited with such
courier.
13.2 Change of Address. The Borrower, the Agent and any
Lender may each change the address for service of notice upon it
by a notice in writing to the other parties hereto.
[signature pages to follow]
<PAGE>
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent
have executed this Agreement as of the date first above written.
RAWLINGS SPORTING GOODS COMPANY,
INC.
By: /s/ Paul E. Martin
Print Name: Paul E. Martin
Title: Chief Financial Officer
Address: 1859 Intertech Drive
Fenton, Missouri 63026
Attn: Chief Financial Officer
Telecopy: 314-349-3580
Telephone: 314-349-3500
Revolving Credit
Commitments
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
$24,000,000
By: /s/ Nathan L. Bloch
Print Name: Nathan L. Bloch
Title: First Vice President
Address: One First National Plaza
Suite 0173
Chicago, Illinois 60670
Attn: Nathan L. Bloch
Telecopy: 312-732-1117
Telephone: 312-732-2243
<PAGE>
THE BANK OF NEW YORK
$18,000,000
By: /s/ John C.Lambert
Print Name: John C. Lambert
Title: Vice President
Address: One Wall Street
New York, New York 10286
Attn: John C. Lambert
Telecopy: 212-635-1208
Telephone: 212-635-8204
<PAGE>
COMERICA BANK
$16,000,000
By: /s/ Burt R. Shurly, III
Print Name: Burt R. Shurly, III
Title: Vice President
Address: Comerica Tower at Detroit
Center
500 Woodward Avenue, Mail
Code 3269
9th Floor
Detroit, Michigan 48226
Attn: Burt R. Shurly, III
Telecopy: 313-222-9516
Telephone: 313-222-3070
<PAGE>
NATIONSBANK, N.A.
$16,000,000
By: /s/ Jeff Potts
Print Name: Jeff Potts
Title: Vice President
Address: One NationsBank Plaza
800 Market Street
Post Office Box 236
St. Louis, Missouri
63166-0236
Attn: Jeff Potts
Telecopy: 314-466-6499
Telephone: 314-466-6061
<PAGE>
$16,000,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ Steven T. Standbridge
Print Name: Steven T. Standbridge
Title: Vice President
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Attn: Steven T. Standbridge
Telecopy: 312-974-0761
Telephone: 312-828-2270
____________
$90,000,000
EXHIBIT 99.2
RAWLINGS SPORTING GOODS ACQUIRES VICTORIAVILLE HOCKEY BUSINESS
ST. LOUIS, Sept 12/PRNewswire/ -- RAWLINGS SPORTING GOODS
COMPANY, INC. (Nasdaq:RAWL) today announced the closing of its
acquisition of substantially all the assets of USA Skate Company,
Inc. (the Victoriaville business), including the Vic,
Victoriaville and McMartin brands. In August, Rawlings announced
its plans to acquire the Victoriaville business. Jon Hodgins,
Victoriaville's President, will manage the Rawlings' hockey
business including the Rawlings, Vic, Victoriaville and McMartin
brands. Victoriaville had approximately $14.0 million in annual
revenues in its most recently completed fiscal year and has NHL
on ice exposure with well over 150 professional players using Vic
equipment.
Carl J. Shields, Chairman, Chief Executive Officer and President
of Rawlings, said "With the acquisition of the Victoriaville
business complete, Rawlings is looking forward to providing the
same high level of quality, service and product innovation to
customers for hockey products that they have grown to expect from
Rawlings in baseball, basketball and football related products."
Except for the historical financial information contained herein,
the matters discussed in this news release are forward looking
statements that involve risks and uncertainties, including
quarterly fluctuations in results, ongoing customer changes in
buying patterns, retail sell rates for the Company's products
which may result in more or less orders than those anticipated
and the impact of competitive products and pricing. In addition,
other risks and uncertainties are detailed from time to time in
the Company's SEC reports, including the report on Form 10-K for
the year ended August 31, 1996.
Rawlings is a leading supplier of team sports equipment and
apparel.
SOURCE: Rawlings Sporting Goods Company, Inc.
