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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(RULE 13D-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13D-1(A)
AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13D-2(A)
(AMENDMENT NO. 5)(1)
RAWLINGS SPORTING GOODS COMPANY, INC.
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(Name of Issuer)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
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(Title of Class of Securities)
754459105
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(CUSIP Number)
ROBERT S. PRATHER, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BULL RUN CORPORATION
4370 PEACHTREE ROAD
ATLANTA, GEORGIA 30319
(404) 266-8333
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(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
with a copy to:
STEPHEN A. OPLER
ALSTON & BIRD LLP
1201 WEST PEACHTREE STREET, N.W.
ATLANTA, GEORGIA 30309-3424
(404) 881-7693
JANUARY 13, 2000
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box. [ ]
NOTE: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
(continued on following pages)
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(1) The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
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CUSIP NO. 754459105 PAGE 2 OF 17 PAGES
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1 NAME OF REPORTING PERSON
BULL RUN CORPORATION
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) 91-1117599
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
BK
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(D) OR 2(E) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Georgia
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7 SOLE VOTING POWER
NUMBER 806,500
OF
SHARES -------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH
REPORTING -------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 806,500
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10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
806,500
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[X] (SEE ITEM 5)
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.2%
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14 TYPE OF REPORTING PERSON
CO
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This Amendment No. 5 to the Statement on Schedule 13D amends and
supplements the Statement on Schedule 13D, as amended by Amendment No. 1,
Amendment No. 2, Amendment No. 3 and Amendment No. 4 thereto (collectively, the
"Schedule 13D") filed by Bull Run Corporation ("Bull Run") relating to the
common stock (the "Common Stock") of Rawlings Sporting Goods Company, Inc. (the
"Company" or "Rawlings"). The address of the Company is 1859 Intertech Drive,
Fenton, MO 63026. Capitalized terms used herein and not defined herein shall
have the meanings assigned thereto in the Schedule 13D.
ITEM 4. PURPOSE OF TRANSACTION
In its press release of May 28, 1999, the Company announced that it
would be exploring strategic financial alternatives as part of its three-year
plan process and had engaged BancBoston Robertson Stephens Inc. ("Robertson
Stephens") as its exclusive investment banker and financial advisor to provide
assistance and advice in such matters. As reported in Amendment No. 3 to the
Schedule 13D, Amendment Number One to Standstill Agreement, dated as of April
23, 1999, between Bull Run and the Company ("Amendment Number One") affords Bull
Run the right to participate on the same basis as any other person in any Board
of Directors initiated process to explore strategic alternatives that could
reasonably be expected to lead to a change in control of the Company or if the
Board should determine to enter into any agreement with any other person
regarding a change in control of the Company. As reported on Amendment No. 3 to
the Schedule 13D, Bull Run's intention following the Company's announcement was
to participate in any Board initiated process to the extent allowed by Amendment
Number One.
In connection with Bull Run's anticipated participation in the Rawlings
Board of Directors' initiated process to explore strategic alternatives, on
August 6, 1999 Bull Run entered into a Confidentiality Agreement letter with
Rawlings (the "Confidentiality Agreement") providing, among other things, that
Bull Run would maintain the confidential nature of information disclosed to Bull
Run in the due diligence process. In addition, the Confidentiality Agreement
restricted Bull Run for one year from the date of the Confidentiality Agreement
from (i) acquiring any voting securities or assets of Rawlings or any of its
subsidiaries, (ii) soliciting proxies to vote any securities of Rawlings; (iii)
making any public announcement with respect to, or submitting a proposal for, or
offer of any extraordinary transaction involving Rawlings or its securities or
assets, (iv) forming or joining in any group (as defined in the Securities
Exchange Act of 1934, as amended) in connection with any of the foregoing, or
(v) requesting any amendment or waiver of any of these provisions. A copy of the
Confidentiality Agreement is filed as Exhibit 1 to this Amendment No. 5 to the
Schedule 13D.
Following Bull Run's execution of the Confidentiality Agreement,
Rawlings provided Bull Run with the Confidential Descriptive Memorandum dated
August 1999, containing information regarding Rawlings' business operations and
historical and forecast results of operations.
On August 10, 1999, Robertson Stephens sent Bull Run a letter
requesting that Bull Run submit a written, non-binding indication of interest to
Robertson Stephens
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regarding the potential sale or recapitalization transaction with the Company
(the "Initial Request Letter"). A copy of the Initial Request Letter is filed as
Exhibit 2 to this Amendment No. 5 to the Schedule 13D. The Initial Request
Letter stated, among other things, that "Rawlings is exploring a possible sale
or recapitalization transaction. Rawlings seeks to maximize the value realized
for the Company, and looks forward to completing the transaction in a timely
manner."
In response to the Initial Request Letter and based on Bull Run's
review of the Confidential Descriptive Memorandum, on August 24, 1999 Bull Run
sent to Rawlings in care of Robertson Stephens a preliminary indication of
interest in acquiring Rawlings (the "Preliminary Indication of Interest"). A
copy of the Preliminary Indication of Interest is filed as Exhibit 3 to this
Amendment No. 5 to the Schedule 13D. The Preliminary Indication of Interest
proposed a purchase by Bull Run of the issued and outstanding capital stock of
Rawlings for a price in the range of $12.00 per share to $16.00 per share,
subject to certain conditions, including without limitation, due diligence.
After submitting the Preliminary Indication of Interest, Robertson
Stephens invited Bull Run and its advisors and prospective debt and equity
financing sources to conduct a due diligence investigation of Rawlings. On
September 7 and 8, 1999, Bull Run, its advisors, Prudential Securities
Incorporated ("Prudential") and Alston & Bird LLP ("A&B"), and certain potential
financing sources initiated the due diligence investigation with a review of
selected confidential information provided by Rawlings and meetings with
Rawlings' senior management. Thereafter, Bull Run continued its due diligence
investigation with a review of additional requested information supplied by
Rawlings and its advisors.
On September 17, 1999, Robertson Stephens sent to Prudential, Bull
Run's financial advisor, a letter outlining the procedures and timeline
anticipated with respect to the submission of final, binding offers to acquire
Rawlings (the "Definitive Offer Procedures Letter"). A copy of the Definitive
Offer Procedures Letter is filed as Exhibit 4 to this Amendment No. 5 to the
Schedule 13D. The Definitive Offer Procedures Letter also included the form of
transaction agreement that Rawlings and Robertson Stephens were "asking all
prospective bidders to mark-up to show any proposed modifications or additional
terms and conditions they suggest or require as part of their definitive
proposal." The Definitive Offer Procedures Letter required the complete final,
binding offer to be sent to Robertson Stephens no later than 5:00 p.m. San
Francisco time, on Monday, October 4, 1999.
In response to the Definitive Offer Procedures Letter and based on its
initial due diligence investigation, on October 4, 1999, Bull Run submitted an
offer (the "October 4 Offer") to the Company's Board of Directors to offer each
of the Company's stockholders (and each holder of stock options and other Common
Stock equivalents) the option of accepting either of the following two
alternatives: (i) $12.25 per share payable in cash for 100% of each of the
Company's stockholder's Common Stock or (ii) $13.00 per share payable in cash
for up to 92% of each of the Company's stockholder's Common Stock, with each
stockholder retaining 8% or more of his, her or its Common Stock. A copy of the
October 4 Offer is filed as Exhibit 5 to this Amendment No. 5 to the Schedule
13D.
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Bull Run's rationale for structuring the October 4 Offer with two options
was, in part, based upon Bull Run's intention to preserve Rawlings as a public
company.
The October 4 Offer described the equity and debt financing proposals
that Bull Run had obtained to finance the acquisition, to refinance all of the
existing indebtedness of Rawlings and to fund Rawlings' future capital
requirements. Bull Run's October 4 Offer was expressly conditioned on, among
other matters, the completion of Bull Run's due diligence review to confirm (i)
the accuracy of the representations and warranties of Rawlings made in the
revised purchase agreement, (ii) the contents of the Disclosure Schedules under
the revised purchase agreement and (iii) other key business items. The October 4
Offer also was expressly conditioned on the receipt of third-party financing,
which Bull Run expected would include certain Rawlings stockholders not
tendering their shares of Rawlings. Bull Run had expected that certain major
institutional stockholders owning, managing or otherwise speaking for
approximately 1.6 million shares of Rawlings Common Stock would agree to retain
their stock and not to tender in the transaction.
On October 7, 1999, Bull Run's financial advisor, Prudential, sent a
letter to Robertson Stephens in response to certain questions raised by
Robertson Stephens with respect to the October 4 Offer (the "October 7 Letter").
A copy of the October 7 Letter is filed as Exhibit 6 to this Amendment No. 5 to
the Schedule 13D.
On October 13, 1999, based on telephone conversations between Bull
Run's legal counsel, A&B, and Rawlings' Finance Committee's legal counsel,
Skadden, Arps, Slate, Meagher & Flom, LLP ("Skadden"), A&B sent to Skadden a
revised version of the form of definitive merger agreement, marked to show the
acceptance of most of Skadden's responses to A&B's original comments included
with the October 4 Offer.
On October 14, 1999, after a meeting of the Finance Committee,
representatives of Robertson Stephens and Skadden contacted Bull Run and its
advisors to discuss the October 4 Offer. During this discussion, as requested by
Robertson Stephens and Skadden on behalf of the Finance Committee, Bull Run
orally agreed to increase the purchase price by $0.25 per share, agreeing to pay
(i) $12.50 per share payable in cash for 100% of each of the Company's
stockholder's Common Stock or (ii) $13.25 per share payable in cash for up to
92% of each of the Company's stockholder's Common Stock with each stockholder
retaining 8% or more of his, her or its Common Stock; subject to the execution
of an agreement providing a period of exclusivity for Bull Run to complete its
due diligence investigation.
On October 25, 1999, Bull Run and Rawlings entered into a letter
agreement (the "Exclusivity Letter") providing a period of exclusivity in which
Bull Run and its financing sources would be allowed to complete their due
diligence review. A copy of the Exclusivity Letter is filed as Exhibit 7 to this
Amendment No. 5 to the Schedule 13D. The Exclusivity Letter provided that the
period of exclusivity (the "Exclusivity Period") would end on the fifteenth day
after the date on which Bull Run and its potential financing sources had
received all or substantially all the due diligence materials pertaining to
Rawlings that they had requested in connection with their due diligence
investigation of
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Rawlings. Bull Run was obligated to acknowledge in writing when the Exclusivity
Period began and ended in accordance with the foregoing.
Pursuant to an October 29, 1999 letter from A&B to Skadden, based on a
significant portion of the requested due diligence materials having been
provided to Bull Run, the Exclusivity Period began on Saturday, October 30, 1999
at 5:00 p.m. (EST) and ended on Sunday, November 14, 1999 at 5:00 p.m. (EST). A
copy of such October 29, 1999 letter is filed as Exhibit 8 to this Amendment No.
5 to the Schedule 13D. On November 17, 1999, pursuant to a letter from Rawlings
to Bull Run, the Exclusivity Period was extended until 5:00 p.m., CST, on
Friday, December 3, 1999. A copy of such November 17, 1999 letter is filed as
Exhibit 9 to this Amendment No. 5 to the Schedule 13D.
During the Exclusivity Period, Rawlings and its financial and legal
advisors expressed concerns regarding Bull Run's proposed tender offer
containing two tender alternatives. As a result of these concerns and numerous
discussions and negotiations that took place among Rawlings, Bull Run and their
respective financial and legal advisors, Bull Run amended the October 4 Offer.
The amended transaction structure provided for a tender for a maximum of
5,000,000 shares of Common Stock at a price of $13.25 per share, payable in
cash.
As a result of Bull Run's continuing due diligence investigation of
Rawlings and based on discussions with Robertson Stephens and Skadden, on
December 3, 1999 Bull Run again amended the October 4 Offer by offering to
purchase all of the outstanding shares of Common Stock not owned by Bull Run
(approximately 7.1 million shares) at $10.00 per share, payable in cash (the
"December 3 Offer"). A copy of the December 3 Offer is filed as Exhibit 10 to
this Amendment No. 5 to the Schedule 13D. The December 3 Offer identified
financing commitments that Bull Run had received for an aggregate of up to $45
Million and that Bull Run anticipated receiving a debt financing commitment to
finance the tender offer, refinance existing debt and fund estimated future
capital requirements.
On December 7, 1999, at the request of the Finance Committee, Bull Run,
Prudential and A&B participated in a telephonic Finance Committee meeting in
which Prudential, on behalf of Bull Run, presented to the Finance Committee the
results of Bull Run's due diligence investigation and the basis and rationale
for Bull Run's December 3 Offer. Bull Run, Prudential and A&B were available for
questions from the Finance Committee.
On December 8, 1999, Mr. Richard Easton of Skadden spoke with A&B on
the telephone, in which conversation Mr. Easton informed A&B that Bull Run's
December 3 Offer was not a proposal that the Finance Committee could accept or
reject. Later on December 8, 1999, Robertson Stephens, Prudential, Skadden, A&B
and Bull Run held a telephone conference call, during which Mr. Easton of
Skadden stated that the Finance Committee had determined that Rawlings must
proceed with the refinancing of its existing bank financing. Further, Mr. Easton
stated that the two alternatives were Rawlings' management's three-year plan and
Bull Run's December 3 Offer. Mr. Easton stated
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further that the parties were pretty close to a final agreement with respect to
the definitive Merger Agreement and that the only issue of a substantive nature
was how to deal with Rawlings' existing stock options since at $10 per share a
large number of options were "under water."
On December 14, 1999, Mr. Easton of Skadden spoke with A&B by telephone
and informed them that the Finance Committee had tentatively scheduled a
telephonic committee meeting for the afternoon of December 15, 1999.
On December 14, 1999, Mr. Robert S. Prather, Jr., President and Chief
Executive Officer of Bull Run, sent a letter to Robertson Stephens, as financial
advisor to Rawlings (the "December 14 Letter"). A copy of the December 14 Letter
is filed as Exhibit 11 to this Amendment No. 5 to the Schedule 13D. In the
December 14 Letter, Bull Run indicated that it was in the process of confirming
the terms of the final amount of capital required to consummate the transaction
and that Bull Run expected to provide the final required financing commitment by
Tuesday, December 21, 1999. The December 14 Letter included a proposed debt
financing commitment of up to $100 million to finance the consummation of the
proposed acquisition of Rawlings' Common Stock, to refinance all of Rawlings'
existing debt and to fund the continuing operations of Rawlings.
On December 15, 1999, Bull Run's legal counsel, A&B, was contacted by
Mr. Easton of Skadden, who communicated certain concerns regarding Bull Run's
December 3 Offer, including concerns relating to the debt financing commitment
attached as an Exhibit to the December 14 Letter. Later on December 15, 1999,
prior to Mr. Easton joining the telephonic Finance Committee meeting, he spoke
with Mr. Stephen Opler of A&B who informed Mr. Easton that Bull Run had obtained
a letter from an existing Rawlings stockholder stating that it spoke for 550,000
shares and expressing its current intention to not tender those shares based on
certain assumptions. Mr. Opler also informed Mr. Easton that a similar letter
was being prepared and sent to Bull Run from another Rawlings stockholder owning
or controlling over 890,000 shares. Mr. Opler suggested that he send to Mr.
Easton by facsimile a copy of the first letter, but Mr. Easton stated that Mr.
Opler and Bull Run should reconsider whether it was in the best interests of
that stockholder for Mr. Opler to send the letter to Mr. Easton. The letter was
not sent to Mr. Easton at that time.
On the afternoon of December 15, 1999, Rawlings' advisors, Robertson
Stephens and Mr. Easton of Skadden, telephoned Bull Run's advisors, Prudential
and A&B, respectively, to inform Bull Run through its advisors that the Finance
Committee had decided, by unanimous vote, to discontinue its discussions with
Bull Run and to recommend to Rawlings' Board of Directors that Rawlings'
management's three-year plan be adopted.
In response to the concerns articulated by Robertson Stephens and Mr.
Easton of Skadden regarding the December 3 Offer and the December 14 Letter, on
December 15, 1999 Bull Run submitted a supplementary letter (the "December 15
Letter") enclosing letters from two existing Rawlings stockholders, owning,
controlling or otherwise speaking for an aggregate of approximately 1.4 million
shares, expressing their current
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intention not to tender such shares in Bull Run's proposed transaction. A copy
of the December 15 Letter is filed as Exhibit 12 to this Amendment No. 5 to the
Schedule 13D. One of those Rawlings stockholders stated that it spoke for a
total of 550,000 shares and that its letter was based on a tender offer being
made within the next thirty days at a price between $9.00 and $12.00 per share.
Further, this stockholder's letter stated that "[h]owever, should an outside
event occur that would present an adverse material effect on the market, total
control of my position might not be possible." Public filings indicated that the
second Rawlings stockholder held beneficial ownership of approximately 890,000
shares. The second Rawlings stockholder's letter stated that "[a]s a significant
shareholder in other companies that have received tender offers, we have chosen
not to tender when we believed that retention of our position was in the best
interests of our clients. At this time, if a $10.00 offer were made for Rawlings
Sporting Goods Company, Inc., it is our present opinion that it would not be in
the best interests of our clients to accept such tender offer."
On December 16, 1999, Rawlings issued a press release that stated that
"the Finance Committee of [Rawlings'] Board of Directors, consisting of five
independent directors, has completed its five and one-half month review of
strategic alternatives and has unanimously determined to recommend that the
Board adopt management's three-year plan." On December 17, 1999, based on input
Bull Run and its advisors received from Robertson Stephens and Skadden, Bull Run
submitted to each member of the Finance Committee, Robertson Stephens and
Skadden revised and supplemental documentation with respect to Bull Run's
previously submitted December 3 Offer to acquire all of the outstanding capital
stock of the Company, excluding shares held by Bull Run and two other existing
stockholders. The documentation provided to the Finance Committee was intended
to be responsive to the comments made by Rawlings' advisors, both before and
after the December 16 press release by Rawlings, and included evidence of
commitments to provide financing in sufficient amount to consummate the
contemplated transaction. A copy of Bull Run's December 17, 1999 letter is filed
as Exhibit 13 to this Amendment No. 5 to the Schedule 13D.
On December 20, 1999, Bull Run sent a letter to the Finance Committee
of Rawlings' Board of Directors to confirm that each member of the Finance
Committee received a copy of the December 17, 1999 letter and the attached
materials as well as to request that the Finance Committee meet with Bull Run,
"in person or by telephone, to determine if [the Finance Committee] and [Bull
Run] (and [their] respective advisors) can work together, cooperatively to
consummate this transaction." A copy of Bull Run's December 20, 1999 letter is
filed as Exhibit 14 to this Amendment No. 5 to the Schedule 13D.
On December 22, 1999, Mr. Prather of Bull Run traveled to St. Louis to
meet with Mr. Andrew N. Baur, the Chairman of the Finance Committee of the Board
of Directors of Rawlings, to discuss Bull Run's proposal to purchase all of the
outstanding capital stock of Rawlings not held by those Rawlings stockholders
who had expressed an interest not to sell their Rawlings stock. On December 23,
1999, Mr. Prather sent Mr. Baur a letter (the "December 23 Letter") confirming
Mr. Prather's understanding that Mr. Baur planned to call a meeting of the
Finance Committee for Monday, December 27, 1999 in order for the Finance
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Committee to discuss Bull Run's offer. A copy of the December 23 Letter is filed
as Exhibit 15 to this Amendment No. 5 to the Schedule 13D.
In response to Mr. Prather's letter on December 23, 1999, Mr. Baur sent
a letter to Mr. Prather clarifying that Mr. Baur intended to attempt to convene
the Finance Committee on Monday, December 27, 1999, but he did not know the
availability of the members of the Finance Committee. Mr. Baur's letter also
stated that he was not going to ask the Finance Committee to reconsider Bull
Run's $10.00 per share cash offer, but that he would update the Finance
Committee on the conversation between Mr. Baur and Mr. Prather on December 22,
1999, and that Mr. Baur would inquire about what the members of the Finance
Committee wished to do. Finally, Mr. Baur stated that it was not his
recommendation to waive the Standstill Agreements, but that "[i]t was simply a
general discussion as to what would happen if a tender from a third party were
to take place." A copy of Mr. Baur's December 23, 1999 letter is filed as
Exhibit 16 to this Amendment No. 5 to the Schedule 13D.
Between December 23, 1999 and December 31, 1999, Mr. Prather and Mr.
Baur had several telephone conversations in which Mr. Prather requested a
meeting between Bull Run and the Finance Committee to discuss Bull Run's $10.00
per share cash offer. In addition, A&B and Prudential had similar discussions
with Skadden and Robertson Stephens, respectively. On December 28, 1999, Mr.
Easton of Skadden spoke by telephone with Mr. Opler of A&B and informed him that
the Finance Committee had not received, and therefore had not considered, any
report or detailed analysis from Robertson Stephens regarding Rawlings'
management's three-year plan or its anticipated impact on stockholder value. Mr.
Easton also informed Mr. Opler that Robertson Stephens had delivered a
memorandum to the Finance Committee stating Robertson Stephen's opinion that the
Finance Committee would be breaching its fiduciary duties to not perform due
diligence with respect to management's three-year plan. Mr. Easton also stated
that perhaps if Bull Run's preliminary indication of interest had indicated a
value in the range of $10 to $13 the Finance Committee's expectations might have
been different.
On January 4, 2000, Mr. Easton of Skadden called A&B to inform A&B on
behalf of Bull Run that the Finance Committee believed that some resolution to
the current situation was necessary and that the Finance Committee had
authorized and instructed Mr. Easton to make a proposal to Bull Run. The
proposal was communicated in that telephone call as well as in writing (the
"January 4 Proposal"). A copy of the January 4 Proposal is filed as Exhibit 17
to this Amendment No. 5 to the Schedule 13D. The January 4 Proposal stated that
the Finance Committee would be prepared to waive the restrictions in the
Standstill Agreement and amend Rawlings' Rights Plan in order to allow Bull Run
to make a cash tender offer for all outstanding shares of Rawlings' capital
stock at a price of $10.00 per share, subject to certain conditions. Bull Run
would be given 45 calendar days to complete the tender offer. The holders of at
least a majority of the outstanding shares (excluding those held by Bull Run)
would have to tender. Bull Run had to agree to do a back-end cash merger as
promptly as practicable following a successful tender offer, pursuant to which
all remaining stockholders (except any agreeing to stay in) would receive the
same $10.00 per share price. Bull Run further had to agree that if the tender
offer failed, Bull Run would lose its current right to designate two
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members of Rawlings' Board of Directors (the two current designees were to
resign) and Bull Run would surrender its Warrant to purchase 925,804 shares of
Rawlings Common Stock in exchange for the forgiveness of the unpaid half of the
Warrant purchase price. Bull Run paid approximately $1.4 million at the time of
the issuance of the Warrant as the first one-half of the Warrant purchase price.
The January 4 Proposal also stated that Rawlings' Board of Directors "will not
recommend in favor of the [tender] offer and may either remain neutral or
recommend against" the tender offer.
In response to the January 4 Proposal, A&B submitted a letter to Mr.
Easton on January 5, 2000 (the "January 5 Letter") expressing Bull Run's
willingness to accept the January 4 Proposal, subject to certain clarifications
and modifications. A copy of the January 5 Letter is filed as Exhibit 18 to this
Amendment No. 5 to the Schedule 13D. The January 5 Letter clarified that the 45
day time period would begin upon the execution of a definitive agreement between
Bull Run and Rawlings. The letter requested that Rawlings' Board of Directors
use all reasonable efforts to cooperate with Bull Run with respect to the tender
offer, including providing updated financial and operational information,
assisting with required filings and taking whatever action may be necessary, if
any, to allow the tender offer to proceed unrestricted by the provisions of
Section 203 of the Delaware General Corporation Law. The January 5 Letter also
requested that the Board of Directors agree not to recommend against the tender
offer.
On January 6, 2000, Mr. Easton of Skadden and Mr. Opler of A&B spoke by
telephone, during which conversation Mr. Easton stated that the Finance
Committee was not prepared to assist Bull Run in connection with the tender
offer or to use reasonable efforts to cooperate with Bull Run. However, Mr.
Easton did agree that the January 4 Proposal would be modified to include mutual
releases of Rawlings, the Rawlings directors and Bull Run.
The Rawlings Board of Directors met on January 7, 1999 by telephone.
After the Board meeting, Mr. Easton of Skadden telephoned Mr. Opler of A&B to
clarify the Finance Committee's January 4 Proposal and to inform A&B that a
deadline of January 12, 2000 at 5:00 p.m. had been established for Bull Run to
accept or reject the January 4 Proposal. Mr. Easton informed A&B that at the
Board meeting, Mr. O'Hara's severance benefits were increased to include: an
extra two years of employee benefits, an extra year (for a total of three) of
base salary, a $50,000 moving allowance if Mr. O'Hara moves within 18 months and
if the costs are not assumed by another employer, and Mr. O'Hara will forgo the
right to join a country club and, in exchange, the Company will pay a $28,000
key man life insurance premium and forgive a $56,000 loan to Mr. O'Hara.
On January 11, 2000, Mr. Easton of Skadden and Mr. Opler of A&B spoke
by telephone, during which conversation Mr. Easton stated that at a price of
$10.00 per share Rawlings was not prepared to assist Bull Run in connection with
its tender offer. Mr. Easton of Skadden, Mr. Opler of A&B and Bull Run's
securities counsel, Proskauer Rose LLP, had several other telephone
conversations between January 6, 2000 and January 12, 2000.
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On January 12, 2000, Mr. Prather of Bull Run sent a letter to the
Finance Committee expressing Bull Run's eagerness to reach an agreement with
Rawlings by that afternoon. A copy of Mr. Prather's letter to the Finance
Committee dated January 12, 2000 is filed as Exhibit 19 to this Amendment No. 5
to the Schedule 13D. Mr. Prather's letter reiterated the concessions that Bull
Run had already made in the spirit of compromise and outlined the few remaining
issues left to be resolved. The three major issues remaining were (i) whether
Rawlings would allow Bull Run to extend the time period by 13 business days in
the event that Bull Run received comments from the Securities and Exchange
Commission on the tender offer documents, (ii) whether Rawlings would allow Bull
Run and its financing sources an opportunity to conduct bring-down confirmatory
due diligence and (iii) whether any consequences of Bull Run's tender offer
failing should be conditioned on Rawlings and the Finance Committee's acting in
a reasonable manner throughout the process as well as whether Bull Run should
forfeit 1/2 or all of its Warrant and whether Bull Run should lose one or both
of its designees to the Rawlings Board of Directors.
The Finance Committee of Rawlings met on the evening of January 12,
2000 to discuss the proposed Bull Run tender offer. Following the Finance
Committee meeting and at the request of the Finance Committee, Mr. Easton of
Skadden spoke with A&B by telephone and informed A&B of the Finance Committee's
revised proposal, which was represented by the "Summary of Agreed Upon Terms"
later sent to A&B by facsimile. A copy of the "Summary of Agreed Upon Terms" is
filed as Exhibit 20 to this Amendment No. 5 to the Schedule 13D. The revised
proposal again stated that the Finance Committee would be willing to waive the
Standstill Agreement and amend Rawlings' Rights Plan in order to allow Bull Run
to make a cash tender offer for all of the outstanding shares of Rawlings'
capital stock at a price of $10.00 per share, subject to certain conditions. The
terms and conditions of this revised proposal were identical to the January 4
Proposal, except that (i) Rawlings agreed to amend the time frame for completion
of the tender offer to 45 calendar days from the date of the public announcement
of the agreement or, if longer, by 13 business days after the first SEC comments
on the offer documents, if any, are received by Bull Run; and (ii) the only
information or assistance Rawlings agreed to provide Bull Run was the same
package of information that it had recently provided to its new lender, GE
Capital Corp. The Summary of Agreed Upon Terms failed to reflect the statements
that Mr. Easton made regarding mutual releases of Rawlings, the Rawlings
directors and Bull Run. The revised proposal was received by telephone by A&B at
approximately 8:00 p.m. on January 12, 2000 with a deadline for Bull Run to
respond by 9:00 a.m. the following morning.
On the evening of January 12, 2000, A&B and Proskauer Rose spoke by
telephone with Mr. Easton of Skadden who informed them that the Finance
Committee needed a "yes" or "no" answer by 9:00 a.m. A&B and Proskauer Rose
explained that it was Bull Run's view that it was not in the best interests of
Rawlings or its stockholders for a tender offer to be commenced but not
consummated and that Bull Run and its financing sources would require an update
of their respective due diligence investigations so that both Rawlings and Bull
Run would have a high degree of confidence that the tender offer would be
consummated. Mr. Easton stated that the Finance Committee would not give Bull
Run's financing sources even four days to perform due diligence prior to Bull
Run making its tender offer.
Page 11 of 17
<PAGE> 12
Shortly before 9:00 a.m. on the Morning of January 13, 2000, Mr.
Prather, on behalf of Bull Run, sent a letter to the Finance Committee in
response to the "Summary of Agreed Upon Terms." A copy of Mr. Prather's letter
to the Finance Committee dated January 13, 2000 is filed as Exhibit 21 to this
Amendment No. 5 to the Schedule 13D. Mr. Prather stated in the letter that Bull
Run was "anxious to move forward with [the Finance Committee] as promptly as
possible," but that Bull Run would not be able to respond by 9:00 a.m. because
the information Rawlings offered to provide would not be sufficient to allow
Bull Run's financing sources to complete their customary confirmatory due
diligence. Mr. Prather also requested the access and information necessary to
conclude this customary, confirmatory due diligence based on and in response to
Mr. Easton's repeated prior statements that Bull Run would be given no
assistance or cooperation whatsoever. Mr. Prather stated that "[w]e believe this
confirmatory due diligence can be completed in a very short period of time," and
that if Rawlings will agree to allow it, "we are confident that we can resolve
promptly all of the remaining issues in the proposal." Mr. Prather further
reiterated in the letter that Bull Run is "anxious to proceed with [the] tender
offer and [Bull Run] will continue to use [its] best good faith efforts to
resolve any concerns that the Finance Committee might have."
In response to questions directed to A&B by Mr. Easton regarding Mr.
Prather's January 13, 2000 letter, Mr. Prather sent a second letter to the
Finance Committee on the morning of January 13, 2000. A copy of Mr. Prather's
second letter to the Finance Committee dated January 13, 2000 is filed as
Exhibit 22 to this Amendment No. 5 to the Schedule 13D. Mr. Prather clarified
that the "remaining issues" he mentioned in the earlier letter were in fact
"likely minor and easily resolved." First, Bull Run would expect that the 45 day
time period would not commence until completion of the confirmatory due
diligence, estimated to take approximately one business week. The only other
issue remaining was whether Rawlings' Board of Directors would have the
flexibility to recommend against the tender offer, as opposed to remaining
neutral. Mr. Prather explained in the letter that Bull Run had no objection to
the Board of Directors recommending against the tender offer, but that one of
Bull Run's equity sources was not allowed to invest in any "hostile"
transactions and Bull Run had not been able to obtain the equity source's
concurrence that a recommendation against the tender offer would not cause the
transaction to be deemed "hostile."
Rawlings issued a press release on the morning of January 13, 2000
announcing that "as part of its recently concluded exploration of strategic
alternatives, it had extensive discussions with Bull Run . . . concerning the
possible acquisition of Rawlings by an investor group led by Bull Run."
Rawlings' press release further stated that "Bull Run declined to accept the
Finance Committee's proposal before an agreed upon deadline" notwithstanding the
fact that Bull Run responded to the Finance Committee's revised proposal dated
January 12, 2000 with two letters in which it assured Rawlings that the parties
were very close to an agreement on all remaining issues. The press release
further stated that "pursuant to a resolution unanimously approved late last
week by Rawlings' Board of Directors, including Bull Run's two representatives
on the Board, the acquisition
Page 12 of 17
<PAGE> 13
talks between the two companies would cease and Rawlings would continue to focus
on implementing its business plan and improving operating results." However,
Bull Run only agreed to a "drop-dead date" of 5:00 p.m. on January 12, 2000 by
which to submit a proposal to the Finance Committee, and as stated, Bull Run did
in fact submit a proposal to Rawlings by the 5:00 p.m. deadline and continued
negotiating with Rawlings well into the night of January 12, 2000. Neither Bull
Run nor its two representatives on the Board of Directors of Rawlings agreed to
implement Rawlings' three-year business plan. A copy of the press release issued
by Rawlings dated January 13, 2000 is filed as Exhibit 23 to this Amendment No.
5 to the Schedule 13D.
This Amendment No. 5 to the Schedule 13D is being filed to disclose
that Bull Run intends to continue through all lawful means to pursue
negotiations with Rawlings and discussions with lenders and financing sources to
attempt to acquire all of the issued and outstanding Common Stock of Rawlings
not owned by it and certain other current Rawlings stockholders. Bull Run's
plans and proposals, including its December 3 Offer, may relate to or might
result in: (a) the acquisition by Bull Run or a corporation to be formed by Bull
Run and other persons of additional Common Stock of Rawlings; (b) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation involving Rawlings; (c) a sale or transfer of a material amount of
assets of Rawlings or of any of its subsidiaries; (d) a change in the present
board of directors or management of Rawlings, including a change in the number
or term of directors; (e) a material change in the present capitalization and
dividend policy of Rawlings; (f) other material changes in Rawlings' business
and corporate structure; (g) changes in Rawlings' certificate of incorporation,
bylaws or other actions which may impede the acquisition of control of Rawlings
by any person; (h) causing a class of securities of Rawlings to cease to be
authorized to be quoted in an inter-dealer quotations system of a registered
national securities association; (i) a class of equity securities of Rawlings
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Securities Exchange Act of 1934, as amended; or (j) any action similar to
any of those enumerated above.
Although Bull Run intends to continue to attempt through all lawful
means to acquire all of the issued and outstanding Common Stock of Rawlings not
owned by it and certain other current Rawlings stockholders, Bull Run cannot
assure that it will not abandon such efforts, that its efforts will be
successful, or that any acquisition of Rawlings Common Stock will be on terms
previously contemplated as described in this Amendment No. 5 to Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 is amended as follows:
As reported in Amendment No. 3 to the Schedule 13D, in connection with
amending the Rights Agreement dated July 1, 1994 between the Company and
ChaseMellon Shareholder Services, L.L.C., as amended (the "Rights Plan"), to
prevent the Rights Plan from being triggered, Bull Run and the Company entered
into Amendment Number One. Among other things, Amendment Number One provided
that Bull Run would sell in the open market on or before July 1, 1999, 30,000
shares of Common Stock.
Page 13 of 17
<PAGE> 14
On June 30, 1999, Bull Run and the Company agreed to extend the July 1, 1999
deadline for such sale to July 31, 1999. Pursuant to such requirements, Bull Run
has sold in the open market 30,000 shares of Common Stock of the Company,
leaving 806,500 shares owned by Bull Run.
In addition to the 806,500 shares of Common Stock noted above, Bull Run
owns the Warrant to purchase 925,804 shares of Common Stock, subject to
adjustment. Bull Run disclaims beneficial ownership of the shares of Common
Stock issuable upon exercise of the Warrant because the Warrant is not
exercisable until the price of the last reported trade of Common Stock on the
NASDAQ Stock Market is at least $16.50 for twenty (20) consecutive trading days.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Item 6 is hereby amended as follows:
As described in Item 4 of this Amendment No. 5 to the Schedule 13D and
the Exhibits hereto, Bull Run has received certain commitments for debt and
equity financing for the December 14 Offer, including the letters received from
two existing Rawlings stockholders described in Item 4 of this Amendment No. 5
to the Schedule 13D. Bull Run has not yet accepted any of these commitments and,
in order to preserve the confidentiality of the parties to these commitments,
Bull Run has not included copies of these commitments as Exhibits to this
Amendment No. 5 to the Schedule 13D. Further, the names of the other parties to
these commitments have been redacted from the Exhibits to this Amendment No. 5
to the Schedule 13D.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- ------------------------------------------------------------
<S> <C>
1 Letter Confidentiality Agreement between Rawlings Sporting
Goods Company, Inc. and Bull Run Corporation dated August 6,
1999.
2 Letter to Bull Run Corporation from BancBoston Robertson
Stephens Inc. dated August 10, 1999.
3 Letter to Rawlings Sporting Goods Company, Inc. from Bull Run
Corporation dated August 24, 1999.
4 Letter from BancBoston Robertson Stephens Inc. to Steve
Powell, Prudential Securities Inc. dated September 17, 1999.
5 Letter to BancBoston Robertson Stephens Inc. from Bull Run
Corporation dated October 4, 1999.
</TABLE>
Page 14 of 17
<PAGE> 15
<TABLE>
<S> <C>
6 Letter to Mr. Joseph A. Pellegrini, BancBoston Robertson
Stephens, Inc. from Prudential Securities Inc. dated
October 7, 1999.
7 Letter from Bull Run Corporation to Rawlings Sporting Goods
Company, Inc. dated October 25, 1999.
8 Letter from Alston & Bird LLP to Skadden, Arps, Slate, Meagher
& Flom LLP dated October 29, 1999.
9 Letter from Rawlings Sporting Goods Company, Inc. to Bull Run
Corporation dated November 17, 1999.
10 Letter to BancBoston Robertson Stephens Inc. from Bull Run
Corporation dated December 3, 1999.
11 Letter to BancBoston Robertson Stephens Inc. from Bull Run
Corporation dated December 14, 1999.
12 Letter to BancBoston Robertson Stephens Inc. from Bull Run
Corporation dated December 15, 1999.
13 Letter to the Finance Committee of the Board of Directors of
Rawlings Sporting Goods Company, Inc., c/o BancBoston
Robertson Stephens Inc., from Bull Run Corporation dated
December 17, 1999.
14 Letter to the Finance Committee of the Board of Directors of
Rawlings Sporting Goods Company, Inc., c/o BancBoston
Robertson Stephens, Inc., from Bull Run Corporation dated
December 20, 1999.
15 Letter to Andrew N. Baur, Chairman, Finance Committee of the
Board of Directors of Rawlings Sporting Goods Company, Inc.
from Bull Run Corporation dated December 23, 1999.
16 Letter from Andrew N. Baur, Chairman of the Finance Committee
of Rawlings Sporting Goods Company, Inc. to Robert S. Prather,
Jr., President and Chief Executive Officer of Bull Run
Corporation, dated December 23, 1999.
17 Proposal from the Finance Committee of Rawlings Sporting Goods
Company, Inc. to Bull Run Corporation dated January 4, 2000.
18 Letter from Alston & Bird LLP to Skadden, Arps, Slate, Meagher
& Flom LLP dated January 5, 2000.
</TABLE>
Page 15 of 17
<PAGE> 16
<TABLE>
<S> <C>
19 Letter from Bull Run Corporation to the Finance Committee of
Rawlings Sporting Goods Company, Inc. dated January 12, 2000.
20 Summary of Agreed Upon Terms submitted by Skadden, Arps,
Slate, Meagher & Flom LLP to Alston & Bird LLP dated
January 12, 2000.
21 Letter from Bull Run Corporation to the Finance Committee of
Rawlings Sporting Goods Company, Inc. dated January 13, 2000.
22 Letter from Bull Run Corporation to the Finance Committee of
Rawlings Sporting Goods Company, Inc. dated January 13, 2000.
23 Press Release issued by Rawlings Sporting Goods Company, Inc.
dated January 13, 2000.
</TABLE>
Page 16 of 17
<PAGE> 17
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: January 19, 2000
BULL RUN CORPORATION
/s/ Robert S. Prather, Jr.
----------------------------------
Name: Robert S. Prather, Jr.
Title: President and CEO
Page 17 of 17
<PAGE> 1
Exhibit 1
August 6, 1999
Bull Run Corporation
4370 Peachtree Road
Atlanta, GA 30319
Attention: Robert S. Prather, Jr.
CONFIDENTIALITY AGREEMENT
Gentlemen:
In connection with your interest in the proposed transaction (the "Transaction")
involving Rawlings Sporting Goods Company, Inc. (the "Company"), you have
requested that we or our representatives furnish you or your representatives
with certain information relating to the Company. All information (whether
written or oral) furnished (whether before or after the date hereof) by us or
our directors, officers, employees, affiliates, representatives (including,
without limitation, financial advisors, attorneys and accountants) or agents
(collectively, "our Representatives") to you or your directors, officers,
employees, affiliates, representatives (including, without limitation, financial
advisors, attorneys and accountants) or agents or your potential sources of
financing for the Transaction (collectively, "your Representatives") and all
notes, reports, analyses, compilations, forecasts, studies or other documents
prepared by you or your Representatives in whatever form maintained, whether
documentary, electronically stored or otherwise, in connection with your or
their review of, or your interest in, the Transaction which contain or reflect
any such information is hereinafter referred to as the "Information". The term
Information will not, however, include information which (i) is or becomes
publicly available other than as a result of a disclosure by you or your
Representatives or (ii) is or becomes available to you on a nonconfidential
basis from a source which, to the best of your knowledge after due inquiry, is
not prohibited from disclosing such information to you by a legal, contractual
or fiduciary obligation to us.
Accordingly, you and the Company hereby agree that:
1. You and your Representatives (i) will keep the Information confidential
and will not (except as required by applicable law, regulation or legal
process, and only after compliance with paragraph 3 below), without our
prior written consent, disclose any Information in any manner
whatsoever, and (ii) will not use any Information, directly or
indirectly, other than in connection with evaluating the Transaction;
PROVIDED, HOWEVER, that you may reveal the Information to those of your
Representatives (a) who need to know the Information for the purpose of
evaluating the Transaction, (b) who are informed by you of the
confidential nature of the Information and (c) who agree to be bound by
and act in accordance with the terms of this letter agreement. You will
<PAGE> 2
cause your Representatives to observe the terms of this letter
agreement, and you will be responsible for any breach of this letter
agreement by any of your Representatives.
2. Neither you or the Company nor our respective Representatives will
(except as required by applicable law, regulation or legal process,
and, in your case, only after compliance with paragraph 3 below),
without the prior written consent of the other party, disclose to any
person the fact that the Information has been made available to you and
your Representatives, that you have entered into this letter agreement,
that you are considering the Transaction or any other transaction
involving the Company, or that discussions or negotiations are taking
or have taken place concerning the Transaction or involving the Company
or any term, condition or other fact relating to the Transaction or
such discussions or negotiations, including, without limitation, the
status thereof. The term "person," as used in this letter agreement,
shall be broadly interpreted to include, without limitation, any
corporation, company, group, entity, trust, partnership or individual;
the term "affiliate" shall have the meaning set forth in Rule 12b-2
under the Securities Exchange Act of 1934, as amended; and the term
"Company" shall include, without limitation, its subsidiaries and
affiliates.
3. In the event that you or any of your Representatives are requested
pursuant to, or required by, applicable law, regulation or legal
process (including by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand, any
informal or formal investigation by any government or governmental
agency or authority or otherwise) to disclose any of the Information,
you will immediately notify us so that we may seek a protective order
or other appropriate remedy or, in our sole discretion, waive
compliance with the terms of this letter agreement. In such an event,
you will, and you will cause your Representatives to, consult and
cooperate with the Company in seeking such a protective order or other
appropriate remedy. In the event that no such protective order or other
remedy is obtained, or that the Company fails to waive compliance with
the terms of this letter agreement, you will furnish only that portion
of the Information which in the opinion of your counsel is legally
required and will exercise all reasonable efforts to obtain reliable
assurance that confidential treatment will be accorded the Information.
4. If you determine not to proceed with the Transaction, you will promptly
inform our Representative, BancBoston Robertson Stephens Inc. ("BRS"),
of that decision and, in that case, and at any time upon request of the
Company or any of our Representatives, you will either (i) promptly
destroy all copies of the written Information in your or your
Representatives' possession and confirm such destruction to us in
writing or (ii) promptly deliver to the Company at your own expense all
copies of the written Information in your or your Representatives'
possession. Notwithstanding the destruction or delivery of the
materials required by this paragraph, all duties and obligations
existing under this letter agreement (including with respect to any
oral Information) will remain in full force and effect.
5. You acknowledge that neither the Company, nor BRS or its affiliates,
nor our other Representatives, nor any of our or their respective
officers, directors, employees, agents or controlling persons within
the meaning of Section 20 of the Securities Exchange Act of 1934, as
-2-
<PAGE> 3
amended, makes any express or implied representation or warranty as to
the accuracy or completeness of the Information, and you agree that no
such person will have any liability relating to the Information or for
any errors therein or omissions therefrom. You further agree that you
are not entitled to rely on the accuracy or completeness of the
Information and that you will be entitled to rely solely on such
representations and warranties as may be included in any definitive
agreement with respect to the Transaction, subject to such limitations
and restrictions as may be contained therein.
6. You and the Company are aware, and you and the Company will advise your
and our respective Representatives who are informed of the matters that
are the subject of this letter agreement, of the restrictions imposed
by the United States securities laws on the purchase or sale of
securities by any person who has received material, non-public
information from the issuer of such securities and on the communication
of such information to any other person when it is reasonably
foreseeable that such other person is likely to purchase or sell such
securities in reliance upon such information.
7. You agree that, for a period of one year from the date of this letter
agreement, neither you nor any of your affiliates will, without the
prior written consent of the Company or its Board of Directors: (i)
acquire, offer to acquire or agree to acquire, directly or indirectly,
by purchase or otherwise, any voting securities or direct or indirect
rights to acquire any voting securities of the Company or any
subsidiary thereof, or any successor to or person in control of the
Company, or any assets of the Company, or any subsidiary or division
thereof or of any such successor or controlling person, (ii) make, or
in any way participate in, directly or indirectly, any "solicitation"
of "proxies" (as such terms are used in the rules of the Securities
Exchange Commission) to vote, or seek to advise or influence any person
or entity with respect to the voting of, any voting securities of the
Company, (iii) make any public announcement with respect to, or submit
a proposal for, or offer of (with or without conditions) any
extraordinary transaction involving the Company or its securities or
assets, (iv) form, join or in any way participate in a "group" (as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) in connection with any of the foregoing or (v) request the
Company or any of our Representatives, directly or indirectly, to amend
or waive any provision of this paragraph. You will promptly advise the
Company of any inquiry or proposal made to you with respect to any of
the foregoing. You and the Company acknowledge and agree that the
restrictions applicable to you and set forth in this paragraph 7 are in
addition to, and are not intended to amend or otherwise modify, the
restrictions applicable to you and set forth in the Standstill
Agreement dated as of November 21, 1997 between the Company and you, as
amended (as so amended, the "Standstill Agreement").
8. You agree that, for a period of three years from the date of this
letter agreement, you will not, directly or indirectly, solicit for
employment or hire any officer or other key employee of the Company or
any of its subsidiaries with whom you have had contact, or who became
known to you in connection with your consideration of the Transaction,
or encourage any such officer or employee to terminate his or her
employment with the Company; PROVIDED, HOWEVER, that the foregoing
provision will not prevent you from employing any such person who
contacts you on his or her own initiative without any direct or
indirect solicitation by or encouragement from you.
-3-
<PAGE> 4
9. You agree that all (i) communications regarding the Transaction, (ii)
requests for additional information, facility tours or management
meetings and (iii) discussions or questions regarding procedures with
respect to the Transaction, will be first submitted or directed to BRS
and not to the Company, provided that the restrictions set forth in
this sentence shall not, and are not intended to, restrict any actions
taken by any person designated by you to serve on the Company's Board
of Directors in such person's capacity as a director of the Company.
Subject to the last sentence of this paragraph 9, you acknowledge and
agree that (a) we and our Representatives are free to conduct the
process leading up to a possible Transaction as we and our
Representatives, in our sole discretion, determine (including, without
limitation, by negotiating with any prospective buyer and entering into
a preliminary or definitive agreement without prior notice to you or
any other person), (b) we reserve the right, in our sole discretion, to
change the procedures relating to our consideration of the Transaction
at any time without prior notice to you or any other person, to reject
any and all proposals made by you or any of your Representatives with
regard to the Transaction, and to terminate discussions and
negotiations with you or any other person at any time and for any
reason and (c) unless and until a written definitive agreement
concerning the Transaction has been executed and delivered, neither we
nor any of our Representatives will have any liability to you with
respect to the Transaction, whether by virtue of this letter agreement,
any other written or oral expression with respect to the Transaction or
otherwise. You and the Company acknowledge and agree that no provision
set forth in the immediately preceding sentence shall, or is intended
to, limit the Company's obligations set forth in Section 3A.1 of the
Standstill Agreement, subject to the terms and conditions thereof.
10. You and the Company acknowledge that remedies at law would be
inadequate to protect us against any actual or threatened breach of
this letter agreement by either party or such party's Representatives,
and, without prejudice to any other rights and remedies otherwise
available, you and the Company agree to the granting of injunctive
relief in favor of the non-breaching party without proof of actual
damage. In the event of litigation relating to this letter agreement,
if a court of competent jurisdiction determines in a final, nonappeable
order that this letter agreement has been breached by any party or any
party's Representatives, then such party will reimburse the
non-breaching party for its costs and expenses (including, without
limitation, legal fees and expenses) incurred in connection with all
such litigation.
11. If any term or provision of this letter agreement, or any application
thereof to any circumstances, shall, to any extent and for any reason,
be held to be invalid or unenforceable, the remainder of this letter
agreement, or the application of such term or provision to
circumstances other than those to which it is held invalid or
unenforceable, shall not be affected thereby and shall be construed as
if such invalid or unenforceable provision had never been contained
herein and each term and provision of this letter agreement shall be
valid and enforceable to the fullest extent permitted by law. You and
the Company agree that no failure or delay by the other party in
exercising any right, power or privilege hereunder will operate as a
waiver thereof, nor will any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any
right, power or privilege hereunder.
-4-
<PAGE> 5
12. This letter agreement will be governed by and construed in accordance
with the laws of the State of Delaware applicable to contracts between
residents of that State and executed in and to be performed in that
State, without giving effect to principles of conflicts of law.
13. Your obligations of confidentiality under paragraphs 1 and 2, and our
obligations under paragraph 2, of this letter agreement shall expire
three years from the date of this letter agreement.
14. Any notice required to be given under this letter agreement shall be
deemed received on the day when personally delivered or confirmed
facsimile transmission, and on the next business day after being
deposited with a nationally recognized overnight courier.
15. This letter agreement contains the entire agreement between you and the
Company concerning the confidentiality of the Information and
supersedes all prior written and oral communications and agreements
relating to the subject matter hereof. No amendment or other
modifications of this letter agreement or waiver of the terms and
conditions hereof will be binding upon you or the Company, unless
approved in writing by each of you and the Company. This letter
agreement shall inure to the benefit of any successor in interest to
the
-5-
<PAGE> 6
Company, as well as of any person that may acquire, after the date
hereof, any subsidiary or division of the Company with respect to
Information concerning the business or affairs of such subsidiary or
division. This letter agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which shall
constitute one and the same agreement.
Very truly yours
Rawlings Sporting Goods Company, Inc.
BY: BANCBOSTON ROBERTSON STEPHENS INC.
ON BEHALF OF RAWLINGS
By: ______________________________
Name: ___________________________
Title: ____________________________
Agreed and accepted:
BULL RUN CORPORATION
By: /s/ Robert S. Prather
-----------------------------
Name: Robert S. Prather
Title: Pres CEO
-6-
<PAGE> 1
Exhibit 2
[BancBoston Robertson Stephens letterhead]
August 10, 1999
Bull Run
4370 Peachtree Road, NE
Atlanta, GA 30319
Dear Mr. Prather:
As you are aware, Rawlings Sporting Goods Company, Inc. ("Rawlings" or the
"Company") is exploring a possible sale or recapitalization transaction.
Rawlings seeks to maximize the value realized for the Company, and looks forward
to completing the transaction in a timely manner. The Company favors a proposal
that would result in the prompt execution of a definitive agreement and a
closing of the agreement soon thereafter. In connection with your interest in
exploring a possible transaction involving Rawlings, we have outlined the
process anticipated in the review of preliminary proposals below.
We are requesting that you submit a written indication of interest to BancBoston
Robertson Stephens no later that 5pm PT, Thursday, August 19, 1999. This
non-binding indication of interest should include (1) a preliminary estimate of
the value range contemplated and the basis for such valuation; (2) the proposed
transaction structure, including form of consideration; (3) the availability and
certainty of financing for the transaction; (4) a list of additional information
required to complete your investigation; (5) a list of corporate, shareholder or
regulatory approvals, or any conditions to financing required to consummate a
transaction; (6) an estimate of time required to consummate the transaction; and
(7) several dates your team would be available to meet with Rawlings'
management.
Following our review of preliminary proposals, we intend to invite a limited
number of interested parties to proceed with an in-depth investigation of
Rawlings with a view toward making a definitive proposal. We have reserved the
weeks of September 13th and 20th for management presentations and access to data
room materials. It is our intention to distribute a draft purchase and sale
agreement to interested parties during the management presentation with final,
binding bids due on October 4th.
If you have any questions, please do not hesitate to contact me (415) 676-2945
or Todd Rosoff at (415) 248-4724. We look forward to our continued discussions
on this matter. Please notify us as soon as possible of any additional
information or conversations with Rawlings' management that you will require
prior to Thursday, September 13, 1999.
Sincerely,
/s/ Anand Gowda
----------------
Anand Gowda
Senior Associate
<PAGE> 1
Exhibit 3
[Bull Run Corporation letterhead]
August 24, 1999
Rawlings Sporting Goods Company, Inc.
c/o BancBoston Robertson Stephens
Suite 2600
555 California Street
San Francisco, California 94104
Attention: Anand Gowda
Dear Mr. Gowda:
In response to your letter of August 10, 1999, Bull Run Corporation
("Bull Run") is pleased to submit this preliminary indication of interest in
acquiring Rawlings Sporting Goods Company, Inc. ("Rawlings"). We are very
excited about the possibility of acquiring Rawlings and working with its
personnel to build upon the strength of the Rawlings brand and its position as a
market leader. Our proposal addresses the seven items identified in your August
10 letter. However, please call me at 404-266-8333 should you have any questions
or need any additional information.
1. Preliminary Estimate of Value Range. Based upon our review of
publicly available information and the August, 1999 Confidential Descriptive
Memorandum, we propose to purchase the issued and outstanding capital stock of
Rawlings for a price in the range of $12 per share to $16 per share.
2. Proposed Transaction Structure. Bull Run, or a related entity, will
pay cash at closing for the issued and outstanding capital stock of Rawlings. In
the interest of time (see paragraph 6 below), we anticipate that we would
structure the transaction as either a cash merger or a tender offer.
3. Financing. Bull Run will raise the necessary financing through a
combination of internal and external sources of capital, including through Bull
Run's existing lending relationship with [_______________](1). We are working
with Prudential Securities Incorporated to assist us in raising and/or
providing any required financing to consummate the acquisition. Bull Run is
confident it can raise the necessary financing on a timely basis.
- -----------
(1) The name of the lender has been redacted to maintain its confidentiality.
<PAGE> 2
Rawlings Sporting Goods Company, Inc.
c/o BancBoston Robertson Stephens
August 24, 1999
Page 2
4. Additional Required Information. We will want to conduct a routine
due diligence review and can send to you a due diligence request list at your
convenience. However, we understand that you are assembling a data room and it
may be more efficient and convenient for you to provide us with an index of the
materials available or to be available in the data room, so that we can identify
any additional information that we would like to review.
In all events, we would like to receive copies of all material
contracts at your earliest convenience, including all license agreements, all
supply agreements (foreign and domestic), all employment or severance
agreements, the aluminum bat manufacturing agreement, all royalty agreements
with the top 50 players and coaches and the contracts with Major League Baseball
and the NCAA.
5. List of Required Approvals. The only approvals of which we are aware
are (i) the approval of the Bull Run Board of Directors, (ii) the filing of the
pre-merger notification and report form under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the expiration of the waiting period
under such Act, and (iii) to the extent required by their respective contracts
with Rawlings, the approval of Major League Baseball and the NCAA.
6. Estimated Time Required to Consummate the Transaction. Through its
investment in Rawlings, Bull Run is confident that it can complete its due
diligence and consummate the acquisition expeditiously. We have assembled a due
diligence team consisting of Bull Run's management, Prudential Securities, our
legal counsel, Alston & Bird LLP, and our independent auditors, Ernst & Young
LLP. This team is positioned to commence our due diligence review as soon as
Rawlings will provide us access to the appropriate personnel and materials.
Subject to availability of appropriate due diligence materials and
personnel, we believe that we can complete the transaction well within the time
requirements of the Rawlings Board of Directors.
7. Available Dates. Our team is available to meet with Rawlings
management as early as September 1, 1999 or as soon thereafter as the data room
materials and management presentations are completed.
As you indicated, this letter sets forth only a preliminary,
non-binding indication of interest with respect to Bull Run's proposed
acquisition of Rawlings and does not constitute a binding agreement or offer to
enter into a binding agreement. Accordingly, no contract or agreement providing
for any transaction involving Rawlings or Bull Run shall be deemed to exist
unless and until a final definitive agreement has been executed and delivered.
Thank you in advance for your consideration; we look forward to hearing
from you soon.
Sincerely yours,
Bull Run Corporation
/s/ Robert S. Prather, Jr.
---------------------------------------
Robert S. Prather, Jr.
President and Chief Executive Officer
RSP:so
<PAGE> 1
EXHIBIT 4
[BancBoston Robertson Stephens Letterhead]
September 17, 1999
Steve Powell
Prudential Securities Inc.
Fourteen Piedmont Center, Suite 310
Atlanta, GA 30305
Dear Mr. Powell:
Thank you for your continued interest in pursuing a business combination
transaction with our client, Rawlings Sporting Goods Company, Inc. ("Rawlings"
or the "Company"). On behalf of Rawlings, I would like to outline the
procedures and timeline anticipated with respect to the submission of final,
binding offers ("Offers") to acquire Rawlings. As we have discussed, the
process is proceeding on an expedited basis.
We are enclosing the form of transaction agreement (the "Agreement") that we
are asking all prospective bidders to mark-up to show any proposed
modifications or additional terms and conditions they suggest or require as
part of their definitive proposal. As you will see, we have structured the
proposed transaction as a two-step cash tender offer followed by a cash merger.
However, we are prepared to consider alternative transaction structures if you
prefer. You will receive a copy of the Company Disclosure Schedule referred to
in the Agreement within the next week.
All proposed changes should be marked clearly on the enclosed form of
Agreement. PLEASE DO NOT RETYPE THE AGREEMENT, AS THIS WILL DELAY ITS REVIEW.
Any proposed changes to the Agreement will be an important and integral
component of your final Offer. We strongly encourage you to discuss any
questions you may have about the Agreement and any changes you expect to
suggest to the Agreement with us or with Skadden, Arps, Slate, Meagher & Flom
LLP, which is acting as special counsel to the Finance Committee of Rawlings'
Board of Directors, prior to the submission of your Offer in order that all
Offers can be reviewed on a comparable basis. Questions
1
<PAGE> 2
or comments concerning the Agreement should be directed to Richard Easton at
(302) 651-3040 or Ron Fisher at (302) 651-3125 at Skadden, Arps.
In setting forth the due date for Offers, we have allowed substantial time to
complete your due diligence, arrange any external financing and take all other
steps necessary to provide a definitive Offer. Accordingly, your Offer should
include the following:
1. The price that you propose to pay for 100% of the outstanding shares of
the Company, including stock options and other common stock equivalents.
Only Offers which are specific as to the amount of consideration will be
considered. Any Offer which contains provisions which trigger an automatic
increase in the consideration offered depending upon the consideration
offered by others will be declared void and will not be considered.
2. A list of all corporate, shareholder, regulatory or other approvals, and
any material conditions, required to consummate the transaction and your
timetable for obtaining these approvals.
3. A description of your plans regarding senior management and employees of
Rawlings.
4. A description of your plans for financing the acquisition. Offers that are
conditioned on financing will be at a considerable disadvantage. To the
extent that your Offer is contingent upon the receipt of third party
financing, provide a description of the expected sources of funds, the
status of the discussions with your financing sources and the steps
necessary to obtain funding commitments, if not yet obtained (with as much
specificity as possible in order to assist the Company in its assessment
of the value of your proposed consideration). Please also provide us with
the names (and contact telephone numbers) of the lending institutions and
equity participants involved so that we may contact them to discuss the
details of such financing.
5. A mark-up of the Agreement. As noted above, the extent and nature of any
changes to the Agreement suggested or required by prospective bidders will
be taken into consideration by Rawlings in evaluating Offers. Any changes
that could subject Rawlings to continuing liability or make an Offer
subject to further business investigation will place a prospective bidder
at a competitive disadvantage. Any changes which could delay consummation
or increase the risk of non-consummation of the purchase also will be
viewed negatively.
2
<PAGE> 3
6. A statement that you are prepared to execute the marked-up Agreement as
submitted and that all necessary internal corporate approvals have been
received.
All Offers which are submitted must be in accordance with the rules set forth
in this letter. Rawlings, with the advice and assistance of BancBoston
Robertson Stephens and its counsel, will evaluate the Offers expeditiously. In
reviewing the Offers, Rawlings and BancBoston Robertson Stephens may need to
discuss with interested parties the terms and conditions of their Offers for
the purpose of clarifying such terms and conditions. As a result, please
indicate the names and contact numbers (including home and weekend telephone
numbers) of those individuals, including advisors and financing sources, who
should be contacted in order to discuss your Offer.
To protect the confidentiality of the Offers which are submitted, Rawlings will
not disclose the terms of any Offer or the identity of any party which has
submitted an Offer except for disclosures made to governmental authorities and
Rawlings' financial and other advisors and as may be required by law.
The following rules will govern the submission of Offers:
1. Three copies of your complete Offer should be sent by messenger to the
attention of Joe Pellegrini, Principal, BancBoston Robertson Stephens, 555
California, 26th Floor, San Francisco, California, 94123, no later than
5 p.m. San Francisco time, on Monday, October 4, 1999.
2. Offers cannot be made by any person acting as agent for another, whether
his principal or principals are disclosed or undisclosed, and accordingly
only Offers from a principal will be considered.
3. Rawlings reserves the right to discuss with any prospective bidder the
terms of its Offer for the purpose of clarifying its terms. However, any
such discussions are not designed to provide an opportunity for the
prospective bidder to rebid or otherwise increase the amount of the Offer.
4. Each Offer will constitute a binding offer for fifteen business days after
the final due date of submission, unless it is sooner returned or rejected.
5. An Offer will be deemed accepted only when a definitive Agreement shall
have been executed and delivered by Rawlings. Until such time, Rawlings
shall not
3
<PAGE> 4
have any obligations to any prospective bidder, and following such time,
Rawlings' only obligations will be those set forth in the definitive Agreement.
6. Rawlings reserves the right, in its sole discretion and without any
liability therefor, to withhold any or all information from any party or to
modify the terms and conditions of or terminate this process at any time
(including, negotiating with any prospective bidder and entering into a
definitive Agreement without prior written notice to any person). The
Company also reserves the right to reject any and all Offers without
providing reasons therefor.
As of 5 p.m. San Francisco time, on Monday, October 4, 1999, we will assume
that all parties have submitted their best Offer. You should not assume that we
will provide you with an opportunity to increase your Offer. It is Rawlings'
intention to promptly evaluate the Offers with the objective of selecting a
purchaser and entering into a definitive Agreement and consummating a
transaction as expeditiously as possible. Therefore, prospective bidders should
be available to commence negotiations at the offices of Stinson, Mag & Fizzell,
P.C. in St. Louis beginning soon thereafter.
Should you have any questions regarding the procedures outlined in this letter,
please do not hesitate to contact me at (415) 693-3558 or Anand Gowda at (415)
676-2945. Management or employees of Rawlings should not be contacted directly.
On behalf of Rawlings, we look forward to receiving your Offer.
Sincerely,
/s/ Joseph A. Pellegrini
Joseph A. Pellegrini
Principal
4
<PAGE> 1
Exhibit 5
[BULL RUN CORPORATION LETTERHEAD]
October 4, 1999
VIA FACSIMILE AND UPS
BancBoston Robertson Stephens, Inc.
Suite 2600
555 California Street
San Francisco, California 94104
Attention: Mr. Joseph A. Pellegrini, Principal
Re: Proposed Acquisition of Rawlings Sporting Goods Company, Inc.
Dear Sir:
Pursuant to your letter of September 17, 1999, Bull Run Corporation
("Bull Run") is pleased to submit this offer by a corporation to be formed by
Bull Run ("Purchaser") to acquire all of the issued and outstanding shares of
Common Stock (including stock options and other common stock equivalents) of
Rawlings Sporting Goods Company, Inc. ("Rawlings" or the "Company"), except
those shares of Common Stock owned by Bull Run and any other existing
stockholders who elect to retain their Common Stock in the Company (the
"Stock"). Subject to the Company's prior consent, Bull Run will offer to certain
existing shareholders of the Company the option to retain their Common Stock in
the Company in connection with the acquisition. Bull Run anticipates that
stockholders representing up to approximately 2.5 million shares of Rawlings'
Common Stock will elect to retain their shares in connection with the proposed
transaction. The terms of our proposal are as follows:
1. CONSIDERATION. Purchaser will offer each Rawlings stockholder (and
each holder of stock options and other common stock equivalents) the option of
accepting either of the following two alternatives: (i) $12.25 per share payable
in cash for 100% of each Rawlings stockholder's Stock or (ii) $13.00 per share
payable in cash for up to 92% of each Rawlings stockholder's Stock, with each
Rawlings stockholder retaining 8% or more of his, her or its Stock.
2. CORPORATE, REGULATORY AND OTHER APPROVALS; TIMING. While Bull Run's
Board of Directors, through its Executive Committee, has given preliminary
approval for this bid, we expect that either the Executive Committee or the full
Board of Directors also will meet to review the final Agreement and Plan of
Merger (the "Agreement") contemporaneously with the similar meeting of Rawlings'
Board of Directors. Otherwise, we are aware of no corporate, regulatory or other
approvals that are not contemplated in the Agreement, such as filing the
<PAGE> 2
BancBoston Robertson Stephens, Inc.
October 4, 1999
Page 2
Pre-Merger Notification and Report Form and expiration of the applicable waiting
period required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and obtaining any necessary consents from parties to Rawlings'
contracts.
We intend to consummate this acquisition as quickly as possible. As we
and our advisors have discussed with you previously, as of this date we have not
completed our due diligence review of Rawlings. Prior to executing the revised
Agreement (TAB 1), we will need to complete our due diligence review in order to
confirm (i) the accuracy of the representations and warranties of Rawlings made
in the revised Agreement, (ii) the contents of the Disclosure Schedule under the
Agreement and (iii) other key business items. Assuming that we will have prompt
and complete access to the appropriate personnel and information, we anticipate
that we can complete our due diligence within approximately twenty days after
Rawlings' acceptance of Bull Run's bid.
We believe we can work with Rawlings and its advisors to commence the
tender offer within 30-40 days after we have been notified that Rawlings has
accepted our bid, including the preparation and filing of the appropriate
securities filings and execution of the final Agreement.
3. MANAGEMENT AND EMPLOYEES OF RAWLINGS. We are still formulating our
plans with respect to Rawlings' management and employees. However, we plan to
appoint a new Chief Executive Officer and we will evaluate each member of senior
management and each employee on an individual basis. We anticipate finalizing
our personnel plan in connection with our due diligence review and will advise
you promptly following our development of such a plan.
4. FINANCING. Bull Run's bid is contingent on the receipt of third
party financing. We anticipate financing this transaction through three primary
sources: (i) retained equity investments by current Rawlings stockholders; (ii)
senior and mezzanine debt financing; and (iii) private equity investments.
o RETAINED EQUITY. Bull Run will retain its current ownership of
Stock. In addition, we anticipate that the Rawlings
stockholders will elect to retain significant equity
ownership. We expect the aggregate retained equity (including
Bull Run Common Stock) will be approximately 30% to 40% of the
issued and outstanding shares of Common Stock of Rawlings.
o SENIOR AND MEZZANINE DEBT FINANCING. We have received a
proposal from [__________________](1) for up to $105 million
of debt financing. In addition, we anticipate receiving
proposals from other lenders, including existing lenders to
Bull Run.
- --------
(1) The name of the debt financing source has been redacted to maintain its
confidentiality.
<PAGE> 3
BancBoston Robertson Stephens, Inc.
October 4, 1999
Page 3
o PRIVATE EQUITY INVESTMENT. We have received proposals for
equity investments sufficient to consummate the proposed
acquisition from investors including [__________________](2),
[__________________](2), [__________________](2) and
[__________________](2).
These proposals are expressly conditioned on the completion of our due
diligence review to our sole satisfaction and the execution of financing
agreements with each of these prospective financing sources. The contact
information for each of our proposed financing sources is attached at TAB 2.
5. AGREEMENT AND PLAN OF MERGER. The Agreement attached at TAB 1 has
been marked to show all of our suggested changes.
In accordance with your September 17, 1999 letter, this acquisition
proposal constitutes a binding offer for fifteen business days from today.
We are very excited about the possibility of joining forces with
Rawlings, its management and its employees. I look forward to the opportunity to
speak with you about our proposal in greater detail. The names and contact
numbers of Bull Run's advisors and me are attached at TAB 3.
Sincerely yours,
Bull Run Corporation
/s/ Robert S. Prather, Jr.
----------------------------------------
Robert S. Prather, Jr.
President and CEO
cc: Mr. Frederick J. Erickson
Mr. Stephen W. Powell
Mr. Stephen A. Opler
- --------
(2) The name of each of the equity financing sources has been redacted to
maintain its confidentiality.
<PAGE> 1
EXHIBIT 6
[Prudential Securities Inc. Letterhead]
CONFIDENTIAL
October 7, 1999
Mr. Joseph A. Pellegrini
BancBoston Robertson Stephens Inc.
555 California Street
Suite 2600
San Francisco, CA 94104
Dear Joe:
Thank you for the opportunity yesterday to more fully discuss the offer
submitted by Bull Run Corporation ("Bull Run") to acquire the outstanding
capital stock of Rawlings Sporting Goods Company, Inc. ("Rawlings"). This
letter is in response to the questions you raised and will, I hope, clarify
the key elements of Bull Run's offer. As you know, Bull Run and its advisors,
including Alston & Bird, Ernst & Young and Prudential Securities Incorporated,
have invested a substantial amount of time and resources towards completing a
successful business combination with Rawlings.
Transaction Structure. Bull Run's offer is constructed to offer each Rawlings
shareholder a choice of selling all or a portion (up to 92%) of their owned
shares. Shareholders may tender 100% of their shares in exchange for $12.25 per
share in cash ("Option A"). Alternatively, Shareholders may elect to retain an
equity interest in Rawlings by tendering from 0% to 92% of their shares at
$13.00 per share in cash ("Option B").
For example, a shareholder owning 100 shares of Rawlings stock may (a) tender
100 shares in exchange for $12.25 per share in cash, or $1,225.00, under Option
A; or (b) tender up to 92 shares for $13.00 per share in cash under Option B.
Assuming the tender of 92 shares, the shareholder would receive $1,196.00 in
cash and retain ownership of 8 Rawlings shares. Under Option B, the shareholder
could tender any amount of shares between zero and 92 for $13.00 per share in
cash; the amount of cash received and shares retained would vary accordingly.
<PAGE> 2
Bull Run's rationale for providing shareholders Option B is based upon Bull
Run's intention to preserve Rawlings as a public company for strategic reasons.
Bull Run and its advisors believe that Rawlings will have future opportunities
to grow its business with funding provided by the capital markets. The
opportunity to preserve a public company will mitigate the market timing risks
and costs associated with an initial public offering and will enable Rawlings
to access capital on a more efficient and cost-effective basis. Although
Rawlings will initially have a limited public float and trading market, we
believe that liquidity will improve in the intermediate term. As we have
discussed, Bull Run's equity partners principally represent professional
institutional equity investors. We anticipate that Rawlings will provide these
investors with registration rights according to customary terms and conditions
which are appropriate to protect the interests of all Rawlings shareholders. We
also anticipate that Rawlings will solicit and secure capital markets
sponsorship from qualified, consumer products oriented investment banks,
including Prudential Securities.
In addition to Bull Run's retention of all of its owned shares in Rawlings, Bull
Run believes that other Rawlings shareholders will elect to participate with
Bull Run in the acquisition of Rawlings. However, Bull Run is concerned that
Rawlings would assert that Bull Run is precluded from securing any such
commitments due to existing agreements with Rawlings. As we discussed, we
request that Rawlings confirm that Bull Run may solicit the support and
participation of selected existing Rawlings shareholders, which will enhance
the options for all shareholders. As you requested, Bull Run is confident that
it can secure commitments from these shareholders prior to executing a
definitive agreement with Rawlings. The shareholders Bull Run wishes to
consider involving in this transaction include _____________________(1)
(together with Bull Run, the "Retained Shares").
SOURCES AND USES OF FUNDS AND CAPITALIZATION. Per your request, we have
attached as Exhibits 1 and 2 summaries of the expected sources and uses of
funds and capital structures for Option A and Option B. As you will note, we
expect to refinance Rawlings' existing bank credit facilities in order to
access adequate debt capital to fund the transaction and operate the business.
We expect that the tender offer will be financed principally with equity
capital provided by Bull Run and its equity partners and partially with debt.
Assuming that all shareholders elect to tender all of their shares under Option
A for $12.25 per share in cash, Bull Run expects to require funding of
approximately $68 million, plus fees and expenses. This assumes approximately
2.4 million Retained Shares, with the holders of the remaining approximately
5.5 million Rawlings shares (out of approximately 7.9 million total outstanding
Rawlings shares) tender all of their shares. Any shareholders electing Option
B, will serve to reduce the total funding required to consummate the
transaction.
The final capital structure depends, in part, on the final determination of
recapitalization accounting vs. purchase accounting treatment. Assuming that
purchase accounting is applied, we expect the final capital structure will
include approximately $80 million of
- --------
(1) The name of each of the stockholders has been redacted to maintain its
confidentiality.
2
<PAGE> 3
outstanding borrowings, at least $20 million of borrowing availability under a
senior revolving credit facility to support working capital requirements and
approximately $35 million to $40 million of shareholders' equity. In addition,
we forecast that Rawlings will generate at least $15 million of net cash
proceeds within the first year from the liquidation of excess working capital
and other tangible assets, which will be applied to repay outstanding
borrowings. Refer to Exhibits 1 and 2 for the estimated pro forma
capitalization under each of Option A and Option B.
PRO FORMA ORGANIZATION STRUCTURE AND OWNERSHIP. With respect to the mechanics
of the transaction, we contemplate the organization of an acquisition company
capitalized by Bull Run, its equity partners and its lenders. The acquisition
company would effect the tender offer for the outstanding Rawlings shares. The
acquisition company would then merge into Rawlings with Rawlings as the
surviving entity and with shares in Rawlings exchanged for all of the
outstanding shares of the acquisition company. Bull Run currently contemplates
that existing Rawlings shareholders will elect to retain 2.4 million to 3.0
million or more shares with new Rawlings shareholders owning approximately 3.5
million to 4.5 million shares. Our counsel will be pleased to discuss
separately the specific elements of the tender offer and subsequent merger.
VALUATION. With respect to your request for our assessment of the
post-transaction valuation of Rawlings, we believe that the Rawlings share
price will appreciate materially from the tender offer valuation over an 18-24
month period as the impact of Bull Run's business plan for Rawlings generates
expected improvements in profitability, cash flow and competitive position.
However, as we discussed, Rawlings will have limited float and trading
liquidity in the near term, which may result in a downward bias on the stock.
Although we can provide no assurance, we expect the share price to trade near
the tender offer valuation in the near term with upward bias as calendar 2000
results are reported and capital markets sponsorship improves.
TIMING. Based on the status of our due diligence investigation to date, we
contemplate that each of Bull Run, its advisors and its investment partners can
complete due diligence within a 20 day time frame. We would then expect to be
in a position to negotiate a definitive agreement without any contingencies,
including financing contingencies, other than, possibly, provisions for
regulatory approvals. Upon completion of our due diligence investigation, we
would expect a period of no more than ten days or so to execute a definitive
agreement and be in a position to proceed with the tender offer immediately
thereafter. However, this time frame is subject to Bull Run, Rawlings and their
respective advisors confirming the scope and timing of our due diligence
investigation and the availability of Rawlings' financial and operating data,
personnel and facilities.
DEFINITIVE AGREEMENT. I understand that our respective counsel have discussed
the representations, warranties and tender offer conditions and have agreed
that mutually satisfactory terms and conditions can be negotiated.
3
<PAGE> 4
Bull Run Board Approval. Per your request, attached as Exhibit 3 are the minutes
from the meeting of the Executive Committee of Bull Run's Board of Directors,
which confirm Bull Run's authority to submit the offer to acquire Rawlings and
to proceed to consummate such a transaction as set forth in Bull Run's letter to
you dated October 4, 1999.
The entire Bull Run team continues to be excited by the prospect of moving
aggressively to consummate the proposed transaction. We are available to you at
your convenience for further discussion. You can reach me via my office at
404-842-5902 or via my pager at 800-608-7023. We appreciate your kind
consideration.
Sincerely,
/s/ STEPHEN W. POWELL
- ---------------------
Attachments
Copy: Robert S. Prather, Jr.
Stephen A. Opler
Denis Kelly
Timothy O'Neil
Tracy Rosenbluth
4
<PAGE> 5
EXHIBIT 6
Exhibit 1
- --------------------------------------------------------------------------------
Option A - $12.25 Purchase Price for 5.4 million shares Prudential
($ in thousands) Securities
<TABLE>
<CAPTION>
Sources of Funds Uses of Funds
- ------------------------------------------ ------------------------------------------
<S> <C> <C> <C>
Bank revolver $ 26,148 Purchase of equity $ 67,124
Term loan 55,000 Repayment of existing debt 52,699
New Equity 45,000 Total fees and expenses 7,944
Existing cash 1,619 --
-------- --------
Total $127,767 $127,767
======== ========
Capitalization
- ----------------------------------------------
Pro Forma
As Adjusted
August 31, 1999
---------------
Bank revolver $ 26,148
Term loan 55,500
Other long-term debt --
--------
Total debt $ 81,648
Total stockholders' equity 34,056
--------
Total capitalization $115,704
========
</TABLE>
- -------------
* Purchase accounting assumed as conservative case.
<PAGE> 6
Exhibit 2
- --------------------------------------------------------------------------------
Option B - $13.00 Purchase Price for 4.8 million shares (Prudential
($ in thousands) Securities
Logo)
<TABLE>
<CAPTION>
Sources of Funds Uses of Funds
- ---------------------------------------- -----------------------------------------
<S> <C> <C> <C>
Bank revolver $ 22,382 Purchase of equity $ 63,452
Term loan 55,000 Repayment of existing debt 52,699
New Equity 45,000 Total fees and expenses 7,850
Existing cash 1,619 -
-------- --------
Total $124,001 $124,001
======== ========
Capitalization
- --------------------------------------------
Pro Forma
As Adjusted
August 31, 1999
---------------
Bank revolver $ 22,382
Term loan 55,500
Other long-term debt -
--------
Total debt $ 77,882
Total stockholders' equity 34,150
--------
Total capitalization $112,032
========
</TABLE>
- ----------------
* Purchase accounting assumed as conservative case.
<PAGE> 7
MINUTES OF BULL RUN CORPORATION
EXECUTIVE COMMITTEE MEETING
The Executive Committee of Bull Run Corporation, J. Mack Robinson and
Robert S. Prather, Jr., met on September 25, 1999. Robert S. Prather acted as
Secretary of the meeting. The Executive Committee authorized Bull Run
Corporation to lead a group of equity investors and current Rawlings
shareholders in structuring a proposal to acquire all or any portion of
Rawlings' issued and outstanding capital stock not owned by Bull Run Corporation
or certain other investors who elect to retain their equity ownership in
Rawlings. It is anticipated that Rawlings will remain an independent public
company with a recapitalized balance sheet, with equity owned by public
shareholders who elect to retain their equity ownership in Rawlings, as well as
Bull Run Corporation, certain institutional shareholders who retain their
current ownership and new equity holders who invest in the transaction.
There being no further business, on motion duly made and seconded, the
meeting was adjourned.
Respectfully submitted as of the 25th day of September, 1999.
/s/ Robert S. Prather, Jr.
-----------------------------------
Robert S. Prather, Jr.
President & Chief Executive Officer
Secretary of the Meeting
<PAGE> 1
Exhibit 7
[BULL RUN CORPORATION LETTERHEAD]
October 25, 1999
Rawlings Sporting Goods Company, Inc.
1859 Intertech Drive
Fenton, MO 63026
Ladies and Gentlemen:
The purpose of this letter is to express our mutual agreement to
negotiate in good faith on an exclusive basis regarding the proposed tender
offer for the common stock of Rawlings Sporting Goods Company, Inc. ("Rawlings")
by, and the merger of Rawlings with, a corporation to be formed by Bull Run
Corporation ("Bull Run") (the "Proposed Transaction").
(a) Except for negotiations with Bull Run, from the date hereof until
5:00 p.m. on the fifteenth day after the date on which Bull Run and its
potential financing sources have received all or substantially all the due
diligence materials pertaining to Rawlings that they have requested in
connection with their due diligence investigation of Rawlings (such period
hereinafter called the "Exclusivity Period"), Rawlings shall not, and shall
direct each of its subsidiaries, affiliates, officers, employees,
representatives or agents not to, directly or indirectly, encourage, solicit,
initiate or engage in discussions or negotiations with, or provide any
non-public information to, any person concerning any merger, sale of substantial
assets, sales of shares of capital stock or similar transactions involving
Rawlings or any subsidiary thereof or enter into any agreement with respect
thereto. Rawlings will promptly communicate to Bull Run the terms of any
proposal that it may receive in respect of all such transactions prohibited by
the foregoing. Bull Run will acknowledge in writing when the Exclusivity Period
begins and ends in accordance with the foregoing.
(b) Rawlings and Bull Run agree that notwithstanding any provisions to
the contrary contained in any of (i) the Standstill Agreement, dated as of
November 21, 1997, and as amended on April 23, 1999, between Rawlings and Bull
Run (the "Bull Run Standstill Agreement"), (ii) the Standstill Agreement dated
as of April 23, 1999 between Rawlings and [__________________](1)
("[__________________]")(1), [__________________](1) ("[__________________]")(1)
and [__________________](1) ("[__________________]")(1) (the
"[__________________](1) Standstill Agreement") or (iii) the Confidentiality
Agreement dated August 6, 1999 between Rawlings and Bull Run (the
"Confidentiality Agreement"), Bull Run will be permitted to communicate with
- --------
(1) The parties to the Standstill Agreement have been redacted to maintain the
confidentiality of the parties to whom Bull Run may communicate.
<PAGE> 2
Rawlings Sporting Goods Company, Inc.
October 25, 1999
Page 2
[__________________](2), [__________________](2), [__________________](2)
("[__________________](2)"), or [__________________](2)
("[__________________]")(2) regarding the Proposed Transaction, including,
without limitation, retaining equity in Rawlings or providing financing. Bull
Run agrees that it will inform each of [__________________](2),
[__________________](2), [__________________](2), [__________________](2) and
[__________________](2) of the confidential nature of the Proposed Transaction
and the restrictions on disclosure of, and trading on the basis of, information
pertaining to the Proposed Transaction contained in the Confidentiality
Agreement and under the federal securities laws. Each of
[__________________](2), [__________________](2) and [__________________](2) may
rely on the first sentence of this Paragraph (b).
(c) Rawlings acknowledges and agrees that any agreement, arrangement or
understanding by and among Bull Run, on the one hand, and
[__________________](2), [__________________](2), [__________________](2),
[__________________](2), and [__________________](2), or any one of them, on the
other hand, with respect to the Proposed Transaction, will not be deemed to make
(i) Bull Run the beneficial owner of the shares of common stock of Rawlings
owned by any or all of [__________________](2), [__________________](2),
[__________________](2), [__________________](2), or [__________________](2) or
(ii) any or all of [__________________](2), [__________________](2),
[__________________](2), [__________________](2) or [__________________](2) a
beneficial owner of the shares of common stock of Rawlings owned by Bull Run for
purposes of Section 203 of the General Corporation Law of the State of Delaware
or the Rights Agreement dated as of July 1, 1994 between Rawlings and Boatmen's
Trust Agent, as Rights Agent, as amended November 21, 1997, April 19, 1999 and
April 23, 1999.
(d) Rawlings and Bull Run agree that in conjunction with Bull Run's
completion of its due diligence investigation of Rawlings during the Exclusivity
Period, Bull Run will be afforded reasonable access to senior management
employees of Rawlings. All requests for such access will be made through either
Stephen O'Hara or BancBoston Robertson Stephens, Inc.
(e) It is the intention of the parties that the existence of this
letter and the negotiations leading to a formal merger agreement remain
confidential. If it becomes necessary, in the sole discretion of either party,
to make a public announcement disclosing the existence of the negotiations
leading to this letter or the continuing negotiations leading toward a formal
merger agreement, such party will give the other party as much advance notice as
reasonably possible of such announcement. In such event, either party, in its
sole discretion, after reasonable notice to the other party, may terminate the
Exclusivity Period and the negotiations between the parties and, in that event,
neither party nor their directors, officers, stockholders, representatives or
- --------
(2) The parties to whom Bull Run may communicate have been redacted to maintain
their confidentiality.
<PAGE> 3
Rawlings Sporting Goods Company, Inc.
October 25, 1999
Page 3
agents shall have any liability for acts that take place after such termination
in respect of Paragraph (a) of this letter.
(f) Rawlings and Bull Run agree that the covenants and agreements
contained in this letter are reasonable and necessary to protect and preserve
the interests of Rawlings and Bull Run; that irreparable loss and damage will be
suffered by Rawlings and Bull Run should the other party breach any of such
covenants and agreements; that each of such covenants and agreements is
separate, distinct and severable from the other of such covenants and
agreements; that the unenforceability of any such covenant or agreement shall
not affect the validity or enforceability of any other such covenant or
agreement shall not affect the validity or enforceability of any other such
covenant or agreement; and that, in addition to other remedies available to
them, Rawlings and Bull Run shall be entitled to specific performance of the
covenants and agreements contained in this letter and to both temporary and
permanent injunctions to prevent a breach or contemplated breach by the other
party of any of such covenants or agreements.
Please indicate Rawlings' agreement to the terms hereof by signing in
the space provided below and returning a copy to Mr. Stephen A. Opler, Alston &
Bird LLP, One Atlantic Center, 1201 West Peachtree Street, Atlanta, Georgia,
30309 (Fax No. 404-881-4777).
Sincerely yours,
BULL RUN CORPORATION
By: /s/ Robert S. Prather, Jr.
---------------------------------------
Robert S. Prather, Jr.
President
Accepted and Agreed to
this 26th day of October, 1999
RAWLINGS SPORTING GOODS COMPANY, INC.
By: /s/ Stephen M. O'Hara
------------------------------------------------------------
Stephen M. O'Hara, Chairman and Chief Executive Officer
cc: Mr. Joseph A. Pellegrini
Mr. Richard L. Easton
Mr. Stephen W. Powell
Mr. Stephen A. Opler
<PAGE> 1
Exhibit 8
[ALSTON & BIRD LLP LETTERHEAD]
STEPHEN A. OPLER DIRECT DIAL: 404-881-7693
October 29, 1999
VIA: FACSIMILE
Richard L. Easton, Esquire
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
RE: RAWLINGS SPORTING GOODS COMPANY, INC. ("RAWLINGS")
Dear Rich:
This letter is written to confirm our agreement today regarding the 15
day period of exclusivity. As we agreed, the 15 day period of exclusivity,
pursuant to the Exclusivity Agreement entered into by Rawlings and Bull Run
Corporation, will begin on Saturday, October 30, 1999 at 5:00 p.m. (EST) and
will continue until Sunday, November 14, 1999 at 5:00 p.m. (EST).
Sincerely,
/s/ Stephen A. Opler
------------------------------------
Stephen A. Opler
SAO:sjc
cc: Mr. Robert S. Prather, Jr.
Mr. Stephen W. Powell
<PAGE> 1
Exhibit 9
[RAWLINGS LOGO]
- --------------------------------------------------------------------------------
"THE MARK OF A PRO" STEPHEN M. O'HARA
Chairman of the Board
Chief Executive Officer
November 17, 1999
Bull Run Corporation
4370 Peachtree Road, N.E.
Atlanta, GA 30319
Attention: Robert S. Prather, Jr.
Gentlemen:
Reference is made to the Exclusivity Agreement between us dated October
25, 1999 (the "Exclusivity Agreement"). Pursuant to the terms of the Exclusivity
Agreement, the exclusivity period expired on Sunday, November 14, 1999. You have
requested an extension of the exclusivity period.
Rawlings hereby grants Bull Run an extension of the exclusivity period
until 5:00 p.m., CST, on Friday, December 3, 1999. Notwithstanding anything to
the contrary contained in the Exclusivity Agreement, it is expressly understood
and agreed between us that during this extended period of exclusivity, Rawlings
and its officers, directors and employees and agents may actively seek out,
engage in discussions and negotiations with, and furnish information to,
potential financing sources to refinance Rawlings existing credit facility. Bull
Run expressly encourages and supports such activity by Rawlings.
Please indicate Bull Run's agreement to the terms hereof by signing in
the space provided below and returning a copy to us.
Very truly yours,
RAWLINGS SPORTING GOODS COMPANY
By: /s/ Stephen M. O'Hara
------------------------------------
Stephen M. O'Hara
Chairman and Chief Executive Officer
Rawlings Sporting Goods Company, Inc. o P.O. Box 22000
o Saint Louis, Missouri 63126 o 636/349-3501 o 636/349-3591 (Fax)
<PAGE> 2
ACCEPTED AND AGREED TO
as of the date first above written:
BULL RUN CORPORATION
By: /s/ Robert S. Prather, Jr.
---------------------------------
Robert S. Prather, Jr.
President
cc: Mr. Joseph A. Pellegrini
Richard L. Easton, Esq.
Mr. Stephen W. Powell
Stephen A. Opler, Esq.
-2-
<PAGE> 1
Exhibit 10
[BULL RUN CORPORATION LETTERHEAD]
December 3, 1999
VIA FACSIMILE
BancBoston Robertson Stephens, Inc.
Suite 2600
555 California Street
San Francisco, California 94104
Attention: Mr. Joseph A. Pellegrini, Principal
Re: Proposed Acquisition of Rawlings Sporting Goods Company, Inc.
Dear Sir:
Since the time that Bull Run Corporation ("Bull Run") made its October
4, 1999 offer to acquire Rawlings Sporting Goods Company, Inc. ("Rawlings"),
Bull Run has proceeded with its due diligence investigation and has been
negotiating with its financing sources concerning the proposed structure of the
transaction. Based on such due diligence investigation and discussions with
financing sources, Bull Run has determined that Rawlings will not be able to
realize the cost savings originally anticipated to support either Bull Run's
original proposal set forth in its letter dated October 4, 1999 or its
subsequent proposal to purchase up to 5,000,000 shares of Rawlings common stock
at $13.25 per share. However, Bull Run is pleased to submit this revised offer
by a corporation to be formed by Bull Run ("Purchaser") to acquire all of the
issued and outstanding shares of common stock (including stock options and other
common stock equivalents) of Rawlings (the "Stock"), except those shares of
common stock owned by Bull Run.
CONSIDERATION
Purchaser and Rawlings will jointly make a tender offer to purchase
from each Rawlings stockholder (and each holder of stock options, and other
common stock equivalents) 100% of such Rawlings stockholder's Stock at $10.00
per share, payable in cash, except those shares of common stock owned by Bull
Run.
STRUCTURE
To enable Purchaser to obtain the benefits of recapitalization
accounting treatment for the proposed transaction, the acquisition of Rawlings
will be structured as a joint tender offer, where Purchaser and Rawlings will
jointly make a tender offer to purchase 100% of each Rawlings stockholder's
Stock, except those shares of common stock owned by Bull Run. In the tender
offer, Purchaser will purchase as many of the shares of Stock that it can
finance using proceeds from equity investments from Bull Run,
[__________________](1), [__________________](1) and [__________________](1)
(the "Equity Investors"). Rawlings will purchase the remaining shares of Stock
(as well as stock options and other common stock equivalents) with proceeds from
debt financing to be provided by [__________________](2)
("[__________________](2)"), and royalties to be paid by [__________________](1)
under a Licensing Agreement among [__________________](1) and Rawlings pursuant
to which [__________________](1) will be granted an exclusive license on certain
trademarks held by Rawlings for use on apparel.
- --------
(1) The name of each of the equity financing sources has been redacted to
maintain its confidentiality.
(2) The name of the debt financing source has been redacted to maintain its
confidentiality.
<PAGE> 2
BancBoston Robertson Stephens, Inc.
December 3, 1999
Page 2
FINANCING
The transaction will be financed through (1) private equity
investments, (2) senior and mezzanine debt financing and (3) pre-paid royalties
to be paid by [__________________](1) to Rawlings. We have received commitments
from the Equity Investors for an aggregate of up to $45 million, a portion of
which will be allocated as pre-paid royalties from [__________________](1) to
Rawlings, as described in [__________________]'s(1) commitment letter attached
hereto on EXHIBIT A. In addition, on Monday, December 6, 1999, we anticipate
receiving a commitment from [__________________](2) for up to $105 million of
debt financing. We believe that the commitments from the Equity Investors,
together with the commitment from [__________________](2), are sufficient to
consummate the proposed acquisition under the structure described above. The
commitments from each of the Equity Investors are attached hereto on EXHIBIT A.
Upon our receipt of the [__________________](2) commitment, we will promptly
forward to you a copy of the commitment.
CORPORATE, REGULATORY AND OTHER APPROVALS; TIMING
Other than the conditions set forth in each of the equity and debt
commitments, we are aware of no corporate, regulatory or other approvals that
are not contemplated in the Agreement and Plan of Recapitalization, such as
filing the Pre-Merger Notification and Report Form and expiration of the
applicable waiting period required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and obtaining any necessary consents from
parties to Rawlings' contracts. We intend to consummate this acquisition as
quickly as possible.
MANAGEMENT AND EMPLOYEES OF RAWLINGS
We are still formulating our plans with respect to Rawlings' management
and employees. However, we plan to appoint a new Chief Executive Officer and we
will evaluate each member of senior management and each employee on an
individual basis. We will advise you promptly following the development of our
plans for Rawlings' management and employees.
AGREEMENT AND PLAN OF RECAPITALIZATION
Under the proposed acquisition structure, we will offer to purchase
from each Rawlings stockholder (and each holder of stock options and other
common stock equivalents) 100% of such Rawlings stockholder's Stock at $10.00
per share, payable in cash, except those shares of common stock owned by Bull
Run. Accordingly, we anticipate that Section 2.3, Limitations on Certain Action,
of the latest draft of the Agreement and Plan of Recapitalization dated November
18, 1999 will be deleted as the protections that Section 2.3 were designed to
ensure will no longer be required for a privately held company. With the removal
of this Section 2.3, together with revisions to the Agreement to reflect a
merger of Purchaser into Rawlings following the tender offer, we believe that
substantially all of the material terms of the Agreement have been agreed upon
and that the Agreement can be executed promptly.
<PAGE> 3
BancBoston Robertson Stephens, Inc.
December 3, 1999
Page 3
We are very excited about the possibility of joining forces with
Rawlings, its management and its employees. I look forward to the opportunity to
speak with you about our proposal in greater detail.
Sincerely yours,
Bull Run Corporation
/s/ Robert S. Prather, Jr.
---------------------------------------
Robert S. Prather, Jr.
President and CEO
cc: Mr. Frederick J. Erickson
Mr. Stephen W. Powell
Mr. Stephen A. Opler
<PAGE> 1
Exhibit 11
[BULL RUN CORPORATION LETTERHEAD]
December 14, 1999
VIA FACSIMILE
BancBoston Robertson Stephens, Inc.
Suite 2600
555 California Street
San Francisco, California 94104
Attention: Mr. Joseph A. Pellegrini, Principal
Re: PROPOSED ACQUISITION OF RAWLINGS SPORTING GOODS
COMPANY, INC. ("RAWLINGS")
Dear Sir:
On December 3, 1999, Bull Run Corporation ("Bull Run") submitted a
proposal to acquire, through a corporation to be formed by Bull Run
("Purchaser"), all of the issued and outstanding shares of common stock of
Rawlings (the "Stock"), except those shares of common stock owned by Bull Run.
This letter is to confirm our proposal for Purchaser and Rawlings to make a
tender offer to purchase from each Rawlings stockholder (and each holder of
stock options, and other common stock equivalents) 100% of such Rawlings
stockholder's Stock at $10.00 per share, payable in cash, except those shares of
common stock owned by Bull Run.
As indicated in our December 3, 1999 letter, the acquisition of
Rawlings will be structured as a joint tender offer, where Purchaser and
Rawlings will jointly make a tender offer to purchase 100% of each Rawlings
stockholder's Stock, except those shares of common stock owned by Bull Run. In
the tender offer, Purchaser will purchase as many of the shares of Stock that it
can finance using proceeds from equity investments from Bull Run,
[__________________](1) and [__________________](1) and potentially another
equity investor (the "Equity Investors"). Rawlings will purchase the remaining
shares of Stock (as well as stock options and other common stock equivalents)
with proceeds from debt financing to be provided by [__________________](2)
("[__________________](2)"), and pre-paid royalties to be paid by
[__________________](1) under a Licensing Agreement between
[__________________](1) and Rawlings pursuant to which [__________________](1)
will be granted an exclusive license on certain trademarks held by Rawlings for
use on apparel.
Attached hereto on EXHIBIT A are the commitments from the Equity
Investors for an aggregate of up to $41 million, a portion of which will be
allocated as pre-paid royalties from [__________________](1) to Rawlings, as
described in [__________________]'s(1) commitment letter. We are in the process
of confirming the terms of the final amount of capital required to consummate
the transaction (approximately $10 million). We expect to provide the final
required financing commitment by Tuesday, December 21, 1999. Attached hereto on
EXHIBIT B is the commitment from [__________________](2) for up to $100 million
of debt financing.
- --------
(1) The name of each of the equity financing sources has been redacted to
maintain its confidentiality.
(2) The name of the debt financing source has been redacted
to maintain its confidentiality.
<PAGE> 2
We remain very excited about the possibility of joining forces with
Rawlings, its management and its employees and continue to intend to consummate
this acquisition as quickly as possible. I look forward to the opportunity to
speak with you about our proposal in greater detail.
Sincerely yours,
Bull Run Corporation
/s/ Robert S. Prather, Jr.
------------------------------------
Robert S. Prather, Jr.
President and CEO
cc: Mr. Frederick J. Erickson
Mr. Stephen W. Powell
Mr. Stephen A. Opler
<PAGE> 1
Exhibit 12
[BULL RUN CORPORATION LETTERHEAD]
December 15, 1999
BancBoston Robertson Stephens, Inc.
Suite 2600
555 California Street
San Francisco, California 94104
Attention: Mr. Joseph A. Pellegrini, Principal
Re: PROPOSED ACQUISITION OF RAWLINGS SPORTING GOODS COMPANY, INC.
Dear Sir:
We understand through our advisors, Prudential Securities Incorporated
and Alston & Bird LLP, that they have been informed by you and Mr. Easton of
Skadden Arps that the Finance Committee of the Board of Directors of Rawlings
Sporting Goods Company, Inc. ("Rawlings") met today and determined to
discontinue its discussions with Bull Run in favor of adopting and supporting
Rawlings' management's three year plan. We understand that the Finance
Committee's rationale is that Bull Run had not yet presented a fully financed
proposal that would allow each shareholder of Rawlings who so desired to sell
his, her or its stock at $10 per share.
I am enclosing for your review a letter from each of
[__________________](1) and [__________________](1) confirming that neither will
participate in the proposed tender offer. Accordingly, our equity and debt
financing is now 100% in place and more than sufficient to consummate our
proposed acquisition. As you are aware from the package of information faxed to
you last night, we have secured $100 million of debt financing as well as $41
million of equity financing ($16 million from Bull Run and $12.5 million from
each of [__________________](2) and [__________________](2)) and $14.4 million
of equity value in shares that are committed to not tendering
([__________________](1) and [__________________](1)). As a result, we have
raised approximately $4.4 million in excess of the financing required to
consummate our proposed acquisition, allowing all shareholders of Rawlings who
so desire to sell their Rawlings shares at $10 per share.
Another concern of the Finance Committee that has been identified to us
generally is the removal of the going concern qualification from Arthur
Andersen's audit opinion as filed with Rawlings 10-K. Based on our due diligence
on this subject, we believe that Arthur Andersen will not remove this
qualification until the funding of the GE Capital loan, regardless of whether or
not a transaction with Bull Run (or anyone else) is pending.
We understand from a conversation that Rich Easton had with Stephen
Opler of Alston & Bird LLP around 11:00 a.m. this morning that Rich, and perhaps
- --------
(1) The name of each of the stockholders has been redacted to maintain its
confidentiality.
(2) The name of each of the equity financing sources has been
redacted to maintain its confidentiality.
<PAGE> 2
BancBoston Robertson Stephens, Inc.
December 15, 1999
Page 2
the Finance Committee, has concerns about some of the terms of the
[__________________](3) Financing Commitment included in our proposal of
yesterday. We have communicated these comments to [__________________](3) and
anticipate that most, if not all, of the comments can be favorably resolved very
promptly.
As you are aware, Bull Run has dedicated extraordinary efforts,
including more than 4 months of time and over $1 million in expenses, in a
singular purpose to maximize value for all shareholders and to secure the
long-term competitive position of Rawlings. As one of Rawlings' largest
shareholders, we are concerned that while we have attempted to structure such a
value maximizing transaction on a cooperative basis with the Finance Committee
and its advisors, we believe that the process has been unnecessarily adversarial
and, as a result, we fear that our proposed transaction may not have been
adequately considered.
Prudential Securities Incorporated, our investment banking advisors,
has assured us that our offer is fair from a financial perspective and we expect
that Rawlings' financial advisors, BancBoston Robertson Stephens, Inc., has come
to the same conclusion. We have been unflinching in our pursuit of the highest
and best value for all shareholders despite many challenges imposed by Rawlings
throughout the process. We have expended great sums of time and money to run the
most thorough and most professional process possible. In fact, it is the level
of our due diligence and that of our financing sources and partners that give us
absolute comfort that the transaction will close as promptly as allowed by law.
We are confident that this fully-financed transaction will be
consummated timely and that it is the only way for Rawlings' shareholders to
obtain the maximum value for their shares in either the short term or the long
term. Rawlings shareholders should have the opportunity to accept or reject the
proposal by their response to the tender offer. All of the information that we
have available to us leads us to believe that the holders of a substantial
majority of Rawlings' shares would tender their shares for $10 per share in
cash.
We would expect the opportunity to discuss this with you directly and
completely. Certainly, we also would expect that you will not make any public
announcement regarding this matter that would require us to amend Bull Run's
Schedule 13D, without first meeting with us. We hope that we can work together,
cooperatively, to achieve this opportunity for all Rawlings shareholders.
Sincerely yours,
Bull Run Corporation
/s/ Robert S. Prather, Jr.
-----------------------------------------
Robert S. Prather, Jr.
President and CEO
cc: Mr. Stephen W. Powell
Mr. John L. Latham
Mr. Stephen A. Opler
- --------
(3) The name of the debt financing source has been redacted to maintain its
confidentiality.
<PAGE> 1
Exhibit 13
[BULL RUN CORPORATION LETTERHEAD]
December 17, 1999
VIA TELECOPY AND UPS
The Finance Committee of the Board of Directors
Rawlings Sporting Goods Company, Inc.
c/o BancBoston Robertson Stephens, Inc.
Suite 2600
555 California Street
San Francisco, California 94104
Attention: Mr. Joseph A. Pellegrini, Principal
Re: PROPOSED ACQUISITION OF RAWLINGS SPORTING GOODS COMPANY, INC.
Dear Sir:
Attached is revised and supplemental documentation with respect to Bull
Run Corporation's previously submitted offer to acquire the outstanding capital
stock of Rawlings Sporting Goods Company, Inc. ("Rawlings") for $10.00 per
share, excluding shares held by Bull Run and two existing Rawlings stockholders
described below. As you may know, on December 14, 1999, we received comments
from your advisors, Skadden Arps and Robertson Stephens on our offer and
supporting documentation submitted on December 13, 1999. The attached
documentation is responsive to the comments made by your advisors and includes
letters evidencing commitments to provide financing in sufficient amount to
consummate our contemplated transaction, together with a proposed merger
agreement. We also have raised sufficient capital to refinance all outstanding
indebtedness owed to Rawlings' bank group.
We understand from your advisors that the Finance Committee has voted
to discontinue further consideration of our offer to acquire the outstanding
capital stock of Rawlings. We further understand that the Finance Committee,
based on the advice of its advisors, has determined that we had not submitted a
legitimate offer. We respectfully dispute any such assertion. We are confident
that our previously submitted offer was fully legitimate and could be
consummated as proposed to purchase all shares tendered by Rawlings'
stockholders at a purchase price of $10.00 per share. The attached
documentation, in response to your advisors' comments and requests, further
confirms the legitimacy of our offer.
<PAGE> 2
BancBoston Robertson Stephens, Inc.
December 17, 1999
Page 2
We further understand from communications made yesterday by Rawlings
and its representatives that the Finance Committee will recommend to the
Rawlings Board of Directors that it vote to conclude the previously announced
initiative to evaluate strategic alternatives in favor of adopting management's
plan. We respectfully request that the Finance Committee and the full Board of
Directors fully consider our offer and the opportunity that Bull Run has made
available to Rawlings and its stockholders through our offer. Based on our due
diligence investigation and advice from our financial and legal advisors, we are
confident that Rawlings' stockholders will support our offer. We further believe
that our offer will produce the highest and best value for all stockholders,
including those tendering their shares and those electing to participate in the
ongoing ownership of Rawlings.
The attached documentation evidences our fully financed proposal to
acquire the shares of each Rawlings stockholder who desires to sell his, her or
its stock at $10.00 per share. As we indicated in our December 15, 1999 letter,
we communicated to [__________________](1) Mr. Easton's concerns about some of
the terms of the [__________________](1) Financing Commitment included in our
proposal and have resolved substantially all of these concerns. A revised
[__________________](1) commitment letter is attached hereto (Tab A). We have
included (Tab B) copies of letters from two Rawlings stockholders
([__________________](2), [___________](2) shares, and [__________________](2),
[____________](2) shares) that evidence their intention to not tender their
shares in the transaction contemplated by our offer.
In evaluating our proposal, it is both relevant and important to note
that since July 1992, Bull Run and its affiliates have consummated more than $1
billion of acquisitions, including an approximately $150 million acquisition
closed today. Neither Bull Run nor any of its affiliates has ever reached this
point in a transaction and failed to close - for any reason. We believe our
record speaks for itself and is testament to the certainty inherent in dealing
with Bull Run.
We did not previously submit comments to the Agreement and Plan of
Merger because we were under the impression that all of the substantive issues
had been resolved and that our attorneys were simply working out the mechanics
of the transaction. To be clear, Bull Run is prepared to execute the draft
Agreement and Plan of Merger received on December 11, 1999 in the form in which
it now exists. However, we do believe that it is in the best interests of
Rawlings and Bull Run for our respective counsel to refine the document to
address minor drafting changes, including the following: (i) some mechanics of
the transaction; (ii) some changes appear not to have been marked and we want to
confirm that we have seen all of the changes; (iii) some sections (such as
- --------
(1) The name of the debt financing source has been redacted to maintain its
confidentiality.
(2) The name, and number of shares, of each of the stockholders has been
redacted to maintain its confidentiality.
(3) The name of each of the equity financing sources has been redacted to
maintain its confidentiality.
(4) The name of each of the stockholders has been redacted to maintain its
confidentiality.
<PAGE> 3
BancBoston Robertson Stephens, Inc.
December 17, 1999
Page 3
operation in the ordinary course of business pending closing of the tender
offer) appear to have been inadvertently omitted.
Accordingly, our equity financing is now 100% in place and, together
with our debt financing, is more than sufficient to consummate our proposed
acquisition. We have attached hereto (Tab C) for your review evidence that we
have secured $41 million of equity financing ($16 million from Bull Run and
$12.5 million from each of [__________________](3) and [__________________](3))
in addition to $100 million of debt financing and $14.4 million of equity value
in shares that are committed to not tendering ([__________________](4) and
[__________________](4)). As a result, we have raised approximately $4.4 million
in excess of the financing required to consummate our proposed acquisition,
allowing all stockholders of Rawlings who so desire to sell their Rawlings
shares at $10 per share.
Clearly, time is of the essence given the apparent challenges to
Rawlings' competitive position and results of operations indicated by our due
diligence investigation and the nature and content of the disclosures made by
Rawlings. We look forward to your prompt response to our offer.
Sincerely yours,
Bull Run Corporation
/s/ Robert S. Prather, Jr.
Robert S. Prather, Jr.
President and CEO
Enclosures
cc: Mr. Richard L. Easton
Mr. Joseph A. Pellegrini
Mr. Stephen W. Powell
Mr. John L. Latham
Mr. Stephen A. Opler
- --------
(3) The name of each of the equity financing sources has been redacted to
maintain its confidentiality.
(4) The name of each of the stockholders has been redacted to maintain its
confidentiality.
<PAGE> 1
Exhibit 14
[Bull Run Corporation letterhead]
December 20, 1999
VIA TELECOPY AND UPS
The Finance Committee of the Board of Directors
Rawlings Sporting Goods Company, Inc.
c/o BancBoston Robertson Stephens, Inc.
Suite 2600
555 California Street
San Francisco, California 94104
Attention: Mr. Joseph A. Pellegrini, Principal
Re: Proposed Acquisition of Rawlings Sporting Goods Company, Inc.
Dear Ladies and Gentlemen:
I am writing this morning to confirm that you received the package of
information that we sent to you by fax and UPS on Friday night; please let me
know as soon as possible if you have not received this information and I will
resend it at once. Based on the extensive conversations that I have had with
both Prudential Securities and Alston & Bird, we believe that the information
included in the December 17 package is responsive to substantially all of the
comments that we have received from Rawlings' advisors, BancBoston Robertson
Stephens and Skadden, Arps, regarding our offer.
I also am writing this morning to request that we meet, in person or by
telephone, to determine if you and we (and our respective advisors) can work
together, cooperatively to consummate this transaction. We are confident that
our offer can be consummated with the cooperation of Rawlings and its advisors
and representatives. We are equally confident that our offer represents that
highest and best value for all Rawlings stockholders.
Please know that we strongly desire to achieve the highest value for
all Rawlings stockholders in a professional, collegial and collaborative
process. I welcome your input and the opportunity to meet with you to reach
agreement on our offer.
The impending holidays only add to our extant sense of urgency about
this matter. I expect that we concur that the needs of Rawlings, its
stockholders, employees, suppliers and customers necessitate that we jointly act
with dispatch. If possible, I would like to meet with you this week. Please let
me know when and where you are available.
<PAGE> 2
BancBoston Robertson Stephens, Inc.
December 20, 1999
Page 2
I appreciate very much your consideration of our offer and I look
forward to working with you in the fulfillment of our common goal of maximizing
stockholders value for all Rawlings stockholders.
Sincerely yours,
Bull Run Corporation
/s/ Robert S. Prather, Jr.
---------------------------
Robert S. Prather, Jr.
President and CEO
Enclosures
cc: Mr. Richard L. Easton
Mr. Joseph A. Pellegrini
Mr. Stephen W. Powell
Mr. John L. Latham
Mr. Stephen A. Opler
<PAGE> 1
Exhibit 15
[Bull Run Corporation letterhead]
December 23, 1999
Via Telecopy
Mr. Andrew N. Baur
Chairman
Finance Committee of the Board of Directors
Rawlings Sporting Goods Company, Inc.
c/o Missouri Valley Bank Shares
13205 Manchester Road
St. Louis, Missouri
Re: Rawlings Sporting Goods Company, Inc.
Dear Drew:
Thank you very much for taking the time yesterday to meet with me; I
enjoyed our candid conversation and the thoughtful exchange of ideas and
perspectives. It was particularly gratifying to see that you are so well on your
way to a "complete mend."
I came away from our meeting convinced that we share the goal of
maximizing stockholder value. Our conversation clearly evidences your
understanding of, and appreciation for, the extraordinary efforts and expense to
which Bull Run has gone to ensure that each Rawlings stockholder receives the
maximum value for their shares.
I understand that you plan to call a meeting of the Finance Committee
on Monday, December 27, 1999 in order for the Committee to reconsider Bull Run's
$10 per share cash offer in light of all the facts, including our having secured
complete financing for the transaction to purchase all the shares that wish to
tender as well as for the refinancing of Rawlings' existing debt. Please let me
know if there is any information or assistance that we can provide. I will make
our team available to meet with the Finance Committee as you deem appropriately.
We hope to avoid the past problems that you described of the Committee not
having all of the relevant facts at its last meeting.
While we have not fully analyzed its implications, we are amenable to
your idea of Rawlings waiving the standstill agreements and the Rights Plan to
allow Bull Run to make a tender offer directly to the shareholders without Board
of Directors' recommendation of the transaction. Please let me know if you would
like us to develop this concept further in any way.
<PAGE> 2
Mr. Andrew N. Baur
December 23, 1999
Page 2
As we discussed, Bull Run and our investor group are completely
committed to this transaction in order to ensure that maximum value is delivered
to the Rawlings stockholders; we will use every resource at our disposal to this
end. Our interest is founded in genuine concern for the long-term viability of
Rawlings and its impact on its employees, customers and suppliers. In addition,
Bull Run, and indirectly its stockholders, have a significant financial
investment in Rawlings, over $8 million of which has been lost due to the
decline in the market value reflecting Rawlings' poor performance. Further, as
you can appreciate given your reputation, I am morally obligated to enhance
value for the very large stockholdings of people who invested in Rawlings due to
my involvement. During a career that spans more than 30 years, I have never
invested in any company and lost money for myself or any other investor. I
simply cannot afford to damage my reputation with our investment in Rawlings.
Once again, thank you for your time and thoughtful insights. I look
forward to working with you toward our mutual goal of maximizing value for all
Rawlings stockholders. Please call me at any time if I can be of assistance. My
telephone numbers are: Office -- 404-266-8333 and Home - 404-355-1350. I look
forward to speaking with you soon.
Sincerely,
Bull Run Corporation
/s/ Robert S. Prather, Jr.
--------------------------------------
Robert S. Prather, Jr.
President and Chief Executive Officer
<PAGE> 1
Exhibit 16
[Southwest Bank letterhead]
December 23, 1999
Via Telecopier
Mr. Robert S. Prather, Jr.
President and Chief Executive Officer
Bull Run Corporation
4370 Peachtree Road, N.E.
Atlanta, GA 30319-3099
Dear Bob:
I have received your letter of December 23. So that there is no
misunderstanding, let me give you my version of our meeting.
1. I intend to attempt to get the Finance Committee on Monday;
however, I have no idea whether they are available.
2. I am not going to ask them to reconsider Bull Run's $10.00 per
share cash offer but will update them on our conversation and
inquire about what the members wish to do.
3. It is not my recommendation to waive the Standstill Agreements.
It was simply a general discussion as to what would happen if a
tender from a third party were to take place.
Sincerely,
/s/ Andrew N. Baur
-------------------------
Andrew N. Baur
ANB:cbd
<PAGE> 1
EXHIBIT 17
STRICTLY CONFIDENTIAL
FOR DISCUSSION PURPOSES ONLY
----------------------
PROPOSAL
----------------------
The Committee would be prepared to waive standstill/amend shareholder rights
plan in order to allow Bull Run (or a newly formed entity controlled by it) to
make a cash tender offer for all outstanding shares at $10 per share, subject
to the following conditions:
- - have 45 days to complete offer
- - must get at least a majority of all shares (excluding those owned by Bull
Run)
- - must commit to do a back-end merger as promptly as practicable pursuant to
which all shareholders (other than those, if any, Bull Run gets to agree to
stay in) receive same price
- - if offer successful, our directors will resign, subject to 14(f) compliance
- - board will not recommend in favor of the offer and may either remain
neutral or recommend against
- - no restrictions on our ability to solicit other offers
- - no break-up fees
- - must agree to honor existing severance arrangements for everybody (other
than Steve)
19055K.01-Wilmington Server 1A Draft January 4, 2000 - 5:00 PM
<PAGE> 2
- - In Steve's case:
- pay current key man insurance premium and forgive loan
- give him extra year of severance pay (2 to 3 years) and gross up for
taxes
- otherwise honor existing severance arrangement
If offer fails for any reason:
- Bob and Chuck resign from Board and Bull Run loses right to
designate two directors
- Standstill agreement otherwise remains in effect
- Bull Run surrenders warrant; Rawlings forgives loan balance
19055K - Wilmington Server 1A 2 Draft January 4, 2000 - 5:00 PM
<PAGE> 1
EXHIBIT 18
ALSTON&BIRD LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
404-881-7000
Fax: 404-881-4777
www.alston.com
<TABLE>
<S> <C> <C>
STEPHEN A. OPLER DIRECT DIAL: 404-881-7693 E-MAIL: [email protected]
</TABLE>
January 5, 2000
VIA: FACSIMILE
Richard L. Easton, Esquire
Skadden, Arps, Slate, Meagher & Flom LLP
Seventh Floor
One Rodney Square
Wilmington, Delaware 19801
Re: Rawlings Sporting Goods Company, Inc.
Dear Rich:
I am writing in response to our telephone call yesterday regarding the
Finance Committee's proposal to allow Bull Run (or a newly formed entity
controlled by Bull Run) to make a cash tender offer for all outstanding shares
at $10 per share. Bull Run is prepared to accept the Proposal, subject to the
following modifications and clarifications:
- Rawlings will, to the extent required, waive the standstill
agreements of [_______________](1) and [________________](1)
to allow consummation of Bull Run's proposed tender offer;
- The Rawlings Board of Directors will take whatever action may
be necessary, if any, to allow the transaction to proceed
unrestricted by the provisions of Section 203 of the Delaware
General Corporation Law;
- The 45 day time frame will commence upon execution of the
definitive agreement relating to these matters;
- The Rawlings Board of Directors may remain neutral with
respect to the transaction, but may not recommend against it;
- Bull Run will cause Rawlings to honor Mr. O'Hara's existing
severance arrangement and to pay the current key man insurance
premium and to forgive the loan owed by Mr. O'Hara (i.e. Bull
Run will not cause Rawlings to give
- --------------------------
(1) The parties to the standstill agreements have been redacted to maintain the
confidentiality of the parties to whom Bull Run may communicate and with
which Bull Run may work to consummate the proposed tender offer.
<TABLE>
<S> <C> <C>
1211 East Morehead Street 3605 Glenwood Avenue, Suite 310 601 Pennsylvania Avenue, N.W.
P. O. Drawer 34009 P. O. Drawer 31107 North Building, 11th Floor
Charlotte, NC 28234-4009 Raleigh, NC 27622-1107 Washington, DC 20004-2601
704-331-6000 919-420-2200 202-756-3300
Fax: 704-334-2014 Fax: 919-420-2260 Fax: 202-756-3333
</TABLE>
<PAGE> 2
Richard L. Easton, Esquire
January 5, 2000
Page 2
Mr. O'Hara an extra year of severance pay or "gross-up" his
payments for taxes);
- If Bull Run's offer fails due to a higher offer being made by
a third party and that offer fails, Bull Run's designees will
not resign from the Rawlings Board of Directors and Bull Run
does not lose its right to designate two directors;
- If Bull Run's offer fails for any other reason, its two
director designees will resign from the Rawlings Board of
Directors and it will lose its right to designate two
directors; provided, however, that Bull Run's warrant will
remain outstanding according to its terms;
- Rawlings will use all reasonable efforts to cooperate with
Bull Run or an entity formed by Bull Run, including without
limitation, preparing and filing all necessary
Hart-Scott-Rodino pre-merger notification and report forms,
promptly providing Bull Run and its investors with updated
financial and operational information, and preparing and
filing all necessary documents with the SEC.
With respect to the last point, would you please forward to me as soon
as possible the most recent financial statements and other available financial
reports for all periods since September, 1999?
As we discussed yesterday, we will begin preparation of a draft
definitive agreement for your review and comment once we have received the
Finance Committee's acceptance of its proposal as modified by this letter. I
look forward to speaking with you soon.
Sincerely yours,
/s/ Stephen A. Opler
-----------------------------
Stephen A. Opler
SAO:me
cc: Mr. Robert S. Prather, Jr.
Mr. Stephen W. Powell
Ms. Tracy Rosenbluth
Greg Williams, Esquire
<PAGE> 1
EXHIBIT 19
[Bull Run Corporation Letterhead]
January 12, 2000
Via Telecopy
The Finance Committee of the Board of Directors
Rawlings Sporting Goods Company, Inc.
1859 Intertech Drive
Fenton, Missouri 63026
Re: Rawlings Sporting Goods Company, Inc.
Dear Gentlemen and Ladies:
Bull Run would very much like to reach an agreement with the Finance
Committee by this afternoon so that it can be announced on or before Thursday's
conference call. The purpose of this letter is to identify the information we
require and matters to resolve to reach an agreement with the Finance Committee.
Since we first learned of the Finance Committee's proposal a week ago, we have
done everything within our power to update our due diligence assessment of
Rawlings to support our proposed valuation and transaction structure, and to
find mutually acceptable terms on which to proceed. It is critical to Bull Run
and, we would think, to Rawlings that the proposed arrangement not be publicly
announced unless and until both Rawlings and Bull Run are satisfied that the
tender offer will be consummated in a timely manner.
Our $10 per share proposal represents more than a 58% premium over the
current market price. We are confident that Bull Run can consummate the proposed
tender offer, but as we have consistently stated, we expect that this can be
accomplished working cooperatively with Rawlings and its representatives.
I believe that we worked out many of the outstanding issues during the
Board meeting on Friday. In the spirit of cooperation, I agreed with all of the
recommendations and proposals made at the Board meeting, including those
regarding new severance arrangements for eleven employees and a revised
severance arrangement for Steve O'Hara. These additional severance arrangements
have added approximately $1.0 million ($.17 per share) to the purchase price we
had anticipated paying for the Company. In addition, the GECC prepayment
penalties have added another approximately $1.5 million ($.26 per share) to the
purchase price we had anticipated paying for the Company. We believe that the
remaining issues can be resolved quickly as none of them should impact Rawlings
negatively.
<PAGE> 2
The Finance Committee of the Board of Directors
Rawlings Sporting Goods Company, Inc.
January 12, 2000
Page 2
The matters we must resolve are as follows:
- Additional Information Needed. We will need cooperation from
Rawlings so that Bull Run and our lender and equity investors
can perform the required customary bring-down and confirmatory
due diligence. None of our professional financing sources will
fund the transaction without updating its due diligence based
on the operations of the business since information provided
to us several months ago. This process is expected to take a
very few days and should not require any resources of Rawlings
other than providing available information from the Company's
books and records and answering certain questions. The
information that will be needed is as follows:
A. Customary information regarding results of operations
and financial condition, including:
i. Actual or budgeted balance sheets, income statements
and cash flow statements for the months ended
December 31, 1999 through February 29, 2000 (or
preliminary trail balances if financial statements
are not available); and
ii. A comparison of current order bookings to current
budget through January 11, 2000.
B. Customary information with respect to borrowing base,
including:
i. Aged trial balances and roll-forwards of accounts
receivable and accounts payable by due date at
month-end for the months September 1999 through
December 1999 and a reconciliation of the aging to
the trial balance at December 31; and
ii. Detail of inventories from the perpetual inventory
records at December 31, 1999 (including break down of
raw materials, work in process, finished goods and
reserves by location).
As noted above, we believe that all of this information should be
available from the books and records of the Company.
<PAGE> 3
The Finance Committee of the Board of Directors
Rawlings Sporting Goods Company, Inc.
January 12, 2000
Page 3
- Time Within Which To Consummate the Tender Offer. We believe
that the 45 day time period should be the longer of (i) 45
calendar days or (ii) 13 business days after any comments are
first received from the SEC. This additional time should not
result in any additional costs to the Company, but will allow
us all greater assurance that any SEC comments can be
addressed and any statutorily mandated extension of the tender
period can be achieved. As I stated above, I cannot imagine
that it is in the best interest of Rawlings and its
stockholders to have a tender offer commenced but not
completed.
- Results of Failure of Bull Run Tender Offer. We believe that
any results of a failed tender offer should be conditioned on
Rawlings and its Finance Committee acting in a reasonable
manner throughout the process. In addition, we believe that
Bull Run should give up 1/2 of its Warrant in return for the
Company reducing the Warrant Purchase Price to the 1/2 that
has been paid. Finally, Bull Run is prepared to have one of
its designees resign from the Board and to permanently lose
the right to designate one of its designees.
We are very anxious to resolve these outstanding items and we will work
cooperatively with you in determining the most appropriate public disclosure. If
we reach agreement in principle or are working towards an agreement in
principle, we recommend that you consider announcing today or tomorrow morning
that the Finance Committee is having continuing discussions with Bull Run in
connection with a potential transaction. That course of action should have the
desired effect with respect to Thursday's conference call without the
unnecessary risk of announcing an agreement relating to a transaction that
ultimately is not consummated.
I firmly believe that each of you and I, at our core, want what is best
for Rawlings and its stockholders. I am not asking you to help me or Bull Run
for our sake, but I am asking that you allow Rawlings to provide assistance to
Bull Run so that the stockholders of Rawlings can make the right informed
decision based on an orderly tender offer process.
<PAGE> 4
The Finance Committee of the Board of Directors
Rawlings Sporting Goods Company, Inc.
January 12, 2000
Page 4
I would like to discuss this with you at your earliest convenience. My
telephone numbers are: Office -- 404-266-8333 and Home - 404-355-1350. I look
forward to speaking with you soon.
Sincerely,
Bull Run Corporation
/s/ Robert S. Prather, Jr.
-------------------------------------
Robert S. Prather, Jr.
President and Chief Executive Officer
cc: Richard L. Easton, Esquire
Mr. Stephen W. Powell
Arnold S. Jacobs, Esquire
Stephen A. Opler, Esquire
<PAGE> 1
EXHIBIT 20
STRICTLY CONFIDENTIAL
FOR DISCUSSION PURPOSES ONLY
-----------------
SUMMARY OF
AGREED UPON TERMS
-----------------
The Committee will waive the restrictions in its standstill agreement with Bull
Run and remove all other structural impediments (e.g., (i) waiving any
applicable restrictions contained in its standstill agreements with
[________________](1) and its affiliates and with [________________](1)(ii)
amending its shareholder rights plan to permit the purchase of shares and (iii)
taking any necessary action under Section 203 of the Delaware General
Corporation Law) in order to allow Bull Run (or a newly formed entity controlled
by it) to make a cash tender offer for all outstanding Rawlings shares at $10
per share, subject to the following conditions:
- - Bull Run (or such entity) will have 45 calendar days from the date of the
public announcement of the agreement (i.e., Thursday, January 13), to
complete the offer (or, if longer, 13 business days after the date the
first SEC comments on the offer documents, if any, are received)
- - the offer must be accepted by the holders of at least a majority of all
outstanding shares (excluding those owned by Bull Run)
- - the offer documents must contain a commitment on the part of Bull Run and
its co-investors to do a back-end merger as promptly as practicable
pursuant to which all shareholders (other than those, if any, Bull Run
gets to agree to stay in) receive the same $10 per share price
- - if the offer is successful, Rawlings' current directors (other than Bull
Run's two designees) will resign, subject to 14(f) compliance
- - the Finance Committee and the full Board will be free to take whatever
position they choose with respect to the offer pursuant to Rule 14e-2
191604.01 - Wilmington Server 1A Draft January 12, 2000 - 8:34 PM
- -----------------
(1) The parties to the standstill agreements have been redacted to maintain the
confidentiality of the parties to whom Bull Run may communicate and with
which Bull Run may work to consummate the proposed tender offer.
<PAGE> 2
- - the agreement will contain no restrictions on Rawlings' ability to
solicit other offers
- - the agreement will contain no provisions requiring the payment of any
break-up fees
- - the agreement will contain a commitment on the part of Bull Run and its
co-investors to honor all existing severance arrangements (including the
modifications approved by the Board on January 7, 2000)
- - the agreement will contain a commitment on Rawlings' part to provide Bull
Run with the same package of financial information provided to GECC as
promptly as practicable after the execution of the agreement
If the offer fails for any reason:
- - Bull Run's two designees on the Rawlings' board will resign and Bull Run
will lose its right to designate two directors
- - Standstill agreement otherwise remains in effect
- - Bull Run surrenders its warrant; Rawlings forgives loan balance
191604.01-Wilmington Server 1A 2 Draft January 12, 2000-8:34PM
<PAGE> 1
EXHIBIT 21
[Bull Run Corporation Letterhead]
January 13, 2000
8:00 a.m.
Via Telecopy
The Finance Committee of the Board of Directors
Rawlings Sporting Goods Company, Inc.
1859 Intertech Drive
Fenton, Missouri 63026
Re: Rawlings Sporting Goods Company, Inc.
Dear Gentlemen and Ladies:
We appreciate the proposal that Mr. Easton communicated last evening at
approximately 8:00 p.m. from the Finance Committee and we are anxious to move
forward with you as promptly as possible. Unfortunately, we are unable to
respond to your proposal by 9:00 a.m. this morning as instructed by Mr. Easton.
Based on our discussions with our lender, our equity investors and our
investment bankers, the information you have offered to provide to us is not
sufficient to allow our lender to complete its customary confirmatory due
diligence.
As you may recall, the December 17, 1999 commitment letter from
[_______________](1) contains customary due diligence conditions, including "a
satisfactory field examination report of Borrowers and Guarantors, including a
verification of outstanding balances on specified accounts receivables, prepared
by Lender's auditors, examiners and/or appraisers." [_______________](1) has not
confirmed any financial information in the last 30 to 45 days and, in our
experience, these due diligence requirements are typical in every asset based
financing. We believe that the scope of our lender's due diligence requirements
and the information and access that we have requested are the same as the
conditions set forth in the GECC loan commitment.
We very much want to proceed with the Finance Committee in allowing
Bull Run (or a newly formed corporation) to make the $10 per share tender offer
to Rawlings' stockholders. We believe that this confirmatory due diligence can
be completed in a very short period of time. Further, if Rawlings will allow
Bull Run and its lender and our respective advisors to have the requested
information and access, we are confident that we can resolve promptly all of the
remaining issues in the proposal.
- ---------------
(1) The name of the debt financing source has been redacted to maintain its
confidentiality.
<PAGE> 2
The Finance Committee of the Board of Directors
Rawlings Sporting Goods Company, Inc.
January 13, 2000
Page 2
We are anxious to proceed with our tender offer and we will continue to
use our best good faith efforts to resolve any concerns that the Finance
Committee might have. Our objective, in part, is for both Bull Run and Rawlings
to avoid the potential embarrassment, business disruption, cost potential
litigation and other risks associated with having a tender offer commenced, but
not completed.
I look forward to speaking with you soon.
Sincerely,
Bull Run Corporation
/s/ Robert S. Prather,Jr.
-------------------------------------
Robert S. Prather, Jr.
President and Chief Executive Officer
cc: Richard L. Easton, Esquire
Mr. Stephen W. Powell
Arnold S. Jacobs, Esquire
Stephen A. Opler, Esquire
<PAGE> 1
EXHIBIT 22
[Bull Run Corporation Letterhead]
January 13, 2000
Via Telecopy
The Finance Committee of the Board of Directors
Rawlings Sporting Goods Company, Inc.
1859 Intertech Drive
Fenton, Missouri 63026
Re: Rawlings Sporting Goods Company, Inc.
Dear Gentlemen and Ladies:
In response to a question that we received from Mr. Easton
this morning, I am writing to clarify the last sentence of the third paragraph
of the letter that I sent to you earlier this morning. The two issues remaining
in the proposal are likely minor and easily resolved. The first of these is
implicit in our earlier letter and that is that we would expect the 45 day time
period to begin upon completion of the confirmatory due diligence, which we
believe will be a very short period of time from now - on the order of one
business week, subject to availability of personnel and information.
The second issue is whether or not the Board can have the flexibility
to recommend against the Bull Run tender, as opposed to remaining neutral. This
is acceptable to Bull Run, but is a problem for one of our equity sources who is
not allowed to finance "hostile" transactions. Neither your counsel nor ours
believes that this transaction can fairly be characterized as "hostile" and we
hope to be able to persuade our equity source that this is the correct position.
However, the principal of that fund has been travelling and unavailable for us
to discuss this. Consequently, this issue may well go away as soon as we can
speak with that individual.
Please call me if you have any further questions or comments. I look
forward to speaking with you soon.
Sincerely,
Bull Run Corporation
/s/ Robert S. Prather, Jr.
-------------------------------------
Robert S. Prather, Jr.
President and Chief Executive Officer
cc: Richard L. Easton, Esquire
Mr. Stephen W. Powell
Arnold S. Jacobs, Esquire
Stephen A. Opler, Esquire
<PAGE> 1
EXHIBIT 23
THURSDAY JANUARY 13, 10:17 AM EASTERN TIME
COMPANY PRESS RELEASE
SOURCE: Rawlings Sporting Goods Company
RAWLINGS CONFIRMS FAILED ACQUISITION TALKS WITH BULL RUN CORPORATION
FENTON, Mo., Jan. 13/PRNewswire/ -- Rawlings Sporting Goods Company, Inc.
(Nasdaq: RAWL - news) confirmed today that, as part of its recently concluded
exploration of strategic alternatives, it had extensive discussions with Bull
Run Corporation (Nasdaq: BULL - news) concerning the possible acquisition of
Rawlings by an investor group led by Bull Run at prices ranging from a high of
$13.25 per share to a low of $10 per share.
Rawlings said that just last week the Finance Committee of its Board of
Directors had offered to waive the restrictions contained in a standstill
agreement between the two companies and to remove all other structural
impediments in order to allow Bull Run and its co-investors to make a cash
tender offer at $10 per share for all outstanding Rawlings shares, provided
that the offer be completed within 45 days, that the holders of at least a
majority of the outstanding shares accept the offer and that the offer contain
a commitment on Bull Run's part to do a follow-up cash merger at the same
price. The Finance Committee's offer was also subject to other conditions,
including that if Bull Run's tender offer was unsuccessful for any reason, its
two designees on Rawlings board would resign, the existing standstill agreement
between the two companies would remain in effect and Bull Run would surrender
the warrant it currently holds to buy an additional 925,000 Rawlings shares in
exchange for Rawlings' agreement to forgive the balance of the warrant's
purchase price. Bull Run declined to accept the Finance Committee's proposal
before an agreed upon deadline.
Rawlings also said that, pursuant to a resolution unanimously approved late
last week by Rawlings' Board of Directors, including Bull Run's two
representatives on the Board, the acquisition talks between the two companies
would cease and Rawlings would continue to focus on implementing its business
plan and improving its operating results.
Finally, Rawlings said that it would have no further comment on its talks with
Bull Run or on any other aspect of its recently concluded review of strategic
alternatives.
