-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FyDHSO4gwhdqbczq+CVfjliGV6HsNwJNLSfw2hixaUl/5z6Ge5BP/+J6dGUI9U+7 w1QQWPjuq+RoY2DHGypFgw== 0000950124-02-000073.txt : 20020413 0000950124-02-000073.hdr.sgml : 20020413 ACCESSION NUMBER: 0000950124-02-000073 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20011130 FILED AS OF DATE: 20020114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RAWLINGS SPORTING GOODS CO INC CENTRAL INDEX KEY: 0000921915 STANDARD INDUSTRIAL CLASSIFICATION: [3949] IRS NUMBER: 431674348 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24450 FILM NUMBER: 2508885 BUSINESS ADDRESS: STREET 1: 1859 INTERTECH DR CITY: FENTON STATE: MO ZIP: 63026 BUSINESS PHONE: 3143493500 MAIL ADDRESS: STREET 1: 1859 INTERTECH DR CITY: FENTON STATE: MO ZIP: 63026 10-Q 1 c66961e10-q.txt QUARTERLY REPORT DATED 11/30/01 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q |X| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended November 30, 2001 ----------------- Commission file number 0-24450 ------- RAWLINGS SPORTING GOODS COMPANY, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 43-1674348 (State or Other Jurisdiction (I.R.S. Employer of Incorporation or Organization) Identification No.) 1859 Intertech Drive, Fenton, Missouri 63026 (Address of Principal Executive Offices) (Zip Code) (636) 349-3500 (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No -------------- ---------------- Number of shares outstanding of the issuer's Common Stock, par value $0.01 per share, as of December 31, 2001: 8,030,249 shares. Part I. FINANCIAL INFORMATION Item 1. Financial Statements Rawlings Sporting Goods Company, Inc. and Subsidiaries Consolidated Statements of Income (Amounts in thousands, except per share data) (Unaudited)
Three Months Ended November 30, ------------------------------ 2001 2000 ------------- ------------- Net revenues....................................................................... $33,408 $36,839 Cost of goods sold................................................................. 23,963 26,208 ------------- ------------- Gross profit.................................................................. 9,445 10,631 Selling, general and administrative expenses....................................... 10,029 9,960 Unusual (income) item.............................................................. - (1,054) ------------- ------------- Operating income (loss)....................................................... (584) 1,725 Interest expense................................................................... 634 1,176 ------------- ------------- Income (loss) before income taxes............................................. (1,218) 549 Provision (benefit) for income taxes............................................... (420) 203 ------------- ------------- Net income (loss) ............................................................ $ (798) $ 346 ============= ============= Net income (loss) per common share, basic and diluted $(0.10) $0.04 ============= ============= Shares used in computing per share amounts: Basic......................................................................... 8,080 7,999 Assumed exercise of stock options............................................. - 2 ------------- ------------- Diluted....................................................................... 8,080 8,001 ============= =============
The accompanying notes are an integral part of these consolidated statements. 2 Rawlings Sporting Goods Company, Inc. and Subsidiaries Consolidated Balance Sheets (Amounts in thousands, except share data)
November 30, 2001 August 31, (Unaudited) 2001 -------------------- ------------------ Assets Current Assets: Cash and cash equivalents.................................. $913 $921 Accounts receivable, net of allowance of $3,055 and $2,871 respectively.......................... 31,500 27,750 Inventories................................................ 42,476 33,379 Deferred income taxes...................................... 4,277 4,277 Prepaid expenses........................................... 462 606 -------------------- ------------------ Total current assets................................... 79,628 66,933 Property, plant and equipment................................. 7,446 7,271 Deferred income taxes......................................... 22,816 22,367 Other assets.................................................. 2,054 1,970 -------------------- ------------------ Total assets........................................... $111,944 $98,541 ==================== ================== Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt and revolving credit agreement............................. $42,122 $34,684 Accounts payable........................................... 17,475 10,178 Accrued liabilities........................................ 8,465 8,740 -------------------- ------------------ Total current liabilities.............................. 68,062 53,602 Long-term debt, less current maturities....................... 3,975 4,242 Other long-term liabilities................................... 9,291 9,291 -------------------- ------------------ Total liabilities...................................... 81,328 67,135 -------------------- ------------------ Stockholders' equity: Preferred stock, none issued............................... - - Common stock, $0.01 par value, 50,000,000 shares authorized, 8,030,249 and 8,011,145 shares issued and outstanding, respectively............ 80 80 Additional paid-in capital................................. 31,216 31,151 Stock subscription receivable.............................. (1,421) (1,421) Cumulative other comprehensive loss........................ (1,549) (1,492) Retained earnings.......................................... 2,290 3,088 -------------------- ------------------ Stockholders' equity....................................... 30,616 31,406 -------------------- ------------------ Total liabilities and stockholders' equity............. $111,944 $98,541 ==================== ==================
The accompanying notes are an integral part of these consolidated balance sheets. 3 Rawlings Sporting Goods Company, Inc. and Subsidiaries Consolidated Statements of Cash Flow (Amounts in thousands) (Unaudited)
Three Months Ended November 30, --------------------------------------- 2001 2000 ----------------- ------------------ Cash flows from operating activities: Net income (loss)..................................................... $(798) $346 Adjustments to reconcile net income (loss) to net cash used in continuing operations: Depreciation and amortization..................................... 463 517 Gain on sale of Springfield distribution center................... - (1,115) Changes in operating assets and liabilities: Accounts receivable............................................... (3,750) (5,160) Inventories....................................................... (9,097) (12,757) Accounts payable.................................................. 7,297 9,979 Other........................................................... (702) (630) ----------------- ------------------ Net cash used in continuing operations..................................... (6,587) (8,820) Net cash provided by discontinued segment.................................. - 897 ----------------- ------------------ Net cash used in operating activities...................................... (6,587) (7,923) ----------------- ------------------ Cash flows from investing activities: Capital expenditures of continuing operations......................... (657) (224) Capital expenditures of discontinued segment.......................... - (18) Proceeds from sale of Springfield distribution center................. - 2,376 ----------------- ------------------ Net cash provided by (used in) investing activities........................ (657) 2,134 ----------------- ------------------ Cash flows from financing activities: Net increase in revolving credit agreement............................ 7,438 7,677 Repayments of long-term debt.......................................... (267) (2,143) Issuance of common stock.............................................. 65 65 ----------------- ------------------ Net cash provided by financing activities.................................. 7,236 5,599 ----------------- ------------------ Net decrease in cash and cash equivalents.................................. (8) (190) Cash and cash equivalents, beginning of period............................. 921 1,424 ----------------- ------------------ Cash and cash equivalents, end of period................................... $913 $1,234 ================= ==================
The accompanying notes are an integral part of these consolidated statements. 4 Rawlings Sporting Goods Company, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1: Summary of Significant Accounting Policies. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission pertaining to interim financial information and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company's Form 10-K for the year ended August 31, 2001 filed on November 28, 2001. In the opinion of management, all adjustments consisting only of normal recurring adjustments considered necessary for a fair presentation of financial position and results of operations have been included therein. The results for the three months ended November 30, 2001 are not necessarily indicative of the results that may be expected for a full fiscal year. Note 2: Discontinued Segment On June 26, 2000 the Company made a strategic decision to seek a buyer for its Vic hockey business. Vic provided an extensive line of equipment for hockey teams including hockey sticks, hockey protective equipment and goalie protective equipment. The sale of the Vic hockey business was completed during the quarter ended May 31, 2001 under substantially the same terms as originally provided. Proceeds from the sale totaled $2,494,000 including cash of $1,474,000 at closing and $1,019,000 of 7% notes to be received through May 2004 which are included in Other Assets on the Consolidated Balance Sheet. Net revenues of the discontinued segment for the three months ended November 30, 2000 were $1,505,000. Note 3: Unusual (Income) Item In connection with the relocation of distribution facilities to a new single location in Washington, Missouri, the Springfield, Missouri distribution center was sold in September 2000. The move to Washington was completed in the fourth quarter of fiscal 2001. The gain on the sale of Springfield of $1,115,000 offset by $61,000 of transition costs incurred during the move to Washington has been included as unusual income in the Consolidated Statement of Income for the three months ended November 30, 2000. 5 Note 4: Inventories Inventories consisted of the following (in thousands):
November 30, August 31, 2001 2001 --------------------- -------------------- Raw materials............................. $6,703 $6,629 Work in process........................... 411 531 Finished goods............................ 35,362 26,219 --------------------- -------------------- Total inventories......................... $42,476 $33,379 ===================== ====================
Note 5: Debt On December 28, 1999, the Company refinanced its credit facility by entering into a five-year credit agreement expiring December 1, 2004 with a financial institution. Actual availability is based on the Company's outstanding receivables and inventories. The facility also allows for a $3,000,000 seasonal advance from August through February. Borrowings under the agreement are based on an interest rate of LIBOR plus 2.50 percent. A commitment fee of 0.50 percent is charged on any unused portion of the facility. The credit facility includes various covenants, including requirements that the Company achieve certain EBITDA levels as defined in the agreement, maintain a fixed charge ratio, limit capital expenditures and restrict the payment of dividends. The Company has amended the EBITDA covenants for the second and third quarters of fiscal 2002 to $6,700,000 and $7,500,000, respectively and the fixed charge ratio for the same periods is 1.0 to 1.0. The EBITDA calculation includes the unusual items. The Company believes its cash position and current credit facility are adequate to provide for its operations. Note 6: Comprehensive Loss For the three months ended November 30, 2001 and 2000 comprehensive loss was $855,000 and $51,000 respectively. Note 7: Operating Segments Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company has identified operating segments based on internal management reports. 6 Aggregation of similar operating segments into a single reportable operating segment is permitted if the businesses are considered to have similar long-term economic characteristics. The Company has four operating segments based on its product categories, which in applying the aggregation criteria have been aggregated into two reportable segments: Sports Equipment and Licensing. The sports equipment segment manufactures and distributes sports equipment and uniforms for team sports including baseball, basketball and football. The licensing segment licenses the Rawlings brand name on products sold by other companies and includes products such as footwear and activewear. There are no significant determinable operating expenses or interest costs for the licensing segment. The accounting policies of the segments are the same as those for the Company. The revenues generated and long-lived assets located outside the United States are not significant for separate presentation.
Three Months Ended November 30, 2001 2000 ------------------- -------------------- Net revenues Sports equipment $32,234 $35,874 Licensing 1,174 965 ------------------- -------------------- Consolidated net revenues $33,408 $36,839 =================== ==================== Operating income (loss) Sports equipment $(1,758) $ 760 Licensing 1,174 965 ------------------- -------------------- Consolidated operating income (loss) $(584) $ 1,725 =================== ====================
November 30, August 31, 2001 2001 ------------------- -------------------- Total assets Sports equipment $111,137 $98,222 Licensing 807 319 ------------------- -------------------- Consolidated total assets $111,944 $98,541 =================== ====================
7 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition RESULTS OF OPERATIONS Quarter Ended November 30, 2001 Compared with Quarter Ended November 30, 2000 Net revenues for the quarter ended November 30, 2001 were $33,408,000 which was 9.3 percent below net revenues of $36,839,000 for the quarter ended November 30, 2000. The decrease in net revenues was primarily due to lower sales of baseball gloves, basketballs, and footballs. The Company's gross profit for the three months ended November 30, 2001 was $9,445,000, or 11.2 percent, lower than the gross profit of $10,631,000 for the same period last year. The gross profit margin for the quarter was 28.3 percent, 0.6 margin points lower than the comparable prior year quarter. The decrease in gross profit was primarily due to the lower net revenues of baseball gloves, basketballs, and footballs. Selling, general and administrative (SG&A) expenses were $10,029,000 or 30.0 percent of net revenues compared to $9,960,000 or 27.0 percent of net revenues in the prior year. Higher distribution costs and severance expense of $175,000 accounted for the increase in SG&A expenses. The unusual income item for the three months ended November 30, 2000 was comprised of the $1,115,000 gain on the sale of the Springfield, Missouri distribution center, offset by $61,000 of transition costs incurred during the move to Washington, Missouri. Interest expense for the quarter ended November 30, 2001 was $634,000 or 46.1 percent lower than the interest expense of $1,176,000 for the comparable prior year quarter. Lower average interest rates of 4.1 points and lower average borrowings of $4,200,000 accounted for the decrease in interest expense. Net loss for the quarter ended November 30, 2001 was $798,000 compared to net income of $346,000 for the quarter ended November 30, 2000. Decreased net revenues and the gain on the sale of the distribution center in the November 2000 quarter partially offset by lower interest expense were the primary reasons for the decreased income. New Accounting Pronouncements The Financial Accounting Standards Board has issued SFAS No. 141, "Business Combinations." SFAS No. 141 requires that all business combinations initiated after June 30, 2001 be accounted for under the purchase method and addresses the initial 8 recognition and measurement of goodwill and other intangible assets acquired in a business combination. The Financial Accounting Standards Board has issued SFAS No. 142, "Goodwill and Other Intangible Assets." Under the new standard, entities will no longer be required or permitted to amortize goodwill reflected on the balance sheet. However, entities will be required to evaluate goodwill reflected on the balance sheet to determine whether the goodwill is impaired under the guidelines of the standard. If an entity determines that the goodwill is impaired, it will be required to write-off all or a portion of the goodwill. Adoption of SFAS No. 142 in fiscal 2002 is not expected to impact our consolidated financial position. The Financial Accounting Standards Board has issued SFAS No. 143, "Asset Retirement Obligations." The new standard requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes the cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement. The standard is effective for fiscal years beginning after June 15, 2002. Adoption of SFAS No. 143 is not expected to impact our consolidated financial position. The Company will adopt SFAS No. 143 in fiscal 2003. The Financial Accounting Standards Board has issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." The new standard replaces FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The primary objectives of this statement were to develop one accounting model, based on the framework established in Statement 121, for long-lived assets to be disposed of by sale and to address significant implementation issues. Statement 144 requires that all long-lived assets, including discontinued operations, be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or in discontinued operations. The standard is effective for fiscal years beginning after December 15, 2001. Adoption of SFAS No. 144 is not expected to impact our consolidated financial position. The Company will adopt SFAS No. 144 in fiscal 2003. Liquidity and Capital Resources Working capital decreased by $1,765,000 during the three months ended November 30, 2001 primarily as a result of increases in accounts payable and short-term borrowings partially offset by a seasonal increase in accounts receivable and inventories. 9 Net cash used in operating activities for the quarter ended November 30, 2001 was $6,587,000 compared to the $7,923,000 used in the comparable prior year period. The improvement in cash used in operating activities was due to smaller increases is accounts receivable and inventories, partially offset by a smaller increase in accounts payable. Capital expenditures were $657,000 for the quarter ended November 30, 2001 compared to $224,000 in the comparable prior year quarter. The Company expects capital expenditures for fiscal 2002 to be approximately $1,500,000. The Company had an increase in net borrowings, primarily related to seasonal working capital needs, of $7,171,000 in the quarter ended November 30, 2001. This resulted in total debt as of November 30, 2001 of $46,097,000 or 9.8 percent lower than the total debt of $51,116,000 as of November 30, 2000. On December 28, 1999, the Company refinanced its credit facility by entering into a five-year credit agreement expiring December 1, 2004 with a financial institution. Actual availability is based on the Company's outstanding receivables and inventories. The facility also allows for a $3,000,000 seasonal advance from August through February. Borrowings under the agreement are based on an interest rate of LIBOR plus 2.50 percent. A commitment fee of 0.50 percent is charged on any unused portion of the facility. The credit facility includes various covenants, including requirements that the Company achieve certain EBITDA levels as defined in the agreement, maintain a fixed charge ratio, limit capital expenditures and restrict the payment of dividends. The Company has amended the EBITDA covenants for the second and third quarters of fiscal 2002 to $6,700,000 and $7,500,000, respectively and the fixed charge ratio for the same periods is 1.0 to 1.0. The EBITDA calculation includes the unusual items. The Company believes its cash position and current credit facility are adequate to provide for its operations. Seasonality Net revenues of baseball equipment and team uniforms are highly seasonal. Customers generally place orders with the Company for baseball-related products beginning in August for shipment beginning in November (pre-season orders). These pre-season orders from customers generally represent approximately 50 percent to 65 percent of the customers' anticipated needs for the entire baseball season. The amount of these pre-season orders generally determines the Company's net revenues and profitability between November 1 and February 28. The Company then receives additional orders (fill-in orders) which depend upon customers' actual sales of products during the baseball season (sell-through). Fill-in orders are typically received by the Company between February and May. These orders generally represent approximately 10 35 percent to 50 percent of the Company's sales of baseball-related products during a particular season. Pre-season orders for certain baseball-related products from certain customers are not required to be paid until early spring. These extended terms increase the risk of collectibility of accounts receivable. An increasing number of customers are on automatic replenishment systems; therefore, more orders are received on a ship-at-once basis. This change has resulted in shipments to the customer closer to the time the products are actually sold. This trend has and may continue to have the effect of shifting the seasonality and quarterly results of the Company with higher inventory and debt levels required to meet orders for immediate delivery. To offset these risks, the Company implemented for the Spring 2000 season a Port of Entry (POE) program to encourage retailers to place and receive early orders, as well as other changes in credit terms to reduce risk and debt levels. The sell-through of baseball-related products also affects the amount of inventory held by customers at the end of the season which is carried over by the customer for sale in the next baseball season. Customers typically adjust their pre-season orders for the next baseball season to account for the level of inventory carried over from the preceding baseball season. Football equipment and team uniforms are both shipped by the Company and sold by retailers primarily in the period between March 1 and September 30. Basketballs and team uniforms generally are shipped and sold throughout the year. Because the Company's sales of baseball-related products exceed those of its other products, Rawlings' business is seasonal, with its highest net revenues and profitability recognized between November 1 and April 30. Cautionary Factors That May Affect Future Results, Financial Condition or Business Statements made in this report, other reports and proxy statements filed with the Securities and Exchange Commission, communications to stockholders, press releases and oral statements made by representatives of the Company that are not historical in nature, or that state the Company's or management's intentions, hopes, beliefs, expectations, or predictions of the future, are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and involve risks and uncertainties. The words "should," "will be," "intended," "continue," "believe," "may," "expect," "hope," "anticipate," "goal," "forecast" and similar expressions are intended to identify such forward-looking statements. It is important to note that any such performance, and actual results, financial condition or business could differ materially from those expressed in such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this document as well as those discussed elsewhere in reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial condition or business over time. 11 Item 3. Quantitative and Qualitative Disclosures about Market Risk The Company has certain market risk exposures related to interest rates. The Company is exposed to market risks related to fluctuations in interest rates for its variable rate borrowings of $46,049,000 as of November 30, 2001. A change in interest rates of 1% on the balance outstanding at November 30, 2001 would cause a change in total annual pre-tax earnings and cash flows of $460,000 assuming other factors are held constant. Due to the relative size of the Company's foreign operations, the Company believes it does not have any material exposure to foreign currency fluctuations. 12 Part II. OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes in Securities and Use of Proceeds None. Item 3. Defaults on Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 10.1 Employment Agreement, dated as of September 1, 2001, by and between Rawlings Sporting Goods Company, Inc. and Ted Sizemore. 10.2 Amendment No. 7 to Credit Agreement, dated as of November 27, 2001, among Rawlings Sporting Goods Company, Inc., General Electric Capital Corporation and the other Credit Parties signatory thereto. (b) Reports on Form 8-K (i) A current report on Form 8-K, filed on November 26, 2001, reporting under Item 9; Regulation FD Disclosure (regarding Bull Run Corp.). 13 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 thereunto duly authorized. RAWLINGS SPORTING GOODS COMPANY, INC. Date: January 9, 2002 /s/ STEPHEN M. O'HARA ------------------------------------------- Stephen M. O'Hara Chairman of the Board and Chief Executive Officer Date: January 9, 2002 /s/ WILLIAM F. LACEY ------------------------------------------- William F. Lacey Vice President and Chief Financial Officer (Principal Accounting Officer) 14 EX-10.1 3 c66961ex10-1.txt EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT THIS AGREEMENT is entered into as of this 1st day of September, 2001, between RAWLINGS SPORTING GOODS COMPANY, INC., a Delaware corporation (the "Company"), and TED SIZEMORE (the "Executive"). This Agreement cancels and supersedes all previous agreements relating to the subject matter of this Agreement or otherwise, whether written or oral, between the parties hereto, including but not limited to that certain October 13, 1994 Indemnity Agreement, and the October 26, 1995 Severance Agreement, and this Agreement contains the entire understanding of the parties hereto and shall not be amended, modified or supplemented in any manner whatsoever except as otherwise provided herein or in writing signed by each of the parties hereto. 1. EMPLOYMENT. The Company agrees to employ the Executive and the Executive agrees to be employed by the Company as its Senior Vice President, Baseball Affairs, upon the terms and conditions of this Agreement. 2. TERM. The term of Executive's employment hereunder shall be ten (10) years, commencing on the date first written above, and ending on the tenth anniversary of such date (the "Contract Term"), unless this Agreement is earlier terminated in accordance with the terms of Section 12 hereof. 3. EXECUTIVE'S COMPENSATION. (a) Base Salary. For all services rendered by the Executive to the Company, the Company shall pay the Executive an initial Base Salary of $100,000 per year. Commencing on the fifth anniversary of this Agreement, through the end of the Contract Term, the Executive's Base Salary shall be reduced to $75,000 per year. Salary payments shall be subject to withholding and other applicable taxes and shall be payable in accordance with the Company's normal payroll practices. (b) Bonus. Beginning with the fiscal year ending August 31, 2002, the Executive shall be eligible to receive an annual bonus of up to 100% of the Executive's Base Salary (the "Bonus"), with a target of 60% of Base Salary, to be determined consistent with the criteria used to determine the payment of bonuses to other executives having duties and responsibilities generally comparable to Executive's, unless such criteria are modified by mutual agreement of the Executive and the Company's Chief Executive Officer. On or before December 31 of each year, the Company shall pay to Executive the amount of any Bonus due hereunder with respect to the previous fiscal year. All bonus payments shall be subject to withholding and all other applicable taxes. Except as otherwise expressly provided herein, if Executive voluntarily terminates employment with the Company, or is terminated by the Company for Cause (under Section 12), the Executive shall receive no Bonus for the year in which he leaves the Company. (c) Reimbursement of Expenses. The Company shall reimburse the Executive for all ordinary and necessary expenses incurred and paid by the Executive in the course of the performance of the Executive's duties pursuant to this Agreement and consistent with the Company's policies in effect from time to time with respect to travel, entertainment and other business expenses, and subject to the Company's requirements with respect to the manner of reporting such expenses. 4. BENEFITS. (a) Life Insurance. Following a medical examination by an independent physician and upon determination that no medical condition exists which would make the cost of such policy commercially unreasonable or that causes Executive not to qualify under the Company's Supplemental group plan, the Company shall obtain on behalf of Executive a term policy insuring the life of the Executive, which shall have death benefits in the amount of $300,000 (the "Policy"). The Company will pay all premium payments due under the Policy until the earlier to occur of (i) the death of the Executive, (ii) the Disability of the Executive (as hereinafter defined), and (iii) the date on which the Executive's service with the Company is terminated whether under Section 12 or following a Change in Control. The premiums for the Policy will be treated as ordinary compensation to the Executive. In the event of the death of the Executive during the term of this Agreement, the face amount of the Policy shall be paid to the spouse of the Executive or other beneficiary designated by the Executive. (b) Additional Benefits. The Executive shall receive additional benefits consistent with those provided to other executives having responsibility commensurate to that of the Executive, and such additional benefits as may be from time to time agreed upon in writing between the Executive and the Company, (c) Vacation. The Executive shall receive twelve (12) weeks of vacation annually through the fifth anniversary of this Agreement. Thereafter, until the end of the Contract Term, Executive shall receive sixteen (16) weeks of vacation annually. 5. STOCK OPTIONS. (a) The Company hereby grants to Executive as of the date of this Agreement a nonqualified stock option (the "Option") to purchase 20,000 shares of the Company's common stock (the "Shares") at the market price per share as of the close of business on the date on which this Agreement is executed, which Option shall become exercisable so long as Executive is an employee of the Company. The number of Shares with respect to which the Option may be exercised shall be cumulative so that if the full number of Shares shall not have been purchased, any such unpurchased Shares shall continue to be included in the 2 number of Shares with respect to which the Option shall then be exercisable along with any other Shares as to which the Option may become exercisable. The Option shall be exercisable following the termination of the Executive's employment with the Company for other than Cause as defined in Section 12 hereof, for a period of ninety (90) days from the date of such termination, to the extent the Option was exercisable as of the date of such termination. The Option shall be exercisable following the termination of the Executive's employment with the Company for Cause as defined in Section 12 hereof, for a period of forty-eight (48) hours from the date of such termination, to the extent the Option was exercisable as of the date of such termination. (b) The Company shall further grant to Executive on each anniversary date of this Agreement a nonqualified stock option (the "Option") to purchase an additional 5,000 shares of the Company's common stock (the "Shares") at the market price per share as of the close of business on the immediately preceding August 31 or as of the end of the fiscal year if not August 31, which Option shall become exercisable so long as Executive is an employee of the Company, and Company remains a public company, in the manner described in Section 5(a) above. (c) The options described in (a) and (b) above are not transferable to any third party by the Executive except to a revocable living trust established by the Executive of which the Executive is a trustee and the primary beneficiary. The options may be exercised only to purchase whole shares. No fractional shares will be issued upon exercise of the options. The options shall be exercised and payment made to the Company in accordance with procedures provided by the Compensation Committee of the Company. (d) All stock options granted to Executive prior to this Agreement remain in effect consistent with their granted terms. 6. DUTIES. The Executive is employed primarily to represent the Company in baseball matters concerning Major League Baseball ("MLB"), minor league baseball, and the National Collegiate Athletic Association ("NCAA"), in addition to other key leagues or associations, including in the negotiation of agreements, MLB winter meeting and spring training, major events (ie. super show, College World Series, MLB Allstar Game, World Series), and publicity and corporate spokesperson roles (ie. presentation of one-half of Gold Glove awards, attending a minimum of 25 St. Louis Cardinals home games, and representation of the Company in radio and television broadcasts.) Upon commencement of this Agreement, Executive is employed to work an average of four (4) days per week for each week during the Contract Term. Commencing on the fifth anniversary of this Agreement, however, Executive is employed to work an average of three (3) days per week for each week through the end of the Contract Term. The Executive agrees that so long as he is employed under this Agreement he will (i) devote his best efforts to further properly the interests of the Company, (ii) at all times be subject to the Company's direction and 3 control with respect to his activities on behalf of the Company, (iii) comply with all rules, orders and regulations of the Company, (iv) truthfully and accurately maintain and preserve such records and make all reports as the Company may require, and (v) fully account for all monies and other property of the Company of which he may from time to time have custody and deliver the same to the Company whenever and however directed to do so. 7. COVENANT NOT TO DISCLOSE CONFIDENTIAL INFORMATION. The Executive acknowledges that during the course of his employment with the Company he has or will have access to and knowledge of certain information and data which the Company considers confidential and that the release of such information or data to unauthorized persons would be extremely detrimental to the Company. As a consequence, the Executive hereby agrees and acknowledges that he owes a duty to the Company not to disclose, and agrees that, during or after the term of his employment, without the prior written consent of the Company he will not communicate, publish or disclose, to any person anywhere or use any Confidential Information (as hereinafter defined) for any purpose other than carrying out his duties as Senior Vice President, Baseball Affairs. The Executive will return to the Company all Confidential Information in the Executive's possession or under the Executive's control whenever the Company shall so request, and in any event will promptly return all such Confidential Information if the Executive's relationship with the Company is terminated for any or no reason and will not retain any copies thereof. For purposes hereof the term "Confidential Information" shall mean any information or data used by or belonging or relating to the Company that is not known generally to the industry in which the Company is or may be engaged, including without limitation, any and all trade secrets, proprietary data and information relating to the Company's past, present or future business and products, price lists, customer lists, processes, procedures or standards, know-how, manuals, business strategies, records, drawings, specifications, designs, financial information, whether or not reduced to writing, or information or data which the Company advises the Executive should be treated as Confidential Information. 8. COVENANT NOT TO COMPETE. The Executive acknowledges that during his employment with the Company he, at the expense of the Company, will be specially trained in the business of the Company, will establish favorable relations with the customers, clients and accounts of the Company and will have access to Inventions, trade secrets and Confidential Information of the Company. Therefore, in consideration of such training and relations and to further protect the Inventions, trade secrets and Confidential Information of the Company, the Executive agrees that during the term of his employment by the Company and for a period of two (2) years from and after the voluntary or involuntary termination of such employment for any or no reason, he will not, directly or indirectly, without the express written consent of the Company, except when and as requested to do in and about the performance of his duties under this Agreement: (a) own or have any interest in or act as an officer, director, partner, principal, employee, agent, representative, consultant or independent contractor of, or in any way assist in, any business located in or doing business in the United States or in any other county, territory or possession in which the Company has engaged in business during the Executive's employ, that is engaged in competition in any manner with any business of the Company at any time during the time of the Executive's employment hereunder; 4 (b) solicit, divert or attempt to divert clients, customers (whether or not such persons have done business with the Company once or more than once), accounts of the Company, or prospective clients, customers or accounts which the Company has contacted within the two (2) years immediately preceding Executive's termination; or (c) solicit, entice or induce or in any manner influence any person who is or shall be in the employ or service of the Company to leave such employ or service for the purpose of engaging in a business that may be in competition with the Company. Notwithstanding anything herein to the contrary, Executive may own up to 1% of the outstanding equity securities of stock in any corporation which is listed upon a national stock exchange or actively traded in the over-the-counter market. 9. SUCCESSORSHIP. The Company shall exercise its best efforts to require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) of all or substantially all of the business and/or assets of the Company or of any division or subsidiary thereof to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as he would be entitled hereunder if terminated voluntarily by Executive for Good Reason or without Cause by the Company as defined in and pursuant to Section 12 hereof, except that for the purposes of implementing the foregoing the date on which any such succession becomes effective shall be deemed the Effective Date of Termination. 10. SPECIFIC PERFORMANCE. Recognizing that irreparable damage will result to the Company in the event of the breach or threatened breach of any of the foregoing covenants and assurances by the Executive contained in Sections 7 or 8 hereof, and that the Company's remedies at law for any such breach or threatened breach will be inadequate, the Company and its successors and assigns, in addition to such other remedies which may be available to them, shall be entitled to an injunction, including a mandatory injunction, to be issued by any court of competent jurisdiction ordering compliance with this Agreement or enjoining and restraining the Executive, and each and every person, firm or company acting in concert or participation with him, from the continuation of such breach and, in addition thereto, he shall pay to the Company all ascertainable damages, including costs and reasonable attorneys' fees sustained by the Company by reason of the breach or threatened breach of said covenants and assurances. The obligations of the Executive and the rights of the Company, its successors and assigns under Sections 7, 8, 10, 11, 13, 17, 19 and 20 of this Agreement shall survive the termination of this Agreement. The covenants and obligations of the Executive set forth in Sections 7 and 8 hereof are in addition to and not in lieu of or exclusive of any other obligations and duties of the Executive to the Company, whether express or implied in fact or in law. 11. POTENTIAL UNENFORCEABILITY OF ANY PROVISION. If a final judicial determination is made that any provision of this Agreement is an unenforceable restriction 5 against the Executive, the provisions hereof shall be rendered void only to the extent that such judicial determination finds such provisions unenforceable, and such unenforceable provisions shall automatically be reconstituted and become a part of this Agreement, effective as of the date first written above, to the maximum extent that is lawfully enforceable. A judicial determination that any provision of this Agreement is unenforceable shall in no instance render the entire Agreement unenforceable, but rather the Agreement will continue in full force and effect absent any unenforceable provision to the maximum extent permitted by law. 12. TERMINATION. (a) This Agreement shall terminate immediately upon the death, Disability or adjudication of legal incompetence of the Executive, or upon the Company's ceasing to carry on its business or becoming bankrupt. (b) In the event this Agreement is terminated, the parties' obligations under this Agreement shall terminate immediately (except as otherwise provided herein), and neither the Executive nor his estate, heirs, successors or assigns shall be entitled to any further compensation hereunder. (c) If the Company terminates the Executive's employment, other than for Cause (as defined below), prior to the end of the Contract Term or if the Executive voluntarily terminates his employment with the Company for "Good Reason," which shall mean the occurrence of any one of the following events unless Executive specifically agrees in writing that such event shall not be a Good Reason: (i) assignment of Executive to duties materially inconsistent with the Executive's authorities, duties, responsibilities, and status (including offices, titles, and reporting requirements), (ii) a reduction or alteration in the nature or status of Executive's authorities, duties, or responsibilities, other than an insubstantial and inadvertent act that is remedied by the Company, or (iii) a reduction of Executive's Base Salary other than pursuant to Section 3(a) above, and in no other circumstances during the term hereof (e.g., the Executive's death or disability or voluntary termination for any reason other than hereinbefore set forth), the Company shall be required to pay Executive: (i) The Executive's accrued Base Salary; (ii) A lump-sum cash payment equal to the product of (A) the sum of the Executive's remaining Base Salary and the target annual Bonus payable on such amounts to the Executive, and (B) the number of years (whole and fractional) remaining of the Contract Term, but not less than 1; (iii) Any additional payments or benefits explicitly provided under the terms of any plan, policy or program of the Company in effect at the time of the 6 Executive's termination or as otherwise required by applicable law. (d) For purposes of this Section 12, "Cause" shall mean the occurrence of any of the following events: (1) Performance by the Executive of illegal or fraudulent acts, criminal conduct or willful misconduct, or gross negligence relating to the activities of the Company; (2) Willful or grossly negligent failure by the Executive to perform his duties in a manner which he knows, or has reason to know, to be in the Company's best interests; (3) Willful and bad faith refusal by the Executive to carry out reasonable instructions of the Company not inconsistent with the provisions of this Agreement; (4) Violation by the Executive of the covenants and agreements contained in Sections 7 and 8 hereof; (5) Any other material breach of the Executive's obligations hereunder which are incurable or which he fails to cure promptly after receiving written notice thereof; or (6) The Company ceases operations due to a voluntary or involuntary discontinuance of its business operations; provided that Cause as defined in clauses (d)(2), (3) and (5) above shall not constitute Cause unless Executive is provided with written notice ("Notice to Cure") of such Cause including the specific reasons which form the basis for such consideration and the Executive fails to cure it within a reasonable time (not more than thirty (30) days) after receipt of the Notice to Cure; and provided further that Cause as defined in clauses (d)(2), (3) and (5) above shall not mean: (A) any act or omission that is consistent with or would be protected by the "Business Judgment Rule" as established by judicial decision or otherwise applicable law; (B) any act or omission believed by the Executive in good faith to have been in or not opposed to the interest of the Company (without intent of the Executive to gain therefrom, directly or indirectly, a profit to which the Executive was not legally entitled); or (C) any act or omission with respect to which notice of termination of employment of the Executive is given more than twelve (12) months after the earliest date on which the Company knew or should have known of such act or omission. Any and all disputes shall be resolved by arbitration in accordance with Section 20 hereof. 13. WAIVER OF BREACH. Failure of the Company to demand strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of the term, covenant or condition, nor shall any waiver or relinquishment by the Company of any right or 7 power hereunder at any one time or more times be deemed a waiver or relinquishment of the right or power at any other time or times. 14. NO CONFLICTS. The Executive represents and warrants to the Company that neither the execution nor delivery of this Agreement, nor the performance of the Executive's obligations hereunder will conflict with, or result in a breach of, any term, condition, or provision of, or constitute a default under, any obligation, contract, agreement, covenant or instrument to which the Executive is a party or under which the Executive is bound, including without limitation, the breach by the Executive of a fiduciary duty to any former employers. 15. INDEMNIFICATION. (a) The Company shall indemnify Executive if he is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether criminal, civil, administrative or investigative, including without limitation any action by or in the right of the Company, by reason of the fact that he is a director or officer of the Company or is or was a director or officer of the Company who is or was serving at the request of the Company as a director, officer, agent, employee, partner or trustee of another corporation, partnership, joint venture, trust or other enterprise; against expenses, including for attorneys' fees, judgments, fines, taxes and amounts paid in settlement, actually and reasonably incurred by him in connection with such action, suit or proceeding if Executive's conduct is not finally adjudged to be knowingly fraudulent, deliberately dishonest or willful misconduct. The right to indemnification conferred in this Section shall include the right to be paid by the Company expenses incurred in defending any actual or threatened civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding. Such right will be conditioned upon receipt of an undertaking by or on behalf of Executive to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Company as authorized in this Section. Such right shall survive any amendment or modification of this Agreement with respect to expenses incurred in connection with claims, regardless of when such claims are brought, arising out of acts or omissions occurring prior to such amendment or modification. (b) The indemnification provided by this Section shall not be deemed exclusive of any other rights to which Executive may be entitled under any by-law, agreement, vote of disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to Executive whether he has ceased to be a director, officer, employee, partner, trustee or agent and shall inure to the benefit of the heirs, executors and administrators of Executive. (c) The Company may, but is not obligated to, obtain directors' and officers' liability insurance ("D&O Insurance") as may be or become available in reasonable amounts from established and reputable insurers with respect to which the Executive is named as an insured. Notwithstanding any other provision of this Agreement, the Company shall not be obligated to indemnify Executive for such expenses that have been paid directly to the Executive by D&O Insurance. If the Company has D&O Insurance in effect at the commencement of a proceeding, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the policy. The Company shall 8 thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Executive, all amounts payable as a result of such proceeding in accordance with the terms of such policy. (d) For purposes of this Section, the term "other enterprise" shall include employee benefit plans; the term "fines" shall include any excise taxes assessed on a person with respect to any employee benefit plan; and the term "serving at the request of the Company" shall include any service as a director, officer, employee, partner, trustee or agent of, or at the request of, the Company which imposes duties on, or involves services by, such director, officer, employee, partner, trustee or agent with respect to an employee benefit plan, its participants, or beneficiaries. 16. CAPTIONS. The headings of the sections of this Agreement have been inserted for convenience of reference only and shall in no way restrict or otherwise modify any of the terms or provisions hereof. 17. GOVERNING Law. This Agreement and all rights and obligations of the parties hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the State of Missouri applicable to agreements made and to be performed entirely within the State, including all matters of enforcement, validity and performance. 18. NOTICE. All notices, requests, demands and other communications hereunder shall be deemed duly given if delivered by hand or if mailed by certified or registered mail with postage prepaid as follows: If to the Company: Rawlings Sporting Goods Company, Inc. P.O. Box 22000 St. Louis, Missouri 63126 Attn:Corporate Secretary If to the Executive: Ted Sizemore ________________________ ___________, Missouri ________ With a copy to: ________________________ or to any other address as either party may provide to the other in writing. 19. ASSIGNMENT. This Agreement is personal and not assignable by the Executive but it may be assigned by the Company in accordance with Section 9 hereof without notice to or consent of the Executive to, and shall thereafter be binding upon and enforceable by any person which shall acquire or succeed to substantially all of the business or assets of the 9 Company (and such person shall be deemed included in the definition of the "Company" for all purposes of this Agreement) but is not otherwise assignable by the Company. 20. ARBITRATION. Except with respect to disputes or controversies arising out of Sections 7 and 8 hereof, any dispute between any of the parties hereto or claim by a party against another party arising out of or in relation to this Agreement or in relation to any alleged breach thereof shall be finally determined by arbitration in accordance with the rules then in force of the American Arbitration Association. The arbitration proceedings shall take place in St. Louis, Missouri, or such other location as the parties in dispute hereafter may agree upon; and such proceedings shall be governed by the laws of the State of Missouri as such laws are applied to agreements between residents of such State entered into and to be performed entirely within that State. The parties shall agree upon one arbitrator, who shall be an individual skilled in the legal and business aspects of the subject matter of this Agreement and of the dispute. If the parties cannot agree upon one arbitrator, each party in dispute shall select one arbitrator and the arbitrators so selected shall select a third arbitrator. In the event the arbitrators cannot agree upon the selection of a third arbitrator, the third arbitrator shall be appointed by the American Arbitration Association at the request of any of the parties in dispute. The arbitrators shall, if possible, be individuals skilled in the legal and business aspects of the subject matter of this Agreement and of the dispute. The decision rendered by the arbitrator or arbitrators shall be accompanied by a written opinion in support thereof. The decision shall be final and binding upon the parties in dispute without right of appeal. Judgment upon the decision may be entered into in any court having jurisdiction thereof, or application may be made to that court for a judicial acceptance of the decision and an order of enforcement. Costs of the arbitration shall be assessed by the arbitrator or arbitrators against any or all of the parties in dispute, and shall be paid promptly by the party or parties so assessed. IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed in duplicate, and the Executive has hereunto set his hand, on the day and year first above written. RAWLINGS SPORTING GOODS COMPANY, INC. By: /s/ Stephen M. O'Hara ----------------------------- Name: Stephen M. O'Hara --------------------------- Title: Chief Executive Officer -------------------------- /s/ Ted Sizemore -------------------------------- Ted Sizemore 10 EX-10.2 4 c66961ex10-2.txt AMENDEMENT NO.7 TO CREDIT AGREEMENT EXECUTION COPY AMENDMENT NO. 7 TO CREDIT AGREEMENT AMENDMENT NO. 7 TO CREDIT AGREEMENT (this "Amendment"), dated as of November 27, 2001 and effective as of August 31, 2001 among RAWLINGS SPORTING GOODS COMPANY, INC., a Delaware corporation ("Borrower"), the other Credit Parties signatory to the hereinafter defined Credit Agreement; GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (in its individual capacity, "GE Capital"), for itself, as Lender, and as Agent for Lenders ("Agent"), and the other Lenders signatory to the hereinafter defined Credit Agreement. W I T N E S S E T H : WHEREAS, the Borrower, the other Credit Parties, the Agent and the Lenders are party to that certain Credit Agreement, dated as of December 28, 1999 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"); WHEREAS, on and subject to the terms and conditions hereof, Borrower and the other Credit Parties have requested that Agent and Lenders, and Agent and Lenders are willing to, amend certain provisions of the Credit Agreement, all as set forth herein; WHEREAS, this Amendment shall constitute a Loan Document and these Recitals shall be construed as part of this Amendment; capitalized terms used herein without definition are so used as defined in Annex A to the Credit Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto hereby agree as follows: 1. Amendment. (a) Section (c) of Annex G to the Credit Agreement is amended by deleting the number "$9,000,000" set forth in the column headed "Minimum EBITDA" opposite the "Fourth Fiscal Quarter of Fiscal Year 2001" in the chart contained in such Section and replacing such number with the number "$8,600,000." (b) Exhibit 4.1(b) to the Credit Agreement is deleted in its entirety and replaced by Exhibit 4.1(b) attached hereto. 2. Representations and Warranties of Credit Parties. In order to induce Agent and Lenders to enter into this Amendment, each Credit Party hereby jointly and severally represents and warrants to Agent and Lenders that: (a) Representations and Warranties. After giving effect to this Amendment, no representation or warranty of any Credit Party contained in the Credit Agreement or any of the other Loan Documents, including this Amendment, shall be untrue or incorrect in any material respect as of the date hereof, except to the extent that such representation or warranty expressly relates to an earlier date. (b) Authorization, etc. Each Credit Party has the power and authority to execute, deliver and perform this Amendment. Each Credit Party has taken all necessary action (including, without limitation, obtaining approval of its stockholders, if necessary) to authorize its execution, delivery and performance of this Amendment. No consent, approval or authorization of, or declaration or filing with, any Governmental Authority, and no consent of any other Person, is required in connection with any Credit Party's execution, delivery and performance of this Amendment, except for those already duly obtained. This Amendment has been duly executed and delivered by each Credit Party and constitutes the legal, valid and binding obligation of each Credit Party, enforceable against it in accordance with its terms. No Credit Party's execution, delivery or performance of this Amendment conflicts with, or constitutes a violation or breach of, or constitutes a default under, or results in the creation or imposition of any Lien upon the property of any Credit Party by reason of the terms of (i) any contract, mortgage, lease, agreement, indenture or instrument to which any Credit Party is a party or which is binding upon it, (ii) any law or regulation or order or decree of any court applicable to any Credit Party, or (iii) the certificate or articles of incorporation or by-laws of any Credit Party. (c) No Default. No Default or Event of Default has occurred or is continuing, or would result after giving effect hereto. 3. Conditions to Effectiveness. The effectiveness of this Amendment is expressly conditioned upon the satisfaction of each condition set forth in this Section 3 on or prior to the date hereof: (a) Documentation. Borrower shall have delivered to Agent (on behalf of itself and Lenders) duly executed originals of this Amendment. (b) Fees, Costs and Expenses. Agent shall have received reimbursement of the amounts payable by Agent to its legal counsel for the reasonable legal fees of such counsel, and the costs and expenses incurred by such counsel, in respect of the preparation and negotiation of this Amendment and the other documents executed in connection herewith and LaSalle Bank National Association, as Lender ("LaSalle"), shall have received from Borrower the amounts payable by LaSalle to its legal counsel for the reasonable legal fees of such counsel, and the costs and expenses incurred by such counsel, in respect of the negotiation of this Amendment in an amount not to exceed $400. (c) No Default. No Default or Event of Default shall have occurred and be continuing, or would result after giving effect hereto. -2- 4. Reference to and Effect on Loan Documents. (a) Ratification. Except as specifically provided in this Amendment, the Credit Agreement and the other Loan Documents shall remain in full force and effect and each Credit Party hereby ratifies and confirms each such Loan Document. (b) No Waiver. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver or forbearance of any right, power or remedy of Agent or any Lender under the Credit Agreement or any of the other Loan Documents, or constitute a consent, waiver or modification with respect to any provision of the Credit Agreement or any of the other Loan Documents. Upon the effectiveness of this Amendment each reference in (a) the Credit Agreement to "this Agreement," "hereunder," "hereof," or words of similar import and (b) any other Loan Document to "the Agreement" shall, in each case and except as otherwise specifically stated therein, mean and be a reference to the Credit Agreement as amended hereby. 5. Miscellaneous. (a) Successors and Assigns. This Amendment shall be binding on and shall inure to the benefit of the Credit Parties, Agent and Lenders and their respective successors and assigns, except as otherwise provided herein. No Credit Party may assign, transfer, hypothecate or otherwise convey its rights, benefits, obligations or duties hereunder without the prior express written consent of Agent and Lenders. The terms and provisions of this Amendment are for the purpose of defining the relative rights and obligations of the Credit Parties, Agent and Lenders with respect to the transactions contemplated hereby and there shall be no third party beneficiaries of any of the terms and provisions of this Amendment. (b) Entire Agreement. This Amendment, including all schedules and other documents attached hereto or incorporated by reference herein or delivered in connection herewith, constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all other understandings, oral or written, with respect to the subject matter hereof. (c) Fees and Expenses. As provided in Section 11.3 of the Credit Agreement, Borrower agrees to pay on demand all fees, costs and expenses incurred by Agent in connection with the preparation, execution and delivery of this Amendment. (d) Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose. (e) Severability. Wherever possible, each provision of this Amendment shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Amendment shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Amendment. -3- (f) Conflict of Terms. Except as otherwise provided in this Amendment, if any provision contained in this Amendment is in conflict with, or inconsistent with, any provision in any of the other Loan Documents, the provision contained in this Amendment shall govern and control. (g) Counterparts. This Amendment may be executed in any number of separate counterparts, each of which shall collectively and separately constitute one agreement. Delivery of an executed signature page to this Amendment by telecopy shall be effective as delivery of a manually executed signature page to this Amendment. (h) Incorporation of Credit Agreement. The provisions contained in Sections 11.9 and 11.13 of the Credit Agreement are incorporated herein by reference to the same extent as if reproduced herein in their entirety, except with reference to this Amendment rather than the Credit Agreement. (i) Acknowledgment. Each Credit Party hereby acknowledges its status as a Credit Party and affirms its obligations under the Credit Agreement and represents and warrants that there are no liabilities, claims, suits, debts, liens, losses, causes of action, demands, rights, damages or costs, or expenses of any kind, character or nature whatsoever, known or unknown, fixed or contingent (collectively, the "Claims"), which any Credit Party may have or claim to have against Agent or any Lender, or any of their respective affiliates, agents, employees, officers, directors, representatives, attorneys, successors and assigns (collectively, the "Lender Released Parties"), which might arise out of or be connected with any act of commission or omission of the Lender Released Parties existing or occurring on or prior to the date of this Amendment, including, without limitation, any Claims arising with respect to the Obligations or any Loan Documents. In furtherance of the foregoing, each Credit Party hereby releases, acquits and forever discharges the Lender Released Parties from any and all Claims that any Credit Party may have or claim to have, relating to or arising out of or in connection with the Obligations or any Loan Documents or any other agreement or transaction contemplated thereby or any action taken in connection therewith from the beginning of time up to and including the date of the execution and delivery of this Amendment. Each Credit Party further agrees forever to refrain from commencing, instituting or prosecuting any lawsuit, action or other proceeding against any Lender Released Parties with respect to any and all Claims. [signature pages follow] -4- IN WITNESS WHEREOF, this Amendment No. 7 has been duly executed and delivered as of the day and year first above written. RAWLINGS SPORTING GOODS COMPANY, INC. By: ------------------------------------------------- Title: ---------------------------------------------- RAWLINGS CANADA, INCORPORATED By: ------------------------------------------------- Title: ---------------------------------------------- RAWLINGS DE COSTA RICA, S.A. By: ------------------------------------------------- Title: ---------------------------------------------- GENERAL ELECTRIC CAPITAL CORPORATION, as Agent and Lender By: ------------------------------------------------- Title: Duly Authorized Signatory LASALLE BANK NATIONAL ASSOCIATION, as Lender By: ------------------------------------------------- Title: ---------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----