EXHIBIT 3
STANDSTILL AGREEMENT
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THIS STANDSTILL AGREEMENT (this "Agreement") is made and entered into
as of April 23, 1999 by and between Rawlings Sporting Goods Company, Inc., a
Delaware corporation (the "Company"), Xxxxxx X. Xxxxxxx ("Xxxxxxx"), Xxxxxxx
Capital Management Company, Inc., a Georgia corporation ("Xxxxxxx Capital") and
The Kaleidoscope Fund, L.P. ("Kaleidoscope").
BACKGROUND:
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On April 9, 1999, Xxxxxxx, Xxxxxxx Capital and Kaleidoscope filed a
Form 13G/A with the Securities and Exchange Commission (the "SEC") reflecting
purchases (the "Additional Xxxxxxx Purchases") of additional shares of the
Company's Common Stock, par value $.01 per share (the "Common Stock"), and
disclosing that Xxxxxxx, Xxxxxxx Capital and Kaleidoscope were the beneficial
owners of a total of 1,277,400 shares of Common Stock, or 16.4% of the
outstanding shares of Common Stock. Based upon information publicly available to
the Company, including reports filed by Bull Run Corporation, a Georgia
corporation ("Bull Run"), Xxxxxxx, Xxxxxxx Capital and Kaleidoscope with the SEC
under the Exchange Act, the Company believes that Bull Run is an Associate (as
defined in the Rights Plan) of Xxxxxxx and that, unless the Company takes action
to amend the Rights Agreement, dated July 1, 1994, between the Company and
ChaseMellon Shareholder Services, L.L.C., as amended (the "Rights Plan"), based
on the number of shares of Common Stock beneficially owned by Bull Run, Xxxxxxx,
Xxxxxxx Capital and Kaleidoscope, collectively, that Xxxxxxx, Xxxxxxx Capital
and Kaleidoscope have or will become Acquiring Persons under the Rights Plan and
that a Stock Acquisition Date (as defined in the Rights Plan) has occurred or
will occur.
The Company, Xxxxxxx Capital, Xxxxxxx and Kaleidoscope desire to enter
into this Standstill Agreement and to amend the Rights Plan to reflect their
mutual agreements and understandings with respect thereto as set forth herein.
AGREEMENT:
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IN CONSIDERATION OF the foregoing, the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:
ARTICLE 1.
DEFINITIONS AND CONSTRUCTION
Section 1.1. CERTAIN DEFINITIONS. As used in this Agreement, the
following terms shall have the meanings specified below:
"AFFILIATE" shall have the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act; provided, however, that,
for purposes of this Agreement, Bull Run shall not be deemed an Affiliate of
Xxxxxxx, Xxxxxxx Capital or Kaleidoscope.
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"BENEFICIAL OWNER" (including, with its correlative meanings,
"BENEFICIALLY OWN" and "BENEFICIAL OWNERSHIP"), with respect to any securities,
shall mean any Person which has, or any of whose Affiliates has, directly or
indirectly, "beneficial ownership" of (as determined pursuant to Rule 13d-3 of
the General Rules and Regulations of the Exchange Act as in effect on the date
hereof) such securities.
"CONTROL TRANSACTION" shall mean an agreement by the Company to be a
party to (a) any consolidation or merger of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which shares of the
Company's Common Stock would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of the
Company's Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger or (b) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
the Common Stock or assets of the Company.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"GROUP" shall mean any group within the meaning of Section 13(d)(3) of
the Exchange Act as in effect on the date hereof.
Section 1.2. INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT. The
definitions in Section 1.1 shall apply equally to both the singular and plural
forms of the terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The words
"include," "includes" and "including" shall be deemed to be followed by the
phrase "without limitation." All references herein to Articles, Sections and
Schedules shall be deemed to be references to Articles and Sections of, and
Schedules to, this Agreement unless the context shall otherwise require. The
headings of the Articles and Sections are inserted for convenience of reference
only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement. Unless the context shall otherwise require or
provide, any reference to any agreement or other instrument or statute or
regulation is to such agreement, instrument, statute or regulation as amended
and supplemented from time to time (and, in the case of a statute or regulation,
to any successor provision).
ARTICLE 2.
STANDSTILL PROVISIONS AND AGREEMENT TO DIVEST
Section 2.1 ACQUISITION RESTRICTIONS. Xxxxxxx, Xxxxxxx Capital and
Kaleidoscope agree that they will not, directly or indirectly, acquire, offer to
acquire, or agree to acquire, by purchase or otherwise, Beneficial Ownership of
any additional shares of Common Stock on and following the date of this
Agreement.
Section 2.2 AGREEMENT TO DIVEST. Xxxxxxx, Xxxxxxx Capital and
Kaleidoscope agree that they will sell into the open market, over a period of
(4) four months, at least 305,000 shares of Common Stock.
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Section 2.3 TENDER AND VOTE OBLIGATION. In the event that (i) the Board
of Directors of the Company (or any committee of the Board of Directors of the
Company) shall determine to engage in, and recommends, a Control Transaction,
then Xxxxxxx, Xxxxxxx Capital and Kaleidoscope will vote all of the shares of
Common Stock they are entitled to vote in favor of such Control Transaction and
(b) sell all of their shares of Common Stock in such Control Transaction,
provided that this Section 2.3 will not prohibit Xxxxxxx, Xxxxxxx Capital and
Kaleidoscope from selling shares of Common Stock into the open market prior to
the consummation of any such Control Transaction.
Section 2.4. OTHER STANDSTILL COVENANTS. Except as required or
contemplated by Section 2.3 hereof, Xxxxxxx, Xxxxxxx Capital and Kaleidoscope
agree that they will not, and they will cause each of their respective
Affiliates not to, directly or indirectly, alone or in concert with others, take
any of the actions set forth below:
(a) effect, seek, offer, propose (whether publicly or
otherwise) or cause or participate in, or assist any other Person to
effect, seek, offer or propose (whether publicly or otherwise) or
participate in:
(i) any acquisition of Beneficial Ownership of Common
Stock or other equity interests in the Company which would
result in a breach of Section 2.1 of this Agreement;
(ii) any tender or exchange offer, merger,
consolidation, share exchange or business combination
involving the Company or any material portion of its business
or any purchase of all or any substantial part of the assets
of the Company;
(iii) any recapitalization, restructuring,
liquidation, dissolution or other extraordinary transaction
with respect to the Company or any material portion of its
business; or
(iv) any "solicitation" of "proxies" (as such terms
are used in the proxy rules of the SEC) with respect to the
Company or any action resulting in such Person becoming a
"participant" in any "election contest" (as such terms are
used in the proxy rules of the SEC) with respect to the
Company;
(b) propose any matter for submission to a vote of
stockholders of the Company;
(c) form, join or participate in a Group with respect to the
Common Stock (other than any Group whose members consist solely of
Xxxxxxx, Xxxxxxx Capital, Kaleidoscope and any of their Affiliates);
(d) grant any proxy with respect to the Common Stock to any
Person not designated by the Company;
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(e) deposit any Common Stock in a voting trust or subject any
Common Stock to any arrangement or agreement with respect to the Voting
of such Common Stock or other agreement having similar effect;
(f) execute any written stockholder consent with respect
to the Company;
(g) take any other action to seek to affect the control of the
management or Board of Directors of the Company; or
(h) enter into any discussions, negotiations, arrangements or
understandings with any Person other than the Company, Xxxxxxx, Xxxxxxx
Capital, Kaleidoscope and their respective Affiliates, directors,
officers, employees, agents or advisors with respect to any of the
foregoing, or advise, assist, encourage or seek to persuade others to
take any action with respect to any of the foregoing.
ARTICLE 3.
VOTING PROVISIONS
Section 3.1. VOTING OF THE COMMON STOCK. Xxxxxxx, Xxxxxxx Capital and
Kaleidoscope will vote all of the shares of Common Stock they are entitled to
vote "for" the slate of directors nominated by the Board of Directors of the
Company at the next Annual Meeting of Stockholders of the Company to be held in
January 2000 or at any adjournment or postponement thereof.
ARTICLE 4.
TERM AND TERMINATION
Section 4.1. TERM. The provisions of this Agreement shall terminate on
the date one year from the date hereof.
Section 4.2. TERMINATION BY XXXXXXX, XXXXXXX CAPITAL AND KALEIDOSCOPE.
The provisions of this Agreement shall terminate in the event of a breach by the
Company of any of the terms of this Agreement, if the Company fails to cure such
material breach within fifteen (15) days after its receipt of notice of such
breach from Xxxxxxx, Xxxxxxx Capital and Kaleidoscope.
Section 4.3. TERMINATION BY THE COMPANY AND OPTION TO PURCHASE SHARES.
In the event of a material breach by Xxxxxxx, Xxxxxxx Capital or Kaleidoscope of
any of the terms of this Agreement, if Xxxxxxx, Xxxxxxx Capital or Kaleidoscope
fails to cure such breach within fifteen (15) days after its receipt of notice
of such breach from the Company, the Company, at its option, may within five (5)
days after the lapse of such 15 day period (such five day period referred to
herein as the "Exercise Period") (i) terminate the provisions of this Agreement
by providing notice of termination to Xxxxxxx, Xxxxxxx Capital and Kaleidoscope,
(ii) exercise the option to purchase for cash all of the Common Stock then held
by Xxxxxxx, Xxxxxxx Capital, Kaleidoscope and their respective Affiliates at a
20% discount to the last reported sales price of the Company's Common Stock on
the date (the "Option Date") of the expiration of the fifteen day period
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described above, or (iii) undertake both (i) and (ii), above. The Company may
exercise the option described in clause (ii) above during the Exercise Period by
providing Xxxxxxx, Xxxxxxx Capital and Kaleidoscope with notice of exercise, at
which time Xxxxxxx, Xxxxxxx Capital and Kaleidoscope shall promptly deliver to
the Company a statement of the number of shares of Common Stock held by them and
their respective Affiliates, and the Company shall deliver payment to Xxxxxxx,
Xxxxxxx Capital and Kaleidoscope against delivery of the certificates for such
shares within ten (10) days after receipt of such statement. The Company's
option set forth in this Section 4.3 shall expire at 5:00 p.m. Central Time on
the last day of the Exercise Period.
ARTICLE 5.
AMENDMENT OF RIGHTS PLAN
Section 5.1. AMENDMENT OF RIGHTS PLAN. Simultaneously with the
execution and delivery of this Agreement, the Company shall enter into an
amendment to the Rights Plan substantially in the form set forth in Exhibit A.
ARTICLE 6.
MISCELLANEOUS PROVISIONS
Section 6.1. EXPENSES. Xxxxxxx, Xxxxxxx Capital and Kaleidoscope shall,
jointly and severally, reimburse the Company for up to $25,000 of all documented
reasonable legal fees and expenses incurred by the Company solely in connection
with the preparation and negotiation of this Agreement and the Amendment of
Standstill Agreement, by and between the Company and Bull Run, and the actions
taken to prevent the Rights (as defined in the Rights Plan) from being triggered
as a result of the Additional Xxxxxxx Purchases, including without limitation
the amendments of the Rights Plan for such purpose, but only to the extent such
fees and expenses exceed $25,000.
Section 6.2. PRESS RELEASES. Unless required by applicable law,
Xxxxxxx, Xxxxxxx Capital and Kaleidoscope will not, and they will cause their
respective Affiliates to not, make any press release, public announcement or
other communication with respect to this Agreement and the effect of the
Additional Xxxxxxx Purchases under the Rights Plan, without the prior written
consent of the Chairman of the Board of the Company, it being understood that
Xxxxxxx, Xxxxxxx Capital and Kaleidoscope may have to file a Statement on
Schedule 13D (a "Schedule 13D") with the SEC with respect to their ownership of
Common Stock and this Agreement, and they agree to provide any draft of such
Schedule 13D to the Company and its counsel for review and comment prior to its
filing.
Section 6.3. NOTICES. All notices and other communications required or
permitted by this Agreement shall be made in writing and shall be deemed
delivered when delivered in person, transmitted by facsimile, or three days
after it has been sent by mail, as follows:
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The Company: Rawlings Sporting Goods Company, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxxxx X'Xxxx
Facsimile No.: (000) 000-0000
with a copies to: Xxxxxxx, Mag & Fizzell, P.C.
1201 Walnut, Suite 2800
P.O. Box 419251
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Xxxxxxx, Xxxxxxx Xxxxxxx Capital Management, Inc.
Capital and 0000 Xxxxxxxxx Xxxx X.X.
Kaleidoscope: Xxxxxxx, XX 00000
Attn: Xx. Xxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
with a copy to: Xxxxxxx, Carton & Xxxxxxx
Quaker Tower, Suite 3400
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxxx, Xx., Esq.
Facsimile No.: (000) 000-0000
The Parties shall promptly notify each other in the manner provided in this
Section 6.3 of any change in their respective addresses. A notice of change of
address shall not be deemed to have been given until received by the addressee.
Communications by telecopier also shall be sent concurrently by mail, but shall
in any event be effective as stated above.
Section 6.4. ASSIGNMENT. No Party will assign this Agreement or any
rights, interests or obligations hereunder, or delegate performance of any of
its obligations hereunder, without the prior written consent of each other
Party.
Section 6.5. ENTIRE AGREEMENT. This Agreement, including the Exhibits
attached hereto, embodies the entire agreement and understanding of the Parties
in respect of the subject matter contained herein, PROVIDED that this provision
shall not abrogate any other written agreement between the Parties executed
simultaneously with this Agreement. This Agreement supersedes all prior
agreements and understandings between the Parties with respect to such subject
matter.
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Section 6.6. WAIVER, AMENDMENT, ETC. This Agreement may not be amended
or supplemented, and no waivers of or consents to departures from the provisions
hereof shall be effective, unless set forth in a writing signed by, and
delivered to, all the Parties. No failure or delay of any Party in exercising
any power or right under this Agreement will operate as a waiver thereof, nor
will any single or partial exercise of any right or power, or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.
Section 6.7. BINDING AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement will be binding upon and inure to the benefit of the Parties and their
successors and permitted assigns. Nothing expressed or implied herein is
intended or will be construed to confer upon or to give to any third party any
rights or remedies by virtue hereof.
Section 6.8. GOVERNING LAW. This Agreement shall be governed by the
laws of the State of Delaware, without regard to conflict or choice of laws
principles.
Section 6.9. SEVERABILITY. The invalidity or unenforceability of any
provision hereof in any jurisdiction will not affect the validity or
enforceability of the remainder hereof in that jurisdiction or the validity or
enforceability of this Agreement, including that provision, in any other
jurisdiction. To the extent permitted by applicable law, each Party waives any
provision of applicable law that renders any provision hereof prohibited or
unenforceable in any respect. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the Parties to the extent possible.
Section 6.10. COUNTERPARTS. This Agreement may be executed in one or
more counterparts each of which when so executed and delivered will be deemed an
original but all of which will constitute one and the same Agreement.
Section 6.11. REMEDIES. In addition to any other remedies which may be
available to the Company (including any remedies which the Company may have at
law or in equity): Xxxxxxx, Xxxxxxx Capital and Kaleidoscope agree that the
Company shall have no obligation to honor transfers of Common Stock to Xxxxxxx,
Xxxxxxx Capital or Kaleidoscope or any of their Affiliates which would cause any
of Xxxxxxx, Xxxxxxx Capital and Kaleidoscope and their Affiliates to
Beneficially Own Common Stock in violation of this Agreement, any such transfers
shall be void and of no effect, and the Company shall be entitled to instruct
any transfer agent or agents to refuse to honor such transfers.
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IN WITNESS WHEREOF, the Company Xxxxxxx Capital and Kaleidoscope have
caused their respective duly authorized officers to execute this Agreement and
Xxxxxxx has executed this Agreement as of the day and year first above written.
RAWLINGS SPORTING GOODS COMPANY, INC.
By: /s/ XXXXXXX X. X'XXXX
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Name: Xxxxxxx X. X'Xxxx
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Title: Chairman/CEO
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XXXXXXX CAPITAL MANAGEMENT, INC.
By: /s/ XXXXXX X. XXXXXXX
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Name: Xxxxxx X. Xxxxxxx
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Title: President
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/s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
THE KALEIDOSCOPE FUND, L.P.
By: /s/ XXXXXX X. XXXXXXX
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Name: Xxxxxx X. Xxxxxxx
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Title: President
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