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) NOVEMBER 21, 1997
BULL RUN CORPORATION
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(Exact name of Registrant as specified in its charter)
GEORGIA 0-9385 91-1117599
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
4370 PEACHTREE ROAD, N.E., ATLANTA, GEORGIA 30319
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (404) 266-8333
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N/A
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(Former name or former address, if changed since last report.)
Page 1 of 4 pages
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ITEM 5. OTHER EVENTS
On November 21, 1997, Bull Run Corporation (the "Company") issued a
press release (the "Press Release") relating to an Investment Purchase Agreement
(the "Agreement"), between the Company and Rawlings Sporting Goods Company, Inc.
("Rawlings"). Pursuant to the Agreement, the Company purchased warrants (the
"Warrants") to purchase 925,804 shares of Rawlings' common stock, par value $.01
per share (the "Common Stock"), and has the right, under certain circumstances,
to purchase additional Warrants (the "Additional Warrants"). The Company's total
cost to purchase the Warrants pursuant to the Agreement (excluding the
Additional Warrants) is $2,842,218. Fifty percent of the purchase price, or
$1,421,109, was paid to Rawlings on November 21, 1997. The source of the funds
was a loan to the Company pursuant to the Sixth Modification of Loan Agreement
(the "Sixth Modification") by and between the Company and NationsBank, N.A. The
remaining fifty percent of the purchase price, plus interest at 7% per annum
from November 21, 1997 until the date of payment, will be due on the earlier of
the date of exercise and the date of expiration of the Warrants. In the event of
a partial exercise of the Warrants, a pro rata portion of the purchase price
with interest accrued thereon will be payable.
The Company and Rawlings also entered into an agreement (the
"Standstill Agreement"), which, among other things, provides that, for a
specified period, the Company will be restricted in acquiring additional shares
of Common Stock or participating in certain types of corporate events relating
to the Company, including proxy contests and tender offers, subject to certain
exceptions. Pursuant to a registration rights agreement between the Company and
Rawlings (the "Registration Rights Agreement"), Rawlings has also granted the
Company rights to have the shares issuable upon exercise of the Warrants (and
the Additional Warrants, if any) registered under the Securities Act of 1933
under certain circumstances.
The Press Release, the Agreement, the Warrants, the Sixth Modification,
the Standstill Agreement and the Registration Rights Agreement are being filed
as exhibits hereto and are hereby incorporated by reference herein.
2
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) and (b) Financial Statements and Pro Forma Financial Information None
(c) Exhibits
99.1 Press Release issued November 21, 1997
99.2 Investment Purchase Agreement dated November 21, 1997 by and
between Rawlings Sporting Goods Company, Inc. and Bull Run
Corporation
99.3 Common Stock Purchase Warrant dated November 21, 1997 issued by
Rawlings Sporting Goods Company, Inc. to Bull Run Corporation
99.4 Sixth Modification of Loan Agreement dated November 21, 1997 by and
between Bull Run Corporation and NationsBank, N.A.
99.5 Fourth Term Loan Note dated November 21, 1997
99.6 Standstill Agreement dated November 21, 1997 by and between
Rawlings Sporting Goods Company, Inc. and Bull Run Corporation
99.7 Registration Rights Agreement dated November 21, 1997 by and
between Rawlings Sporting Goods Company, Inc. to Bull Run
Corporation
3
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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.
Date: December 5, 1997 BULL RUN CORPORATION
By: /s/ FREDERICK J. ERICKSON
---------------------------
Frederick J. Erickson
Vice President - Finance,
Chief Financial Officer,
Treasurer and Assistant
Secretary
4
<PAGE>
EXHIBIT 99.1
News Release
November 21, 1997
BULL RUN CORPORATION ANNOUNCES STRATEGIC MARKETING ALLIANCE
BETWEEN RAWLINGS SPORTING GOODS AND HOST COMMUNICATIONS
AND RELATED INVESTMENT AGREEMENT WITH RAWLINGS
Atlanta, Georgia - Bull Run Corporation (NASDAQ: BULL) announced today that its
29.7%-owned affiliate, Host Communications, Inc. ("HCI"), has entered into a
five year strategic marketing alliance with Rawlings Sporting Goods Company,
Inc. (NASDAQ: RAWL), under which HCI and Rawlings will jointly market and sell
Rawlings' products primarily through corporate promotions, grass roots events
and international programs. HCI provides marketing services for the NCAA and
numerous universities and has a majority investment in Universal Sports America,
Inc. ("USAI"), the worlds' leading "grass roots" sports event company which
sponsors, among other things, domestic and international three on three
basketball tournaments. HCI has also established relationships with many Fortune
500 companies who perform promotions related to the above-described events.
Rawlings is a leading manufacturer and supplier of branded team sports equipment
and apparel, particularly in baseball, softball, basketball, hockey and
football.
In connection with this marketing alliance, the Company also announced today
that it has entered into an investment agreement with Rawlings under which the
Company has purchased approximately 926,000 warrants for $3.09 per warrant.
These warrants have a four year term and enable the Company to purchase
approximately 926,000 shares of Rawlings' common stock at an exercise price of
$12.00 per share but are exercisable only if Rawlings' common stock closes at or
above $16.50 for twenty consecutive trading days during the four year term. In
addition, under the terms of the agreement, the Company may purchase up to 10.1
percent of the outstanding shares of Rawlings' common stock in the open market
over the next six months, with extensions allowed under certain circumstances
defined in the investment agreement. After completing the open market share
purchases, if the Company exercises the warrants, it could have as much as a
20.1 percent ownership interest in Rawlings and for five and one-half years
thereafter, the Company is subject to a standstill agreement which, except for
specific circumstances, precludes the Company from acquiring additional shares.
Mr. Robert S. Prather, Jr., President of the Company, has been nominated for
election as a director of Rawlings, which election will take place at Rawlings'
annual meeting of stockholders scheduled for January 15, 1998. Mr. Prather also
serves as a director of HCI, USAI and the Company's 17%-owned affiliate, Gray
Communications Systems, Inc. (NYSE: GCS and GCS.B), an operator of eight network
affiliated television stations, three daily newspapers and other media-related
businesses in the southeast.
For additional information contact Robert S. Prather, Jr., President and CEO of
Bull Run Corporation at (404) 266-8333.
<PAGE>
EXHIBIT 99.2
INVESTMENT PURCHASE AGREEMENT
BY AND BETWEEN
RAWLINGS SPORTING GOODS COMPANY, INC.
AND
BULL RUN CORPORATION
DATED AS OF NOVEMBER 21, 1997
<PAGE>
CONTENTS
ARTICLE I
PURCHASE OF COMMON STOCK AND WARRANTS
Section 1.01 Purchases of Common Stock in the Open Market....... 1
Section 1.02 Tolling of Open Market Purchase Period............. 1
Section 1.03 Purchase of First Tranche Warrants................. 2
Section 1.04 Purchase of Additional Warrant..................... 2
ARTICLE II
CLOSING
Section 2.01 Closing .......................................... 3
Section 2.02 Payment of Purchase Price.......................... 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.01 Existence; Power................................... 3
Section 3.02 Authority.......................................... 3
Section 3.03 Capitalization..................................... 3
Section 3.04 No Conflict........................................ 4
Section 3.05 Valid Issue........................................ 4
Section 3.06 Reports and Financial Statements................... 4
Section 3.07 Absence of Certain Changes or Events............... 5
Section 3.08 Offering of Shares................................. 5
Section 3.09 DGCL Section 203................................... 5
Section 3.10 Governmental and Other Consents.................... 5
Section 3.11 Access to Public Information....................... 5
Section 3.11 Truth and Accuracy of Information.................. 5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Section 4.01 Existence; Power................................... 6
Section 4.02 Authority.......................................... 6
Section 4.03 No Conflict........................................ 6
Section 4.04 Reports and Financial Statements................... 6
Section 4.05 Absence of Certain Changes or Events............... 6
Section 4.06 Governmental and Other Consents.................... 7
Section 4.07 Investment......................................... 7
Section 4.08 Accredited Investor................................ 7
Section 4.08 Accredited Investor................................ 7
Section 4.10 Truth and Accuracy of Information.................. 7
ARTICLE V
COVENANTS OF THE COMPANY AND THE PURCHASER
Section 5.01 Standstill Agreement............................... 7
Section 5.02 Registration Rights Agreement...................... 7
Section 5.03 Board of Director Representation................... 8
Section 5.04 1994 Rights Agreement.............................. 8
Section 5.04 Reservation of Shares.............................. 9
Section 5.05 Satisfaction of Closing Conditions................. 9
Section 5.06 Further Assurances................................. 9
Section 5.07 Cooperation........................................ 9
Section 5.08 Antitrust Filings.................................. 9
Section 5.09 Confidentiality.................................... 9
Section 5.10 Public Announcements...............................10
Section 5.11 Covenants Regarding Stock..........................10
ARTICLE VI
CONDITIONS TO THE PURCHASER'S OBLIGATIONS
Section 6.01 Representations and Warranties.....................11
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Section 6.02 Agreements, Covenants and Conditions............... 11
Section 6.03 Governmental Approvals and Injunctions............. 11
Section 6.04 Due Diligence Review............................... 11
Section 6.05 Purchase of Shares Not Enjoined.................... 11
ARTICLE VII
CONDITIONS TO THE COMPANY'S OBLIGATIONS
Section 7.01 Representations and Warranties..................... 11
Section 7.02 Agreements, Covenants and Conditions............... 12
Section 7.03 Governmental Approvals and Injunctions............. 12
Section 7.04 Due Diligence Review............................... 12
Section 7.05 Sales of Shares Not Enjoined....................... 12
ARTICLE VIII
TERMINATION
Section 8.01 Termination........................................ 12
Section 8.02 Notice of Termination.............................. 13
Section 8.03 Effect of Termination.............................. 13
ARTICLE IX
DEFINITIONS
Accredited Investor..................................................13
Acquisition Completion Date..........................................13
Additional Warrant...................................................13
Affiliate............................................................13
Barrier..............................................................13
Black-Scholes Option Pricing Model...................................13
Business.............................................................14
Business Day.........................................................14
Charter Documents....................................................14
Closing..............................................................15
Closing Date.........................................................15
Common Stock.........................................................15
Confidentiality Agreement............................................15
Exchange Act.........................................................15
Expiration Date......................................................15
First Tranche Warrant................................................15
Governmental Authority...............................................15
H-S-R Act............................................................15
Liquidity Discount...................................................15
Material Adverse Effect..............................................15
NASDAQ...............................................................15
Open Market Purchases................................................15
Person...............................................................16
Preferred Stock......................................................16
Purchaser Nominee....................................................16
Requirement of Law...................................................16
1994 Rights Agreement................................................16
SEC..................................................................16
Second Closing.......................................................16
Second Closing Date..................................................16
Securities Act.......................................................16
Warrants.............................................................16
Warrant Shares.......................................................16
ARTICLE X
MISCELLANEOUS
Section 10.01 Brokers and Finders................................17
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Section 10.02 Notice ..........................................17
Section 10.03 Modifications, Amendments and Waivers..............18
Section 10.04 Captions and References............................18
Section 10.05 Pronouns...........................................18
Section 10.06 Gender ..........................................19
Section 10.07 Remedies...........................................19
Section 10.08 Governing Law......................................19
Section 10.09 Time of The Essence................................19
Section 10.10 Entire Agreement...................................19
Section 10.11 Successors and Assigns.............................19
Section 10.12 Severability.......................................19
Section 10.13 Counterparts.......................................19
Section 10.14 Interpretations....................................19
<PAGE>
SCHEDULE INDEX
Schedule 3.07 -- Certain Changes and Events
Schedule 3.10 -- Governmental and Other Consents
<PAGE>
EXHIBIT INDEX
Exhibit 1.03 -- Form of Common Stock Purchase Warrant
Exhibit 5.01 -- Form of Standstill Agreement
Exhibit 5.02 -- Form of Registration Rights Agreement
Exhibit 5.12 -- Form of Press Release
<PAGE>
INVESTMENT PURCHASE AGREEMENT
This INVESTMENT PURCHASE AGREEMENT (this "Agreement") is entered into
as of this 21st day of November 1997, by and between RAWLINGS SPORTING GOODS
COMPANY, INC., a Delaware corporation (the "Company") and BULL RUN CORPORATION,
a Georgia corporation (the "Purchaser").
BACKGROUND:
The Company and Bull Run desire for Bull Run to make a substantial
investment in the Company. Accordingly, pursuant to this Agreement and subject
to the terms and conditions set forth in this Agreement, (i) during the six
months beginning on the Closing Date (as herein defined), Bull Run will acquire
up to 10.1% of the outstanding shares of the Company's Common Stock (as herein
defined) through open market purchases; (ii) the Company will sell to Bull Run
warrants exercisable into a number of shares equal to 10.0% of the Common Stock
of the Company outstanding on the Closing Date; (iii) the Company will sell to
Bull Run additional warrants to purchase up to the lesser of (A) five percent
(5%) of the outstanding shares of the Company's Common Stock and (B) the
difference between 10% of the outstanding shares of the Company's Common Stock
and the percentage of outstanding shares of the Company's Common Stock owned by
Bull Run on the Acquisition Completion Date (as herein defined); (iv) the
Company and Bull Run will enter into a standstill agreement, and (v) the Company
and Bull Run will enter into a registration rights agreement. Certain
capitalized terms used in this Agreement are defined in Article IX.
AGREEMENT:
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 Company and the Purchaser
hereby agree as follows:
ARTICLE I
PURCHASE OF COMMON STOCK AND WARRANTS
SECTION 1.01 PURCHASES OF COMMON STOCK IN THE OPEN MARKET. During the
six (6) month period beginning on the Closing Date (or such longer period as
provided in Section 1.02), the Purchaser may purchase on the open market a
number of shares of the Common Stock not to exceed 10.1% of the outstanding
shares of the Common Stock (the "Open Market Purchases"). The Company will take
no action to oppose the Open Market Purchases, provided that nothing herein
shall restrict the Company's obligation to provide any disclosures regarding the
Company, its operations and financial condition necessary or appropriate to
comply with applicable securities laws.
SECTION 1.02 TOLLING OF OPEN MARKET PURCHASE PERIOD. The six (6) month
period during which the Purchaser may make the Open Market Purchases as provided
in Section 1.01 shall be suspended and tolled during such times as and for as
long as:
(a) (i) any Purchaser Nominee or any Affiliate or Associate of
Purchaser is a member of the Company's Board of Directors or
is an officer of the Company and (ii) any officers or
directors of the Company are prohibited from trading in the
Common Stock pursuant to any policies or procedures of the
Company;
(b) (i) any Purchaser Nominee or any Affiliate or Associate of
Purchaser is a member of the Company's Board of Directors or
is an officer of the Company and (ii) any officers or
directors of the Company are prohibited from trading in the
Common Stock of the Company at the direction of the Company's
Board of Directors or legal advisors; or
<PAGE>
(c) the Purchaser has informed the Company that the Purchaser
believes that it may have knowledge of material non-public
information relating to the Company and the Purchaser has
received neither (i) reasonably satisfactory written
confirmation from the Company that the information in question
is not material non-public information or (ii) written
confirmation from the Company that such information has been
publicly disclosed in a manner and on terms reasonably
satisfactory to the Purchaser.
Any time that the six (6) month period for the Open Market Purchases provided in
Section 1.01 is suspended and tolled pursuant to this Section 1.02, the Company
shall provide the Purchaser with written notice of the date of the new
Acquisition Completion Date. Purchaser shall promptly notify the Company of any
disagreement with the calculation of the new Acquisition Completion Date.
SECTION 1.03 PURCHASE OF FIRST TRANCHE WARRANT. On the Closing Date,
the Company shall sell and issue to the Purchaser a Common Stock Purchase
Warrant, substantially in the form of Exhibit 1.03, entitling it to purchase a
number of shares of Common Stock representing ten percent (10%) of the shares of
Common Stock outstanding on the Closing Date, on a fully-diluted basis as of the
Closing Date for a purchase price based on the Black-Scholes Option Pricing
Model. The purchase price for the First Tranche Warrant shall be paid fifty
percent (50%) on the Closing Date and fifty percent (50%), plus interest from
the Closing Date at the rate of seven percent (7%) per annum, at the earlier of
the date of exercise or the date of expiration of the First Tranche Warrant. In
the event that the First Tranche Warrant is exercised in part, at the date of
each exercise, a percentage of the remaining portion of the purchase price shall
be paid in an amount equal to (A)(i) the percentage of the First Tranche Warrant
being exercised MULTIPLIED BY (ii) fifty percent (50%) of the purchase price
PLUS (B) interest from the Closing Date at the rate of seven percent (7%) per
annum.
SECTION 1.04 PURCHASE OF ADDITIONAL WARRANT. On the Acquisition
Completion Date or within ten (10) Business Days thereafter, the Purchaser shall
have the option to purchase an additional warrant (having the same terms as the
First Tranche Warrant) exercisable into a number of Warrant Shares equal to the
lesser of (a) five percent (5.0%) of the outstanding shares of Common Stock on
the Acquisition Completion Date, on a fully-diluted basis, or (b) the difference
between (i) ten percent (10.0%) of the outstanding shares of Common Stock on the
Acquisition Completion Date, on a fully-diluted basis, and (ii) the percentage
of outstanding shares of Common Stock owned by the Purchaser on the Acquisition
Completion Date (which percentage shall not include any shares which may be
acquired or were acquired upon exercise of the First Tranche Warrant). Purchaser
shall provide the Company with written notice in accordance with Section 10.02
of its exercise of the option to purchase the Additional Warrant pursuant to
this Section 1.04, which notice shall be given or mailed no later than the tenth
(10th) Business Day after the Acquisition Completion Date. The purchase price
for the Additional Warrant shall be based on the Black-Scholes Option Pricing
Model.
ARTICLE II
CLOSING; PAYMENT OF PURCHASE PRICE
SECTION 2.01 CLOSING. The Closing and, if applicable, the Second
Closing, shall occur on the Closing Date and the Second Closing Date,
respectively, at the offices of Stinson, Mag & Fizzell; 100 South Fourth Street;
St. Louis, Missouri 63102.
SECTION 2.02 PAYMENT OF PURCHASE PRICE. The purchase price for the
First Tranche Warrant and, if applicable, the purchase price for the Additional
Warrant shall be made in cash in immediately available funds by wire transfer to
an account designated in writing by the Company to the Purchaser at least two
(2) Business Days prior to the Closing Date and the Second Closing Date,
respectively.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
<PAGE>
The Company hereby represents and warrants to the Purchaser as follows:
SECTION 3.01 EXISTENCE; POWER. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has all requisite corporate power and authority to conduct
its Business as presently conducted by it and to enter into and perform this
Agreement.
SECTION 3.02 AUTHORITY. This Agreement and all other instruments or
documents executed and delivered pursuant hereto, including without limitation,
the Registration Rights Agreement, the Warrant and the Standstill Agreement,
have been duly authorized by all necessary corporate action on the part of the
Company, including without limitation, all necessary approvals of the Company's
Board of Directors and stockholders, and duly executed and delivered by the
Company and constitute legal, valid and binding agreements of the Company,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, arrangement,
reorganization, moratorium and other similar laws relating to or affecting
creditors generally, by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
SECTION 3.03 CAPITALIZATION. As of November 10, 1997 the authorized
capital stock of the Company consists of (a) 50,000,000 shares of Common Stock,
$0.01 par value per share, of which 7,731,646 shares were outstanding and (b)
10,000,000 shares of preferred stock, par value $0.01 per share, none of which
shares of the Preferred Stock are outstanding. All outstanding shares of capital
stock are duly authorized, validly issued, fully paid and nonassessable, and no
class of capital stock is entitled to preemptive rights. There were outstanding
as of November 10, 1997 no options, warrants or other rights to acquire capital
stock from the Company other than (x) options representing in the aggregate the
right to purchase 600,589 shares of Common Stock, (y) rights under the Company's
Employee Stock Purchase Plan and the Non-Employee Director Plan permitting the
purchase of up to an aggregate of 675,000 shares of Common Stock and (z) no
shares of Preferred Stock convertible into shares of Common Stock.
SECTION 3.04 NO CONFLICT. Neither the execution and delivery nor the
performance of this Agreement and all other instruments or documents executed
and delivered pursuant hereto: (i) conflicts with the Charter Documents of the
Company, (ii) violates any provision of any law, rule, regulation or ordinance,
or any order, judgment, decree or ruling of any court or Governmental Authority
or any determination of an arbitrator, or (iii) results in a breach or violation
of any term of, or constitutes a default (or an event which with the passage of
time or giving of notice or both, would constitute a default) under, or cause or
permit the acceleration of the maturity of or give rise to any right of
termination, cancellation, imposition of fees or penalties under, any contract,
obligation, debt, note, bond, lease, mortgage, license, indenture or any other
agreement or instrument to which the Company or any of its subsidiaries or
Affiliates is a party or by which the Company, any of its subsidiaries or
Affiliates or any of their respective properties or assets are or may be bound
and that either individually or in the aggregate are material to the operations,
condition (financial or otherwise), results of operations, Business, or
properties or prospects of the Company and its subsidiaries, taken as a whole.
SECTION 3.05 VALID ISSUE. The issuance of all of the Warrant Shares has
been duly authorized by all necessary corporate action on the part of the
Company (including, without limitation, all necessary action by the Company's
Board of Directors and stockholders) and, upon issuance and delivery in
accordance with the provisions of this Agreement and the Warrants and payment
therefor as provided herein and therein, shall be validly issued, fully paid and
nonassessable and free from all taxes, liens, charges and security interests
(other than liens and security interests created by the Purchaser thereof).
SECTION 3.06 REPORTS AND FINANCIAL STATEMENTS. The Company has filed
all reports required to be filed with the SEC since August 31, 1996
(collectively, including all exhibits thereto, the "SEC Reports"). None of such
SEC Reports, as of their respective dates, contained any untrue statement of
<PAGE>
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the financial
statements (including the related notes) included in the SEC Reports presents
fairly, in all material respects, the consolidated financial position and
consolidated results of operations and cash flows of the Company and its
subsidiaries as of the respective dates or for the respective periods set forth
therein, all in conformity with generally accepted accounting principles
consistently applied during the periods involved, except as otherwise noted
therein, and subject, in the case of the unaudited interim financial statements,
to normal year-end adjustments and any other adjustments described therein. All
of such SEC Reports, as of their respective dates, complied in all material
respects with the requirements of the Exchange Act.
SECTION 3.07 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in Schedule 3.07, during the period since August 31, 1997 (the date of the
Company's last audited consolidated financial statements), there has not been
any event or circumstances causing or resulting in, or reasonably likely to
cause or result in, a Material Adverse Effect with respect to the Company.
SECTION 3.08 OFFERING OF SHARES. Neither the Company, directly or
indirectly, nor any agent on its behalf has offered or will offer the Warrants
or the Warrant Shares or any similar securities or has solicited or will solicit
an offer to acquire the Warrants or the Warrant Shares or any similar securities
from any Person so as to require registration of the issuance and sale of the
Warrants or the Warrant Shares to be sold to the Purchaser under the
circumstances contemplated by this Agreement under the provisions of Section 5
of the Securities Act.
SECTION 3.09 DGCL SECTION 203. Prior to the Closing Date, the Board of
Directors of the Company approved the Open Market Purchases, the issuance of the
Warrants and the exercise of the Warrants which transaction may result in the
Purchaser becoming an "interested stockholder" (as defined in Section 203 of the
General Corporation Law of the State of Delaware ("DGCL")).
SECTION 3.10 GOVERNMENTAL AND OTHER CONSENTS. Except as disclosed on
Schedule 3.10 and except for applicable requirements under the H-S-R Act, no
governmental or other consents, approvals, authorizations of, or filings,
registrations, qualifications, declarations or designations with, any
Governmental Authority are required on the part of the Company as a condition to
the valid execution, delivery and performance of this Agreement and the other
instruments and documents executed and delivered in connection herewith by the
Company, including without limitation, the valid issuance and sale of the
Warrants and the Warrant Shares.
SECTION 3.11 TRUTH AND ACCURACY OF INFORMATION. None of the documents,
instruments and other information furnished to the Purchaser by the Company
contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make any statements made therein not misleading. No
representation, warranty or statement made by the Company in this Agreement or
any of the instruments or documents executed and delivered in connection
herewith contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make any statements
made therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents, warrants and acknowledges to the Company as
follows:
SECTION 4.01 EXISTENCE; POWER. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia. The Purchaser has all requisite corporate power and authority to
conduct its Business as presently conducted by it and to enter into and perform
this Agreement.
SECTION 4.02 AUTHORITY. This Agreement and all other instruments or
documents executed
<PAGE>
and delivered by the Purchaser pursuant hereto, including without limitation,
the Registration Rights Agreement and the Standstill Agreement, have been duly
authorized by all necessary corporate action on the part of the Purchaser,
including without limitation, all necessary approvals of the Purchaser's Board
of Directors and shareholders, and duly executed and delivered by the Purchaser
and constitute legal, valid and binding agreements of the Purchaser, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, arrangement, reorganization, moratorium and
other similar laws relating to or affecting creditors generally, by general
equity principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law) or by an implied covenant of good faith and fair
dealing.
SECTION 4.03 NO CONFLICT. Neither the execution and delivery nor the
performance of this Agreement and all other instruments or documents executed
and delivered by the Purchaser pursuant hereto: (i) conflicts with the Charter
Documents of the Purchaser, (ii) violates any provision of any law, rule,
regulation or ordinance, or any order, judgment, decree or ruling of any court
or Governmental Authority or any determination of an arbitrator, or (iii)
results in a breach or violation of any term of, or constitutes a default (or an
event which with the passage of time or giving of notice or both, would
constitute a default) under, or cause or permit the acceleration of the maturity
of or give rise to any right of termination, cancellation, imposition of fees or
penalties under, any contract, obligation, debt, note, bond, lease, mortgage,
license, indenture or any other agreement or instrument to which the Purchaser
or any of its subsidiaries or Affiliates is a party or by which the Purchaser,
any of its subsidiaries or Affiliates or any of their respective properties or
assets are or may be bound.
SECTION 4.04 REPORTS AND FINANCIAL STATEMENTS. The Purchaser has filed
all reports required to be filed with the SEC since December 31, 1995
(collectively, including all exhibits thereto, the "Purchaser SEC Reports").
None of such Purchaser SEC Reports, as of their respective dates, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. Each of the
financial statements (including the related notes) included in the Purchaser SEC
Reports presents fairly, in all material respects, the consolidated financial
position and consolidated results of operations and cash flows of the Purchaser
and its subsidiaries as of the respective dates or for the respective periods
set forth therein, all in conformity with generally accepted accounting
principles consistently applied during the periods involved, except as otherwise
noted therein, and subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments and any other adjustments described
therein. All of such Purchaser SEC Reports, as of their respective dates,
complied in all material respects with the requirements of the Exchange Act.
SECTION 4.05 ABSENCE OF CERTAIN CHANGES OR EVENTS. During the period
since December 31, 1996 (the date of the Purchaser's last audited consolidated
financial statements), there has not been any event or circumstances causing or
resulting in, or reasonably likely to cause or result in, a Material Adverse
Effect with respect to the Purchaser.
SECTION 4.06 GOVERNMENTAL AND OTHER CONSENTS. Except for applicable
requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, no governmental or other consents, approvals, authorizations of, or
filings, registrations, qualifications, declarations or designations with, any
Governmental Authority are required on the part of the Purchaser as a condition
to the valid execution, delivery and performance of this Agreement and the other
instruments and documents executed and delivered in connection herewith by the
Purchaser, including without limitation, the valid issuance and sale of the
Warrants and the Warrant Shares.
SECTION 4.07 INVESTMENT. The Warrants issued to the Purchaser, and the
Warrant Shares to be issued to the Purchaser upon exercise of the Warrants, are
being acquired by the Purchaser for its own account without the participation of
any other Person, with the intent of holding the Warrants and the Warrant
Shares, as the case may be, for investment and without a view to, or for resale
in connection with, any distribution of either the Warrants or the Warrant
Shares, nor is the Purchaser aware of the existence of any distribution of the
Warrants or the Warrant Shares. The Purchaser has
<PAGE>
not been contacted concerning the acquisition of the Warrants or Warrant Shares
by means of any general or public solicitations or advertisements.
SECTION 4.08 ACCREDITED INVESTOR. The Purchaser is an Accredited
Investor.
SECTION 4.09 REGISTRATION OF WARRANTS AND WARRANT SHARES. The Purchaser
understands that the Warrants and the Warrant Shares may not be sold or
transferred unless such shares are subsequently registered under the Securities
Act and/or applicable state securities or blue sky laws or an exemption from
such registration is available.
SECTION 4.10 TRUTH AND ACCURACY OF INFORMATION. None of the documents,
instruments and other information furnished to the Company by the Purchaser
contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make any statements made therein not misleading. No
representation, warranty or statement made by the Purchaser in this Agreement or
any of the instruments or documents executed and delivered in connection
herewith contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make any statements
made therein not misleading.
ARTICLE V
COVENANTS OF THE COMPANY AND THE PURCHASER
SECTION 5.01 STANDSTILL AGREEMENT. Simultaneously with the execution
and delivery of this Agreement, the Purchaser and the Company shall enter into a
standstill agreement with the Company substantially in the form set forth in
Exhibit 5.01 (the "Standstill Agreement").
SECTION 5.02 REGISTRATION RIGHTS AGREEMENT. Simultaneously with the
execution and delivery of this Agreement, the Purchaser and the Company shall
enter into a registration rights agreement with the Company substantially in the
form set forth in Exhibit 5.02 (the "Registration Rights Agreement").
SECTION 5.03 1994 RIGHTS AGREEMENT. Simultaneously with the execution
and delivery of this Agreement, the Purchaser shall enter into an amendment to
the 1994 Rights Agreement substantially in the form set forth in Exhibit 5.03.
The Company shall not amend or waive the 1994 Rights Agreement for any Person
other than the Purchaser without Purchaser's prior written consent which consent
shall not be unreasonably withheld.
SECTION 5.04 RESERVATION OF SHARES. During the period within which the
Warrants may be exercised, the Company shall have authorized and reserved a
sufficient number of Warrant Shares to provide for the complete exercise of the
Warrants.
SECTION 5.05 SATISFACTION OF CLOSING CONDITIONS. Subject to the terms
and conditions provided herein, the Company and the Purchaser each agree to use
its commercially reasonable best efforts to satisfy the closing conditions set
forth in Article VI and Article VII of this Agreement.
SECTION 5.06 FURTHER ASSURANCES. The Company and the Purchaser each
shall execute and deliver such additional instruments and other documents and
shall take such further actions as may be necessary or appropriate to
effectuate, carry out and comply with all of the terms of this Agreement and the
transactions contemplated hereby, including, without limitation, making
application as soon as practicable hereafter for all consents and approvals
required in connection with this Agreement and the transactions contemplated
hereby and diligently pursuing the receipt of such consents and approvals in
good faith thereafter.
SECTION 5.07 COOPERATION. The Company and the Purchaser each agree to
cooperate with the other in the preparation and filing of all forms,
notifications, reports and information, if any, required
<PAGE>
or reasonably deemed advisable pursuant to any Requirement of Law or the rules
of the NASDAQ Stock Market in connection with the transactions contemplated
herein and, subject to the provisions of Section 5.09, to use their respective
good faith efforts jointly to agree on a method to overcome any objections by
and Governmental Authority to any such transactions.
SECTION 5.08 ANTITRUST FILINGS. The Company and the Purchaser each
agree to make all necessary filings in connection with this Agreement and the
transactions contemplated hereby under the H-S-R Act, as promptly as practicable
after the Purchaser determines such filing is advisable, and to use their
commercially reasonable best efforts to furnish or cause to be furnished, as
promptly as practicable, all information and documents requested under the HSR
Act and shall otherwise cooperate with the applicable Governmental Authority in
order to obtain any required regulatory approvals in as expeditious a manner as
possible. The Company and the Purchaser shall each pay one-half of all filing
fees payable with respect to all filings required by the H-S-R Act.
SECTION 5.09 CONFIDENTIALITY. For a period of three (3) years from and
after the date hereof, without the prior written consent of the Purchaser, the
Company agrees that it will not, and will use reasonable efforts to ensure that
none of its representatives or Affiliates will, use in the conduct of its
business (except as contemplated by this Agreement), or disclose to or file with
any other Person (other than a permitted assignee of some or all of the
Purchaser's rights or obligations hereunder and other than employees of the
Company, financing sources, financial advisors, accountants and attorneys for
the foregoing), any non-public financial information regarding the Purchaser or
its Affiliates or Associates.
SECTION 5.10 PUBLIC ANNOUNCEMENTS. On the date hereof or another
mutually agreed date, the Company and the Purchaser shall jointly issue an
initial press release relating to execution of this Agreement and the
transactions contemplated hereby substantially in the form of Exhibit 5.12.
Other than such initial press release and the related conversations with
analysts and investors, neither the Company nor the Purchaser, nor any of their
respective representatives, shall make any public announcement with respect to
this Agreement or the transactions contemplated hereby, without the prior
written consent of the other party hereto unless required to do so by applicable
Requirement of Law or the rules of the NASDAQ Stock Market, in which case
notification shall be given to the other party hereto prior to such disclosure.
Each party shall consult with and provide reasonable cooperation to the other in
connection with the issuance of any press releases after the initial press
release or any other public documents or announcements describing this Agreement
and the transactions contemplated hereby.
SECTION 5.11 COVENANTS REGARDING STOCK. Until the earlier of the
expiration of the Standstill Period (as defined in the Standstill Agreement) or
the date on which the Warrants have terminated without exercise in full, the
Company covenants and agrees to the following:
(a) The Company will not issue Preferred Stock or other
securities having voting powers greater than those of the Common Stock,
other than the rights and the underlying Preferred Stock issuable under
the 1994 Rights Agreement, or any amendment, replacement or restatement
thereof.
(b) If the Company determines to issue for cash or cash
equivalents Common Stock, Preferred Stock or other securities having
the right to vote in the election of directors, the Purchaser shall
have the right to purchase an amount of such securities, on the same
terms and conditions as those being paid by the third party offerees,
necessary to maintain after the completion of such offer the percentage
of outstanding voting securities held by the Purchaser prior to such
offer.
(c) The Company shall furnish timely such information and
assistance as may be reasonably required by the Purchaser to utilize
the equity method of accounting for the Purchaser's ownership interests
in the Company, provided that the Purchaser will reimburse the
<PAGE>
Company for any additional third party expenses which may be incurred
in connection with such assistance.
ARTICLE VI
CONDITIONS TO THE PURCHASER'S OBLIGATIONS
The obligation of the Purchaser to effect the transactions contemplated
by this Agreement are subject to satisfaction on or before the Closing Date of
the following conditions:
SECTION 6.01 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in Article III hereof shall be true and
correct in all material respects when made and shall be true and correct in all
material respects at and as of the Closing Date, as if made on and as of such
date, taking into account any date specified therein. The Company shall execute
and deliver to the Purchaser a certificate dated as of the Closing Date
certifying the fulfillment of the conditions of this Section 6.01.
SECTION 6.02 AGREEMENTS, COVENANTS AND CONDITIONS. The Company shall
have performed and complied in all material respects with all agreements,
covenants and conditions contained herein that are required to be performed or
complied with by it on or before the Closing Date. The Company shall execute and
deliver to the Purchaser a certificate dated as of the Closing Date certifying
the fulfillment of the conditions of this Section 6.02.
SECTION 6.03 GOVERNMENTAL APPROVALS AND INJUNCTIONS. All regulatory
consents and approvals shall have been received, including the expiration or
termination of the HSR Act waiting period, if necessary pursuant to any
Requirement of Law. No injunctions or restraints prohibiting the transactions
contemplated by this Agreement shall be pending or threatened.
SECTION 6.04 DUE DILIGENCE REVIEW. The Purchaser shall have completed
its due diligence review of the Company (the results of which shall be
reasonably satisfactory to the Purchaser).
SECTION 6.05 PURCHASE OF SHARES NOT ENJOINED. The purchase of the
Warrants or the Warrant Shares by the Purchaser shall not have been enjoined
(temporarily or permanently) as of the Closing Date.
ARTICLE VII
CONDITIONS TO THE COMPANY'S OBLIGATIONS
The obligation of the Company to effect the transactions contemplated
by this Agreement are subject to satisfaction on or before the Closing Date of
the following conditions:
SECTION 7.01 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchaser contained in Article IV hereof shall be true and
correct in all material respects when made and shall be true and correct in all
material respects at and as of the Closing Date, as if made on and as of such
date. The Purchaser shall execute and deliver to the Company a certificate dated
as of the Closing Date certifying the fulfillment of the conditions of this
Section 7.01.
SECTION 7.02 AGREEMENTS, COVENANTS AND CONDITIONS. The Purchaser shall
have performed and complied in all material respects with all agreements,
covenants and conditions contained herein that are required to be performed or
complied with by it on or before the Closing Date. The Purchaser shall execute
and deliver to the Company a certificate dated as of the Closing Date certifying
the fulfillment of the conditions of this Section 7.02.
SECTION 7.03 GOVERNMENTAL APPROVALS AND INJUNCTIONS. All regulatory
consents and approvals
<PAGE>
shall have been received, including the expiration or termination of the HSR
waiting period, if necessary pursuant to any Requirement of Law. No injunctions
or restraints prohibiting the transactions contemplated by this Agreement shall
be pending or threatened.
SECTION 7.04 DUE DILIGENCE REVIEW. The Company shall have completed its
due diligence review of the Purchaser (the results of which shall be reasonably
satisfactory to the Company).
SECTION 7.05 SALE OF SHARES NOT ENJOINED. The sale of the Warrant and
the Warrant Shares by the Company shall not have been enjoined (temporarily or
permanently) as of the Closing Date.
SECTION 7.06 HOST MARKETING AGREEMENT. The Company and Host
Communications, Inc. shall have entered into a Strategic Marketing Agreement in
a form acceptable to such parties.
ARTICLE VIII
TERMINATION
SECTION 8.01 TERMINATION. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the Closing Date:
(a) Mutual Consent. By mutual consent of the Company and the
Purchaser;
(b) Expiration Date. By the Company or the Purchaser by
written notice to the other party at any time after the Closing Date if
the Closing has not occurred; provided that this Agreement may not be
terminated by any party whose breach of this Agreement (including
without limitation, failure to use its commercially reasonable best
efforts to cause any of the conditions in Articles VI and VII of this
Agreement to be satisfied) has caused or materially contributed to the
failure of the Closing on or before the Closing Date;
(c) Permanent Injunction. By the Company or the Purchaser if
consummation of the transactions contemplated by this Agreement shall
violate any final non-appealable order, decree or judgment of any court
or governmental body having competent jurisdiction;
(d) Lack of Governmental Approval. By the Company or the
Purchaser if any governmental approval or consent required for this
Agreement and the transactions contemplated by this Agreement pursuant
to any Requirement of Law shall be permanently and unconditionally
denied; or
(e) Failure to Honor Agreements. By the Company or the
Purchaser if the other party shall have failed to perform or comply in
any material respect with any agreement or covenant contained herein
that is required to be performed by or complied with it on or before
the Closing Date after having been provided by the other party written
notice of, and a reasonable opportunity to cure, such failure.
SECTION 8.02 NOTICE OF TERMINATION. Notice of termination of this
Agreement as provided for in this Article VIII shall be given by the party
terminating to the other parties hereto in accordance with the provisions of
Section 10.02.
SECTION 8.03 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to this Article VIII, this Agreement shall forthwith become wholly void
and of no further force and effect and all further obligations of the Company
and the Purchaser or their respective officers or directors with respect to any
obligations under this Agreement shall terminate without further liability;
provided, however, that if the non-occurrence of Closing is the direct or
indirect result of the breach of this Agreement by any party, such defaulting
party shall be fully liable to the other party for any such breach.
<PAGE>
ARTICLE IX
DEFINITIONS
The following words and terms as used in this Agreement shall have the
following meanings:
"Accredited Investor" shall have the meaning set forth in Section
501(a)(3) of Regulation D promulgated under the Securities Act.
"Acquisition Completion Date" means the earlier of (i) the date that
the Purchaser first acquires 10.1% of the outstanding Common Stock through the
Open Market Purchases or (ii) the first Business Day that is six (6) months (or
such longer period provided by Section 1.02) after the Closing Date.
"Additional Warrant" means the additional warrant purchased by the
Purchaser on the Acquisition Completion Date pursuant to Section 1.04.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.
"Barrier" means the price of the last reported trade of the Company's
Common Stock on the NASDAQ Stock Market shall be equal to or greater than $16.50
for twenty (20) consecutive trading days.
"Black-Scholes Option Pricing Model" means that option pricing model
developed in 1973 by Fisher Black and Myron Scholes and used herein to determine
the purchase price for the Warrant based on assumptions for Volatility, Warrant
Exercise Price, Barrier, Expiration, Spot Price, Option Style, Risk-Free
Borrowing Rate, Liquidity Discount and Payment Term for Warrants, as follows:
Volatility: Historical annualized volatility from
the initial public offering of the
Common Stock (July 8, 1994) to the close
of business on the trading day prior to
the Closing Date or the Second Closing
Date, as applicable
Exercise Price: $12.00
Barrier: The price of the last reported trade of
the Common Stock on The NASDAQ Stock
Market shall be equal to or greater than
$16.50 for twenty consecutive trading
days
Expiration: Four years from the Closing Date
Spot Price: Based on the average of the price
of the last reported trade of the Common
Stock on The NASDAQ Stock Market for the
twenty consecutive trading days prior to
the Closing Date or the Second Closing
Date, as applicable
Option Style: American
Risk Free
Borrowing
Rate: Four year swap rate at the close of
business on the trading day prior to the
Closing Date or the Second Closing Date,
as appropriate
<PAGE>
Liquidity
Discount: 33% of the value derived using the
Black-Scholes option pricing model and
the assumptions set forth herein
Payment Term
for Warrants: 50% at closing and 50% (plus
interest from the Closing Date at the
rate of 7% compounded annually) at time
of exercise or expiration
"Business" means the business of the Company and its Affiliated Company
as presently conducted.
"Business Day" means a day other than a Saturday, a Sunday, a day on
which banking institutions in the State of Georgia and the State of Missouri are
authorized or obligated by law or required by executive order to be closed, or a
day on which the New York Stock Exchange is closed.
"Charter Documents" of a Person means the Certificate of Incorporation,
the By-Laws and any other charter documents of such Person, including without
limitation any certificate of designation, as amended or restated and as in
effect as of the Closing Date.
"Closing" means the consummation of the purchase and sale of the First
Tranche Warrants pursuant to the terms of this Agreement.
"Closing Date" means November 21, 1997, or such later date as the
parties may agree.
"Common Stock" means the Company's $.01 par value per share common
stock and stock of any other class of the common equity of the Company into
which such shares may hereafter have been changed and other rights or securities
convertible into shares of common stock of the Company.
"Confidentiality Agreement" means that agreement, dated as of March 6,
1997, by and among the Company, the Purchaser and Host Communications, Inc.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"First Tranche Warrant" means those Warrants purchased by the Purchaser
on the Closing Date pursuant to Section 1.03.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"H-S-R Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Material Adverse Effect" means a material and adverse effect (i) on
the condition (financial or otherwise), results of operations, business or
properties of a Person and its subsidiaries and Affiliates, taken as a whole, or
(ii) on a Person's and its subsidiaries' and Affiliates' ability, taken as a
whole, to perform their respective obligations under any of the material
contracts or agreements to which such Person or its subsidiaries or Affiliates
is a party or this Agreement or any of the other documents and agreements issued
in connection herewith or (iii) upon the binding nature, validity or
enforceability of any of the material contracts or agreements to which a Person
or its subsidiaries or Affiliates is a party or this Agreement or any of the
other documents and agreements issued in connection herewith.
<PAGE>
"NASDAQ" means the electronic inter-dealer quotation system operated by
NASDAQ, Inc.
"Open Market Purchases" means the Purchaser's acquisition of the Common
Stock as provided in Section 1.01.
"Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or any agency or political subdivision thereof) or other entity of
any kind.
"Preferred Stock" means the Company's $0.01 par value per share
preferred stock and stock of any other class of the equity of the Company into
which such shares may hereafter have been changed and other rights or securities
convertible into shares of preferred stock of the Company.
"Purchaser Nominee" means any Person designated by the Purchaser to act
as a director or an advisory director of the Company pursuant to Section 5.03.
"Requirement of Law" means as to any Person, any law, treaty, rule or
regulation of any Governmental Authority applicable to such Person or any of its
property or to which such Person or any of its property is subject.
"1994 Rights Agreement" means that certain Rights Agreement, dated as
of January 1, 1994, as amended, by and between the Company and ChaseMellon
Shareholder Services, as rights agent.
"SEC" means the United States Securities And Exchange Commission.
"Second Closing" means the consummation of the purchase and sale of the
Additional Warrants pursuant to the terms of this Agreement.
"Second Closing Date" means that certain date specified by Purchaser
that shall be on the Acquisition Completion Date or within ten (10) Business
Days thereafter.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Warrants" means collectively the First Tranche Warrant and the
Additional Warrant.
"Warrant Shares" means the shares of Common Stock acquired or
acquirable upon exercise of the First Tranche Warrant or the Additional Warrant,
any shares of Common Stock issued as (or issuable upon the conversion or
exercise of any warrant, right or other security that is issued as) a dividend
or other distribution with respect to, or in exchange for, or in replacement of,
such shares of Common Stock, or any other interest in the Company that has been
or may be acquired upon exercise of the First Tranche Warrant or the Additional
Warrant.
ARTICLE X
MISCELLANEOUS
SECTION 10.01 BROKERS AND FINDERS. Each party shall be solely
responsible for any fee or commission payable to any investment banker, broker,
or finder it retains for services in connection with the transactions
contemplated by this Agreement.
SECTION 10.02 NOTICE. All notices, demands and other communications
under the Warrant shall be in writing (which shall include communications by
telex and telecopy) and shall be delivered (a) in person or by courier or
overnight service, (b) mailed by first class registered or certified mail,
postage prepaid, return receipt requested, by prepaid telex or telecopier, or by
hand, courier or overnight service,
<PAGE>
and (c) be given at the following respective addresses and telecopier numbers
and to the attention of the following Persons:
(i) if to the Company, to:
RAWLINGS SPORTING GOODS COMPANY, INC.
1859 Intertech Drive
Fenton, Missouri 63026
Attn: Mr. Paul E. Martin
Telecopier No.: (314) 349-3598
with a copy (which shall not constitute notice) to:
STINSON, MAG & FIZZELL
1201 Walnut Street, Suite 2800
Kansas City, Missouri 64106
Attn: Craig L. Evans, Esq.
Telecopier No.: (816) 691-3495
(ii) if to the Purchaser hereof, to:
BULL RUN CORPORATION
4370 Peachtree Road
Atlanta, Georgia 30319
Attn: Mr. Robert S. Prather, Jr.
Telecopier No.: (404) 261-9607
with a copy (which shall not constitute notice) to:
ALSTON & BIRD LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Attn: Stephen A. Opler, Esq.
Telecopier No.: (404) 881-4777
or at such other address or telecopier number or to the attention of such other
person as the party to whom such information pertains may hereafter specify for
the purpose in a notice to the other specifically captioned "Notice of Change of
Address", and (d) be effective or deemed delivered or furnished (i) if given by
mail, on the third Business Day after such communication is deposited in the
mail, addressed as above provided, (ii) if given by telecopier, when such
communication is transmitted to the appropriate number determined as above
provided in this Section 10.02 and the appropriate answer back is received or
receipt is otherwise acknowledged, and (iii) if given by hand delivery or
overnight delivery service when left at the address of the addressee addressed
as above provided, except that notices of a change of address or telecopier
number, shall not be deemed furnished until received.
SECTION 10.03 MODIFICATIONS, AMENDMENTS AND WAIVERS. This Agreement and
any term hereof may be changed, waived, discharged, or terminated only by an
instrument in writing signed by the party hereof against whom enforcement of
such change, waiver, discharge or termination is sought.
SECTION 10.04 CAPTIONS AND REFERENCES. The captions and headings in
this Agreement are for purposes of reference only and shall not limit or
otherwise affect the meaning hereof. When used in this Agreement, the words
"herein," "hereof" and "hereunder," and words of similar import, shall refer to
this Agreement as a whole and not to any provision of this Agreement, and the
words "Section" and
<PAGE>
"Exhibit" shall refer to Sections of and Exhibits to this Agreement unless
otherwise specified.
SECTION 10.05 PRONOUNS. Except as otherwise specified herein, all
references herein (A) to any Person other than the Company shall be deemed to
include such Person's successors and assigns, (B) to the Company shall be deemed
to include the Company's successors and assigns, and (C) to any applicable law
defined or referred to herein shall be deemed references to such applicable law
as the same may have been or may be amended or supplemented from time to time.
SECTION 10.06 GENDER. Whenever the context so requires, the neuter
gender includes the masculine or feminine, and the singular number includes the
plural, and vice versa.
SECTION 10.07 REMEDIES. The Company stipulates that the remedies at law
of the Purchaser in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Agreement are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
SECTION 10.08 GOVERNING LAW. This Agreement shall be governed by the
laws of the State of Georgia, without regard to conflict or choice of laws
principles.
SECTION 10.09 TIME OF THE ESSENCE. Time is of the essence in the
performance and satisfaction of this Agreement and each of the conditions
specified in Articles VI and VII of this Agreement are material for purposes of
this Agreement.
SECTION 10.10 ENTIRE AGREEMENT. This Agreement, the Schedules and the
Exhibits constitute the entire agreement between the parties relating to the
subject matter hereof and supersede all prior oral and written, and all
contemporaneous oral, negotiations, discussions, writings and agreements
relating to the subject matter of this Agreement (other than the agreements and
other documents executed simultaneously with this Agreement or contemplated
herein), including, without limitation, the Confidentiality Agreement.
SECTION 10.11 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of and be enforceable by the parties hereto,
and their respective successors and permitted assigns. This Agreement cannot be
assigned by any party without the prior written consent of the other parties
hereto, except that Purchaser, without the consent of the Company, may assign
this Agreement and its rights hereunder, in whole or in part, to (i) any of its
lenders as collateral security and (ii) J. Mack Robinson, Robert S. Prather,
Jr., Charles L. Jarvie, James Host, Gray Communications Systems, Inc., Host
Communications, Inc. and Universal Sports America, Inc.
SECTION 10.12 SEVERABILITY. Should any one or more of the provisions of
this Agreement be determined to be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
hereof shall not in any way be affected or impaired thereby. To the extent such
determination is reasonably likely to give rise to a Material Adverse Effect,
the parties shall endeavor in good faith to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as practicable to that of the invalid, illegal or unenforceable
provisions.
SECTION 10.13 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original; but all of such
counterparts together shall constitute one and the same instrument.
SECTION 10.14 INTERPRETATIONS. Neither this Agreement nor any
uncertainty or ambiguity shall be construed or resolved against the Purchaser or
the Company, whether under any rule of construction or otherwise. No party to
this Agreement shall be considered the draftsman. On the contrary, this
Agreement has been reviewed, negotiated and accepted by all parties and their
attorneys and shall be
<PAGE>
construed and interpreted according to the ordinary meaning of the words used so
as fairly to accomplish the purposes and intentions of all parties hereto.
[SIGNATURES ON FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed under seal by its duly authorized officers as of the date first above
written.
RAWLINGS SPORTING GOODS COMPANY, INC.
By: /s/ PAUL E. MARTIN
--------------------------
Name: Paul E. Martin
Title: Chief Financial Officer
ATTEST:
By: /s/ HOWARD B. KEENE
------------------------------
Secretary
[CORPORATE SEAL]
BULL RUN CORPORATION
By: /s/ ROBERT S. PRATHER, JR.
-----------------------------
Name: Robert S. Prather, Jr.
Title: President
ATTEST:
By: ______________________________
Secretary
[CORPORATE SEAL]
<PAGE>
EXHIBIT 99.3
NEITHER THIS COMMON STOCK PURCHASE WARRANT, NOR THE SHARES OF COMMON
STOCK ISSUABLE UPON THE EXERCISE HEREOF, HAVE BEEN REGISTERED FOR OFFER OR SALE
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THE SECURITIES LAWS OF ANY OTHER
STATE, OR ANY OTHER APPLICABLE SECURITIES LAWS. THIS WARRANT HAS BEEN ISSUED OR
SOLD, AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF WILL BE
ISSUED OR SOLD, IF AT ALL, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH LAWS
FOR TRANSACTIONS NOT INVOLVING ANY PUBLIC OFFERING. THIS WARRANT HAS BEEN
ACQUIRED, AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF WILL
BE ACQUIRED, IF AT ALL, FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED,
HYPOTHECATED, PLEDGED OR DISPOSED OF IN ANY MANNER EXCEPT IN A TRANSACTION THAT
IS EXEMPT FROM REGISTRATION UNDER SUCH LAWS OR PURSUANT TO AN EFFECTIVE
REGISTRATION UNDER SUCH LAWS.
THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13)
OF CODE SECTION 10-5-9 OF THE "GEORGIA SECURITIES ACT OF 1973," AND MAY NOT BE
SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR
PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT.
THESE SECURITIES ARE SUBJECT TO A STANDSTILL AGREEMENT DATED AS OF
NOVEMBER 21, 1997, WHICH CONTAINS RESTRICTIONS ON THE RIGHTS OF THE HOLDER
THEREOF. COPIES OF THE STANDSTILL AGREEMENT ARE ON FILE WITH THE SECRETARY OF
THE COMPANY AND WILL BE MAILED TO A HOLDER WITHOUT CHARGE WITHIN FIVE (5) DAYS
AFTER RECEIPT BY THE COMPANY OF A WRITTEN REQUEST THEREFOR FROM SUCH HOLDER.
RAWLINGS SPORTING GOODS COMPANY, INC.
COMMON STOCK PURCHASE WARRANT
RAWLINGS SPORTING GOODS COMPANY, INC., a Delaware corporation (the
"Company"), hereby certifies that, for value received, BULL RUN CORPORATION, a
Georgia corporation (together with its successors and permitted assigns, the
"Holder"), is entitled, subject to the terms hereof, to purchase from the
Company upon surrender of this Common Stock Purchase Warrant (this "Warrant")
at any time during the period described in Section 2 hereof, a number of
shares (the "Warrant Shares") equal to 925,804 (as adjusted from time to time
as provided in this Warrant), at the Warrant Exercise Price (as defined below)
per share.
DEFINITIONS
SECTION 1. DEFINITIONS. The following words and terms as used
in this Warrant shall have the following meanings:
"Affiliate" shall have the meaning set forth in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended.
"Barrier" means the price of the last reported trade of the
Company's Common Stock on the NASDAQ Stock Market shall be equal to or greater
than $16.50 for twenty (20) consecutive trading days.
"Business Day" means a day other than a Saturday, a Sunday, a
day on which banking
<PAGE>
institutions in the State of Georgia or the State of Missouri are authorized or
obligated by law or required by executive order to be closed, or a day on which
the New York Stock Exchange is closed.
"Close of Business" means the close of business on any day
other than a Saturday, a Sunday, a day on which banking institutions in the
State of Georgia or the State of Missouri are authorized or obligated by law or
required by executive order to be closed, or a day on which the New York Stock
Exchange is closed.
"Closing Date" means November 21, 1997.
"Common Stock" means the Company's $.01 par value per share
common stock and stock of any other class of the equity of the Company into
which such shares may hereafter have been changed.
"Company" means Rawlings Sporting Goods Company, Inc., a
Delaware corporation.
"Conversion Price" means the price per share for which Common
Stock is issuable upon the conversion or exchange of Convertible Securities,
determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the issuance of such Convertible Securities,
plus the minimum aggregate amount of additional consideration payable to the
Company upon the conversion or exchange of such Convertible Securities, by (ii)
the total maximum number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities.
"Convertible Securities" mean any securities issued by the
Company or an Affiliate of the Company which are convertible into or
exchangeable for, directly or indirectly, shares of Common Stock.
"Expiration Date" means the fourth anniversary of the Closing
Date.
"Holder" means Bull Run Corporation, a Georgia corporation,
together with its successors and permitted assigns.
"Market Price" of a share of Common Stock on any day means the
average closing price of a share of Common Stock for the twenty (20) consecutive
trading days preceding such day on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, the average
of the reported bid and asked prices during such twenty (20) trading day period
in the over-the-counter market as furnished by the National Association of
Securities Dealers automated quotation system, or, if such firm is not then
engaged in the business of reporting such prices, as furnished by any similar
firm then engaged in such business selected by the Company, or, if there is no
such firm, as furnished by any member of the National Association of Securities
Dealers, Inc. selected by the Company or, if the shares of Common Stock are not
publicly traded, the Market Price for such day shall be the book value of a
share of Common Stock of the Company as disclosed in the last balance sheet of
the Company regularly prepared by the Company.
"Material Adverse Effect" means a material and adverse effect
(i) on the condition (financial or otherwise), results of operations, business
or properties of the Company and its Affiliates, taken as a whole, or (ii) on
the Company's and its Affiliates' ability, taken as a whole, to perform their
respective obligations under any of the Company's or its Affiliates' material
agreements or under any other document or agreement issued in connection
herewith to which the Company or any of its Affiliates is a party or (iii) upon
the binding nature, validity or enforceability of any material agreements.
"NASDAQ" means the electronic inter-dealer quotation system
(the National Association of Securities Dealers Automated Quotations Systems)
operated by NASDAQ, Inc.
<PAGE>
"Person" means an individual, corporation, limited liability
company, partnership, trust, incorporated or unincorporated association, joint
venture, joint stock company, government (or any agency or political subdivision
thereof) or other entity of any kind.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Standstill Agreement" means that certain Standstill
Agreement, dated as of the Closing Date, by and between the Company and the
Holder.
"Strike Price" means the price per share for which Common
Stock is issuable upon the exercise of any rights, options or warrants for the
purchase of Common Stock, determined by dividing (i) the total amount, if any,
received or receivable by the Company as consideration for the grant of such
rights, options or warrants, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of such rights, options
or warrants, by (ii) the total maximum number of shares of Common Stock issuable
upon the exercise of such rights, options or warrants.
"Vote" shall mean, as to any entity, the ability to cast a
vote at a stockholders' or comparable meeting of such entity with respect to the
election of directors or other members of such entity's governing body.
"Voting Power" means the aggregate number of Votes represented
by all Voting Securities which as of such date Bull Run or any of its Affiliates
has the right to acquire from the Company pursuant to the Warrants.
"Voting Securities" shall mean the Common Stock and any other
securities of the Company having the right to Vote.
"Warrant Exercise Price" means the consideration payable by
the Holder for each Warrant Share upon exercise of this Warrant, which initially
shall be $12.00 per share.
"Warrant Shares" means the shares of Common Stock acquired or
acquirable upon exercise of this Warrant, any shares of Common Stock issued as
(or issuable upon the conversion or exercise of any warrant, right or other
security that is issued as) a dividend or other distribution with respect to, or
in exchange for, or in replacement of, such shares of Common Stock, or any other
interest in the Company that has been or may be acquired upon exercise of this
Warrant.
(b) Other Definitional Provisions.
(i) Except as otherwise specified herein, all
references herein (A) to any Person, including the Company, shall be deemed to
include such Person's successors and assigns and (B) to any applicable law
defined or referred to herein shall be deemed references to such applicable law
as the same may have been or may be amended or supplemented from time to time.
(ii) When used in this Agreement, the words "herein,"
"hereof" and "hereunder," and words of similar import, shall refer to this
Agreement as a whole and not to any provision of this Agreement, and the words
"Section" and "Exhibit" shall refer to Sections of and Exhibits to this
Agreement, respectively, unless otherwise specified.
(iii) Whenever the context so requires, the neuter
gender includes the masculine or feminine, and the singular number includes the
plural, and vice versa.
SECTION 2. EXERCISE, EXCHANGE AND LIMITATIONS OF WARRANT.
<PAGE>
(a) Exercise of Warrant. Subject to the terms and conditions
hereof, this Warrant may be exercised, in whole or in part, at any time or from
time to time during normal business hours after (i) the Barrier has been met and
(ii) the Holder and its Affiliates beneficially own at least five percent (5%)
of the outstanding Common Stock, and prior to the Close of Business on the
Expiration Date. The rights represented by this Warrant may be exercised by the
Holder, in whole or from time to time in part (except that this Warrant shall
not be exercisable as to a fractional share) by (i) delivery of a written notice
of such Holder's election to exercise this Warrant to the Company's office
located at the address set forth in Section 19 hereof, which notice shall
specify the number of Warrant Shares to be purchased, (ii) payment to the
Company of an amount equal to the Warrant Exercise Price multiplied by the
number of Warrant Shares as to which the Warrant is being exercised, such
payment to be made by wire transfer or by certified or official bank check,
(iii) surrender of this Warrant, properly endorsed, at the principal office of
the Company (or at such other agency or office of the Company as the Company may
designate by written notice to the Holder), and (iv) if the Warrant Shares
issuable upon the exercise of the rights represented by this Warrant have not
been registered under the Securities Act, delivery to the Company by the Holder
of a letter in the form of Exhibit A hereto; provided, however, that if such
Warrant Shares are to be issued in any name other than that of the registered
holder of this Warrant, such issuance shall be deemed a transfer subject to the
provisions and restrictions of Section 18 hereof. In the event of any exercise
of the rights represented by this Warrant, a certificate or certificates for the
Warrant Shares so purchased, registered in the name of, or as directed by, the
Holder, shall be delivered to, or as directed by, such Holder within three (3)
Business Days after such rights shall have been so exercised. Unless the rights
represented by this Warrant shall have expired or have been fully exercised, the
Company shall issue a new Warrant identical in all respects to the Warrant
exercised except that it shall represent rights to purchase the number of
Warrant Shares purchasable immediately prior to such exercise under the Warrant
exercised, less the number of Warrant Shares with respect to which such Warrant
was exercised. The Person in whose name any certificate for Warrant Shares is
issued upon the exercise of this Warrant shall for all purposes be deemed to
have become the holder of record of such Warrant Shares immediately prior to the
Close of Business on the date on which the Warrant was surrendered and payment
of the amount due in respect of such exercise and any applicable taxes was made,
irrespective of the date of delivery of such share certificate, except that, if
the date of such surrender and payment is a date when the stock transfer books
of the Company are properly closed, such person shall be deemed to have become
the holder of such Warrant Shares at the opening of business on the next
succeeding date on which the stock transfer books are open. If this Warrant is
not exercised on or prior to the Close of Business on the Expiration Date, this
Warrant shall become void and all rights of the Holder hereunder shall cease.
(b) Exceptions to Exercise of Warrant. Notwithstanding the
provisions of Section 2(a) hereof to the contrary, this Warrant may be
exercised, in whole or in part, at any time or from time to time during normal
business hours on or after the date hereof and prior to the Close of Business on
the Expiration Date upon the occurrence of any of the following:
(i) and any acquisition of more than fifty percent (50%)
of the Voting Power of the Company by any Person and
such Person's Affiliates, however acquired, including
without limitation, by acquisition of securities,
merger, consolidation, recapitalization or
reorganization of the Company;
(ii) any partial or complete liquidation of the Company;
(iii) any sale or disposition of fifty percent (50%) or
more of the assets of the Company;
(iv) any tender offer for more than twenty percent (20%)
of the Voting Power of any outstanding class of
Voting Securities issued by the Company which has
been approved by a majority of the Company's Board of
Directors or in connection with which the Board of
Directors has redeemed rights under, or amended, the
Company's 1994 Rights Agreement (or any successor
agreement); or
(v) any issuance by the Company of capital stock of the
Company constituting
<PAGE>
(on a cumulative basis) more than fifty percent (50%)
of the Voting Power of the Company.
(c) Exchange of Warrant. At the option of the Holder, this
Warrant is exchangeable upon the surrender hereof by the Holder at the principal
office or agency of the Company, for new warrants of like tenor representing in
the aggregate the right to purchase the number of Warrant Shares that may be
purchased hereunder from time to time after giving effect to all the provisions
hereof, each of such new warrants to represent the right to purchase such number
of Warrant Shares as shall be designated by said Holder at the time of such
surrender. This Warrant so surrendered for exchange shall be canceled by the
Company.
(d) Lost, Stolen, Mutilated or Destroyed Warrant. If this
Warrant is lost, stolen, mutilated or destroyed, on receipt of an affidavit of
Holder containing representations and indemnities reasonably satisfactory to the
Company, the Company shall issue a new warrant of like denomination and tenor as
this Warrant so lost, stolen, mutilated or destroyed.
(e) Date. The date of this Warrant is the Closing Date. This
Warrant, in all events, shall be wholly void and of no effect after the Close of
Business on the Expiration Date.
SECTION 3. COVENANTS.
(a) The Company covenants and agrees that all securities which
may be issued upon the exercise of the rights represented by this Warrant will,
upon issuance, be validly issued, fully paid and nonassessable, free and clear
of all taxes, liens, claims and security interests (other than liens and
security interests created by the Holder). The Company further covenants and
agrees that (i) during the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized and
reserved a sufficient number of shares of Common Stock to provide for the
exercise of the rights then represented by this Warrant and (ii) it will, at its
expense, use its best efforts to cause such shares to be listed (subject to
issuance or notice of issuance) on NASDAQ Stock Market or any stock exchanges,
if any, on which the Common Stock may become listed during such period.
SECTION 4. ADJUSTMENT OF WARRANT EXERCISE PRICE UPON STOCK
SPLITS, DIVIDENDS, DISTRIBUTIONS AND COMBINATIONS. In case the Company shall at
any time subdivide its outstanding shares of Common Stock into a greater number
of shares or issue a stock dividend or make a distribution with respect to
outstanding shares of Common Stock or Convertible Securities payable in Common
Stock or in Convertible Securities which are convertible with no additional
consideration into shares of Common Stock, the Warrant Exercise Price in effect
immediately prior to such subdivision or stock dividend or distribution shall be
proportionately reduced (treating for such purpose any such shares of
Convertible Securities outstanding or payable as being the number of shares of
Common Stock issuable upon their conversion); and conversely, in case the shares
of Common Stock of the Company shall be combined into a smaller number of
shares, the Warrant Exercise Price in effect immediately prior to such
combination shall be proportionately increased.
SECTION 5. REORGANIZATION OR RECLASSIFICATION. In case of any
capital reorganization, or of any reclassification of the capital stock, of the
Company (other than a change in par value or from par value to no par value or
from no par value to par value), or any consolidation or merger of the Company
with another corporation or other entity, or the sale of all or substantially
all of the assets of the Company shall be effected in a manner by which the
holders of Common Stock shall be entitled (either directly or upon subsequent
liquidation) to securities or assets with respect to or in exchange for Common
Stock, then this Warrant shall, after such capital reorganization,
reclassification of capital stock, merger or sale of assets, entitle the Holder
hereof to purchase the kind and number of shares of stock or other securities or
property of the Company, or of the corporation resulting from such consolidation
to which the Holder hereof would have been entitled if it had held the Common
Stock
<PAGE>
issuable upon the exercise hereof immediately prior to such capital
reorganization, reclassification of capital stock, consolidation, merger or sale
of assets. The Company shall not effect any such capital reorganization,
reclassification of capital stock, consolidation, merger or sale of assets
unless prior to the consummation thereof the successor corporation (if other
than the Company) resulting therefrom or the corporation purchasing such assets
shall, by written instrument executed and mailed to the Holder hereof at the
last address of such Holder appearing on the books of the Company, (i) assume
the obligation to deliver to such Holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such Holder may be
entitled to purchase, and (ii) agree to be bound by all the terms of this
Warrant.
SECTION 6. ANTI-DILUTION ADJUSTMENTS.
(a) Issuance of Additional Shares. In case at any time the
Company shall issue or sell any shares of its Common Stock (excluding shares
issued upon the exercise of this Warrant and excluding shares issued in a public
offering) for a consideration per share less than the Market Price on the date
of such issue or sale, the Warrant Exercise Price shall be reduced to the price
determined by multiplying the Warrant Exercise Price in effect immediately prior
to the time of such issue or sale by a fraction, the numerator of which shall be
the sum of (i) the number of shares of Common Stock outstanding immediately
prior to such issue or sale multiplied by the Market Price immediately prior to
such issue or sale plus (ii) the aggregate consideration received by the Company
upon such issue or sale, and the denominator of which shall be the product of
(iii) the total number of shares of Common Stock outstanding immediately after
such issue or sale, multiplied by (iv) the Market Price immediately prior to
such issue or sale.
(b) Issuance of Rights, Options or Warrants. In case at any
time the Company shall grant (whether directly or by assumption in a merger or
otherwise) any rights (other than the rights represented by this Warrant),
options or warrants to subscribe for or to purchase shares of Common Stock,
whether or not such rights, options or warrants are immediately exercisable, and
the Strike Price is less than the Market Price as of the date such rights,
options or warrants are granted, then, for purposes of the adjustment required
by Section 6(a), the total maximum number of shares of Common Stock issuable
upon the exercise of such rights, options or warrants shall be deemed to have
been issued at the Strike Price. Except as otherwise provided in Section 6(d)
below, no adjustments of the Warrant Exercise Price shall be made upon the
actual issuance of the shares of Common Stock underlying such rights, options or
warrants.
(c) Issuance of Convertible Securities. In case at any time
the Company shall issue any Convertible Securities, whether or not the right to
convert or exchange any such Convertible Securities are immediately exercisable,
and the Conversion Price is less than the Market Price as of the date such
Convertible Securities are issued, then, for purposes of the adjustment required
by Section 6(a), the total maximum number of shares of Common Stock issuable
upon the conversion or exchange of such Convertible Securities shall be deemed
to have been issued at the Conversion Price. Except as otherwise provided in
Section 6(d) below, no adjustments of the Warrant Exercise Price shall be made
upon the actual issuance of the shares of Common Stock underlying such
Convertible Securities.
(d) Change in Strike Price, Conversion Price or Conversion
Rate. If (i) the Strike Price for any right, option or warrant for the purchase
of Common Stock, (ii) the Conversion Price of any Convertible Security or (iii)
the rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock changes at any time (other than by reason of
provisions designed to protect against dilution), the Warrant Exercise Price in
effect at the time such event occurs shall be readjusted to the Warrant Exercise
Price which would have been in effect at such time had such rights, options,
warrants or Convertible Securities still outstanding provided for such changed
Strike Price, Conversion Price or conversion rate, as the case may be, at the
time such rights, options or warrants were initially granted or such Convertible
Securities were initially issued. Upon the expiration of any such right, option
or warrant or the termination of any such right to convert or exchange such
<PAGE>
Convertible Securities, the Warrant Exercise Price then in effect shall be
increased to the Warrant Exercise Price which would have been in effect at the
time of such expiration or termination had such right, option, warrant or
Convertible Security, to the extent outstanding immediately prior to such
expiration or termination, never been granted or issued, and the Common Stock
issuable thereunder shall no longer be deemed to be outstanding.
(e) Consideration for Stock. In case any shares of Common
Stock or Convertible Securities or any rights, options or warrants to purchase
Common Stock or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by the
Company therefor, without deducting any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in connection
therewith. In case any shares of Common Stock or Convertible Securities or any
rights, options or warrants to purchase Common Stock or Convertible Securities
shall be issued or sold in whole or in part for consideration other than cash,
the amount of such consideration shall be deemed to be the fair value thereof as
determined by the Board of Directors of the Company, without deducting any
expenses incurred or any underwriting commissions or concessions paid or allowed
by the Company in connection therewith. In the event of any consolidation or
merger of the Company in which the Company is not the surviving corporation or
in the event of any sale of all or substantially all of the assets of the
Company for stock or other securities of any corporation, the Company shall be
deemed to have issued a number of shares of its Common Stock for stock or
securities of the other corporation computed on the basis of the actual exchange
ratio on which the transaction was predicated and for consideration equal to the
fair market value on the date of such transaction of such stock or securities of
the other corporation as determined by the Board of Directors of the Company,
and if any such calculation results in adjustment of the Warrant Exercise Price,
the determination of the number of shares of Common Stock issuable upon exercise
of this Warrant immediately prior to such merger, conversion or sale, for
purposes of Section 5 shall be made after giving effect to such adjustment of
the Warrant Exercise Price.
(f) Exceptions. Notwithstanding anything in this Section 6 to
the contrary, the Company shall not be required to make any adjustment of the
Warrant Exercise Price in connection with the grant of stock options to
employees or directors of the Company or the issuance of shares of Common Stock
upon exercise of stock options pursuant to a stock option plan.
SECTION 7. RECORD DATE. In case the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them (i)
to receive a dividend or other distribution payable in Common Stock or in
Convertible Securities, or (ii) to subscribe for or purchase Common Stock or
Convertible Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
SECTION 8. TREASURY SHARES. The number of shares of Common
Stock outstanding at any given time shall not include shares owned or held by or
for the account of the Company, and the sale or other disposition of any such
shares shall be deemed an issuance thereof for the purposes of Section 6.
SECTION 9. CERTAIN EVENTS. If any event occurs (including,
without limitation, the granting of stock appreciation rights, phantom stock
rights or other rights with equity features) as to which, in the opinion of the
majority of the Board of Directors of the Company, the provisions of Sections 4,
5 or 6 are not strictly applicable or, if strictly applicable, would not fairly
protect the purchase rights of the Holder of this Warrant in accordance with the
essential intent and principles of such provisions, then the Board of Directors
of the Company shall make an equitable adjustment in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such purchase rights.
<PAGE>
SECTION 10. NOTICE OF ADJUSTMENT OF WARRANT EXERCISE PRICE.
Upon any adjustment of the Warrant Exercise Price or in the occurrence of any
event which should result in an adjustment to the Warrant Exercise Price, the
Company shall promptly give written notice thereof to the Holder of this
Warrant, which notice shall state the Warrant Exercise Price resulting from such
adjustment and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise of this Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
SECTION 11. ADJUSTMENTS.
(a) Computation of Adjustments. Upon each computation of an
adjustment in the Warrant Exercise Price, the Warrant Exercise Price shall be
computed to the nearest cent (i.e., fractions of .5 of a cent, or greater, shall
be rounded to the highest cent) and the shares which may be purchased upon
exercise of this Warrant shall be calculated to the nearest whole share (i.e.,
fractions of one half of a share, or greater, shall be treated as being a whole
share). No such adjustment shall be made, however, if the change in the Warrant
Exercise Price would be less than $.01 per share, but any such lesser adjustment
shall be made at the time and together with the next subsequent adjustment
which, together with any adjustments carried forward, shall amount to $.01 per
share or more.
(b) Adjustment of Number of Shares. Upon each adjustment of
the Warrant Exercise Price as provided above, the registered holder of this
Warrant shall thereafter be entitled to purchase, at the Warrant Exercise Price
resulting from such adjustment, the number of shares (calculated to the nearest
tenth of a share) obtained by multiplying the Warrant Exercise Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Warrant Exercise Price after such adjustment.
(c) Certain Prohibited Adjustments. Notwithstanding anything
herein to the contrary, the Company agrees not to enter into any transaction
which would cause an adjustment of the Warrant Exercise Price to less than the
par value of the Common Stock.
SECTION 12. FRACTIONAL SHARES. The Company shall not be
required to issue fractional Warrant Shares upon the exercise of this Warrant.
If the Holder would be entitled upon the exercise of any rights evidenced hereby
to receive a fractional interest in a Warrant Share, the Company shall, upon
such exercise, pay in lieu of such fractional interest an amount in cash equal
to the value of such fractional interest, calculated based upon the Market Price
as of the date this Warrant is exercised.
SECTION 13. NOTICE OF CERTAIN EVENTS. In case at any time:
(a) the Company shall pay any dividend upon, or make any
distribution in respect of, its Common Stock;
(b) the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
(c) there shall be any capital reorganization, or
reclassification of the capital stock, of the Company, or consolidation or
merger of the Company with, or sale of all or substantially all of its assets to
another corporation or other entity; or
(d) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more said cases, the Company shall give notice to the Holder
of the date on which (i) the books of the Company shall close or a record shall
be taken for such dividend, distribution or
<PAGE>
subscription rights or (ii) such reorganization, reclassification,
consolidation, merger, sale of assets, dissolution, liquidation or winding up
shall take place, as the case may be. Such notice shall be given not less than
ten (10) days prior to the record date or the date on which the transfer books
of the Company are to be closed in respect thereto in the case of an action
specified in clause (i) and at least thirty (30) days prior to the action in
question in the case of an action specified in clause (ii). Notices of regular
dividends provided by the Company in accordance with the requirements of the
NASDAQ Stock Market shall constitute notice to the Holder of such dividends in
accordance with this Section 13.
SECTION 14. NO CHANGE IN WARRANT TERMS ON ADJUSTMENT.
Irrespective of any adjustment in the Warrant Exercise Price or the number of
shares of Common Stock issuable upon exercise hereof, this Warrant, whether
theretofore or thereafter issued or reissued, may continue to express the same
Warrant Exercise Price and number of shares as are stated herein and the Warrant
Exercise Price and such number of shares specified herein shall be deemed to
have been so adjusted.
SECTION 15. TAXES. The Company shall pay any tax or taxes
attributable to the issuance of securities issuable upon the exercise of this
Warrant, unless the certificates for such securities are to be issued in a name
other than that of the Holder hereof. The Company shall not be required to pay
any tax or taxes levied or assessed with respect to any transfer of this Warrant
or any Warrant Shares.
SECTION 16. WARRANT HOLDER NOT DEEMED A SHAREHOLDER. No
Holder, as such, of the Warrant shall be entitled to vote or receive dividends
or be deemed a shareholder of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Company or any right to vote,
give or withhold consent to any corporate action (whether any reorganization,
issue of stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance of record to the Holder of this
Warrant of the securities which it is then entitled to receive upon the due
exercise of this Warrant.
SECTION 17. NO LIMITATION ON CORPORATE ACTION. Except as
otherwise specifically set forth herein, no provisions of this Warrant and no
right or option granted or conferred hereunder shall in any way limit, affect or
abridge the exercise by the Company of any of its corporate rights or powers to
recapitalize, amend its Certificate of Incorporation, reorganize, consolidate or
merge with or into another corporation, or transfer all or any part of its
property or assets, or the exercise of any other of its corporate rights and
powers.
SECTION 18. TRANSFER; RESTRICTIVE LEGENDS.
(a) Subject to the provisions of the Standstill Agreement,
this Warrant may not be transferred or assigned to any Person without the prior
written consent of the Company, which consent shall not be unreasonably
withheld, except that Holder may transfer this Warrant, in whole or in part,
without the Company's consent, to (i) J. Mack Robinson, Robert S. Prather, Jr.,
Charles L. Jarvie, James Host, Gray Communications Systems, Inc., Host
Communications, Inc. and Universal Sports America, Inc. (the "Permitted
Assigns") provided that the Permitted Assigns shall agree to be bound to the
Standstill Agreement until the termination of the Standstill Period (as defined
therein) and (ii) any of its lenders as collateral security. In addition to the
foregoing, the Holder may pledge this Warrant to a commercial bank that is FDIC
insured.
(b) This Warrant is subject to the condition that if at any
time the Board of Directors of the Company determines, in its reasonable
discretion based upon the advice of its securities counsel, that the
registration or qualification of the Warrant Shares is necessary under any state
or federal law as a condition of or in connection with the issuance and delivery
of such securities, the issuance and delivery of such securities may be withheld
unless and until such registration or qualification shall have
<PAGE>
been effected. Upon the request of Holder, the Company shall promptly supply
to such Holder all information regarding the Company required to be delivered
in connection with a transfer of the Warrant, in whole or in part, and/or any
of the Warrant Shares pursuant to Rule 144 or Rule 144A of the Securities and
Exchange Commission. If a registration statement is not in effect under the
Securities Act or any applicable state securities laws with respect to the
securities, the Board of Directors may require, as a condition of exercise and
as a condition to the issuance and delivery of any such securities, that the
Holder deliver to the Company a letter in the form of Exhibit A hereto, with any
supplemental changes reasonably required by the Board of Directors to comply
with federal and state securities laws. The Company may endorse on certificates
representing such securities such legends referring to the representations and
restrictions contained herein and in such letter, in addition to any other
applicable restrictions on resale as the Company, as it in its reasonable
discretion shall deem appropriate.
SECTION 19. NOTICE. All notices, demands and other
communications under the Warrant shall be in writing (which shall include
communications by telex and telecopy) and shall be delivered (a) in person or by
courier or overnight service, (b) mailed by first class registered or certified
mail, postage prepaid, return receipt requested, by prepaid telex or telecopier,
or by hand, courier or overnight service, and (c) be given at the following
respective addresses and telecopier numbers and to the attention of the
following Persons:
(i) if to the Company, to:
RAWLINGS SPORTING GOODS COMPANY, INC.
1859 Intertech Drive
Fenton, Missouri 63026
Attn: Mr. Paul E. Martin
Telecopier No: (314) 349-3598
with a copy (which shall not constitute notice) to:
STINSON, MAG & FIZZELL
1201 Walnut, Suite 2800
Kansas City, Missouri 64106
Attn: Craig L. Evans, Esquire
Telecopier No.: (816) 691-3495
(ii) if to the Holder hereof, to:
BULL RUN CORPORATION
4370 Peachtree Road
Atlanta, Georgia 30319
Attn: Mr. Robert S. Prather, Jr.
Telecopier No.: (404) 261-9607
with a copy (which shall not constitute notice) to:
ALSTON & BIRD LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Attn: Stephen A. Opler, Esquire
Telecopier No.: (404) 881-4777
<PAGE>
or at such other address or telecopier number or to the attention of such other
person as the party to whom such information pertains may hereafter specify for
the purpose in a notice to the other specifically captioned "Notice of Change of
Address", and (d) be effective or deemed delivered or furnished (i) if given by
mail, on the third Business Day after such communication is deposited in the
mail, addressed as above provided, (ii) if given by telecopier, when such
communication is transmitted to the appropriate number determined as above
provided in this Section 19 and the appropriate answer back is received or
receipt is otherwise acknowledged, and (iii) if given by hand delivery or
overnight delivery service when left at the address of the addressee addressed
as above provided, except that notices of a change of address or telecopier
number, shall not be deemed furnished until received.
SECTION 20. MISCELLANEOUS. This Warrant and any term hereof
may be changed, waived, discharged, or terminated only by an instrument in
writing signed by the party or holder hereof against whom enforcement of such
change, waiver, discharge or termination is sought. The headings in this Warrant
are for purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
SECTION 21. REMEDIES. The Company stipulates that the remedies
at law of the Holder in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
SECTION 22. GOVERNING LAW. This Warrant shall be governed by
the laws of the State of Georgia, without regard to conflict or choice of laws
principles.
[SIGNATURES ON FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
under seal by its duly authorized officers as of this 21st day of
November, 1997.
RAWLINGS SPORTING GOODS COMPANY, INC.
By: /s/ PAUL E. MARTIN
--------------------------------
Name: Paul E. Martin
Title: Chief Financial Officer
ATTEST:
By: /s/ HOWARD B. KEENE
______________________________
Secretary
[CORPORATE SEAL]
BULL RUN CORPORATION
By: /s/ ROBERT S. PRATHER, JR.
------------------------------
Name: Robert S. Prather, Jr.
Title: President
ATTEST:
By: ______________________________
Secretary
[CORPORATE SEAL]
<PAGE>
EXHIBIT A
TO COMMON STOCK PURCHASE WARRANT
Notice of Exercise
[Date]
RAWLINGS SPORTING GOODS COMPANY, INC.
1859 Intertech Drive
Fenton, Missouri 63026
Attn: Mr. Paul Martin
Re: Exercise of Warrant
Pursuant to the provisions of that certain Common Stock Purchase
Warrant (the "Warrant") of RAWLINGS SPORTING GOODS COMPANY, INC., a Delaware
corporation (the "Company"), dated [______________], BULL RUN CORPORATION, a
Georgia corporation ("Bull Run"), hereby represents, warrants, covenants, and
agrees with the Company as follows:
The shares of common stock of the Company being acquired by
Bull Run pursuant to this exercise of the Warrant (the "Warrant
Shares") will be acquired for its own account without the participation
of any other person, with the intent of holding the Warrant Shares for
investment and without the intent of participating, directly or
indirectly, in a distribution of the Warrant Shares and not with a view
to, or for resale in connection with, any distribution of the Warrant
Shares, nor is Bull Run aware of the existence of any distribution of
the Warrant Shares;
The Warrant Shares were not offered to Bull Run by means of
any form of general or public solicitations or advertisements,
including, but not limited to the following:
(i) Publicly disseminated advertisements or sales literature,
through the mails or otherwise;
(ii) Any advertisement, article, notice, or other
communication published in any newspaper, magazine, or other
similar media, or broadcast over television or radio; or
(iii) Any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising;
Bull Run is able to bear the economic risks of the investment
in the Warrant Shares, including the risk of a complete loss of Bull
Run's investment therein;
Bull Run understands and agrees that the Warrant Shares will
be issued and sold to Bull Run in reliance upon an exemption from, but
without registration under any state law relating to the registration
of securities for sale, and will be issued and sold in reliance on the
exemptions from registration under the Securities Act of 1933, as
amended (the "1933 Act"), provided by Sections 3(b) and/or 4(2) thereof
and the rules and regulations promulgated thereunder;
The Warrant and the Warrant Shares cannot be offered for sale,
sold or transferred by Bull Run other than pursuant to: (A) an
effective registration under the 1933 Act or in a transaction otherwise
in compliance with the 1933 Act and (B)
<PAGE>
evidence reasonably satisfactory to the Company of compliance with the
applicable securities laws of other jurisdictions. The Company shall be
entitled to rely upon an opinion of counsel reasonably satisfactory to
it with respect to compliance with the above laws;
Bull Run has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks
of the purchase of the Warrant Shares hereunder and it is able to bear
the economic risk of such purchase; and
The agreements, representations, warranties, and covenants
made by Bull Run herein extends to and applies to all of the Warrant
Shares. Acceptance by Bull Run of the certificate representing such
Warrant Shares shall constitute a confirmation by Bull Run that all
such agreements, representations, warranties, and covenants made herein
are true and correct at that time.
Bull Run understands that the certificates representing the Warrant
Shares shall bear a legend referring to the foregoing covenants, representations
and warranties and restrictions on transfer, and agrees that a legend to that
effect may be placed on any certificate which may be issued to Bull Run as a
substitute for the certificates representing the Warrant Shares.
Very truly yours,
BULL RUN CORPORATION
By:
Its:
<PAGE>
AGREED TO AND ACCEPTED:
RAWLINGS SPORTING GOODS COMPANY, INC.
By:
Title:
Number of Shares
Exercised:
Number of Shares
Remaining: Date:
<PAGE>
EXHIBIT 99.4
SIXTH MODIFICATION OF LOAN AGREEMENT
THIS MODIFICATION is made as of this 21st day of November, 1997, by and
between BULL RUN CORPORATION, a Georgia corporation ("Borrower"), and
NATIONSBANK, N.A. ("Lender").
STATEMENT OF FACTS
Lender and Borrower are parties to that certain Loan Agreement, dated
as of March 29, 1995, as amended by the First Modification of Loan Agreement,
dated as of January 3, 1996, the Second Modification of Loan Agreement, dated as
of September 24, 1996, the Third Modification of Loan Agreement, dated as of
January 27, 1997, the Fourth Modification of Loan Agreement, dated as of March
27, 1997 and the Fifth Modification of Loan Agreement, dated as of August 15,
1997 (the Loan Agreement), pursuant to which Lender has agreed to make one or
more loans from time to time to the Borrower in accordance with the terms and
conditions thereof. Lender and Borrower desire to modify the Loan Agreement in
order to provide for a new $1,400,000 term loan, and in certain other respects
in accordance with the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises, the covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Borrower and Lender do
hereby agree that all capitalized terms used herein shall have the meanings
ascribed thereto in the Loan Agreement as amended hereby (except as otherwise
expressly defined or limited herein) and do hereby further agree as follows:
STATEMENT OF TERMS
1. AMENDMENTS OF LOAN AGREEMENT. Subject to the fulfillment of the
conditions precedent to the effectiveness of this Modification which are set
forth below, the Loan Agreement shall be amended as follows:
(a) Section 1.01 of the Loan Agreement is hereby amended by
adding to Section 1.01 the following new definitions:
"Fourth Term Loan" shall mean any and all advances
made by Lender to Borrower under the Fourth Term Loan
Facility.
"Fourth Term Loan Facility" shall mean the term loan
facility provided by Lender to Borrower under Section 3.02B
hereof.
"Fourth Term Loan Facility Expiration Date" shall
mean November 24, 1997 (as such date may be extended,
accelerated or amended from time to time pursuant to this
Agreement).
"Fourth Term Loan Maximum Availability" shall mean
$1,400,000.
"Fourth Loan Note" shall mean the Fourth Term Loan
Note, dated as of the date of the Sixth Modification of Loan
Agreement, executed by the Borrower and payable to the order
of the Lender as evidence of the Fourth Term Loan and any
extension, renewal, modification or replacement thereof or
therefor.
"Fourth Term Loan Obligations" shall mean,
collectively, any and all Obligations
<PAGE>
of Borrower to pay Lender the principal of, interest or fees
on, collection costs for, or any other sums owing in respect
of the Fourth Term Loan or the Fourth Term Loan Note.
Rawlings shall mean Rawlings Sporting Goods Company,
Inc.
Rawlings Warrant shall mean the warrant to purchase
925,804 shares of the common stock of Rawlings issued on
November 21, 1997, by Rawlings in favor of Borrower, as more
fully described in the Common Stock Purchase Warrant, a true
and correct copy of which is attached to the Sixth
Modification as Annex 1 thereto, and any extension,
modification, supplement or replacement thereof or therefor.
Sixth Modification shall mean that certain Sixth
Modification of Loan Agreement, dated as of November 21, 1997,
by and between Borrower and Lender.
(b) Section 1.01 of the Loan Agreement is hereby further
amended by deleting from Section 1.01 the terms "Collateral," "Term
Loan Facilities," "Term Loan Notes," and "Term Loans" and by
substituting in lieu thereof the following new definitions of such
terms:
"Collateral" shall mean (i) the Pledged Shares, (ii)
the Warrants, (iii) the Rawlings Warrant, (iv) any and all
other property which may be hereafter pledged or collaterally
assigned to Lender or in which Lender may be otherwise granted
a Lien to secure the Obligations pursuant to any and all of
the Credit Documents and (v) any and all cash and non-cash
proceeds of the foregoing.
"Term Loan Facilities" shall mean, collectively, the
First Term Loan Facility, the Second Term Loan Facility, the
Third Term Loan Facility, and the Fourth Term Loan Facility.
"Term Loan Notes" shall mean, collectively, the First
Term Loan Note, the Second Term Loan Note, the Third Term Loan
Note, and the Fourth Term Note.
"Term Loans" shall mean, collectively, the First Term
Loan, the Second Term Loan, the Third Term Loan, and the
Fourth Term Loan.
(c) The Loan Agreement is hereby further amended by adding the
following Section 3.02B after the existing Section 3.02A and before the
existing Section 3.03:
SECTION 3.02B. FOURTH TERM LOAN FACILITY.
(a) Subject to the terms and conditions of this
Agreement, the Lender agrees to advance to the Borrower, from
time to time on or prior to the Fourth Term Loan Facility
Expiration Date and upon the Borrower's request therefor, a
Fourth Term Loan in the principal amount of up to the Fourth
Term Loan Maximum Availability.
(b) The proceeds of the Fourth Term Loan shall be
used to purchase the Rawlings Warrant.
(d) The Loan Agreement is hereby further amended by adding to
Section 3.04 the following subsection (e) after subsection (d) thereof:
(e) The Borrower's obligation to pay to the Lender
the principal of and interest on the Fourth Term Loan
shall be evidenced by the records of the Lender
(subject to Section 4.05 hereof) and by the Fourth
Term Loan Note. The
<PAGE>
principal balance of the Fourth Term Loan shall be
payable in one (1) installment which shall be due on
July 1, 1998 in an amount equal to the entire
remaining unpaid principal balance of the Fourth Term
Loan.
(e) The Loan Agreement is hereby further amended by deleting
Section 4.04(b) and Section 4.04(c) in their entireties and by
substituting in lieu thereof the following new Section 4.04(b) and
Section 4.04(c):
(b) The Obligations shall be secured by (i) the
Borrower's first-priority and perfected pledge to the
Lender of (1) one hundred percent of the outstanding
capital stock of Guarantor, (2) 51.5 shares of common
stock of Capital Sports Properties, Inc. and (3)
41,049 shares of common stock of Host Communications,
Inc., all pursuant to the Borrower Pledge Agreement,
(ii) the Guarantor's first priority and perfected
pledge to the Lender of 305,296 shares of Class A
Common Stock of Gray pursuant to the First Guarantor
Pledge Agreement, and (iii) the Partnership's first
priority and perfected pledge to the Lender of
1,284,000 shares of common stock of the Borrower
pursuant to the Partnership Pledge Agreement.
(c) The Second Term Loan Obligations, the Third Term
Loan Obligations and the Fourth Term Loan Obligations
shall be secured by the Guarantor's first- priority
and perfected pledge to the Lender of 906,294 shares
of Class A Common Stock of Gray pursuant to the
Second Guarantor Pledge Agreement and shall be
further secured by the Borrower's first-priority and
perfected pledge to the Lender of 1,000 shares of
Series A Preferred Stock of Gray, 500 shares of
Series B Preferred Stock of Gray, the Warrants and
the Rawlings Warrant, pursuant to the Second Borrower
Pledge Agreement.
2. NO OTHER AMENDMENTS. Except for the amendments expressly set forth
and referred to in Section 1 above, the Loan Agreement shall remain unchanged
and in full force and effect. Nothing in this Modification or any of the other
Supplemental Credit Documents (as defined below) is intended, or shall be
construed, to constitute a novation or an accord and satisfaction of any of the
Obligations or to modify, affect or impair the perfection or continuity of
Lender's security interests in, security titles to or other Liens on any
Collateral for the Obligations.
3. REPRESENTATIONS AND WARRANTIES. To induce Lender to enter into this
Modification, the Borrower does hereby warrant, represent and covenant to Lender
that: (a) each representation or warranty of the Borrower set forth in the Loan
Agreement is hereby restated and reaffirmed as true and correct on and as of the
date hereof as if such representation or warranty were made on and as of the
date hereof (except to the extent that any such representation or warranty
expressly relates to a prior specific date or period), and no Default or Event
of Default has occurred and is continuing as of this date under the Loan
Agreement as amended by this Modification; and (b) each of the Borrower, the
Guarantor and the Partnership has the power and is duly authorized to enter
into, deliver and perform the Supplemental Credit Documents to which it is a
party, and each of the Supplemental Credit Documents is the legal, valid and
binding obligation of each Credit Party enforceable against such Credit Party in
accordance with its terms.
4. REIMBURSEMENT OF COSTS AND EXPENSES. The Borrower hereby agrees to
reimburse Lender on demand for all costs (including reasonable attorneys' fees)
incurred by Lender in negotiating, documenting and consummating this
Modification, the other documents referred to herein, and the transactions
contemplated hereby and thereby.
5. CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS MODIFICATION. The
effectiveness of this Modification and the amendments provided in Section 1
above are subject to the truth and accuracy
<PAGE>
in all material respects of the representations and warranties of the Borrower
contained in Section 3 above and to the fulfillment of the following additional
conditions precedent (all documents described below shall be in form and
substance satisfactory to Lender, and are herein collectively called the
Supplemental Credit Documents):
(a) Lender shall have received one or more duly executed
counterparts of this Modification, the Fourth Term Loan Note, the Third
Modification of Second Borrower Pledge Agreement, and the Third
Modification of Amended and Restated Second Guarantor Pledge Agreement;
(b) Lender shall have received a duly executed Guarantor
Reaffirmation and Consent to Sixth Modification of Loan Agreement from
the Guarantor and a duly executed Partnership Reaffirmation and Consent
to Sixth Modification of Loan Agreement from the Partnership; and
(c) Lender shall have received a duly executed and completed
Federal Reserve Form U-1 relating to the Second Term Loan, the Third
Term Loan and the Fourth Term Loan.
6. CONDITIONS PRECEDENT TO FUNDING OF THE FOURTH TERM LOAN. The
following condition, together with the conditions set forth in Section 5 hereof,
are conditions precedent to the funding of the Fourth Term Loan:
All conditions precedent to the issuance of the Rawlings
Warrant shall have been fulfilled (other than the disbursement of the
Fourth Term Loan proceeds as contemplated hereby), and the Rawlings
Warrant shall be issued on terms and conditions acceptable to Lender in
all respects.
7. REFERENCE TO AND EFFECT ON THE CREDIT DOCUMENTS. Upon the
effectiveness of this Modification, each reference in the Loan Agreement to this
Agreement, hereunder, hereof or words of like import referring to the Loan
Agreement, and each reference in the other Credit Documents to the Loan
Agreement, thereunder, thereof or words of like import referring to the Loan
Agreement, shall mean and be a reference to the Loan Agreement as amended
hereby.
8. COUNTERPARTS. This Modification may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which
when taken together shall constitute one and the same instrument.
9. GOVERNING LAW. This Modification shall be governed by, and construed
in accordance with, the internal laws of the State of Georgia applicable to
contracts made and performed in such state.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Modification to
be duly executed and delivered as of the day and year specified at the beginning
hereof.
BORROWER:
BULL RUN CORPORATION
By: /s/ ROBERT S. PRATHER, JR.
------------------------------------
Robert S. Prather, Jr., President
LENDER:
NATIONSBANK, N.A.
By: /s/ MELINDA M. BERGBOM
---------------------------
Melinda M. Bergbom
Senior Vice President
<PAGE>
EXHIBIT 99.5
FOURTH TERM LOAN NOTE
$1,400,000 NOVEMBER 21, 1997
FOR VALUE RECEIVED, the undersigned, BULL RUN CORPORATION, a Georgia
corporation (the "Borrower"), hereby promises to pay to the order of
NATIONSBANK, N.A., (herein, together with any subsequent holder hereof, called
the "Lender"), the principal sum of ONE MILLION FOUR HUNDRED THOUSAND AND NO/100
DOLLARS ($1,400,000), or the outstanding principal amount of the Fourth Term
Loan made to the Borrower by the Lender pursuant to the Loan Agreement referred
to below, which principal sum shall be payable (i) in installments on the due
dates and in the amounts set forth in the Loan Agreement or (ii) on any earlier
date on which all amounts outstanding under this Fourth Term Loan Note (this
"Note") have become due and payable pursuant to the provisions of Section 9.02
of the Loan Agreement. The Borrower likewise promises to pay interest on the
outstanding principal balance of the Fourth Term Loan made by the Lender to the
Borrower, at such interest rates, payable at such times, and computed in such
manner, as are specified in the Loan Agreement in strict accordance with the
terms thereof.
This Note is issued pursuant to, and is the Fourth Term Loan Note
referred to in the Loan Agreement, dated as of March 29, 1995, between the
Borrower and the Lender, as amended by the First Modification of Loan Agreement,
dated as of January 3, 1996, the Second Modification of Loan Agreement, dated as
of September 24, 1996, the Third Modification of Loan Agreement, dated as of
January 27, 1997, the Fourth Modification of Loan Agreement, dated as of March
27, 1997, the Fifth Modification of Loan Agreement, dated as of August 14, 1997,
and the Sixth Modification of Loan Agreement, dated as of the date hereof (as
the same may be further amended or supplemented from time to time, the "Loan
Agreement"), and the Lender is and shall be entitled to all benefits thereof and
of all the other Credit Documents executed and delivered to the Lender in
connection therewith. Terms defined in the Loan Agreement are used herein with
the same meaning. The Loan Agreement, among other things, contains provisions
for acceleration of the maturity hereof upon the happening of certain Events of
Default, provisions relating to prepayments on account of principal hereof prior
to the maturity hereof, and provisions for post-default interest rates.
The Borrower agrees to make payments of principal and interest hereon
on the dates and in the amounts specified in the Loan Agreement in strict
accordance with the terms thereof.
In case an Event of Default shall occur and be continuing, the
principal and all accrued interest of this Note may automatically become, or may
be declared, immediately due and payable in the manner and with the effect
provided in the Loan Agreement. The Borrower agrees to pay, and save the Lender
harmless against any liability for the payment of, all costs and expenses,
including actual and reasonable attorneys' fees, arising in connection with the
enforcement by the Lender of any of its rights or remedies under this Note or
the Loan Agreement.
This Note has been delivered in Atlanta, Georgia, and the rights and
obligations of the Lender and the Borrower hereunder shall be construed in
accordance with and governed by the laws of the State of Georgia (without giving
effect to its conflicts of law rules).
The Borrower expressly waives any presentment, demand, protest or
notice in connection with this Note, whether now or hereafter required by
applicable law. This Note is intended to be an instrument under seal.
<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed,
sealed and delivered by its duly authorized officer as of the date first above
written.
BULL RUN CORPORATION
(CORPORATE SEAL)
By: /s/ ROBERT S. PRATHER, JR.
---------------------------------
Robert S. Prather, Jr., President
<PAGE>
EXHIBIT 99.6
STANDSTILL AGREEMENT
THIS STANDSTILL AGREEMENT (the "Agreement") dated as of November 21,
1997 by and between Rawlings Sporting Goods Company, Inc., a Delaware
corporation (the "Company"), and Bull Run Corporation, a Georgia corporation
("Bull Run").
W I T N E S S E T H:
WHEREAS, the Company and Bull Run have entered into that certain
Investment Purchase Agreement dated as of the date hereof (the "Investment
Agreement") pursuant to which Bull Run has agreed to purchase shares of Common
Stock, par value $.01 per share ("Common Stock") of the Company and Warrants to
purchase shares of Common Stock; and
WHEREAS, as a condition to its entering into the Investment Agreement,
the Company has required that Bull Run enter into this Agreement, which contains
certain restrictions on purchases of the Company's capital stock by Bull Run and
their respective Affiliates and Associates and certain other limitations on Bull
Run and their respective Affiliates and Associates.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein and in
the Investment Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each of the Company
and Bull Run (each a "Party"), intending to be legally bound, hereby agrees 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:
"Acquisition Completion Date" shall mean the earlier of (a) the first
date upon which Bull Run obtains Beneficial Ownership of shares of Common Stock
aggregating at least 10.1% of the outstanding shares of Common Stock (the
computation of such percentage shall not include any shares of Common Stock
issuable upon exercise of the Warrants), or (b) the first Business Day that is
six (6) months (or such longer period provided by Section 1.02 of the Investment
Agreement) after the Closing Date.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, provided that in the case
of Bull Run, its Affiliates shall be all persons controlled by Bull Run,
including without limitation Gray Communications Systems, Inc., Host
Communications, Inc. and Universal Sports America, Inc., and the following
Persons and their Affiliates: J. Mack Robinson, Robert S. Prather, Jr., Charles
L. Jarvie and James Host.
"Applicable Law" shall mean all applicable provisions of all (a)
constitutions, treaties, statutes, laws (including common law), rules,
regulations, ordinances or codes of any Governmental Authority, and (b) orders,
decisions, injunctions, judgments, awards and decrees of any Governmental
Authority.
"Associate" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules
<PAGE>
and Regulations of the Exchange Act, provided that when used to indicate a
relationship with Bull Run, the term "Associate" shall only mean the following
Persons and their Associates: J. Mack Robinson, Robert S. Prather, Jr., Charles
L. Jarvie, James Host, Gray Communications Systems, Inc., Host Communications,
Inc. and Universal Sports America, Inc.
"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 or Associates 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, including pursuant to any agreement,
arrangement or understanding (whether or not in writing).
"Bull Run Nominee" shall mean Robert S. Prather, Jr., with respect to
the Bull Run Nominee designated in Section 3.7(a) and Charles L. Jarvie, with
respect to the Bull Run Nominee designated in Section 3.7(b), and the successors
of such individuals as set forth in Section 3.7(c), provided that no Person who
has not received the approval of a majority of the Disinterested Directors shall
be deemed a Bull Run Nominee if such Person (a) is, or is an Affiliate,
Associate, officer, director, member or employee of, a Person (other than the
Company, Bull Run and their respective Affiliates and Associates), a substantial
amount of the business of which is the manufacture or sale of sports equipment,
supplies and apparel, (b) is, or is an Affiliate, Associate, officer, director,
member or employee of a Person (other than the Company, Bull Run and their
respective Affiliates and Associates), which Person has taken any actions which,
if such Person were Bull Run, would violate Section 3.1, (c) is, or is an
Affiliate, Associate, officer, director, member or employee of, a Person (other
than the Company, Bull Run and their respective Affiliates and Associates),
described in Rule 262 of Regulation A of the Securities Act, or (d) has been
convicted by a court of competent jurisdiction of a misdemeanor involving moral
turpitude or a felony.
"Business Day" shall mean a day other than a Saturday, a Sunday, a day
on which banking institutions in the States of Georgia or Missouri are
authorized or obligated by law or required by executive order to be closed, or a
day on which the New York Stock Exchange is closed.
"Certificate" shall mean the Certificate of Incorporation of the
Company, as amended, restated or supplemented from time to time.
"Closing Date" shall mean November 21, 1997.
"Common Stock" shall have the meaning set forth in the Recitals.
"Control Event" shall mean (a) a Control Transaction, (b) at any time
during a period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of the Company shall cease for
any reason to constitute at least a majority thereof, unless the election or the
nomination for election by the Company's stockholders of each new director
during such two-year period was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period, or (c) any Beneficial Owner of Voting Securities of the Company
acquiring the legal or practical ability to elect a majority of the Company's
Board of Directors.
"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,
<PAGE>
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, the assets of the Company.
"Disinterested Directors" shall mean those members of the Board of
Directors of the Company that (a) are unaffiliated with Bull Run, (b) are not
Bull Run Directors, and (c) are not "interested directors" within the meaning of
Applicable Law, including Section 144 of the Delaware General Corporation Law.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"Governmental Authority" shall mean any federal, state, local or
political subdivision, governmental or administrative body, instrumentality,
department or agency or any court, administrative hearing body, arbitration
tribunal, commission or other similar dispute resolution panel or body, and any
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of a government.
"Group" shall mean any group within the meaning of Section 13(d)(3) of
the Exchange Act as in effect on the date hereof.
"Investment Agreement" shall have the meaning set forth in the
Recitals.
"Percentage Limitation" shall mean the lesser of (a) 10.1%, or (b) the
percentage of outstanding shares of Common Stock Beneficially Owned by Bull Run
and its Affiliates and Associates on the Acquisition Completion Date (the
computation of such percentage shall not include any shares of Common Stock
issuable or issued upon the exercise of the Warrants).
"Person" shall mean an individual, a partnership, an association, a
joint venture, a corporation, a business, a trust, any entity organized under
Applicable Law, an unincorporated organization or any Governmental Authority.
"Rights Plan" shall mean the Rights Agreement dated as of July 1, 1994,
as amended, between the Company and ChaseMellon Shareholder Services, as rights
agent.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall man the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
"The Company" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"Vote" shall mean, as to any entity, the ability to cast a vote at a
stockholders' or comparable meeting of such entity with respect to the election
of directors or other members of such entity's governing body.
"Voting Power" shall mean the aggregate number of Votes of the Company
outstanding as at such date.
"Voting Securities" shall mean the Common Stock and any other
securities of the Company having the right to Vote.
<PAGE>
"Warrants" shall have the meaning set forth in the Investment
Agreement.
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.
RESTRICTIONS ON ACQUISITION OF VOTING SECURITIES
BY BULL RUN AND ITS AFFILIATES AND ASSOCIATES
Section 2.1. Acquisition Restrictions. Subject to Sections 2.2, and
2.3, Bull Run agrees that it will not, and will cause each of its respective
Affiliates and Associates not to, directly or indirectly, acquire, offer to
acquire, or agree to acquire, by purchase or otherwise, Beneficial Ownership of
any shares of Common Stock on and following the Acquisition Completion Date, if
as a result the shares of Common Stock Beneficially Owned in the aggregate by
Bull Run and its Affiliates and Associates would represent more than the
Percentage Limitation of the outstanding shares of Common Stock at such time
(the computation of such percentage shall not include any shares of Common Stock
issuable or issued upon exercise of the Warrants). Bull Run and its Affiliates
and Associates may, from time to time after the Acquisition Completion Date,
acquire, by purchase or otherwise, Beneficial Ownership of shares of Common
Stock in an amount which would not cause the aggregate shares of Common Stock
Beneficially Owned by Bull Run and its Affiliates and Associates to exceed the
Percentage Limitation of the outstanding shares of Common Stock at such time
(the computation of such percentage shall not include any shares of Common Stock
issuable or issued upon exercise of the Warrants).
Section 2.2. Effect of Action by the Company.
(a) Subject to Section 2.2(b), Bull Run shall not be deemed in
violation of this Article 2 if the Beneficial Ownership of shares of Common
Stock by Bull Run and its Affiliates and Associates exceeds the Percentage
Limitation (i) solely as a result of an acquisition of shares of Common Stock by
the Company that, by reducing the number of outstanding shares of Common Stock,
increases the proportionate number of shares of Common Stock Beneficially Owned
by Bull Run and its Affiliates and Associates, or (ii) because Bull Run and its
Affiliates and Associates purchase shares in excess of the applicable Percentage
Limitation in reliance on written information regarding the number of
outstanding shares of the Company provided directly to any of Bull Run and its
respective Affiliates and Associates by the Company in response to a request for
such information by any of Bull Run and its respective Affiliates and Associates
immediately prior to such purchase.
(b) Notwithstanding Section 2.2(a), the Percentage Limitation shall be
deemed exceeded if (i) in the case of Section 2.2(a)(i), Bull Run or any of its
Affiliates or Associates acquires Beneficial Ownership of any additional shares
of Common Stock after it has been notified of an acquisition of shares of Common
Stock by the Company, or (ii) in the case of Section 2.2(a)(ii), Bull Run or any
of its
<PAGE>
Affiliates or Associates acquires Beneficial Ownership of additional shares of
Common Stock after it has been notified that the information regarding the
number of outstanding shares previously provided to it was incorrect and it has
been provided by the Company with correct information, unless in the case of
clause (i) or (ii) upon the acquisition of Beneficial Ownership of such
additional shares of Common Stock, Bull Run and its Affiliates and Associates do
not Beneficially Own in the aggregate more than the applicable Percentage
Limitation.
(c) If the Percentage Limitation shall be deemed exceeded, Bull Run and
its Affiliates and Associates shall sell or otherwise dispose of an amount of
shares of Common Stock necessary to cause Bull Run and its Affiliates and
Associates to be in compliance with Section 2.1 within six (6) months after (i)
in the case of Section 2.2(a)(i), the first date upon which it has been notified
of an acquisition of shares of Common Stock by the Company, or (ii) in the case
of Section 2.2(a)(ii), the first date upon which it has been notified that the
information regarding the number of outstanding shares previously provided to it
was incorrect and it has been provided by the Company with correct information.
The six (6) month period during which Bull Run and its Affiliates and Associates
may be required to sell or otherwise dispose of shares of Common Stock pursuant
to this Section 2.2(c) shall be suspended and tolled during such times as and
for as long as:
(i) (A) any Bull Run Nominee or any Affiliate or Associate of
Bull Run is a member of the Company's Board of Directors or is an
officer of the Company and (B) any officers or directors of the Company
are prohibited from trading in the Common Stock pursuant to any
policies or procedures of the Company;
(ii) (A) any Bull Run Nominee or any Affiliate or Associate of
Bull Run is a member of the Company's Board of Directors or is an
officer of the Company and (B) any officers or directors of the Company
are prohibited from trading in the Common Stock of the Company at the
direction of the Company's Board of Directors or legal advisors;
(iii) Bull Run has informed the Company that Bull Run believes
that it may have knowledge of material non-public information relating
to the Company and Bull Run has received neither (A) reasonably
satisfactory written confirmation from the Company that the information
in question is not material non-public information or (B) written
confirmation from the Company that such information has been publicly
disclosed in a manner and on terms reasonably satisfactory to Bull Run;
or
(iv) Any profit realized by Bull Run, its Affiliates or
Associates from such required sale or disposition would inure to the
benefit of the Company pursuant to paragraph (b) of Section 16 of the
Exchange Act.
Any time that such six (6) month period is suspended and tolled pursuant to this
Section 2.2(c), the Company shall provide Bull Run with written notice of the
revised date as to which such period shall expire. Bull Run shall promptly
notify the Company of any disagreement with the calculation of such new
expiration date.
Section 2.3. The Company's Rights Plan. Notwithstanding the provisions
of Section 2.1, Bull Run agrees that it will not, and will cause each of its
Affiliates not to, directly or indirectly, acquire, offer to acquire, or agree
to acquire, by purchase or otherwise, Beneficial Ownership of any shares of
Common Stock if such acquisition would result in Bull Run or any of its
respective Affiliates being deemed an Acquiring Person (as such term is defined
in the Rights Plan) or result in the occurrence of a Stock Acquisition Date,
Distribution Date, Section 11(a)(ii) Event or Section 13 Event (as such terms
are defined in the Rights Plan), as amended in accordance with the terms of the
Investment Agreement.
<PAGE>
ARTICLE 3.
OTHER STANDSTILL PROVISIONS; QUORUM; DIRECTORS
Section 3.1. Standstill Covenants. Except as set forth in Section 3.2,
Bull Run agrees that it will not, and it will cause each of its respective
Affiliates and Associates not to, directly or indirectly, alone or in concert
with others, unless specifically requested in writing by the Chairman of the
Company or by a resolution of a majority of the Disinterested Directors, 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 Article 2 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) other than solely in connection with the
nomination or election of no more than two Bull Run Directors
to the Company's Board of Directors, 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) other than solely in connection with the nomination or
election of no more than two Bull Run Directors to the Company's Board
of Directors, propose any matter for submission to a vote of
stockholders of the Company; provided that nothing in this Section
3.1(b) shall restrict the manner in which the Bull Run Directors may
(i) vote on any matter submitted to the Company's Board of Directors,
or (ii) participate in deliberations or discussions of the Company's
Board of Directors (including making suggestions and raising issues to
the Board) in their capacity as members of the Company's Board of
Directors and in no other capacity;
(c) form, join or participate in a Group with respect to any
Voting Securities (other than any Group whose members consist solely of
Bull Run and any of its Affiliates and Associates);
(d) grant any proxy with respect to any Voting Securities to
any Person not designated by the Company;
(e) deposit any Voting Securities in a voting trust or subject
any Voting Securities to any arrangement or agreement with respect to
the Voting of such Voting Securities or other agreement having similar
effect;
<PAGE>
(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; provided that nothing
in this Section 3.1(g) shall restrict the manner in which the Bull Run
Directors may (i) vote on any matter submitted to such Board, or (ii)
participate in deliberations or discussions of such Board (including
making suggestions and raising issues to the Board) in their capacity
as members of the Company's Board of Directors and in no other
capacity; or
(h) enter into any discussions, negotiations, arrangements or
understandings with any Person other than the Company, Bull Run, and
their respective Affiliates, Associates, 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.
Section 3.2 Exceptions to Standstill Covenants. Notwithstanding any
other provision of this Agreement to the contrary, including the foregoing
Section 3.1:
(a) if any party other than the Company, Bull Run or their
respective Affiliates or Associates commences or otherwise undertakes
any tender or exchange offer which is approved by a majority of the
Disinterested Directors, Bull Run may commence a competing tender or
exchange offer having terms at least as favorable as those terms
offered by such third party; and
(b) if a Control Event occurs or if the majority of the
Disinterested Directors approves a Control Transaction or directs the
officers, advisors or agents of the Company to find or negotiate with a
third party regarding a Control Transaction, then the provisions of
this Agreement shall not be applicable until such time as the majority
of the Disinterested Directors shall have abandoned such actions.
Section 3.3. Press Releases, Etc. by Bull Run.
(a) Subject to Section 3.3(b) and Sections 5.09 and 5.10 of the
Investment Agreement, Bull Run may issue such press releases and make such other
public communications to the financial community and to its stockholders and
such other public statements made in the ordinary course relating to its
investment in the Company, in each case as it reasonably deems appropriate and
customary. Prior to making any such press release or other communication, Bull
Run will use reasonable efforts to consult with the Company in good faith
regarding the form and content of any such communication, and Bull Run will use
reasonable efforts to coordinate any such communication with any decisions
reached by the Company with respect to disclosures relating to such matters.
(b) Notwithstanding the provisions of Section 3.3(a), unless required
by Applicable Law or other than solely in connection with the nomination or
election of not more than two Bull Run Directors to the Company's Board of
Directors, neither Bull Run nor any of its Affiliates or Associates, may make
any press release, public announcement or other communication with respect to
any of the matters described in Sections 3.1(a), 3.1(b), 3.1(c), 3.1(g) or
3.1(h) without the prior written consent of the Chairman of the Company or by a
resolution of a majority of the directors of the Company. Nothing in this
Section 3.3 shall permit Bull Run to take any action which would otherwise
violate any provision contained in Section 3.1 or in Sections 5.09 or 5.10 of
the Investment Agreement.
Section 3.4. Voting of the Company's Voting Securities. Bull Run shall
vote its shares of Common Stock (a) for the Bull Run Directors, and (b) other
than as may be inconsistent with the
<PAGE>
foregoing clause (a), for any item of business raised at a meeting of the
stockholders of the Company that has received (or will be received, as
determined by the Company upon the review of proxies of the stockholders
received by the Company immediately prior to such meeting) the affirmative vote
of a majority of the stockholders of the Company in attendance at such meeting
of the stockholders, whether in person or by proxy, other than Bull Run or any
of its Affiliates or Associates, except (i) the waiver or repeal of any takeover
defenses of the Company or the redemption of the rights issued pursuant to the
Rights Agreement unless replaced with rights having at least the same takeover
deterrent effect of the current rights, (ii) any changes in the capitalization
having a material adverse effect on Bull Run, (iii) the merger or consolidation
of the Company with or into another corporation or entity other than a wholly
owned subsidiary of the Company, (iv) the liquidation or dissolution of the
Company, and (v) the sale of all or substantially all of the assets of the
Company.
Section 3.5. Quorum. Bull Run shall use reasonable efforts to ensure
that it shall be present, and shall use reasonable efforts to cause its
Affiliates and Associates owning Voting Securities to be present, in each case,
in person or by proxy, at all meetings of stockholders of the Company so that
all Voting Securities Beneficially Owned by Bull Run and its Affiliates and
Associates shall be counted for purposes of determining the presence of a quorum
at such meeting.
Section 3.6. Notice of Proposals Regarding Acquisition Transactions.
Bull Run agrees that it will notify the Company promptly if any inquiries or
proposals which Bull Run reasonably believes are of substance are received by,
any information is exchanged with respect to, or any negotiations or substantive
discussions are initiated or continued with, Bull Run or, to Bull Run's
knowledge, with any of its Affiliates or Associates regarding any proposal
involving (a) a sale of all or substantially all of the assets of the Company,
(b) a third-party tender offer, exchange offer or other purchase offer for
Voting Securities with a number of Votes in excess of five percent (5%) of the
Voting Power of the Company, (c) a merger, consolidation or other business
combination involving the Company, or (d) a Control Event.
Section 3.7. Bull Run Directors.
(a) On or before the Closing Date, the Board of Directors of the
Company will cause the number of members to be elected to the Board of Directors
to be increased to six (6) and will nominate a Bull Run Nominee for election to
such additional director position at the annual meeting of stockholders
scheduled to be held on January 15, 1998 for a term which will expire at the
first annual meeting of stockholders following the end of the Company's fiscal
year ending August 31, 2000. The Company's Board of Directors will recommend the
election of such Bull Run Nominee to the Company's stockholders and the Company
will solicit proxies for the election of such Bull Run Nominee pursuant to its
proxy statement for such meeting to the same extent and in the same manner that
it customarily solicits such proxies for other nominees of the Company's Board
of Directors.
(b) Within thirty (30) days after the first date upon which the shares
of Common Stock Beneficial Owned in the aggregate by Bull Run and its Affiliates
and Associates represents in excess of 5% of the outstanding shares of Common
Stock at such time, but in any case, not on or prior to January 15, 1998, the
Board of Directors of the Company will cause the number of members to be elected
to the Board of Directors to be increased by one (1) and will appoint a second
Bull Run Nominee as a director of the Company in the position created by such
increase.
(c) In the case of any vacancy occurring among the Bull Run Nominees
serving on the Company's Board of Directors, Bull Run shall have the right to
designate a Bull Run Nominee for appointment as a successor to hold office for
the unexpired term of the Bull Run Nominee whose place shall be vacant. Prior to
the annual meeting of stockholders of the Company at which any term of a Bull
Run Nominee as director of the Company is scheduled to expire, (i) the Board of
Directors will
<PAGE>
nominate a Bull Run Nominee designated by Bull Run to be elected or re-elected
to such director position; (ii) the Board of Directors will recommend the
election of such Bull Run Nominee to the Company's stockholders and (iii) the
Company will select proxies for the election of such Bull Run Nominee pursuant
to its proxy statement for such meeting to the same extent and in the same
manner that it customarily solicits such proxies for other nominees of the
Company's Board of Directors.
(d) The Company's obligation to solicit proxies for the election and
reelection of Bull Run Nominees pursuant to this Section 3.7 is subject to Bull
Run providing all information requested by the Company and reasonable necessary
for the Company to prepare the proxy statement in accordance with the SEC's
proxy rules in a timely and complete manner.
(e) Notwithstanding anything in this Section 3.7 to the contrary, the
Company shall have no obligation to nominate, appoint, recommend or solicit
proxies for any Bull Run Nominee unless such Bull Run Nominee has entered into
an Agreement with Bull Run and the Company in the form attached hereto as
Exhibit A.
Section 3.8 Right of First Refusal. Bull Run will not, and Bull Run
will cause its Affiliates and Associates not to, seek, offer, propose or cause
or participate in, or assist any other Person to effect, seek, offer or propose
or participate in the sale of the Warrants or shares of Common Stock
Beneficially Owned by Bull Run or its Affiliates and Associates without first
offering such shares to the Company at the price and upon the terms of such
proposed transfer or sale. The Company shall have thirty (30) days during which
it may accept the offer and sixty (60) days thereafter during which to close the
purchase of such shares if it accepts the offer. If the Company elects not to
accept the offer, Bull Run may transfer or sell the shares to a third party
within sixty (60) days following the expiration of the Company's option at a
price and upon terms no more favorable to the acquirer of such shares as that
offered to the Company, provided that prior to the sale or transfer of such
shares, the transferee shall agree to be bound by the terms and conditions of
this Agreement during its term and until its termination pursuant to Article 4.
This Section 3.8 shall not apply to any sales by Bull Run (a) made in accordance
with Rule 144(b) under the 1933 Act, (b) to a third party pursuant to a tender
or exchange offer which has been approved by the majority of the Disinterested
Directors, or (c) pursuant to the registration of such shares of Common Stock
pursuant to the Securities Act in a bona fide public offering.
ARTICLE 4.
TERM AND TERMINATION
Section 4.1. Termination. The provisions of this Agreement shall
terminate on the date sixty-six (66) months after the Acquisition Completion
Date. The provisions of this Agreement also shall terminate in the event of a
material breach by the Company of any of the terms of this Agreement, the
Investment Agreement, the Registration Rights Agreement referred to in the
Investment Agreement or the Warrants if the Company fails to cure such breach
within forty-five (45) days after its receipt of notice of such breach from Bull
Run. Any termination of this Agreement as provided herein shall be without
prejudice to the rights of any Party arising out of the breach by any other
Party of any provision of this Agreement.
ARTICLE 5.
MISCELLANEOUS
<PAGE>
Section 5.1. 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 telecopier, or three days
after it has been sent by mail, as follows:
The Company: Rawlings Sporting Goods Company, Inc.
1859 Intertech Drive
Fenton, Missouri 63026
Attn: Mr. Paul E. Martin
Telecopy No.: (314) 349-3598
with a copy to: Stinson, Mag & Fizzell, P.C.
1201 Walnut, Suite 2800
P.O. Box 419251
Kansas City, Missouri 64141-6251
Attn: Craig L. Evans, Esq.
Telecopy No.: (816) 691-3495
Bull Run: Bull Run Corporation
4370 Peachtree Road
Atlanta, Georgia 30319
Attn: Mr. Robert S. Prather, Jr.
Telecopy No.: (404) 261-9607
with a copy to: Alston & Bird LLP
One Atlantic Center
1201 West Peachtree St.
Atlanta, Georgia 30309
Attn: Stephen A. Opler, Esq.
Telecopy No.: (404) 881-4777
The Parties shall promptly notify each other in the manner provided in this
Section 5.1 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. 5.2. 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 5.3. 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.
Section 5.4. 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.
<PAGE>
Section 5.5. 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 5.6. Governing Law. This Agreement shall be governed by the
laws of the State of Georgia, without regard to conflict or choice of laws
principles.
Section 5.7. 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 5.8. 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 5.9. 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): Bull Run agrees that the Company shall have no obligation to
honor transfers of Voting Securities or other equity interests in the Company to
Bull Run or any of its Affiliates or Associates which would cause any of Bull
Run and Affiliates or Associates to Beneficially Own Voting Securities or other
equity interests in the Company 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 for the equity interests in the Company to
refuse to honor such transfers.
IN WITNESS WHEREOF, the Company and Bull Run have caused their
respective duly authorized officers to execute this Agreement as of the day and
year first above written.
RAWLINGS SPORTING GOODS COMPANY,
INC.
By: /s/ HOWARD B. KEENE
----------------------
Name: Howard B. Keene
Title: President
BULL RUN CORPORATION
By: /s/ ROBERT S. PRATHER, JR.
--------------------------
Name: Robert S. Prather, Jr.
Title: President
<PAGE>
EXHIBIT A
AGREEMENT
THIS AGREEMENT (the "Agreement") dated as of _________, 199__ by and
among Rawlings Sporting Goods Company, Inc., a Delaware corporation (the
"Company"), Bull Run Corporation, a Georgia corporation ("Bull Run"), and
______________________, an individual residing at
_________________________________ ("Bull Run Nominee").
W I T N E S S E T H:
WHEREAS, the Company and Bull Run have entered into that certain
Standstill Agreement dated as of November 21, 1997 (the "Standstill Agreement")
pursuant to which the Company has agreed to appoint or nominate certain
individuals designated by Bull Run to be directors of the Company; and
WHEREAS, as a condition to its entering into the Standstill Agreement,
and as a condition to the Board of Directors of the Company nominating or
appointing such designee to the Board of Directors, the Company requires that
each individual designated by Bull Run enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein and in
the Investment Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each of the Company,
Bull Run and the Bull Run Nominee (each a "Party"), intending to be legally
bound, hereby agrees as follows:
1. The Bull Run Nominee agrees to serve as a member of the Board of
Directors until the earlier of his or her resignation or upon the expiration of
the term thereof. The Bull Run Nominee further agrees to immediately resign all
positions as a director and officer of the Company and any subsidiary of the
Company upon any of the following events: (i) upon the written request by Bull
Run delivered to the Bull Run Nominee requesting the Bull Run Nominee to resign
as a director of the Company; and (ii) upon the termination of the Warrants (as
defined in the Standstill Agreement) if the Warrants are not exercised in full
prior to their termination.
2. Clause (ii) of Section 1 of this Agreement and Section 3 of this
Agreement shall terminate on the earlier of (i) the date sixty-six (66) months
after the Acquisition Completion Date, or (ii) in the event of a material breach
by the Company of any of the terms of this Agreement, the Standstill Agreement,
the Investment Agreement, or the Registration Rights Agreement referred to in
the Investment Agreement or the Warrants if the Company fails to cure such
breach within forty-five (45) days after its receipt of notice of such breach
from Bull Run. The remainder of this Agreement shall not terminate until the
Bull Run Nominee is no longer a director of the Company.
3. The Bull Run Nominee acknowledges, and agrees to be bound by, the
terms of the Standstill Agreement as fully as if the Bull Run Nominee was a
party thereto.
<PAGE>
IN WITNESS WHEREOF, the Company, Bull Run and the Bull Run Nominee have
caused their respective duly authorized officers to execute this Agreement as of
the day and year first above written.
RAWLINGS SPORTING GOODS COMPANY,
INC.
By:
Name:
Title:
BULL RUN CORPORATION
By:
Name:
Title:
"Bull Run Nominee"
Name:
<PAGE>
EXHIBIT 99.7
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
November 21, 1997 (the Effective Date), is by and between Rawlings Sporting
Goods Company, Inc., a Delaware corporation (the "Company") and Bull Run
Corporation, a Georgia corporation ("Bull Run").
W I T N E S S E T H:
WHEREAS, on the Closing Date (as defined in the Investment Agreement),
Bull Run will be the beneficial owner of Warrants (as defined below) to purchase
shares of the Companys Common Stock pursuant to the Investment Agreement of even
date herewith (the "Investment Agreement");
WHEREAS, Bull Run shall have the option to purchase Additional Warrants
(as defined in the Investment Agreement) to purchase shares of the Company's
Common Stock pursuant to the Investment Agreement;
WHEREAS, Bull Run may desire, from time to time, to sell to the public
shares of such Common Stock which may be issued upon exercise by Bull Run of the
Warrants;
WHEREAS, the Company and Bull Run therefore deem it to be in their
respective best interests to set forth the rights of Bull Run in connection with
public offerings and sales of Warrant Common Shares (as defined below);
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto 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:
"Common Stock" means the Company's Common Stock, par value $.01 per
share, and the stock of any other class of common equity of the Company into
which such shares may hereafter have been changed, exchanged or converted.
"Effective Date" shall have the meaning ascribed to that term in the
introductory paragraph of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder as in effect at the time.
"Holder" means Bull Run, so long as it holds any Registrable
Securities, and any person owning Registrable Securities who is a permitted
transferee or assignee of rights under Article 10 of this
<PAGE>
Agreement and acquired such Registrable Securities subject to any applicable
restrictions on transfer set forth in the Investment Agreement, the Standstill
Agreement and/or the Warrants.
"Investment Agreement" means the Investment Purchase Agreement, of even
date herewith, between the Company and Bull Run.
The terms "register," "registered," and "registration" refer to a
registration effected by the preparation and filing of a Registration Statement
in compliance with the Securities Act, and the declaration or ordering of
effectiveness of such Registration Statement by the SEC.
"Registrable Securities" means at any time: (i) the Warrant Common
Shares then owned or held by the Holders, and (ii) the Warrant Common Shares
then issuable upon exercise of any and all unexercised Warrants then owned or
held by the Holders, and, in each case, all shares of Common Stock issued as (or
issuable upon the conversion or exercise of any warrant, right or other security
which is issued as) a dividend, stock split or other distribution with respect
to, in exchange for, or in replacement of such Warrant Common Shares then owned
or held by such Holder or Holders or Warrant Common Shares then issuable upon
exercise of any and all unexercised Warrants then owned or held by the Holders,
as the case may be. The term "Registrable Securities" excludes, however, any
security (i) the sale of which has been effectively registered under the
Securities Act and which has been disposed of in accordance with a Registration
Statement, (ii) that has been sold by a Holder in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under
Section 4(l) thereof (including, without limitation, transactions pursuant to
Rules 144 and 144A) such that the further disposition of such securities by the
transferee or assignee is not restricted under the Securities Act, (iii) that
has been sold by a Holder in a transaction in which such Holder's rights under
this Agreement are not, or cannot be, assigned, (iv) for which the registration
rights provided under this Agreement have expired pursuant to Article 14 of this
Agreement, or (v) that has ceased to be outstanding.
"Registration Expenses" means: (i) registration, qualification and
filing fees; (ii) fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of counsel in connection with
blue sky qualifications of any Registrable Securities being registered); (iii)
printing expenses; (iv) fees and disbursements of counsel for the Company and
customary fees and expenses for independent certified public accountants
retained by the Company (including the expenses of any comfort letters or costs
associated with the delivery by independent certified public accountants of
comfort letters customarily requested by underwriters); and (v) fees and
expenses of listing any Registrable Securities on any securities exchange on
which the Common Stock is then listed, but in all events excluding the
compensation of regular employees of the Company and excluding underwriter's
fees, discounts and commissions.
"Registration Statement" means any registration statement or similar
document under the Securities Act or any successor thereto that covers any of
the Registrable Securities pursuant to the provisions of this Agreement,
including the prospectus or preliminary prospectus included therein, all
amendments and supplements to such Registration Statement, including
post-effective amendments, all exhibits to such Registration Statement and all
material incorporated by reference in such Registration Statement.
"Rule 144" means Rule 144 promulgated under the Securities Act or any
successor rule thereto.
"Rule 144A" mean Rule 144A promulgated under the Securities Act or any
successor rule thereto.
"SEC" means the Securities and Exchange Commission.
<PAGE>
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder as in effect at the time.
"Standstill Agreement" means the Standstill Agreement, of even date
herewith, between the Company and Bull Run.
"Warrants" means, collectively, the First Tranche Warrants (as defined
in the Investment Agreement) of even date herewith to purchase shares of Common
Stock and the Additional Warrants (as defined in the Investment Agreement) to
purchase shares of Common Stock.
"Warrant Common Shares" shall mean all shares of Common Stock issued to
Bull Run or any permitted assignee or transferee of the Warrants upon exercise
of the Warrants.
Section 1.2. Construction. 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 and Sections shall be deemed to be references to Articles and
Sections of 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.
DEMAND REGISTRATION
Section 2.1. If the Company shall receive a written request in the
manner provided in Section 14.2 hereof, from one or more Holders (collectively,
the "Initiating Holders") that the Company file a Registration Statement under
the Securities Act covering the registration of any or all of such Holder's
Registrable Securities, then the Company shall (i) within 10 days of the receipt
thereof, give written notice, in the manner provided in Section 14.2 hereof and
to any additional addressees provided to the Company by any transferee of any
Holder, of such request to all Holders of outstanding Registrable Securities
known to the Company, and (ii) subject to the limitations contained in this
Article 2, as soon as practicable and in any event within 45 days of the receipt
of such request, file the Registration Statement to effect registration under
the Securities Act covering all Registrable Securities for which the Company
receives a request from the Holders thereof in the manner provided in Section
14.2 hereof, within 30 days of the delivery of such notice by the Company. The
Company, however, shall not be required to file a Registration Statement
pursuant to this Article 2 unless the aggregate number of Registrable Securities
requested to be registered is greater than 386,250.
Section 2.2. If an Initiating Holder intends to distribute the
Registrable Securities covered by its request by means of an underwriting, it
shall so advise the Company as a part of its request made pursuant to Section
2.1 hereof and the Company shall include such information in the written notice
to the Holders referred to in Section 2.1. In such event, the right of any
Holder to include its Registrable Securities in such registration shall be
conditioned upon such Holder's participation in the underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to sell Registrable Securities
through such underwriting (together
<PAGE>
with the Company as provided in Section 4.1(vii) of this Agreement and any other
holder of shares of Common Stock permitted to participate in such registration
pursuant to this Section 2.2) shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Initiating Holder(s) (provided the same are underwriters of
recognized national standing reasonably acceptable to the Company) upon the
terms and conditions agreed upon among the Company, the Initiating Holder(s) and
such underwriter(s). Notwithstanding any other provision of this Article 2, if
the underwriter(s) advise the Initiating Holder(s) in writing that marketing or
other factors require a limitation of the number of Registrable Securities to be
underwritten, then the Company shall so advise all Holders of Registrable
Securities that would otherwise be underwritten pursuant hereto, and the number
of Registrable Securities that may be included in the underwriting shall be
allocated among all Holders thereof, including the Initiating Holder(s), in
proportion (as nearly as practicable) to the number of Registrable Securities
which each Holder requested to be included in such registration; provided, that
there shall be no reduction in the number of shares included in the registration
by Bull Run until all shares of Holders other than Bull Run have been excluded
from such registration. If the number of Registrable Securities to be
underwritten has not been so limited, the Company may include shares of Common
Stock for its own account (or for the account of other shareholders) in such
registration if the underwriter(s) so agree and to the extent that, in the
opinion of such underwriter(s), the inclusion of such additional shares will not
adversely affect the offering and successful marketing of the Registrable
Securities included in such registration and if the number of Registrable
Securities that would otherwise have been included in such registration and
underwriting will not thereby be limited.
Section 2.3. The Company shall not be obligated to effect a total of
more than two (2) registrations and shall not be obligated to effect more than
one registration in any six-month period pursuant to this Article 2.
<PAGE>
ARTICLE 3.
INCIDENTAL REGISTRATION
If at any time (but without any obligation to do so) the Company
proposes to register (including a registration effected by the Company for
shareholders other than the Holders) any shares of Common Stock under the
Securities Act in connection with the public offering of such shares solely for
cash on any form of Registration Statement in which the inclusion of Registrable
Securities is appropriate (other than a registration (i) relating solely to the
sale of securities to participants in a Company employee or non-employee
director stock plan, (ii) pursuant to a Registration Statement on Form S-4 or
Form S-8 (or any successor forms) or any form that does not include
substantially the same information, other than information relating to the
selling shareholders or their plan of distribution, as would be required to be
included in a registration statement covering the sale of Registrable
Securities, (iii) in connection with any dividend reinvestment or similar plan,
or (iv) for the sole purpose of offering securities to another entity or its
securityholders in connection with the acquisition of assets or securities of
such entity or any similar transaction), the Company shall promptly give each
Holder written notice of such registration in the manner provided in Section
14.2 hereof at least 30 days before the anticipated filing date of any such
Registration Statement. If the registration of which the Company gives notice is
for a registered public offering involving an underwriting, the Company shall so
advise each of the Holders as a part of the written notice given pursuant to
this Article. Upon the written request of any Holder given in the manner
provided in Section 14.2 within 20 days after the delivery of such notice by the
Company, the Company shall cause to be registered under the Securities Act all
of the Registrable Securities that such Holder has so requested to be
registered. The Company may decline to file a Registration Statement after
giving notice to the Holders as herein provided, or withdraw a Registration
Statement after filing and after such notice, but prior to the effectiveness
thereof, provided that the Company shall promptly notify each Holder of
Registrable Securities in writing of any such action and provided further that
the Company shall bear all expenses incurred by each Holder or otherwise in
connection with such declined or withdrawn Registration Statement. Further, any
such declining or withdrawal shall be without prejudice to the rights (if any)
of the Holders immediately to request that such registration be effected as a
registration under Article 2 hereof. The right of any Holder to have Registrable
Securities included in such Registration Statement shall be conditioned upon
participation in any underwriting to the extent provided herein. The Company
shall not be required to include any Registrable Securities in such underwriting
unless the Holders thereof agree to enter into an underwriting agreement in
customary form, and upon terms and conditions agreed upon among such Holders,
the Company and the underwriter(s), with the underwriter(s) selected by the
Company. In the event that the underwriter(s) shall advise the Company that
marketing or other factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all Holders of Registrable
Securities that would otherwise be underwritten pursuant hereto. The
underwriter(s) may exclude some or all of the Registrable Securities from such
underwriting and the number of Registrable Securities, if any, that may be
included in the underwriting shall be allocated among all Holders thereof in
proportion (as nearly as practicable) to the number of Registrable Securities
which each Holder requested be included in such registration; provided, however,
that all of the Registrable Securities of the Company held by Bull Run or its
successor that Bull Run or its successor shall have requested to be included in
such registration shall be included before the securities of any other Holder
are included in such registration and underwriting. Nothing in this Article 3 is
intended to diminish the number of Registrable Securities to be included by the
Company in such underwriting. The Company and the underwriter(s) selected by the
Company shall make all determinations with respect to the timing, pricing and
other matters related to the offering.
<PAGE>
ARTICLE 4.
REGISTRATION PROCEDURE
Section 4.1 Whenever required under this Agreement to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably practicable:
(i) Prepare and file with the SEC as soon as practicable a new
Registration Statement with respect to such Registrable Securities and
use its reasonable best efforts to cause such Registration Statement to
become effective, and keep such Registration Statement continuously
effective for up to 135 days or such shorter period as shall be
required to sell all of the Registrable Securities covered by such
Registration Statement; provided, however, that no Registration
Statement need remain in effect after all Registrable Securities
covered thereby have been sold. In no event shall the Company be
required to undertake or cause a shelf registration.
(ii) Furnish to each Holder, and to any underwriter before
filing with the SEC, copies of any Registration Statement (including
all exhibits) and any prospectus forming a part thereof and any
amendments and supplements thereto (including all documents
incorporated or deemed incorporated by reference therein prior to the
effectiveness of such Registration Statement and including each
preliminary prospectus, any summary prospectus or any term sheet (as
such term is used in Rule 434 under the Securities Act)) and any other
prospectus filed under Rule 424 under the Securities Act, which
documents, other than documents incorporated or deemed incorporated by
reference, will be subject to the review of the Holders and any such
underwriter for a period of at least five business days, and the
Company shall not file any such Registration Statement or such
prospectus or any amendment or supplement to such Registration
Statement or prospectus to which any Holder or any such underwriter
shall reasonably object within five business days after the receipt
thereof; a Holder or such underwriters, if any, shall be deemed to have
reasonably objected to such filing only if the Registration Statement,
amendment, prospectus or supplement, as applicable, as proposed to be
filed, contains a material misstatement or omission.
(iii) Prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in
connection with such Registration Statement as may be necessary to
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement.
(iv) Furnish to the Holders of Registrable Securities to be
registered and to any underwriter, without charge, such number of
copies of a prospectus, including each preliminary prospectus, summary
prospectus or term sheet, and any amendment or supplement thereto as
they may, from time to time, reasonably request and a reasonable number
of copies of the then- effective Registration Statement and any
post-effective amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference and all
exhibits (including those incorporated by reference).
(v) To the extent practicable, promptly prior to the filing of
any document that is to be incorporated by reference into any
Registration Statement or prospectus forming a part thereof subsequent
to the effectiveness thereof, and in any event no later than the date
such document is filed with the SEC, provide copies of such document to
the Holders of Registrable Securities covered thereby and any
underwriter and make representatives of the Company available for
discussion of such document and other customary due diligence matters,
and
<PAGE>
include in such document prior to the filing thereof such information
as any Holder or any such underwriter may reasonably request.
(vi) Use its reasonable best efforts (x) to register and
qualify the securities covered by such Registration Statement under
such other securities or blue sky laws of such jurisdictions as shall
be reasonably requested by the Holders, (y) to keep such registration
or qualification in effect for so long as the applicable Registration
Statement remains in effect, and (z) to take any other action which may
be reasonably necessary or advisable to enable such Holders to
consummate the disposition in such jurisdictions of the securities to
be sold by such Holders; provided, however, that the Company shall not
be required to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions where it would
not otherwise be required to so qualify to do business or consent to
service of process or subject itself to taxation in any such
jurisdiction.
(vii) Use its reasonable best efforts to cause all Registrable
Securities covered by such Registration Statement to be registered with
or approved by such other federal or state governmental agencies or
authorities as may be necessary in the opinion of counsel to the
Company and counsel to the Holders of Registrable Securities to enable
the Holders thereof to consummate the disposition of such Registrable
Securities;
(viii) Cooperate with the Holders of Registrable Securities
and each underwriter participating in the disposition of such
Registrable Securities and their respective counsel in connection with
any filings required to be made with the National Association of
Securities Dealers, Inc.
(ix) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in
usual and customary form, with the underwriter(s) of such offering,
with such terms and conditions as the Company, the Holders and the
underwriter(s) may agree. Each Holder participating in such
underwriting shall also enter into and perform its obligations under
such an agreement.
(x) Promptly notify each Holder of Registrable Securities
covered by a Registration Statement (A) upon discovery that, or upon
the happening of any event as a result of which, the prospectus forming
a part of such Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, (B) of the issuance by the SEC of any stop order suspending
the effectiveness of such Registration Statement or the initiation of
proceedings for that purpose, (C) of any request by the SEC for (1)
amendments to such Registration Statement or any document incorporated
or deemed to be incorporated by reference in any such Registration
Statement, (2) supplements to the prospectus forming a part of such
Registration Statement or (3) additional information, or (D) of the
receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any
of the Registrable Securities for sale in any jurisdiction or the
initiation of any proceeding for such purpose, and at the request of
any such Holder promptly prepare and furnish to it a reasonable number
of copies of a supplement to or an amendment of such prospectus as may
be necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
<PAGE>
(xi) Use its reasonable best efforts to obtain the withdrawal
of any order suspending the effectiveness of any such registration, or
the lifting of any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction;
(xii) If requested by any Initiating Holder, or any
underwriter, promptly incorporate in such Registration Statement or
prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as the Initiating Holder and any
underwriter may reasonably request to have included therein, including,
without limitation, information relating to the "plan of distribution"
of the Registrable Securities, information with respect to the
principal amount or number of shares of Registrable Securities being
sold to such underwriter, the purchase price being paid therefor and
any other terms of the offering of the Registrable Securities to be
sold in such offering and make all required filings of any such
prospectus supplement or post-effective amendment as soon as
practicable after the Company is notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment;
(xiii) Otherwise use its reasonable best efforts to comply
with all applicable rules and regulations of the SEC, and make
available to its security holders, as soon as reasonably practicable,
an earnings statement covering the period of at least 12 months, but
not more than 18 months, beginning after the effective date of such
Registration Statement, which earnings statement shall satisfy the
provision of Section 11(a) of the Securities Act and Rule 158
promulgated thereunder;
(xiv) Provide promptly to the Holders upon request any
document filed by the Company with the SEC pursuant to the requirements
of Section 13 and Section 15 of the Exchange Act;
(xv) Cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange or
automated quotation system on which shares of the Common Stock is then
listed. If any of such shares are not so listed, the Company shall
cause such shares to be listed on the securities exchange or automated
quotation system as may be reasonably requested by the Holders of a
majority of the Registrable Securities being registered.
(xvi) Furnish to the Holders, at the request of any Holder
requesting registration pursuant to this Agreement, (A) an opinion of
counsel representing the Company for the purposes of such registration
addressed to such Holder and dated the date of the closing under the
underwriting agreement, if any, or the date of effectiveness of the
Registration Statement if such registration is not an underwritten
offering, and (B) a "comfort" letter from independent certified public
accountants of the Company who have certified the Company's financial
statements included in such registration with respect to events
included in and subsequent to the date of such financial statements, in
each case to be dated such date and to be in form and substance as is
customarily given by counsel or independent certified public
accountants, as the case may be, to underwriters in an underwritten
public offering, addressed to the underwriters.
(xvii) Permit a representative of any Holder of Registrable
Securities, any underwriter participating in any disposition pursuant
to such registration, and any attorney or accountant retained by such
Holder or underwriter, to participate, at each person's own expense, in
the preparation of the Registration Statement, and cause the Company's
officers, directors and employees to supply all information reasonably
requested by any such representative, underwriter, attorney or
accountant in connection with such registration; provided, however,
that such representatives, underwriters, attorneys or accountants enter
into a confidentiality
<PAGE>
agreement, in form and substance reasonably satisfactory to the
Company, prior to the release or disclosure of any such information.
(xviii) To the extent practicable, promptly prior to the
filing of any document that is to be incorporated by reference into any
Registration Statement or prospectus forming a part thereof subsequent
to the effectiveness thereof, and in any event no later than the date
such document is filed with the SEC, provide copies of such document to
the Holders, if requested, and to any underwriter and make
representatives of the Company available for discussion of such
document and other customary due diligence matters, and include in such
document prior to the filing thereof such information as any Holder or
any such underwriter reasonably may request.
Notwithstanding the foregoing, the Company may delay, suspend or withdraw any
registration or qualification of Registrable Securities required pursuant to
this Agreement for a period not exceeding 90 days if the Company shall in good
faith determine that any such registration would adversely affect an offering or
contemplated offering of any securities of the Company or any other contemplated
material corporate event; provided that (i) the duration of any such
discontinuance together with any delay, suspension or withdrawal effected
pursuant to Article 5 hereof may not exceed 90 days in the aggregate in any
period of 12 consecutive months and (ii) the Company may not impose such a
suspension or a postponement pursuant to this Article 4 following the printing
and distribution of a preliminary prospectus in any underwritten public offering
of Registrable Securities (except such suspension, not to exceed fifteen days,
which results from an event that is not within the reasonable control of the
Company). In addition, the Company shall not be required to register Registrable
Securities within six months after the effective date of a Registration
Statement referred to in Article 3 pursuant to which the Holders were afforded
the opportunity to register the disposition of all of the Registrable Securities
sought to be registered thereby.
ARTICLE 5.
HOLDER'S OBLIGATION TO FURNISH INFORMATION
It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Agreement with respect to any Registrable
Securities that the Holder of such securities furnish to the Company such
information regarding itself, the Registrable Securities held by it, and the
intended method of disposition of such securities as shall be required to effect
the registration of such Holder's Registrable Securities.
Each Holder agrees that, upon receipt of any notice from the Company,
such Holder will forthwith discontinue disposition of Registrable Securities
pursuant to the then current prospectus until (i) such Holder is advised in
writing by the Company that a new Registration Statement covering the reoffer of
Registrable Securities has become effective under the Securities Act, (ii) such
Holder receives copies of a supplemented or amended prospectus contemplated by
Article 4 hereof which addresses any additional information, including material
nonpublic information, required to be disclosed therein, or until such Holder is
advised in writing by the Company that the use of the prospectus may be resumed,
or (iii) a period of 60 days has elapsed, whichever is sooner. The Company shall
use its reasonable best efforts to limit the duration of any discontinuance of
disposition of Registrable Securities pursuant to this paragraph.
<PAGE>
ARTICLE 6.
REGISTRATION EXPENSES
In the case of the first demand registration pursuant to Article 2, the
Company shall pay all Registration Expenses. In the case of the second demand
registration pursuant to Article 2, the requesting Holders shall pay all
Registration Expenses. In the case of any incidental registration pursuant to
Article 3, the requesting Holders shall bear any incremental Registration
Expenses, in each case, including, without limitation, (i) incremental
registration and qualification fees and expenses, (ii) the pro rata share of the
underwriter's fees, discounts and commissions incurred in such registration, and
(iii) any incremental costs and disbursements (including legal fees and
expenses) that result from the inclusion of the Registrable Securities included
in such registration, with such incremental expenses being borne by the
requesting Holders on a pro rata basis. Notwithstanding the foregoing, if, as a
result of the withdrawal of a request for registration pursuant to Article 2 by
any of the Holders, as applicable, the Registration Statement does not become
effective, the Holders and the other stockholders requesting registration may
elect to bear the Registration Expenses (pro rata on the basis of the number of
their shares included in the registration request, or on such other basis as
such Holders and other stockholders may agree), in which case such registration
shall not be counted as a registration requested under Article 2.
ARTICLE 7.
EFFECTIVENESS OF REGISTRATION
A registration requested pursuant to Article 2 will not be deemed to
have been effected if (i) the registration statement has not been kept effective
for the period required under Section 4.1(i) of this Agreement, (ii) the
offering of Registrable Securities pursuant to such registration is interfered
with by any stop order, injunction or other order or requirement of the SEC or
other governmental agency or court, (iii) the conditions to the closing of any
such registration that is underwritten are not satisfied, unless such conditions
have not been satisfied by the Holders participating in the underwriting, or
(iv) the Company has not complied with the terms of this Agreement, including
Article 4.
<PAGE>
ARTICLE 8.
INDEMNIFICATION AND CONTRIBUTION
Section 8.1. In the event any Registrable Securities are included in a
Registration Statement pursuant to this Agreement, the Company will indemnify
and hold harmless each Holder, its directors, officers and employees and each
person, if any, who "controls" such Holder (within the meaning of the Securities
Act) against all losses, claims, damages, or liabilities, joint or several, or
actions in respect thereof to which such Holder or other person entitled to
indemnification hereunder may become subject under the Securities Act, or
otherwise, insofar as such losses, claims, damages, liabilities or actions in
respect thereof arise out of, or are based upon, any untrue statement or alleged
untrue statement of any material fact contained in such Registration Statement,
any related preliminary prospectus, or any related prospectus or any amendment
or supplement thereto, offering circular or other document (including any
related notification or the like) incident to any such registration,
qualification or compliance, or arise out of, or are based upon, any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or any violation by
the Company of the Securities Act or the Exchange Act or any rule or regulation
thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, qualification or
compliance, and the Company will reimburse each such Holder or other person
entitled to indemnification hereunder for any legal or other expenses reasonably
incurred by it in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
be so liable to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, an untrue statement or alleged untrue
statement of a material fact or an omission or alleged omission to state a
material fact in such Registration Statement, such preliminary prospectus, or
such prospectus, or any such amendment or supplement thereto, offering circular
or other document (including any related notification or the like) incident to
any registration, qualification or compliance, in reliance upon, and in
conformity with, written information furnished to the Company by or on behalf of
Holder or an underwriter specifically for use therein; and provided, further,
that the Company will not be liable, and this indemnification agreement shall
not apply, in any such case to the extent that any such loss, claim, damage,
liability or action is solely attributable to the failure of such Holder (or
underwriter or agent acting on its behalf) to deliver a final prospectus (or
amendment or supplement thereto) that corrects a material misstatement or
omission contained in the preliminary prospectus (or final prospectus). The
Company will also indemnify underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the distribution,
their officers and directors and each person who "controls" such persons (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the Holders, if so requested, except with
respect to information furnished in writing specifically for use in any
prospectus or Registration Statement by any selling Holders or any such
underwriters.
<PAGE>
Section 8.2. With respect to written information furnished to the
Company by or on behalf of a Holder specifically for use in a Registration
Statement, any related preliminary prospectus, or any related prospectus or any
supplement or amendment thereto, offering circular or other document (including
any related notification or the like) incident to any registration,
qualification or compliance, if Registrable Securities held by it are included
in the securities as to which such registration, qualification or compliance is
being effected, such Holder will severally indemnify and hold harmless the
Company, and its directors, officers and employees and each person, if any, who
"controls" the Company (within the meaning of the Securities Act) and any other
Holder against any losses, claims, damages or liabilities, joint or several, or
actions in respect thereof, to which the Company or such other person entitled
to indemnification hereunder may become subject under the Securities Act, or
otherwise, insofar as such losses, claims, damages, liabilities or actions in
respect thereof arise out of, or are based upon, any untrue statement or alleged
untrue statement of any material fact contained in such Registration Statement,
such preliminary prospectus, or such prospectus, or any such amendment or
supplement thereto, offering circular or other document (including any related
notification or the like) incident to any registration, qualification or
compliance, or arise out of, or are based upon, the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; and such Holder will reimburse the
Company and such other persons for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action, in each case to the extent, but only to the
extent, that the same arises out of, or is based upon, an untrue statement or
alleged untrue statement of material fact or an omission or alleged omission to
state a material fact in such Registration Statement, such preliminary
prospectus, or such prospectus or any such amendment or supplement thereto in
reliance upon, and in conformity with, such written information; provided,
however, that the obligations of each of the Holders hereunder shall be limited
to an amount equal to the net proceeds to such Holder of Registrable Securities
sold as contemplated herein. The Company shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, to the same
extent as provided above with respect to the information so furnished in writing
by such persons specifically for inclusion in any prospectus or Registration
Statement. The Holder will also indemnify underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, their officers and directors and each person who "controls" such
persons (within the meaning of the Securities Act) to the same extent as
provided herein with respect to the indemnification of the Company, if so
requested.
Section 8.3. Promptly after receipt by an indemnified party of notice
of any claim or the commencement of any action, the indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party, notify
the indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying party
will not relieve it from any liability that it may have to the indemnified party
except to the extent it was actually damaged or suffered any loss or incurred
any additional expense as a result thereof. If any such claim or action is
brought against an indemnified party, and it notifies the indemnifying party
thereof, the indemnifying party will be entitled to assume the defense thereof
with counsel selected by the indemnifying party and reasonably satisfactory to
the indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim or action,
(i) the indemnifying party will not be liable to the indemnified party for any
legal or other expense subsequently incurred by the indemnified party in
connection with the defense thereof, (ii) the indemnifying party will not be
liable for the costs and expenses of any settlement of such claim or action
unless such settlement was effected with the written consent of the indemnifying
party or the indemnified party waived any rights to indemnification hereunder in
writing, in which case the indemnified party may effect a settlement without
such consent, and (iii) the indemnified party will be obligated to cooperate
with the indemnifying party in the investigation of such claim or action;
provided,
<PAGE>
however, that the Holders and their respective controlling persons who may be
subject to liability arising out of any claim in respect of which indemnity may
be sought by such Holders against the Company may employ their own counsel if
they have been advised by counsel in writing that, in the reasonable judgment of
such counsel, it is advisable for such Holders and their controlling persons to
be represented by separate counsel due to the presence of conflicts of interest,
and in that event the fees and expenses of such separate counsel will also be
paid by the Company; provided that the Company shall not be liable for the
reasonable fees and expenses of more than one separate counsel at any time for
all such indemnified parties. An indemnifying party shall not, without the prior
written consent of the indemnified parties, settle, compromise or consent to the
entry of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes a release of such indemnified party reasonably acceptable to such
indemnified party from all liability arising out of such claim, action, suit or
proceeding and unless the indemnifying party shall confirm in a written
agreement reasonably acceptable to such indemnified party, that notwithstanding
any federal, state or common law, such settlement, compromise or consent shall
not adversely affect the right of any indemnified party to indemnification or
contribution as provided in this Agreement.
Section 8.4. If for any reason the indemnification provided for in
Sections 8.1 or 8.2 is unavailable to an indemnified party or is insufficient to
hold it harmless as contemplated therein, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result of
such loss, claim , damage or liability in such proportion as is appropriate to
reflect not only the relative benefits received by the indemnifying party and
the indemnified party, but also the relative fault of the indemnifying party and
the indemnified party, as well as any other relevant equitable considerations.
The relative fault of the indemnifying party and of the indemnified party shall
be determined by reference to, among other things, whether the untrue (or
alleged untrue) statement of a material fact or the omission (or alleged
omission) to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
Section 8.5. The obligations under this Article 8 shall survive the
completion of any offering of Registrable Securities in a Registration Statement
pursuant to this Agreement, and otherwise.
Section 8.6 Notwithstanding the foregoing provision of this Article 8,
to the extent that the provisions regarding indemnification and contribution
contained in the underwriting agreement entered into in connection with any
underwritten public offering contemplated by this Agreement are in conflict with
the foregoing provisions, the provisions in such underwriting agreement shall be
controlling.
ARTICLE 9.
REPORTS UNDER EXCHANGE ACT
With a view to making available to the Holders the benefits of Rule 144
and any other rule or regulation of the SEC that may at any time permit a Holder
to sell securities of the Company to the public without registration, the
Company agrees that so long as the Company is subject to the reporting
requirements of the Exchange Act, to:
<PAGE>
(i) Make and keep public information available, as those terms
are understood and defined in Rule 144;
(ii) File with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and
the Exchange Act; and
(iii) Furnish to any Holder, so long as the Holder owns any
Registrable Securities, upon request (a) a written statement by the
Company as to its compliance with the reporting requirements of Rule
144 (at any time after 90 days after the Effective Date), the
Securities Act and the Exchange Act, (b) a copy of the most recent
annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (c) such other information as
may be reasonably requested in availing any Holder of any rule or
regulation of the SEC which permits the selling of any such securities
without registration or pursuant to such form.
ARTICLE 10.
ASSIGNMENT OF REGISTRATION RIGHTS
The rights to cause the Company to register Registrable Securities
pursuant to this Agreement may not be assigned or transferred by Bull Run
without the consent of the Company; provided, however, that any transfer or
assignment of the Warrants or the Warrant Common Shares permitted pursuant to
the Investment Agreement, the Standstill Agreement and/or the Warrants shall
also cause a permitted transfer or assignment of the rights to cause the Company
to register Registrable Securities without the consent of the Company. Such an
assignment or transfer shall be in accordance with all applicable securities
laws, and the assignee or transferee shall execute and agree to be bound by this
Agreement, an executed counterpart of which shall be furnished to the Company.
ARTICLE 11.
AMENDMENT OF REGISTRATION RIGHTS
Any provision of this Agreement may be amended or the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Holders of a majority of Registrable Securities then outstanding. Any
amendment or waiver effected in accordance with this Section shall be binding
upon each Holder of any Registrable Securities, each future Holder of such
Registrable Securities and the Company.
<PAGE>
ARTICLE 12.
STAND-OFF AGREEMENT
Any Holder, if requested by the Company or an underwriter of an
underwritten public offering, agrees not to sell, make any short sale of, loan,
grant any option for the purchase of, or otherwise transfer or dispose of any
Common Stock held by such Holder (other than Registrable Securities included in
the registration) without the prior written consent of the Company or such
underwriter(s), as the case may be, during a period of up to five days prior to
the pricing of such public offering and 180 days following the effective date of
any underwritten registration of the Company's securities effected pursuant to
Articles 2 or 3 hereof. Such agreement shall be in writing in form satisfactory
to the Company and such underwriter, and may be included in the underwriting
agreement. The Company may impose stop-transfer instructions with respect to the
securities subject to the foregoing restriction until the end of the required
stand-off period.
ARTICLE 13.
TERMINATION OF REGISTRATION RIGHTS
If the number of shares of Registrable Securities owned by a Holder
represents less than one percent (1%) of the total number of shares of Common
Stock then outstanding, then such Holder's registration rights under this
Agreement relating to such Registrable Securities shall terminate on the date
such Holder is able to dispose of all of its shares of Registrable Securities in
any 90-day period pursuant to Rule 144. All registration rights (except for
rights previously exercised in connection with an underwritten public offering
pursuant to Article 3) of a Holder under this Agreement shall terminate on the
date on which all of such Holder's shares of Registrable Securities can be sold
pursuant to Rule 144(k).
ARTICLE 14.
MISCELLANEOUS
Section 14.1. Confidential Information. No Holder may use any
confidential information received by it pursuant to this Agreement in violation
of the Exchange Act or reproduce, disclose, or disseminate such information to
any other person (other than its employees or agents having a need to know the
contents of such information and its accountants and attorneys), except to the
extent reasonably related to the exercise of rights under this Agreement, unless
(i) such information has been made available to the public generally (other than
by such recipient in violation of this Section 14.1), or (ii) such recipient is
required to disclose such information by a governmental body, regulatory agency
or subpoena or by law in connection with a transaction that is not otherwise
prohibited hereby and the Company is given a reasonable opportunity to obtain
injunctive relief or a protective order to maintain the confidentiality of such
information.
Section 14.2. 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 telecopier, or three days
after it has been sent by mail, as follows:
<PAGE>
The Company: Rawlings Sporting Goods Company, Inc.
1859 Intertech Drive
Fenton, Missouri 63026
Attn: Mr. Paul E. Martin
Telecopy No.: (314) 349-3598
with a copy to: Stinson, Mag & Fizzell, P.C.
1201 Walnut, Suite 2800
P.O. Box 419251
Kansas City, Missouri 64141-6251
Attn: Craig L. Evans, Esq.
Telecopy No.: (816) 691-3495
Bull Run: Bull Run Corporation
4370 Peachtree Road
Atlanta, Georgia 30319
Attn: Mr. Robert S. Prather, Jr.
Telecopy No.: (404) 261-9607
with a copy to: Alston & Bird LLP
One Atlantic Center
1201 West Peachtree St.
Atlanta, Georgia 30309
Attn: Stephen A. Opler, Esq.
Telecopy No.: (404) 881-4777
The Parties shall promptly notify each other in the manner provided in this
Section 14.2 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. 14.3. Entire Agreement. This Agreement 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.
Section 14.4. Waiver, Amendment, etc. Except as otherwise permitted in
this Agreement, 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. Except as otherwise permitted in this Agreement, 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 14.5. 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 14.6. Governing Law. This Agreement shall be governed by the
laws of the State of
<PAGE>
Georgia, without regard to conflict of laws principles.
Section 14.7. 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 14.8. 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 on and the same Agreement.
Section 14.9 No Inconsistent Agreements. The Company will not hereafter
enter into any agreement with respect to its securities which is inconsistent
with the rights granted to the Holders of Registrable Securities in this
Agreement.
Section 14.10 Remedies. Each Holder of Registrable Securities, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
IN WITNESS WHEREOF, the Company and Bull Run have caused their
respective duly authorized officers to execute this Agreement as of the day and
year first above written.
RAWLINGS SPORTING GOODS COMPANY,
INC.
By: /s/ HOWARD B. KEENE
-------------------------
Name: Howard B. Keene
Title: President
BULL RUN CORPORATION
By: /s/ ROBERT S. PRATHER, JR.
---------------------------
Name: Robert S. Prather, Jr.
Title: President
