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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 8, 1994
FIGGIE INTERNATIONAL INC.
(Exact name of registrant specified in its charter)
Delaware 1-8591 52-1297376
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
4420 Sherwin Road, Willoughby, Ohio 44094
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
216-953-2700
(not applicable)
(Former name or former address, if changed since last report)
Page 1 of 3 pages
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Item 2. Acquisition or Disposition of Assets.
On July 8, 1994, Figgie International Inc. (the
"Registrant") sold its Rawlings Sporting Goods Company
division (the "Rawlings Business") through a public offering
of the shares of Rawlings Sporting Goods Company, Inc., a
Delaware corporation (the "RSGC") formed to acquire the
Rawlings Business in exchange for shares of Common Stock.
Immediately prior to the transfer by the Registrant of the
Rawlings Business to RSGC pursuant to an Assets Transfer
Agreement between the Registrant and RSGC dated July 8, 1994,
the Registrant purchased the outstanding receivables of the
Rawlings Business from The CIT Group/Commercial Services,
Inc., to which the Registrant had previously sold the
receivables, and contributed them to the Rawlings Business.
In exchange for the Rawlings Business, including all of the
stock of two subsidiaries of the Registrant and various
assets of other subsidiaries, the Registrant received (a) a
note in the principal amount of $35.0 million (the "Selling
Stockholder Note"), (b) 7,649,981 shares of common stock of
RSGC, which resulted in the Registrant owning 7,650,000
shares, or over 99% of the issued and outstanding shares of
RSGC's common stock, (c) the right to receive any amount by
which the investment of the Registrant in the Rawlings
Business as of July 8, 1994 but prior to the transfer of the
Rawlings Business to RSGC exceeds approximately $42.0
million, provided, however, that if the Registrant's
investment in the Rawlings Business is less than $42.0
million, the Registrant has the obligation to pay to RSGC the
difference between such investment amount and $42.0 million,
and (d) the right to receive 43% of the tax benefit that RSGC
obtains as a result of the higher tax basis of the assets of
the Rawlings Business from their basis when owned by the
Registrant. The Registrant sold the 7,650,000 shares of
common stock of RSGC in concurrent public underwritten
offerings in the United States and Canada at a public
offering price of $12.00 per share.
Item 7. Financial Statements and Exhibits.
(a) Pro Forma Financial Information
Pro Forma Financial Information is not required
because the Registrant has reflected the Rawlings Business as
a discontinued operation in its financial statements for the
fiscal year ended December 31, 1993 and for the interim
period ended March 31, 1994.
(b) Exhibits.
(1) Assets Transfer Agreement, dated July 8,
1994, by and among Figgie International
Inc., Figgie Licensing Corporation,
Figgie International Real Estate, Inc.,
Figgie Properties Inc. and Rawlings
Sporting Goods Company, Inc.
(2) Tax Sharing and Separation Agreement,
dated July 8, 1994, between Figgie
International Inc. and Rawlings Sporting
Goods Company, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto
duly authorized.
FIGGIE INTERNATIONAL INC.
By /s/ L.A. Harthun, Esq.
L.A. Harthun, Esq.
Senior Vice President
International, General Counsel
and Secretary
Dated: July 26, 1994
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Exhibit Index
Exhibit Page
2 Assets Transfer Agreement, dated July 8, 1994, by
and among Figgie International Inc., Figgie
Licensing Corporation, Figgie International Real
Estate, Inc., Figgie Properties Inc. and Rawlings
Sporting Goods Company, Inc
10 Tax Sharing and Separation Agreement, dated July 8,
1994, between Figgie International Inc. and Rawlings
Sporting Goods Company, Inc.
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EXHIBIT-2
ASSETS TRANSFER AGREEMENT
DATED AS OF JULY 8, 1994,
BY AND AMONG
FIGGIE INTERNATIONAL INC.,
FIGGIE LICENSING CORPORATION,
FIGGIE INTERNATIONAL REAL ESTATE, INC.,
FIGGIE PROPERTIES INC.
AND
RAWLINGS SPORTING GOODS COMPANY, INC.
ASSETS TRANSFER AGREEMENT
ASSETS TRANSFER AGREEMENT (the "Agreement"), dated
as of July 8, 1994, by and among FIGGIE INTERNATIONAL INC., a
Delaware corporation ("Figgie"), FIGGIE LICENSING
CORPORATION, a Delaware corporation ("Figgie Licensing"),
FIGGIE INTERNATIONAL REAL ESTATE, INC., a Delaware
corporation ("Figgie Real Estate"), FIGGIE PROPERTIES INC., a
Delaware corporation ("Figgie Properties"; and together with
Figgie, Figgie Licensing and Figgie Real Estate, "Seller"),
and RAWLINGS SPORTING GOODS COMPANY, INC., a Delaware
corporation ("RSGC"; and together with Figgie, Figgie
Licensing, Figgie Real Estate and Figgie Properties, the
"Parties", and each, a "Party").
WHEREAS, Rawlings Sporting Goods Company (the
"Division") is currently an unincorporated operating division
of Figgie;
WHEREAS, upon and subject to the terms and conditions of
this Agreement, Seller desires to convey and assign to RSGC
all of the assets (other than the "Excluded Assets," as
defined below) and liabilities (other than the "Excluded
Liabilities," as defined below) of the Division and certain
other assets, including all of the stock of two subsidiaries
of Figgie, used in the business conducted by the Division
(the "Rawlings Business"), in exchange for 7,649,981 shares
of Common Stock, par value $.01 per share, of RSGC (the
"Shares"), a note in the principal amount of $35,000,000 in
the form of Exhibit A hereto (the "Note"), the tax benefits
to be obtained under the Tax Sharing and Separation
Agreement, between RSGC and Figgie, in the form of Exhibit G
hereto (the "Tax Sharing and Separation Agreement"), and the
assumption by RSGC of the liabilities (other than the
Excluded Liabilities) of the Division; and
WHEREAS, upon and subject to the terms and conditions of
this Agreement, RSGC desires to accept the conveyance and
assignment from Seller of the assets (other than the Excluded
Assets) and liabilities (other than the Excluded Liabilities)
of the Division and certain other assets, including all of
the stock of two subsidiaries of Figgie, used in the Rawlings
Business, issue the Shares to Seller, issue the Note to
Figgie, enter into the Tax Sharing and Separation Agreement
and assume the liabilities (other than the Excluded
Liabilities) of the Division.
NOW, THEREFORE, in consideration of the respective
covenants, representations, warranties and agreements herein
contained, and intending to be legally bound hereby, the
Parties hereby agree as follows:
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ARTICLE 1 - TRANSFER
1.1 Agreement to Transfer. At the Closing hereunder
(as defined in Section 2.1 hereof) and except as otherwise
specifically provided in this Article 1, Seller shall grant,
sell, convey, assign, transfer and deliver to RSGC, upon and
subject to the terms and conditions of this Agreement, all
right, title and interest of Seller in and to (a) the
operations of the Rawlings Business as of the Closing Date,
as a going concern, and the goodwill associated therewith,
and (b) all of the assets, properties and business as of the
Closing Date, whether tangible or intangible, real, personal
or mixed, used in the operation of or otherwise relating to
the Rawlings Business, including without limitation the
assets described in Section 1.2 hereof, but excluding those
assets (the "Excluded Assets") specifically set forth in
Section 1.3 hereof as being excluded (collectively, but
excluding the Excluded Assets, the "Assets").
1.2 The Assets. The Assets shall include, without
limitation, the following:
(a) Leaseholds. Seller's leasehold interests in
the real property described on SCHEDULE 1.2(a) hereto;
(b) Inventory. All raw materials and inventory of
or relating to the Rawlings Business consisting of
merchantable raw materials and in-process and finished goods
of or relating to the Rawlings Business;
(c) Fixed Assets. All the machinery, equipment,
vehicles, office furniture, tools, dies, leasehold
improvements, trade fixtures and all other personal property
of or relating to the Rawlings Business, except as set forth
in Section 4.1.4 hereof;
(d) Accounts Receivable. All outstanding accounts
receivable of or relating to the Rawlings Business, or of
Seller which arise solely from sales of products of the
Rawlings Business or otherwise relate solely to the Rawlings
Business, including the accounts receivable relating to the
Rawlings Business that were previously transferred to The CIT
Group/Commercial Services, Inc. and/or to Figgie Acceptance
Corporation;
(e) Intellectual Property. All of the
intellectual property solely of or relating solely to the
Rawlings Business, including without limitation all
trademarks, trade names, service marks, trade secrets, patent
applications, patents, copyrights, licenses, royalty rights,
processes, designs and inventions owned or used by the
Rawlings Business in the ordinary course of business,
including without limitation all the items listed on SCHEDULE
1.2(e) hereto, and all goodwill associated with the
foregoing;
(f) Business Records. All business records of or
relating solely to the Rawlings Business, including, without
limitation, all files, data, drawings, customer lists, bills
of material, labor route sheets, standard cost records,
supplier lists, marketing plans, product evaluations, product
and sales literature and promotional materials;
(g) Prepaid Expenses. The prepaid expenses of or
relating to the Rawlings Business;
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(h) Agreements. All of Seller's right, title and
interest in and to all agreements, contracts, leases,
commitments and orders pertaining solely to the ownership and
conduct of or relating to the Rawlings Business, including
without limitation those listed on SCHEDULE 1.2(h) hereto,
except as described on such SCHEDULE 1.2(h);
(i) Business. The Rawlings Business as a going
concern and all associated goodwill;
(j) Real Estate. All right, title and interest of
Seller in and to all the parcels of land described on
SCHEDULE 1.2(j) hereto and to all buildings, structures and
improvements located thereon as of the Closing Date, together
with (i) all right, title and interest of Seller in and to
all rights of way or uses, privileges, permits, franchises,
servitude, licenses, easements, tenements, hereditaments and
appurtenances now or hereafter belonging or pertaining to any
of the foregoing, (ii) all rights, awards and other payments
in respect of any taking of any of the foregoing and (iii)
all proceeds of any sales or other dispositions relating to
any of the foregoing;
(k) Stock. All of the outstanding capital stock
of Figgie de Costa Rica, S.A., a Costa Rica company, and
Rawlings Sporting Goods Company, a Missouri company; and
(l) Insurance Policy Benefits Relating to
Environmental Liabilities.
(i) Except as otherwise provided herein, the
benefits, if any, of coverage under the property and
casualty insurance policies and binders held by Seller
at or prior to the Closing Date, to the extent they
provide coverage for any claims, actions or other
proceedings initiated before the Closing Date in
connection with Environmental Liabilities (as defined
below) ("Existing Environmental Claims"), net of
Seller's unreimbursed out-of-pocket expenses, legal and
consulting fees, incurred in connection with the
Existing Environmental Claims.
(ii) The benefits, if any, of coverage under
the property and casualty insurance policies and binders
held by Seller at or prior to the Closing Date, to the
extent they provide coverage for any claims, actions or
other proceedings initiated on or after the Closing Date
in connection with Environmental Liabilities arising
before the Closing Date ("New Environmental Claims"),
including assumption of defense, payment of defense
costs or indemnification by the insurance carriers.
1.3 The Excluded Assets. Specifically excluded from
the Assets are the following:
(a) the corporate seals, certificates of
incorporation, minute books, stock books, tax returns, books
of account or other records having to do with the corporate
organization of Seller, except to the extent included in
Section 1.2(f) hereof;
(b) the rights which accrue or will accrue to
Seller under this Agreement;
(c) all cash and cash equivalents;
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(d) any and all insurance policies of Seller,
claims thereunder, related payments or recoveries thereunder,
related refunds or proceeds, and all rights relating thereto,
except to the extent provided in Section 1.2(l) hereof;
(e) any and all assets of Seller's employee
welfare benefit plans as defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the employee pension benefit plans as defined
in Section 3(2) of ERISA maintained by Seller for the benefit
of its employees, including the employees of the Division;
(f) the assets, properties or rights set forth on
SCHEDULE 1.3(f) hereto; and
(g) any and all actions, claims, causes of action,
rights of recovery, choses in action and rights of set off of
any kind arising before, on or after the Closing Date
relating to the Excluded Assets set forth above.
1.4 Liens. The Assets conveyed to RSGC on the Closing
Date pursuant to this Agreement will be conveyed free and
clear of all liens, charges and encumbrances whatsoever,
except as otherwise disclosed in this Agreement or on
SCHEDULE 1.4 hereto.
1.5 Consideration by Seller. At the Closing hereunder,
Seller shall convey and assign to RSGC all of Seller's right,
title and interest in and to the Assets, upon and subject to
the terms and conditions of this Agreement and in reliance on
the representations, warranties and covenants of RSGC
contained herein. At the Closing, Seller shall execute and
deliver to RSGC "bargain and sale deeds with covenants
against grantor's acts" or their equivalents to transfer to
RSGC the real properties and other real estate interests
described in Section 1.2(j) hereof and on SCHEDULE 1.2(j)
hereto and a bill of sale substantially in the form of
Exhibit B hereto to transfer to RSGC the other Assets and
take any and all additional actions as may be required to
convey and assign the Assets to RSGC. At the Closing, Seller
shall also execute and deliver to RSGC multiple copies of the
Confirmation of Patent Assignment, in the form of Exhibit C
hereto (the "Assignment of Patents"), the Confirmation of
Trademark Assignment, in the form of Exhibit D hereto (the
"Assignment of Trademarks"), and the Confirmation of
Copyright Assignment, in the form of Exhibit E hereto (the
"Assignment of Copyrights").
1.6 Consideration by RSGC. At the Closing hereunder,
RSGC will issue the Note to Figgie and will issue the Shares
to Seller, which shall be fully paid and non-assessable
shares of Common Stock of RSGC. In addition, RSGC will enter
into the Tax Sharing and Separation Agreement and will assume
at the Closing Date pursuant to an agreement in the form of
Exhibit F hereto (the "Assignment and Assumption Agreement"),
and shall perform and discharge when due, all liabilities and
obligations that have historically been reflected as
liabilities on the Rawlings Business's balance sheet and
which arise out of or relate to the Rawlings Business,
whether arising before or after the Closing Date and whether
known or unknown, fixed or contingent, including, but not
limited to, the following (collectively, but excluding those
liabilities (the "Excluded Liabilities") specifically set
forth in Section 1.7 hereof as being excluded, the "Assumed
Liabilities"):
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(a) Unfilled Orders. All customer orders issued
in the ordinary course of business relating to the purchase
of products of or relating to the Rawlings Business which are
on hand unfilled as of the Closing Date, including those
which are listed on SCHEDULE 1.6(a) hereto, subject to such
changes as may have occurred in the ordinary course of
business between the date of such Schedule and the Closing
Date;
(b) Outstanding Purchase Orders. All orders for
the purchase of goods, materials and supplies which are used
in the Rawlings Business, which are issued in the ordinary
course of business, and which are outstanding and unfilled as
of the Closing Date, including those which are listed on
SCHEDULE 1.6(b) hereto, subject to such changes as may have
occurred in the ordinary course of business between the date
of such Schedule and the Closing Date;
(c) Product Liability. Any claim, action, cause
of action, litigation or other proceeding which relates to,
arises from or is in any way connected with an incident which
occurs on or after the Closing Date and which involves any
product sold by the Division;
(d) Environmental Liability. Any and all actual
or threatened, administrative or judicial, actions, orders,
claims, liens, notices, violations or proceedings, civil or
criminal, brought, issued or asserted by any governmental
authority or third party for compliance, penalties, damages,
natural resource damages, property damage, personal injury,
removal, response or remedial action, or recovery of the
costs of removal, response or remedial actions, resulting
from a violation of any Environmental Law (as hereinafter
defined) or a release or threatened release of a Hazardous
Substance (as hereinafter defined) at, to or from, any real
property included within the Assets and used in connection
with the Rawlings Business or at any third party-owned site
where wastes generated by Assets used in connection with the
Rawlings Business were sent for disposal, pursuant to any
federal, state, local or provincial, civil or criminal law,
statute, ordinance, code, rule or regulation, relating to the
protection of the environment and/or governing the presence,
generation, use, management, storage, transport, treatment,
recycling, reclamation, disposal, discharge, emission or
release of any Hazardous Substance, including the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Sections
6901 et seq.; the Toxic Substances Control Act, 15 U.S.C.
Sections 2601 et seq.; the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C.
Sections 9601 et seq.; the Federal Water Pollution Control
Act, 33 U.S.C. Sections 1251 et seq.; the Clean Air Act, 42
U.S.C. Sections 7401 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Sections 1801 et seq.; the
Occupational Safety and Health Act, 29 U.S.C. Sections 651;
the Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. Sections 136y et seq.; the Oil Pollution Act of 1990,
33 U.S.C. Sections 2701 et seq., all as amended from time to
time; any permit, license, approval, authorization, order,
consent order or binding agreement issued or entered into
pursuant to any of the aforementioned; and common law
(collectively, "Environmental Law"). Any and all actual or
threatened, administrative or judicial, actions, orders,
claims, liens, notices, violations or proceedings described
in the preceding sentence shall be referred to herein as
"Environmental Liabilities." For purposes of this paragraph,
"Hazardous Substance" means petroleum materials, petroleum
wastes, radioactive materials, hazardous wastes,
polychlorinated byphenyls, lead based paint, urea
formaldehyde, asbestos or any materials containing asbestos,
and any materials or substances defined as or included in the
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definition of "hazardous substances," "hazardous materials,"
"hazardous constituents," "toxic substances," "toxic
pollutants," "pollutants," or "contaminants" under any
Environmental Law;
(e) Litigation. Any actions, suits, claims,
proceedings, investigations, demands, assessments or audits
which arise under, out of or in connection with any incident
which occurs on or after the Closing Date and which involves
the Rawlings Business or any of the Assumed Liabilities or
Assets;
(f) Accounts Payable. All accounts payable that
relate to the Rawlings Business and are outstanding at and
after the Closing Date;
(g) Warranty and Contractual Obligations. All
warranty and contractual obligations arising from the sales
of products of the Division or relating to the Rawlings
Business;
(h) Transferred Employees. All liabilities and
obligations of Seller with respect to the Transferred
Employees (as defined below) to the extent described in
Section 5.1 hereof;
(i) Taxes. Except as provided in Article 6
hereof, taxes to the extent provided in the Tax Sharing and
Separation Agreement;
(j) Agreements. All of Seller's liabilities and
obligations under all of the agreements, contracts, leases,
commitments and orders pertaining solely to the ownership and
conduct of or relating solely to the Rawlings Business,
including without limitation those listed on SCHEDULES 1.2(a)
and 1.2(h) hereto; and
(k) Workers' Compensation Claims. Any workers'
compensation claims which relate to, arise from or are in any
way connected with incidents which occur on or after the
Closing Date and which involve any of the Transferred
Employees.
In no event, however, shall RSGC assume or incur any
liability or obligation under this Section 1.6 or otherwise
in respect of any liability or obligation related solely and
exclusively to the Excluded Assets.
1.7 Excluded Liabilities. Figgie, and not RSGC, will
be responsible for (a) any claims, actions, causes of action,
litigation and other proceedings, including those listed on
SCHEDULE 1.7(a) hereto, which relate to, arise from or are in
any way connected with any incidents which occurred prior to
the Closing Date and which involve any product sold by the
Division; (b) any actions, suits, claims, proceedings,
investigations, demands, assessments or audits, including
those listed on SCHEDULE 1.7(b) hereto, which arise under,
out of or in connection with any incidents which occurred
prior to the Closing Date and which involve the Rawlings
Business or any of the Assumed Liabilities or Assets; (c) any
worker's compensation claims which relate to, arise from or
are in any way connected with any incidents which occurred
prior to the Closing Date and which involve any of the
Transferred Employees; (d) any amounts due and payable to
Deloitte & Touche for services rendered to Seller and/or RSGC
prior to the Closing Date; and (e) any actions, suits,
claims, proceedings, investigations, demands, assessments or
audits which arise under, out of or in connection with any
liabilities or obligations of Seller with respect to the
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Transferred Employees (and any other current or former
employees of Seller) to the extent not assumed by RSGC under
Section 1.6(h) hereof.
1.8 Dividend of the Shares by Figgie Licensing, Figgie
Real Estate and Figgie Properties. In connection with the
transactions contemplated by this Agreement, Figgie will
receive 4,649,898 of the Shares, Figgie Licensing will
receive 2,750,000 of the Shares, Figgie Real Estate will
receive 214,583 of the Shares and Figgie Properties will
receive 35,500 of the Shares. Figgie Licensing, Figgie Real
Estate and Figgie Properties hereby agree to dividend to
Figgie any and all Shares they receive in connection with the
transactions contemplated by this Agreement. Accordingly,
Figgie Licensing, Figgie Real Estate and Figgie Properties
hereby agree that all of the Shares issued by RSGC pursuant
to the terms of this Agreement shall be issued in the name of
Figgie.
1.9 Additional Payment by or to Figgie. As soon as
practicable following the Closing Date, but in no event later
than 60 days after the Closing Date, RSGC will prepare, at
Figgie's sole cost and expense, and deliver to Figgie a
balance sheet for the Rawlings Business as of June 30, 1994
with pro forma adjustments to reflect contributions by Figgie
of accounts receivables, any elimination of liabilities
relating to capital leases and any cash of the Rawlings
Business retained by Figgie as of the Closing Date (the
"Final Balance Sheet") which has been prepared in accordance
with generally acceptable accounting principles consistently
applied and audited by the independent certified public
accountant or firm which customarily prepares the balance
sheets and other financial statements of Figgie ("Figgie's
Accountants"), except that such Final Balance Sheet will not
reflect any accruals for any liabilities being retained by
Figgie. Within 15 days after receipt of the Final Balance
Sheet, as determined in Section 8.4 hereof, Figgie shall
either confirm acceptance of the Final Balance Sheet or
furnish to RSGC and Figgie's Accountants a written
description of each apparent discrepancy or disagreement with
the Final Balance Sheet, specifying all the facts supporting
each discrepancy or disagreement and the effect of each
discrepancy or disagreement on the results of the Final
Balance Sheet, except that, no such discrepancy or
disagreement shall be expressed by Figgie with regard to
accruals relating to environmental costs. (Failure to so
object within such 15 days shall be deemed an acceptance by
Figgie of the Final Balance Sheet.) If all discrepancies and
disagreements cannot be resolved by RSGC and Figgie within 15
days after RSGC's receipt of any such written description
from Figgie, each discrepancy or disagreement which cannot be
so resolved shall be submitted to a Big Six accounting firm
reasonably acceptable to Figgie and RSGC, which shall be
instructed to reach a decision within 60 days, which decision
shall be final and binding on the parties. The fees and
expenses of such Big Six accounting firm shall be borne one-
half by Figgie and one-half by RSGC, and each party shall
bear its own expenses in connection therewith including
without limitation its attorneys' and accountants' fees.
Once the Final Balance Sheet is accepted by Figgie or final
resolution of all disputes is received from the Big Six
accounting firm (the "Adjustment Date"), then, within five
days after the Adjustment Date, if the investment of Figgie
in the Rawlings Business as of the Closing Date (the "Final
Figgie Investment"), exceeded $41,972,000 (the "Estimated
Figgie Investment"), RSGC shall pay Figgie the difference
between those amounts (the "Additional Purchase Price"). If
the Final Figgie Investment is lower than the Estimated
Figgie Investment, Figgie shall pay the difference to RSGC
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(the "Purchase Price Refund") within five days after the
Adjustment Date. RSGC shall pay interest on the amount of
the Additional Purchase Price and Figgie shall pay interest
on the amount of the Purchase Price Refund calculated from
the date Figgie is considered to have received the Final
Balance Sheet, as determined in Section 8.4 hereof, to the
date of payment, at an interest rate equal to the First
National Bank of Boston's "base lending rate" as in effect
from time to time. RSGC shall have the right to offset any
amounts due to Figgie by RSGC pursuant to Section 7 of the
Tax Sharing and Separation Agreement by any amounts payable
by Figgie to RSGC pursuant to this Section 1.9.
ARTICLE 2 - CLOSING, THIRD PARTY CONSENTS
AND CONDUCT OF THE RAWLINGS BUSINESS
2.1 Closing. The closing (the "Closing") of the sale
and purchase of the Assets and related events shall take
place at 10:00 A.M., local time, on July 8, 1994 at the
offices of Morgan, Lewis & Bockius, 1800 M Street, N.W.,
Washington, DC 20036 or on such other date as may be mutually
agreed upon in writing by RSGC and Figgie. The date of the
Closing is sometimes herein referred to as the "Closing
Date."
2.2 Effectiveness of Transfer. The transfer of the
Assets and Assumed Liabilities contemplated hereby shall be
effective as of the Closing Date. Upon consummation of the
Closing, RSGC shall be deemed to be responsible for all of
the Assumed Liabilities (to the exclusion of Seller being
responsible therefor) and to be the beneficial owner of the
Assets, including those Assets as to which record title has
not been transferred formally in accordance with applicable
law, and RSGC shall be entitled to the benefits arising
therefrom.
2.3 Items to be Delivered at Closing. At the Closing
and subject to the terms and conditions herein contained:
(a) Seller shall deliver to RSGC the following:
(i) a duly executed Bill of Sale;
(ii) all agreements, authorizations,
exemptions, waivers, and consents of any third persons
or entities required to be obtained by Seller hereunder
or generally required by Seller or RSGC for the
consummation of the transactions contemplated by this
Agreement, including, but not limited to, the consents
of the relevant financial institutions;
(iii) sufficient original, executed copies of
the Assignment of Patents, the Assignment of Trademarks
and the Assignment of Copyrights such that there is one
original version for each group of patents, trademarks
and copyrights for each country covered by those
documents covering the intellectual property and other
rights to be transferred pursuant to Section 1.2(e)
hereof;
(iv) sufficient original, executed (by
Figgie, Figgie Real Estate and/or Figgie Properties, as
appropriate) "bargain and sale deeds with covenants
against grantor's acts" or their equivalents conveying
the real property and other real estate interests
described in Section 1.2(j) hereof and on SCHEDULE
1.2(j) hereto;
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(v) stock certificates executed in blank
evidencing ownership of all of the outstanding capital
stock of Figgie de Costa Rica, S.A., a Costa Rica
company, and Rawlings Sporting Goods Company, a Missouri
company;
(vi) a duly executed Assignment and
Assumption Agreement;
(vii) duly executed certificates
substantially in the form of Exhibit H hereto; and
(viii) such other specific instruments of
sale, conveyance, assignment, transfer and delivery as
are required to vest good and marketable title to the
Assets in RSGC.
(b) RSGC shall deliver to Figgie the following:
(i) the Shares;
(ii) the Note; and
(iii) a duly executed Assignment and
Assumption Agreement.
(c) The Parties shall execute and deliver the
following agreements and instruments:
(i) Tax Sharing and Separation Agreement; and
(ii) Transitional Services Agreement, between
RSGC and Figgie, in the form of Exhibit I hereto.
(d) At or prior to the Closing, the Parties shall
also deliver to each other the agreements, opinions,
certificates and other documents and instruments referred to
in Article 4 hereof.
2.4 Third Party Consents. To the extent that Seller's
rights under any agreement, contract, commitment, lease,
authorization or other Asset to be assigned to RSGC hereunder
may not be assigned without the consent of another person
which has not been obtained, this Agreement shall not
constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof or be unlawful.
If any such required consent shall not be obtained or if any
attempted assignment would be ineffective or would impair
RSGC's rights under the Asset in question so that RSGC would
not in effect acquire the benefit of all such rights, Seller,
to the maximum extent permitted by law and the terms
applicable to the Asset, upon the written request of RSGC and
payment by RSGC of all out-of-pocket expenses of Seller in
connection therewith, shall act after the Closing Date as
RSGC's agent in order to obtain for it the benefits
thereunder and shall cooperate, to the maximum extent
permitted by law and the terms applicable to the Asset, with
RSGC in any other reasonable arrangement designed to provide
such benefits to RSGC. In connection with the assignment of
contracts and other rights and obligations in connection with
the transfer of the Assets, Seller, in its sole discretion,
may enter into one or more guarantees with respect to RSGC's
obligations under the contract.
2.5 Conduct of the Rawlings Business. Prior to the
Closing Date, Seller shall conduct the Rawlings Business in
substantially the same manner as it was conducted prior to
the date hereof.
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2.6 Adjustments for Real Estate Matters. The following
items shall be apportioned between Seller and RSGC and shall
be prorated on a per diem basis as of 11:59 p.m. of the day
before the Closing Date: (a) with respect to the real
property listed on SCHEDULE 1.2(j) hereto: (i) real estate
taxes, vault taxes, water charges and sewer rents, if any, on
the basis of the fiscal year for which assessed, (ii) fuel
and electric costs, based on the most recent monthly bills
and (iii) assessments, if any, and (b) with respect to each
leasehold listed on SCHEDULE 1.2(a) hereto, any and all fixed
rent, additional rent or other charges payable by all
tenants.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Parties.
Each of the Parties hereto hereby represents and warrants to
the other that:
3.1.1 Corporate Existence. Such Party is a
corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
incorporation.
3.1.2 Corporate Power; Authorization; Enforceable
Obligations. Such Party has the corporate power, authority
and legal right to execute, deliver and perform this
Agreement. The execution, delivery and performance of this
Agreement by such Party have been duly authorized by all
necessary corporate action. This Agreement has been, and the
other agreements, documents and instruments required to be
delivered by such Party in accordance with the provisions
hereof will be, duly executed and delivered on behalf of such
Party by duly authorized officers of such Party, and this
Agreement constitutes, and such other agreements, documents
and instruments when executed and delivered will constitute,
the legal, valid and binding obligations of such Party,
enforceable against such Party in accordance with their
respective terms except to the extent that such
enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting the rights of creditors
generally or by general principles of equity.
3.1.3 Validity of Contemplated Transactions, Etc.
The execution, delivery and performance of this Agreement by
such Party does not and will not violate or result in the
breach of any material term, condition or provision of, or
require the consent of any other person which has not been
obtained under, (a) any material law, ordinance, or
governmental rule or regulation to which such Party is
subject, (b) any judgment, order, writ, injunction, decree or
award of any court, arbitrator or governmental or regulatory
official, body or authority which is applicable to such
Party, (c) the charter documents of such Party or (d) any
material mortgage, indenture, agreement, contract, lease,
plan, authorization or other instrument to which such Party
is a party, by which such Party may have rights or by which
any of the Assets may be bound, except for the delivery and
recording of title transfer documentation (including UCC
financing statement filings) with various regulatory
authorities with respect to the transfer of title to certain
of the Assets.
3.1.4 Rawlings Business. Except to the extent
otherwise provided herein, all assets incidental to the
Rawlings Business are being transferred to RSGC pursuant to
this Agreement.
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3.1.5 Federal Income Tax Liability. Figgie has
made no accounting method change with respect to the Rawlings
Business that requires Figgie to take into account
adjustments under Section 481(a) of the Internal Revenue Code
of 1986, as amended (the "Code").
3.2 No Other Representations or Warranties of Seller.
In connection with the transactions contemplated hereby and
the Rawlings Business and the Assets, except as expressly set
forth in Section 3.1 hereof, THE ASSETS ARE SOLD ON AN "AS
IS" BASIS AND SELLER MAKES NO REPRESENTATIONS OR WARRANTIES
WHATSOEVER, WHETHER EXPRESS OR IMPLIED OR STATUTORY, OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR
OTHERWISE. IN ADDITION, SELLER SHALL NOT BE LIABLE TO OR
THROUGH RSGC FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL LOSS OR DAMAGES OF ANY NATURE OTHER THAN THE
EXCLUDED LIABILITIES.
3.3 Representations and Warranties of RSGC. RSGC
hereby represents and warrants to Seller that: (a) RSGC
personnel are experienced in the operation of the type of
business conducted by the Rawlings Business, (b) RSGC and its
directors, officers, attorneys, accountants and advisors have
been given the opportunity to examine to the full extent
deemed necessary and desirable by RSGC all books, records and
other information with respect to Seller, the Assets and the
Assumed Liabilities, (c) RSGC has taken full responsibility
for determining the scope of its investigations of Seller,
the Assets and the Assumed Liabilities, and for the manner in
which such investigations have been conducted, and has
examined Seller, the Assets and the Assumed Liabilities to
RSGC's full satisfaction, (d) RSGC is fully capable of
evaluating the adequacy and accuracy of the information and
material obtained by RSGC in the course of such
investigations, (e) RSGC has not relied on Seller with
respect to any matter in connection with RSGC's evaluation of
Seller, the Assets and the Assumed Liabilities, other than
the representations and warranties of Seller specifically set
forth in Section 3.1 hereof and (f) Seller is making no
representations or warranties, express or implied, of any
nature whatever with respect to Seller, the Assets and the
Assumed Liabilities, other than the representations and
warranties of Seller specifically set forth in Section 3.1
hereof.
3.4 Survival of Representations and Warranties. The
representations and warranties included or provided for
herein shall survive until the first anniversary of the
Closing Date.
ARTICLE 4 - CONDITIONS PRECEDENT TO THE CLOSING
4.1 Conditions Precedent to RSGC's Obligations. All
obligations of RSGC under this Agreement are subject to the
fulfillment or satisfaction, prior to or at the Closing, of
each of the following conditions precedent:
4.1.1 Representations, Warranties and Covenants of
Seller. The representations and warranties of Seller herein
contained shall have been true and correct in all material
respects at the date of execution of this Agreement and shall
be true and correct in all material respects at the time of
the Closing; Seller shall have performed in all material
respects all obligations and complied in all material
respects with all agreements, undertakings, covenants and
conditions required by this Agreement to be performed or
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<PAGE> 12
complied with by it at or prior to the Closing Date; and
Figgie shall have delivered to RSGC a certificate dated the
Closing Date and signed by an officer of Figgie to such
effect.
4.1.2 Injunctions, Etc. There shall not be any
judgment, decree, injunction, ruling or order of any court,
governmental department, commission, agency or
instrumentality outstanding against Seller or RSGC which
prohibits or materially restricts or delays consummation of
the Closing.
4.1.3 Consents and Approvals. Seller shall have
obtained the consents required by the terms of the material
contracts, commitments, agreements or authorizations of or
relating to the Rawlings Business to which Seller or the
Division is a party to the extent that RSGC determines that
obtaining such consent is required, necessary or desirable
under the pertinent debt, lease, contract, commitment or
agreement or other document or instrument or under applicable
orders, laws, rules or regulations, for the consummation of
the transactions contemplated hereby in the manner herein
provided.
4.1.4 Injection Molding Machines. At the Closing,
RSGC and Seller shall enter into: (a) a sublease with
respect to an injection molding machine which is currently
leased by Seller and used in the Rawlings Business and (b)
lease(s) with respect to three injection molding machines
which are currently owned by Seller and used in the Rawlings
Business.
4.2 Conditions Precedent to Seller's Obligations. All
obligations of Seller under this Agreement are subject to the
fulfillment or satisfaction, prior to or at the Closing, of
each of the following conditions precedent:
4.2.1 Representations, Warranties and Covenants of
RSGC. The representations and warranties of RSGC herein
contained shall have been true and correct in all material
respects at the date of execution of this Agreement and shall
be true and correct in all material respects at the time of
the Closing; RSGC shall have performed in all material
respects all obligations and complied in all material
respects with all agreements, undertakings, covenants and
conditions required by this Agreement to be performed or
complied with by it at or prior to the Closing Date; and RSGC
shall have delivered to Seller a certificate dated the
Closing Date and signed by an officer of RSGC to such effect.
4.2.2 Injunctions, Etc. There shall not be any
judgment, decree, injunction, ruling or order of any court,
governmental department, commission, agency or
instrumentality outstanding against Seller or RSGC which
prohibits or materially restricts or delays consummation of
the Closing.
4.2.3 Consents and Approvals. Seller shall have
obtained the consents required by the terms of the material
contracts, commitments, agreements or authorizations of or
relating to the Rawlings Business to which Seller or the
Division is a party to the extent that Seller determines that
obtaining such consent is required, necessary or desirable
under the pertinent debt, lease, contract, commitment or
agreement or other document or instrument or under applicable
orders, laws, rules or regulations, for the consummation of
the transactions contemplated hereby in the manner herein
provided.
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<PAGE> 13
4.2.4 Binding Commitment to Sell the Shares.
Figgie shall have entered into a binding commitment to sell
the Shares pursuant to one or more underwriting agreements.
ARTICLE 5 - POST CLOSING MATTERS
5.1 Employee Arrangements.
5.1.1 Continuation of Employment.
(a) RSGC's Undertaking. Effective as of the
Closing Date, RSGC shall continue to employ all of the
employees of the Division (all such employees, the
"Transferred Employees"); provided, however, that such
employment shall be employment at will and RSGC shall have
the ability to terminate any such Transferred Employee at any
time for any reason, subject to Section 5.1.5 hereof.
(b) Employee Benefits. On and after the Closing
Date: (i) Figgie shall not have any responsibility for
providing nor any liability with respect to any employee
benefit accruals for the Transferred Employees with respect
to their service with RSGC after the Closing Date and RSGC
shall not have any responsibility for providing nor any
liability with respect to any employee benefit accruals for
Transferred Employees with respect to their service with
Figgie prior to the Closing Date and (ii) nothing to the
contrary withstanding, all Transferred Employees will be
considered 100% vested in, and considered to be terminated
vested employees or retirees, if applicable, under Figgie's
employee pension benefit plans as of the Closing Date. On or
after the Closing Date: (i) RSGC shall establish its own
employee benefit plans ("RSGC's Employee Benefit Plans"),
which, except as otherwise provided in this Section 5.1, need
not be comparable to the employee benefit plans being
provided by Figgie prior to the Closing Date and shall
provide for the eligibility of the Transferred Employees
under such Plans and (ii) RSGC's Employee Benefit Plans shall
provide the Transferred Employees with credit for service
with Figgie for purposes of eligibility under all of RSGC's
welfare benefit plans and for purposes of eligibility and
vesting under all of RSGC's pension and profit sharing plans
to the extent that such service credit would be relevant.
(c) Compliance with Law. In taking the actions
contemplated hereunder in connection with employee benefit
plans, Figgie and RSGC shall comply with all applicable law.
5.1.2 Welfare Benefit Plans; Liabilities
Retained by Figgie.
(a) Effective upon the Closing Date, Figgie shall
retain and be responsible for:
(i) the welfare benefits, if any, of all
present and former employees, other than Transferred
Employees, and retirees of Figgie as of the Closing
Date; and
(ii) welfare benefit payments payable with
respect to Transferred Employees for any period prior to
the Closing Date.
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<PAGE> 14
(b) On and after the Closing Date, Figgie shall
have no liability under any welfare benefit program of Figgie
with respect to the Transferred Employees, except as
specifically provided in this Section 5.1 hereof or as may be
provided under the provisions of ERISA or the Code (including
the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended ("COBRA")). RSGC shall take whatever steps are
necessary so that no COBRA liability will be incurred by
Figgie in connection with the consummation of the
transactions contemplated by this Agreement including, but
not limited to, providing during the one year period
following the Closing Date group health plans which are at
least as good as the Figgie plans with no pre-existing
condition exclusion or "actively at work" requirement
applicable to the Transferred Employees. Figgie shall be
responsible for providing such notices to the Transferred
Employees under COBRA as it shall deem to be necessary or
desirable. Neither Figgie nor RSGC shall have any obligation
to pay any severance compensation or separation pay to the
Transferred Employees. Figgie shall have no past, present or
future responsibility or liability of any kind, contingent or
otherwise, arising out of the operation or termination of any
welfare benefit plan of RSGC existing at any time whether
prior or subsequent to the Closing Date. Figgie shall be
responsible for payment of claims arising from occurrences
prior to the Closing Date.
5.1.3 Pension Plan.
(a) RSGC's Actions.
(i) Not later than 120 days after the Closing
Date, RSGC shall take such action as is necessary so
that the Transferred Employees who were covered by the
Figgie International Inc. Retirement Income Plan II
("RIP II") shall be eligible to participate in a defined
benefit pension plan which qualifies under Code Section
401(a) ("RSGC's Pension Plan for Transferred
Employees"). RSGC's Pension Plan for Transferred
Employees shall initially have substantially the same
provisions as the provisions of RIP II applicable to the
Transferred Employees immediately prior to the Closing
Date.
(ii) RSGC shall furthermore provide in RSGC's
Pension Plan for Transferred Employees service credit
for (A) eligibility to participate, (B) vesting, (C)
eligibility for retirement and early retirement, and (D)
benefit accrual, with respect to each Transferred
Employee, for service prior to the Closing Date credited
for the same purposes under RIP II. RSGC's Pension Plan
for Transferred Employees shall further provide that the
accrued benefit for a Transferred Employee under such
plan shall not be less than the difference between: (A)
the benefit accrued by the Transferred Employee under
the terms of RSGC's Pension Plan for Transferred
Employees, as it may be amended from time to time,
recognizing service rendered by such Transferred
Employee as a participant in both RSGC's Pension Plan
for Transferred Employees and RIP II; and (B) such
Transferred Employee's accrued benefit as of the Closing
Date under RIP II, under the terms of RIP II as it
exists on that date and irrespective of the extent to
which such accrued benefit is funded under or paid from
RIP II on or after the Closing Date.
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<PAGE> 15
(iii) Notwithstanding any provision to the
contrary in (i) or (ii) above, on and after the first
anniversary of the Closing Date, RSGC shall be free to
amend, revise or terminate any provisions or benefits
under RSGC's Pension Plan for Transferred Employees.
(b) Figgie's Actions. Within a reasonable period
after the Closing Date, to the extent necessary, Figgie shall
amend RIP II to provide (i) that each Transferred Employee
who is a participant in RIP II on the Closing Date shall be
fully vested on such date in his or her accrued benefit under
RIP II and (ii) that distributions to Transferred Employees
may commence at age 55 (regardless of service) at the
Transferred Employee's election subject to full actuarial
reduction. In addition, a Transferred Employee with an
accrued benefit with a present value equal to or less than
$3,500 under RIP II shall be cashed out of his or her
benefit.
5.1.4 Defined Contribution Plans.
(a) RSGC's Actions.
(i) Not later than 120 days after the Closing
Date, RSGC shall take such action as is necessary so
that the Transferred Employees who were covered by the
Figgie International Inc. Supplementary Retirement
Savings Plan ("SRSP") shall be eligible to participate
in a defined contribution plan which qualifies under
Code Sections 401(a) and 401(k) ("RSGC's Savings Plan
for Transferred Employees").
(ii) RSGC shall furthermore provide in RSGC's
Savings Plan for Transferred Employees service credit
for (A) eligibility to participate and (B) vesting for
each Transferred Employee, for service prior to the
Closing Date credited for the same purposes under SRSP.
(b) Figgie's Actions.
(i) Within a reasonable period after the
Closing Date, to the extent necessary, Figgie shall
amend all of Figgie's defined contribution plans which
cover Transferred Employees, including SRSP ("Figgie's
DC Plans"), to provide (A) that each Transferred
Employee who is a participant in such plans on the
Closing Date shall be fully vested on such date in his
or her account balances under Figgie's DC Plans and (B)
that distributions to Transferred Employees may commence
at age 55 (regardless of service) at the Transferred
Employee's election. In addition, a Transferred
Employee with an account balance equal to or less than
$3,500 under Figgie's DC Plans shall be cashed out of
his or her benefit.
(ii) On or before the first anniversary of
the Closing Date, Figgie shall offer each Transferred
Employee the right to receive a lump sum distribution of
his or her account balances under Figgie's DC Plans or
to transfer such account balances to RSGC's Savings Plan
for Transferred Employees.
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<PAGE> 16
5.1.5 Cooperation.
(a) With respect to all benefits for which Figgie
is liable under this Section 5.1, RSGC shall cooperate with
Figgie by promptly providing the information reasonably
requested by Figgie to enable Figgie to perform its
obligations. RSGC shall direct all claimants and claims for
such benefits to Figgie. Figgie shall provide RSGC with such
reasonable access prior to the Closing Date as may be
necessary or appropriate to enable RSGC to enroll Transferred
Employees into RSGC's Employee Benefits and otherwise fulfill
its obligations under this Section 5.1.
(b) With respect to all benefits for which RSGC is
liable under this Section 5.1 or otherwise provides to
Transferred Employees, Figgie shall cooperate with RSGC by
promptly providing the information reasonably requested by
RSGC to enable RSGC to perform its obligations. Figgie shall
direct all claimants and claims for such benefits to RSGC.
(c) After the Closing Date, Figgie and RSGC each
will cooperate with the other in providing reasonable access
to all information required for the operation of, or the
preparation and submission of reports or notices required in
connection with the operation of the employee benefit
programs maintained by Figgie or RSGC or their affiliates
which cover any of the Transferred Employees, including but
not limited to the preparation and submission of reports or
notices to the Pension Benefit Guaranty Corporation, the
Department of Labor, the Internal Revenue Service or any
other agency of the U.S. Government.
5.1.6 Collective Bargaining Agreements. Effective
on the Closing Date, RSGC shall assume all collective
bargaining agreements that are in effect between Figgie or
the Division and a union or other collective bargaining
representative to the extent such agreements cover
Transferred Employees.
5.1.7 Multiemployer Pension Plan Matters. In
addition to RSGC's obligations set forth in this Section 5.1,
RSGC shall assume certain obligations of Figgie and the
Division relating to certain of the Transferred Employees as
follows:
(a) Figgie is a contributor to two multiemployer
pension plans, the Amalgamated Cotton Garment & Allied
Industries Fund (the "Amalgamated Fund") and the Central
States, Southeast and Southwest Areas Pension Fund (the
"Central States Fund" and, with the Amalgamated Fund, the
"Funds," and, individually, a "Fund"). RSGC and Figgie
intend that the sale of the Rawlings Business pursuant to
this Agreement shall constitute a Sale of Assets under
Section 4204 of ERISA, 29 U.S.C.A. 1384, and shall not result
in the imposition of complete or partial withdrawal liability
to Figgie under either such Fund. Therefore, RSGC and Figgie
agree to comply with the provisions of said Section 4204 of
ERISA in respect of both such Funds, as follows:
(i) RSGC shall contribute to each Fund with
respect to the Rawlings Business for substantially the
same number of contribution base units (as defined by
Section 4001(a)(11) of ERISA) for which Figgie had an
obligation to contribute to such Fund with respect to
the Rawlings Business, but in no event for fewer
contribution base units than would be required of RSGC
under the applicable collective bargaining agreement.
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<PAGE> 17
(ii) RSGC shall comply with the provisions of
Section 4204(a)(1)(B) of ERISA and provide to each such
Fund for a period of five plan years commencing with the
first plan year beginning after the Closing Date a bond
issued by a corporate surety company that is an
acceptable surety within the meaning of Section
4204(a)(1)(B) of ERISA, or an amount held in escrow by a
bank or similar financial institution satisfactory to
the Fund, in an amount (calculated separately for each
such Fund) equal, in either case (bond or escrow) to the
greater of (A) the average annual contribution required
to be made by Figgie with respect to the Rawlings
Business under the Fund for the three plan years
preceding the plan year in which the Closing Date
occurs, or (B) the annual contribution that Figgie was
required to make with respect to the Rawlings Business
under the Fund for the last plan year before the plan
year in which the Closing Date occurs, which bond (or
escrowed funds) shall be paid to the Fund if RSGC
withdraws from the Fund or fails to make a contribution
to the Fund when due, at any time during the first five
plan years beginning after the Closing Date; provided,
however, that RSGC shall not be obligated to provide
such bond (or escrowed funds) if excepted from such
obligation under the provisions of 29 C.F.R. Sections
2643.11 and 2643.13, applicable to certain de minimis
transactions. For the purpose of establishing the
applicability of such exception, prior to the first day
of the first plan year commencing after the Closing
Date, RSGC agrees to provide, and Figgie agrees to
cooperate with RSGC in providing, to the Fund trustees
for each such Fund: (A) notification in writing of
RSGC's and Figgie's intention that the sale be covered
by Section 4204 of ERISA; (B) a request for a variance
from the obligation for RSGC's bond (or escrow) and the
sale-contract provision under Sections 4204(a)(1)(B) and
4204(a)(1)(C) of ERISA, respectively; and (C) such
information as may be necessary to demonstrate to the
Fund trustees the applicability of 29 C.F.R. Section
2643.13 (i.e., establish that the bond which would
otherwise be required under Section 4204(a)(1)(B) does
not exceed the lesser of the following amounts: (1)
$250,000 or (2) two percent of the average total annual
contributions made by all employers to the Fund for the
three most recent plan years prior to the Closing Date).
Notwithstanding any of the foregoing provisions, RSGC
shall have no obligation to provide such bond (or
escrowed funds) until notified by the Fund trustees of
their decision with respect to RSGC's aforementioned
timely application for a variance from such obligation
as set forth herein. RSGC shall send Figgie copies of
all notices and other correspondence with the Fund
trustees pursuant to this Section 5.1.7 for each such
Fund. If either Fund is in reorganization in the plan
year in which the Closing Date occurs, and if RSGC is
required to post a bond or provide escrowed amounts to
such Fund pursuant to this Section 5.1.7, RSGC shall
furnish such bond or escrow in an amount equal to 200%
of the amount that would otherwise be applicable under
Section 4204(a)(1)(B) of ERISA.
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<PAGE> 18
(iii) If RSGC withdraws from either such Fund
in a complete withdrawal, or a partial withdrawal with
respect to the Rawlings Business, during the first five
plan years beginning after the Closing Date, RSGC shall
pay any withdrawal liability resulting from such action.
Figgie shall be secondarily liable for any withdrawal
liability it would have had to the Fund with respect to
the Rawlings Business (but for Section 4204 of ERISA) if
the liability of RSGC with respect to the Fund is not
paid.
(iv) RSGC shall notify Figgie immediately in
the event that RSGC withdraws from either such Fund in a
complete or partial withdrawal during the first five
plan years beginning after the Closing Date, and upon
request of Figgie, shall provide Figgie with any and all
information relevant to the obligations of RSGC and
Figgie under this Section 5.1.7 or ERISA. RSGC shall
provide Figgie with timely copies of all notices,
demands, and other correspondence between RSGC (or any
party acting on behalf of RSGC or in connection with a
partial or complete withdrawal by RSGC) and the Fund
relating to such withdrawal.
(b) RSGC hereby indemnifies and holds harmless
Figgie from, and agrees to reimburse Figgie immediately and
in full upon demand with respect to:
(i) any payment that Figgie is required to
make to the Amalgamated Fund or the Central States Fund
by reason of Section 4204(a)(2) of ERISA, subsection
(a)(iii) of this Section 5.1.7 or the failure of RSGC to
fully and completely perform any part of the obligation
undertaken by RSGC in this Section 5.1.7; and
(ii) any and all expenses incurred, including
reasonable accounting, actuarial, and legal fees,
arising directly or indirectly by reason of the failure
of RSGC to fully and completely perform any part of the
obligation undertaken by RSGC in this Section 5.1.7.
(c) In the event that, prior to the date on which
RSGC would otherwise be required to provide the Amalgamated
Fund with a bond or cash escrow pursuant to subsection
(a)(ii) of this Section 5.1.7, the Amalgamated Fund
determines that (i) Figgie has incurred a complete withdrawal
from the Amalgamated Fund and (ii) Figgie would owe no
liability as a result of such complete withdrawal, even in
the absence of this Section 5.1.7; then the obligations of
this Section 5.1.7 shall not apply with respect to the
Amalgamated Fund.
5.2 Maintenance of Books and Records. Each of the
Parties shall preserve, in accordance with their applicable
written record retention policies in effect from time to
time, all records possessed or to be possessed by such Party
relating to any of the assets, liabilities or business of the
Rawlings Business prior to the Closing Date. After the
Closing Date, where there is a legitimate purpose, such Party
shall provide the other Party with access, upon prior
reasonable written request specifying the need therefor,
during regular business hours, to (a) the officers and
employees of such Party and (b) the books of account and
records of such Party, and the other Parties and their
representatives shall have the right to make copies of such
books and records; provided, however, that the foregoing
right of access shall not be exercisable in such a manner as
to interfere unreasonably with the normal operations and
business of such Party; and provided, further, that, as to so
much of such information as constitutes trade secrets or
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<PAGE> 19
confidential business information of such Party, the
requesting Party and its officers, directors and
representatives will use due care to not disclose such
information except (i) as required by law, (ii) with the
prior written consent of such Party, which consent shall not
be unreasonably withheld, or (iii) where such information
becomes available to the public generally, or becomes
generally known to competitors of such Party, through sources
other than the requesting Party, its affiliates or its
officers, directors or representatives. Such records may
nevertheless be destroyed by a Party if such Party sends to
the other Parties written notice of its intent to destroy
records, specifying with particularity the contents of the
records to be destroyed. Subject to the provisions of
Section 6.9 hereof, such records may then be destroyed after
the 30th day after such notice is given unless any of the
other Parties objects to the destruction in which case the
Party seeking to destroy the records shall deliver such
records to the objecting Party or Parties. For purposes of
this Section 5.2, any request by Seller for information about
any litigation, product liability claims or workers'
compensation claims relating to the Rawlings Business,
whether or not Seller is responsible for such litigation or
claims, and any request by Seller for information relating to
actions with respect to the recovery of costs incurred in
connection with the environmental matters at the Adirondack
facility in Dolgeville, New York shall be deemed to be for
legitimate purposes.
5.3 Payments Received. Seller and RSGC each agree that
after the Closing they will hold and will promptly transfer
and deliver to the other, from time to time as and when
received by them, any cash, checks with appropriate
endorsements (using their reasonable efforts not to convert
such checks into cash), or other property that they may
receive on or after the Closing which hereunder or otherwise
properly belongs to another Party, including any insurance
proceeds, and will account to the other for all such
receipts.
5.4 Use of Name. From and after the Closing Date,
Seller and its affiliates will sign such consents and take
such other action as RSGC shall reasonably request in order
to perfect RSGC's ownership of the name "Rawlings" and
variants thereof. Except for the time periods during which
RSGC is a direct or indirect wholly-owned subsidiary of
Figgie, in no event shall RSGC or its affiliates use the name
"Figgie" or any variant thereof; provided, however, that RSGC
shall have the right to continue to market and sell packaged
Rawlings Business inventory which, as of the Closing, bears
the Figgie name, until but only until such inventory is
depleted; provided, further, that RSGC shall have the right
to use the name Figgie de Costa Rica for a period of up to 60
days following the Closing. Seller acknowledges and agrees
that, from and after the Closing Date, Seller has no right to
sell or authorize a third party to use the name "Rawlings."
5.5 UCC Matters. From and after the Closing Date,
Seller will promptly refer all inquiries with respect to
ownership of the Assets or the Rawlings Business to RSGC. In
addition, upon reimbursement by RSGC of all related out-of-
pocket costs of Seller, Seller will execute such documents
and financing statements as RSGC may request from time to
time to evidence transfer of the Assets to RSGC, including
any necessary assignments of financing statements.
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<PAGE> 20
5.6 Discharge of Certain Liabilities. From and after
the Closing Date, RSGC shall pay and discharge, in accordance
with past practice but not less than on a timely basis, all
Assumed Liabilities in accordance with their respective
terms.
5.7 Nonsolicitation Covenant. For one year immediately
after the Closing Date, each of Seller on one side and RSGC
on the other side agrees not to directly or indirectly
solicit for employment the employees of the other side
without the prior written consent of Figgie's Director,
Personnel and the Chief Executive Officer of RSGC.
5.8 Covenant Not to Compete.
(a) For five years immediately after the Closing
Date, RSGC shall not, and shall cause all of RSGC's
affiliates not to, directly or indirectly engage or attempt
to engage in any business that competes with the business of
Seller, other than the Rawlings Business, either in the
United States or elsewhere in the world, whether for its own
account or as a partner, joint venturer, agent, stockholder
of a corporation (other than as a beneficial owner of less
than 10% of the outstanding voting securities thereof), or
otherwise; provided, however, that RSGC may continue to
conduct the Rawlings Business as it existed on the Closing
Date and may continue to produce, manufacture and sell the
products the Division was producing, manufacturing and
selling as of the Closing Date.
(b) For five years immediately after the Closing
Date, Seller shall not, and shall cause all of Seller's
affiliates not to, directly or indirectly engage or attempt
to engage in any business that competes with the Rawlings
Business, either in the United States or elsewhere in the
world, whether for its own account or as a partner, joint
venturer, agent, stockholder of a corporation (other than as
a beneficial owner of less than 10% of the outstanding voting
securities thereof), or otherwise; provided, however, that
Seller may continue to conduct its business (other than the
Rawlings Business) as it existed on the Closing Date and may
continue to produce, manufacture and sell the products it was
producing, manufacturing and selling (other than those
produced, manufactured or sold by the Rawlings Business) as
of the Closing Date.
(c) If a court shall declare that any term or
provision of this Section 5.8 is invalid or unenforceable,
the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce
the time, geographic area and scope of activity limitations
or to replace any invalid or unenforceable term or provision
with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid
or unenforceable term or provision.
5.9 Further Assurances. Seller from time to time after
the Closing, at RSGC's request and upon payment by RSGC of
all reasonable out-of-pocket expenses of Seller in connection
therewith, will execute, acknowledge and deliver to RSGC such
other instruments of conveyance and transfer and will take
such other actions and execute and deliver such other
documents, certifications and further assurances as RSGC may
reasonably require in order to vest more effectively in RSGC,
or to put RSGC more fully in possession of, any of the
Assets, or to better enable RSGC to complete, perform or
discharge any of the Assumed Liabilities. Each of the
Parties will cooperate with the other and execute and deliver
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<PAGE> 21
to the other Parties such other instruments and documents and
take such other actions as may be reasonably requested from
time to time by another Party as necessary to carry out,
evidence and confirm the intended purposes of this Agreement.
5.10 Cooperation with Respect to Claims. RSGC shall
use reasonable efforts to cooperate and assist Seller in
pursuing and defending all product liability claims,
litigation, environmental claims, workers' compensation
claims and any other claims in any way related to the
Rawlings Business, including, but not limited to, those
claims set forth on SCHEDULES 1.7(a) and 1.7(b) hereto and
claims against insurance carriers.
5.11 WARN Act Compliance. Following the Closing Date,
RSGC shall comply in all respects with the Worker's
Adjustment and Retraining Notification Act, P.L. 100-379, 102
Stat. 890, as amended (the "WARN Act"), and shall not take
any action which would subject RSGC or Figgie to any
disclosure or announcement obligations under the WARN Act.
5.12 Insurance Policy Benefits Relating to
Environmental Liabilities.
(i) With respect to claims against insurance
carriers relating to Existing Environmental Claims under
the property and casualty insurance policies and binders
held by Seller at or prior to the Closing Date, RSGC
hereby irrevocably appoints (which appointment is
coupled with an interest) Seller, or its delegate, as
the attorney-in-fact of RSGC with the duty to prosecute,
and the right to adjust, litigate or compromise, any
claim against the issuers of any such policy, in each
case, in order to realize the benefits of the
assignment, if any, in Section 1.2(l)(i) hereof;
provided, however, that Seller shall not take any action
which would have a material adverse effect on RSGC
without the prior written consent of RSGC. Seller
hereby directs the issuer of such policies to pay any
such monies to RSGC to the extent required by Section
1.2(l)(i) hereof.
(ii) With respect to New Environmental
Claims, Seller hereby irrevocably appoints (which
appointment is coupled with an interest) RSGC, or its
delegate, as the attorney-in-fact of Seller with the
non-exclusive right (but not the duty) from time to time
to (A) prepare, complete, execute, deliver, endorse or
file, in the name and on behalf of Seller, any and all
instruments, documents, proofs of claim and other
writings required to be obtained, executed, delivered or
endorsed, (B) receive all monies, endorse checks and
other instruments representing payment of monies and (C)
adjust, litigate, compromise or release any claim
against the issuers of any such policy, in each case, in
order to realize the benefits of the assignment, if any,
in Section 1.2(l)(ii) hereof. Seller hereby directs the
issuer of such policies to pay any such monies to RSGC.
5.13. Injection Molding Machines. As soon as
practicable following the Closing: (a) RSGC and Seller shall
terminate their lease(s) with respect to the three injection
molding machines which were owned by Seller and used in the
Rawlings Business (the "Machines"); (b) Seller shall transfer
the Machines to General Electric Capital Corporation
("GECC"); (c) Seller shall lease the Machines from GECC; and
(d) Seller shall sublease the Machines to RSGC.
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<PAGE> 22
ARTICLE 6 - TAX MATTERS
6.1. Tax Character of Transfer. The Parties
acknowledge and agree that the conveyance and assignment of
the Assets to RSGC pursuant to this Agreement is intended to
be treated as a sale or other disposition under Section 1001
of the Code and as an applicable asset acquisition within the
meaning of Section 1060 of the Code. The Parties shall make
all reports, returns and claims and other statements in
respect of taxation consistent with this characterization and
shall not make any inconsistent written statement on any and
all returns, declarations, reports, statements and other
documents (the "Returns") required to be filed in respect of
Taxes (as hereinafter defined) or during the course of any
Internal Revenue Service or other Tax audit or proceeding.
"Taxes" shall mean all federal, state, provincial, local and
foreign income, profits, franchise, unincorporated business,
withholding, capital, general corporate, customs duties,
environmental, disability, registration, alternative, add-on,
minimum, estimated, sales, goods and services, use,
occupation, property, severance, production, excise,
recording, ad valorem, gains, transfer, value-added,
unemployment compensation, social security premium, privilege
and any and all other taxes (including interest, additions to
tax and penalties thereon, and interest on such additions to
tax and penalties).
6.2. Allocation of Consideration. The consideration
received for the Assets conveyed or assigned pursuant to this
Agreement shall be allocated among the Assets in accordance
with the Tax Allocation Schedule provided for by the Tax
Sharing and Separation Agreement.
6.3. Transfer Taxes. Seller and RSGC shall equally
share and pay any sales, use, transfer, stamp, stamp duty,
stamp duty reserve tax, conveyance, documentary, or similar
taxes, duties, excises or governmental charges imposed by any
taxing jurisdiction, including any and all recording fees,
notarial fees and other similar costs incurred in connection
with the conveyance of the Assets ("Transfer Taxes");
provided, however, that RSGC shall not be required to pay
more than $150,000 in Transfer Taxes and Seller shall be
required to pay all Transfer Taxes in excess of $300,000.
RSGC shall, on the Closing Date, execute and deliver to
Seller a sales tax resale exemption certificate for each
state in which inventory is transferred to RSGC pursuant to
this Agreement.
6.4. New York Tax Law. Seller and RSGC shall timely
comply with the requirements of Article 31-B of the Tax Law
of the State of New York and regulations applicable thereto
(as the same from time to time may be amended) (the "Tax
Law") with respect to the transfer of the property listed as
item 1 on SCHEDULE 1.2(j) hereto and the assignment of the
Brewster, New York lease. Seller shall, within two business
days after receipt of an appraisal with respect to such
property (a) notify RSGC of the amount of the appraisal and
the amount of the transfer tax due under Article 31 of the
Tax Law, (b) deliver to RSGC for execution the return
required by Article 31 of the Tax Law prepared by Seller and
(c) deliver to RSGC for execution a Transferee Questionnaire
prepared by Seller. RSGC shall return to Seller within two
business days after receipt of such items (i) one-half of the
amount of the transfer tax due under Article 31 of the Tax
Law in immediately available funds, (ii) the return required
by Article 31 of the Tax Law duly executed and acknowledged
by RSGC and (iii) the Transferee Questionnaire duly executed
and acknowledged by RSGC. Within two business days after
<PAGE>
<PAGE> 23
receiving payment for one-half of the transfer taxes, the
duly executed and acknowledged transfer tax return and the
duly executed and acknowledged Transferee Questionnaire from
RSGC, Seller shall file with the appropriate governmental
authority all required documentation (including a duly
executed and acknowledged Transferor Questionnaire) in order
to obtain either an official Tentative Assessment and Return
or an official Statement of No Tax Due. Within two business
days after receipt of an official Tentative Assessment and
Return or official Statement of No Tax Due, Seller shall
cause the deed which was executed and delivered on the date
hereof with respect to the property to be recorded and shall
pay to the New York State Tax Commission the full amount of
each tax shown to be due in connection with the transfer
under Articles 31 and 31-B of the Tax Law. Seller and RSGC
shall timely make any other payments and execute, acknowledge
and deliver such further documents and instruments, as may be
necessary to comply with Articles 31 and 31-B of the Tax Law.
The provisions of this section shall survive the Closing.
6.5. Property Taxes. RSGC shall pay any and all real
property and personal property taxes and assessments relating
to the Assets (including taxes and assessments on property
subject to leases) to the extent unpaid, regardless of the
taxable periods to which such taxes relate. If Seller is
contesting any such taxes before a taxing authority,
administrative tribunal or in a judicial proceeding,
following the Closing Date RSGC shall assume responsibility
for and control any such proceeding at its own expense and
with its own counsel. Seller shall execute all consents,
authorizations or other documents necessary to enable RSGC to
have proper standing to conduct any such proceedings.
6.6. Unemployment Tax Experience. The state
unemployment tax experience (the "Experience") of Figgie
shall be transferred to RSGC for Missouri, Tennessee and New
York and for such other states in which employees in the
Rawlings Business are located, if any, as Figgie may select
in its sole discretion. The decision to transfer such
Experience may be made separately for each state in which the
business of RSGC is conducted. If Figgie transfers or elects
to transfer the Experience in a particular state, RSGC shall
timely execute any and all necessary governmental filings to
accomplish this transfer.
6.7. Preparation of W-2's, Etc. Figgie and RSGC agree
that RSGC has received directly and indirectly substantially
all the property used in a trade or business previously
operated in the Rawlings Business, and in connection
therewith RSGC shall employ individuals who immediately
before the Closing Date were employed in such trade or
business in the Rawlings Business. Accordingly, pursuant to
Rev. Proc. 84-77, 1984-2 C.B. 753 and provided that Figgie
provides RSGC with all necessary payroll records for the
calendar year which includes the Closing Date, RSGC shall
furnish a Form W-2 to each employee employed by RSGC who had
been employed by Figgie disclosing all wages and other
compensation paid for such calendar year, and taxes withheld
therefrom, and Figgie shall be relieved of the responsibility
to do so.
6.8. Consolidated Return. Figgie agrees to file a
consolidated federal income tax return for calendar year 1994
which will include the operations of the Rawlings Business
for the period ending on the Closing Date. RSGC agrees to
take such action as may be necessary or appropriate to carry
out the purpose of this section.
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<PAGE> 24
6.9. Cooperation and Records Retention. Seller and
RSGC, individually and on behalf of their respective
affiliates, shall (a) each provide the other with such
assistance as may reasonably be requested by any of them in
connection with the preparation of any Return, audit or other
examination by any taxing authority or judicial or
administrative proceedings relating to liability for Taxes,
(b) each retain and provide the other with any records or
other information which may be relevant to such Return, audit
or examination, proceeding or determination, and (c) each
provide the other with any final determination of any such
audit or examination, proceeding or determination that
affects any amount required to be shown on any Return of the
other for any period. Without limiting the generality of the
foregoing, Seller and RSGC shall retain, until the applicable
statutes of limitations (including any extensions) have
expired, copies of all Returns, supporting work schedules and
other records or information which are relevant to such
Returns for all tax periods or portions thereof ending before
or including the Closing Date and shall not destroy or
otherwise dispose of any such records without first providing
the other Parties with a reasonable opportunity to review and
copy the same.
ARTICLE 7 - INDEMNIFICATION
7.1 Indemnification of RSGC and Related Persons.
Seller shall indemnify and hold harmless RSGC, its successors
and assigns, and each person who controls RSGC within the
meaning of the Securities Act of 1933, as amended, and each
person who is an affiliate of RSGC within the meaning of Rule
405 promulgated thereunder, and each officer and director of
RSGC or of any such controlling person or affiliate, from,
against and in respect of any and all damages, losses,
deficiencies, liabilities, costs and expenses, including any
and all actions, suits, claims, proceeding, investigations,
demands, assessments, audits, fines, judgments, costs and
other expenses (including reasonable legal fees and expenses)
incident to the foregoing or to the enforcement of this
Section 7.1 resulting from, relating to or arising out of:
(a) any misrepresentation or breach of warranty by
Seller hereunder;
(b) any non-fulfillment of any agreement or
covenant of Seller hereunder;
(c) any and all of the Excluded Liabilities;
(d) any fraudulent conveyance claims;
(e) any bulk sales claims to the extent required
by Section 8.1 hereof; and
(f) any liabilities related solely to the Excluded
Assets or the business which Seller will hold after the
Closing Date, except to the extent that such liabilities are
Assumed Liabilities or RSGC is obligated to indemnify Seller
with respect thereto pursuant to the provisions hereof.
Such indemnification obligation of Seller hereunder shall
continue until the first anniversary of the Closing and shall
not expire or be terminable by Seller and shall be without
limitation as to amount. In addition, RSGC shall have the
right to offset any amounts due to Figgie by RSGC pursuant to
Section 7 of the Tax Sharing and Separation Agreement by any
amounts payable by Figgie to RSGC pursuant to Sections
7.1(c), 7.1(d) or 7.1(e) hereof.
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<PAGE> 25
7.2 Indemnification of Seller and Related Persons.
RSGC shall indemnify and hold harmless Seller, its successors
and assigns, and each person who controls Seller within the
meaning of the Securities Act of 1933, as amended, and each
person who is an affiliate of Seller within the meaning of
Rule 405 promulgated thereunder, and each officer and
director of Seller or of any such controlling person or
affiliate, from, against and in respect of any and all
damages, losses, deficiencies, liabilities, costs and
expenses, including any and all actions, suits, claims,
proceeding, investigations, demands, assessments, audits,
fines, judgments, costs and other expenses (including
reasonable legal fees and expenses) incident to the foregoing
or to the enforcement of this Section 7.2 resulting from,
relating to or arising out of
(a) any misrepresentation or breach of warranty by
RSGC hereunder;
(b) any non-fulfillment of any agreement or
covenant of RSGC hereunder;
(c) any and all of the Assumed Liabilities;
(d) the conduct of the Rawlings Business by any
person following the Closing;
(e) any and all brokerage or other commissions to
the extent required by Section 8.2(a) hereof; and
(f) except as otherwise expressly provided herein,
the employment of the Transferred Employees by RSGC.
Such indemnification obligation of RSGC hereunder shall
continue until the first anniversary of the Closing and shall
not expire or be terminable by RSGC and shall be without
limitation as to amount.
7.3 Method of Asserting Claims. All claims for
indemnification under Sections 7.1 and 7.2 shall be asserted
and resolved as follows:
(a) In the event that any claim or demand for
which any Party would be liable (the "Indemnifying Party") to
any other Party hereunder (the "Indemnified Party") is
asserted against or sought to be collected by a third party,
the Indemnified Party shall notify the Indemnifying Party of
such claim or demand, specifying the nature of such claim or
demand and the amount or the estimated amount thereof to the
extent then feasible (which estimate shall not be conclusive
of the final amount of such claim or demand) (the "Claim
Notice"). The Indemnifying Party shall have 30 days from its
receipt of the Claim Notice (the "Notice Period") to notify
the Indemnified Party (i) whether or not it disputes its
liability to the Indemnified Party hereunder with respect to
such claim or demand, and (ii) if it does not dispute such
liability, whether or not it desires, at its sole cost and
expense, to defend the Indemnified Party against such claim
or demand; provided, however, that the Indemnified Party is
hereby authorized prior to and during the Notice Period to
file any motion, answer or other pleading which it shall deem
necessary or appropriate to protect its interests. In the
event that the Indemnifying Party notifies the Indemnified
Party within the Notice Period that it does not dispute such
liability and that it does desire to defend against such
claim or demand, then except as hereinafter provided, the
Indemnifying Party shall have the right to defend by
appropriate proceedings, which proceedings shall be promptly
settled or prosecuted to a final conclusion in such a manner
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<PAGE> 26
as to avoid any risk of the Indemnified Party becoming
subject to liability for any other matter. If the
Indemnified Party desires to participate in, but not control,
any such defense or settlement it may do so at its sole cost
and expense. If, in the reasonable opinion of the
Indemnified Party, any such claim or demand involves an issue
or matter which could have a materially adverse effect on the
business, operations, assets, properties or prospects of the
Indemnified Party or an affiliate of the Indemnified Party,
the Indemnified Party shall have the right to control the
defense or settlement of any such claim or demand, and its
reasonable costs and expenses thereof shall not be included
as part of the indemnification obligations of the
Indemnifying Party hereunder. If the Indemnifying Party
elects not to defend against such claim or demand, whether by
not giving timely notice as provided above or otherwise, then
the amount of any such claim or demand, or, if the same be
contested by the Indemnifying Party or by the Indemnified
Party (but the Indemnified Party shall not have any
obligation to contest any such claim or demand), then that
portion thereof as to which such defense is unsuccessful,
shall be conclusively deemed to be a liability of the
Indemnifying Party hereunder (subject, if the Indemnifying
Party has timely disputed liability, to a determination that
the disputed liability is covered by these indemnification
provisions). The Indemnifying Party shall not be required to
indemnify the Indemnified Party with respect to any
settlement entered into by the Indemnified Party without the
prior written consent of the Indemnifying Party.
(b) In the event that the Indemnified Party should
have a claim against the Indemnifying Party hereunder which
does not involve a claim or demand being asserted against or
sought to be collected from it by a third party, the
Indemnified Party shall promptly send a Claim Notice with
respect to such claim to the Indemnifying Party. If the
Indemnifying Party does not notify the Indemnified Party
within the Notice Period that it disputes such claim, the
amount of such claim shall be conclusively deemed a liability
of the Indemnifying Party hereunder.
(c) Nothing herein shall be deemed to prevent the
Indemnified Party from making a claim hereunder for potential
or contingent claims or demands provided the Claim Notice
sets forth the basis for any such potential or contingent
claim or demand and the estimated amount thereof to the
extent then feasible and the Indemnified Party has reasonable
grounds to believe that such a claim or demand will be made.
(d) In the event that the Indemnified Party has
the right to recover any losses under any insurance policies
in effect from time to time and the Indemnified Party, in its
sole discretion, determines to pursue such rights, any
recovery under such insurance actually received by the
Indemnified Party shall not be deemed an indemnifiable loss
hereunder; provided that the Indemnified Party shall not be
required hereby to (i) maintain any insurance policy or (ii)
make any claim under any insurance policy maintained by the
Indemnified Party unless the Indemnified Party is reimbursed
by the Indemnifying Party for an amount which the Indemnified
Party determines, in its sole discretion, is equal to all
expenses and increased future premium costs resulting
therefrom.
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<PAGE> 27
7.4 Payment. In the event that the Indemnifying Party
is required to make any payment under this Article 7, the
Indemnifying Party shall promptly pay the Indemnified Party
the amount so determined. If there should be a dispute as to
the amount or manner of determination of any indemnity
obligation owed under this Article 7, the Indemnifying Party
shall nevertheless pay when due such portion, if any, of the
obligation as shall not be subject to dispute. The
difference, if any, between the amount of the obligation
ultimately determined as properly payable under this Article
7 and the portion, if any, theretofore paid shall bear
interest as provided in the last sentence of this Section
7.4. Upon the payment in full of any claim, either by setoff
or otherwise, the Indemnifying Party shall be subrogated to
the rights of the Indemnified Party against any person, firm,
corporation or other entity with respect to the subject
matter of such claim. If all or part of any indemnification
obligation under this Agreement is not paid when due, then
the Indemnifying Party shall pay the Indemnified Party or
Parties interest on the unpaid amount of the obligation for
each day from the date the amount became due until payment in
full, payable on demand, at the fluctuating rate per annum
which at all times shall be two percentage points in excess
of the lowest rate generally charged from time to time by the
First National Bank of Boston and publicly announced by such
bank as its "base lending rate" from time to time.
7.5 Service of Process, Consent to Jurisdiction, Etc.
(a) Each of the Parties irrevocably consents to
the service of any process, pleadings, notices or other
papers by the mailing of copies thereof by registered,
certified or first class mail, postage prepaid, to such Party
at such Party's address set forth in Section 8.4 hereof, or
by any other method provided or permitted under Delaware law.
(b) Each of the Parties irrevocably and
unconditionally (i) agrees that any suit, action or other
legal proceeding arising out of this Agreement may be brought
in the United States District Court for Delaware or, if such
court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in the
County of New Castle, Delaware; (ii) consents to the
jurisdiction of any such court in any such suit, action or
proceeding; and (iii) waives any objection which it may have
to the laying of venue of any such suit, action or proceeding
in any such court.
ARTICLE 8 - MISCELLANEOUS
8.1 Compliance with Bulk Sales Laws. RSGC and Seller
hereby waive compliance by RSGC and Seller with the bulk
sales laws and any other similar laws in any applicable
jurisdiction in respect of the transactions contemplated by
this Agreement. Figgie will indemnify RSGC and hold RSGC
harmless against and in respect of, any claims relating to
the bulk sales laws and any other similar laws in any
applicable jurisdiction in respect of the transactions
contemplated by this Agreement.
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<PAGE> 28
8.2 Brokerage; Expenses; Etc.
(a) The Parties represent and warrant that all
negotiations relative to this Agreement have been carried on
by them directly without the intervention of any person, firm
or corporation other than Dillon, Read & Co. Inc. RSGC will
be responsible for, and will indemnify Seller and hold Seller
harmless against and in respect of, any claim for brokerage
or other commissions relative to this Agreement or the
transactions contemplated hereby made by any person or entity
other than Dillon, Read & Co. Inc. Figgie shall be
responsible for any of the fees and expenses of Dillon, Read
& Co. Inc.
(b) Except as otherwise expressly provided herein,
each Party hereto shall pay its own expenses, including the
reasonable fees and expenses of its counsel, incurred in
connection with this Agreement and the transactions
contemplated hereby.
8.3 Contents of Agreement; Amendment; Parties in
Interest, Assignment, Etc. This Agreement sets forth the
entire understanding of the Parties with respect to the
subject matter hereof. Any previous agreements or
understandings between the Parties regarding the subject
matter hereof are merged into and superseded by this
Agreement. This Agreement may be amended, modified or
supplemented only by written instrument duly executed by each
of the Parties. All representations, warranties, covenants,
terms and conditions of this Agreement shall be binding upon
and inure to the benefit of and be enforceable by the
respective successors and permitted assigns of the Parties,
provided that no Party hereto shall assign this Agreement or
any right, benefit or obligation hereunder. Any term or
provision of this Agreement may be waived at any time by the
Party entitled to the benefit thereof by a written instrument
duly executed by such Party.
8.4 Notices. All notices, consents or other
communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have
been duly given when delivered personally, delivery charges
prepaid, or three business days after being sent by
registered or certified mail (return receipt requested),
postage prepaid, or one business day after being sent by a
nationally recognized express courier service, postage or
delivery charges prepaid, to the Parties at their respective
addresses stated below. Notices may also be given by prepaid
telegram or facsimile and shall be effective on the date
transmitted if confirmed within 24 hours thereafter by a
signed original sent in the manner provided in the preceding
sentence. Any Party may change its address for notice and
the address to which copies must be sent by giving notice of
the new address to the other Parties in accordance with this
Section 8.4, except that any such change of address notice
shall not be effective unless and until received.
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<PAGE> 29
If to RSGC, to:
Rawlings Sporting Goods Company, Inc.
1859 Intertech Drive
Fenton, MO 63026
Attention: Carl J. Shields
If to Seller, to:
Figgie International Inc.
4420 Sherwin Road
Willoughby, OH 44094
Attention: Luther A. Harthun, Esquire
8.5 Delaware Law to Govern. This Agreement shall be
governed by and interpreted and enforced in accordance with
the laws of the State of Delaware without giving effect to
conflicts of laws principles.
8.6 No Benefit to Others. The representations,
warranties, covenants and agreements contained in this
Agreement are for the sole benefit of the Parties and their
respective successors and assigns, and they shall not be
construed as conferring any rights on any other persons,
except as otherwise expressly provided herein.
8.7 Headings, Gender, "Person," and "Including." All
section headings contained in this Agreement are for
convenience of reference only, do not form a part of this
Agreement and shall not affect in any way the meaning or
interpretation of this Agreement. Words used herein,
regardless of the number and gender specifically used, shall
be deemed and construed to include any other number, singular
or plural, and any other gender, masculine, feminine or
neuter, as the context requires. Any reference to a "person"
herein shall include an individual, firm, corporation,
partnership, trust, governmental authority or body,
association, unincorporated organization or any other entity.
The term "including" or "include" shall mean "including,
without limitation," and the subsequent listing of any
matters shall in no event be construed to limit or narrow the
breadth of the preceding clause or matter.
8.8 Schedules and Exhibits. All Exhibits and Schedules
referred to herein are intended to be and hereby are
specifically made a part of this Agreement.
8.9 Severability. The provisions of this Agreement
shall be deemed severable, and if any part of any provision
is held to be illegal, void, voidable, nonbinding or
unenforceable in its entirety or partially or as to any
Party, for any reason, such provision may be changed,
consistent with the intent of the Parties, to the extent
reasonably necessary to make the provision, as so changed,
legal, valid, binding and enforceable. If any provision of
this Agreement is held to be illegal, void, voidable,
nonbinding or unenforceable in its entirety or partially or
as to any Party, for any reason, and if such provision cannot
be changed, consistent with the intent of the Parties, to
make it fully legal, valid, binding and enforceable, then
such provision shall be stricken from this Agreement, and the
remaining provisions of this Agreement shall not in any way
be affected or impaired, but shall remain in full force and
effect.
<PAGE>
<PAGE> 30
8.10 Counterparts. This Agreement may be executed in
any number of counterparts and any Party hereto may execute
any such counterpart, each of which when executed and
delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the
same instrument. This Agreement shall become binding when
one or more counterparts taken together shall have been
executed and delivered by the Parties. It shall not be
necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other
counterparts.
IN WITNESS WHEREOF, the Parties have duly executed
this Agreement on the date first written.
<TABLE>
<CAPTION>
ATTEST:
FIGGIE INTERNATIONAL INC.
<S> <C>
By______________________ By__________________________
Robert D. Vilsak L.A. Harthun
Assistant Secretary Senior Vice President -
International, General
Counsel and Secretary
ATTEST: FIGGIE LICENSING CORPORATION
By______________________ By_________________________
Robert D. Vilsak L.A. Harthun
Assistant Secretary Vice President and
Secretary
ATTEST: FIGGIE INTERNATIONAL REAL
ESTATE, INC.
By______________________ By_________________________
L.A. Harthun Allen C. Hays
Secretary Vice President and
Treasurer
ATTEST: FIGGIE PROPERTIES INC.
By______________________ By________________________
L.A. Harthun Allen C. Hays
Secretary Vice President and
Treasurer
ATTEST: RAWLINGS SPORTING GOODS COMPANY,
INC.
By______________________ By________________________
Craig A. Mankowski Carl J. Shields
Assistant Secretary President
</TABLE>
<PAGE>
<PAGE> 31
<TABLE>
<CAPTION>
Schedules and Exhibits to Assets Transfer Agreement
(Omitted)
Schedules Tables
<S> <C>
1.2(a) Leaseholds
1.2(e) Intellectual Property
1.2(h) Agreements
1.2(j) Real Estate
1.3(f) Certain Excluded Assets
1.4 Liens
1.6(a) Unfilled Orders as of March 31, 1994
1.6(b) Outstanding Purchase Orders as of March 31, 1994
1.7(a) Excluded Liabilities Relating to Litigation
(Product Liabilities)
1.7(b) Excluded Liabilities Relating to Litigation
(Other than Product Liabilities)
</TABLE>
<TABLE>
<CAPTION>
Exhibits Title
<S> <C>
A Note in the principal amount of $35,000,000
B Bill of Sale
C Confirmation of Patent Assignment
D Confirmation of Trademark Assignment
E Confirmation of Copyright Assignment
F Assignment and Assumption Agreement
G (Included as an Exhibit to Form 8-K)
H Certificate
I Transitional Services Agreement
</TABLE>
<PAGE>
<PAGE> 1
EXHIBIT-10
TAX SHARING AND SEPARATION AGREEMENT
This TAX SHARING AND SEPARATION AGREEMENT (the
"Agreement"), dated July 8, 1994, is by and between Rawlings
Sporting Goods Company, Inc., a Delaware corporation
("Rawlings"), and Figgie International Inc., a Delaware
corporation ("Figgie").
W I T N E S S E T H:
WHEREAS, Rawlings has acquired the assets and
liabilities related to the business previously conducted by
Figgie and certain of its subsidiaries through the Figgie
division known as Rawlings Sporting Goods Company (the
"Rawlings Business") pursuant to the Assets Transfer
Agreement (defined below);
WHEREAS, Rawlings and Figgie expressly agree that the
execution of this Agreement constitutes part of the
consideration under the Assets Transfer Agreement;
WHEREAS, the operations of the Rawlings Business have
been reflected on the consolidated federal income tax returns
filed by an affiliated group of corporations of which Figgie
is the common parent (the "Figgie Group") and on certain
state and local income tax returns filed by Figgie or members
of the Figgie Group;
WHEREAS, after consummation of the Closing (defined
below), the operations of the Rawlings Business will no
longer be reflected on tax returns filed by the Figgie Group
and will be reflected on returns filed by Rawlings and its
subsidiaries (the "Rawlings Group"); and
WHEREAS, the parties wish to assign responsibility for
the preparation and filing of tax returns; to set forth the
methodology for determining their respective liabilities for
Taxes (defined below) and for allocating such liabilities
among themselves for all Taxes that may be owed to or
assessed by the Internal Revenue Service or any other
comparable state, local or foreign governmental authority
attributable to the periods before, after and including the
Closing Date (defined below); to establish procedures for
reimbursing one party for Taxes allocated to the other under
this Agreement; and to provide for the division of any tax
benefits resulting from the transfer of the Rawlings Business
by Figgie to Rawlings;
NOW, THEREFORE, in consideration of the mutual covenants
and agreements hereafter set forth, the parties hereby agree
as follows:
1. Definitions: For purposes of this Agreement, the
following terms shall be defined as follows:
1.1. "Asset Sale" means the transfer of the
Rawlings Business, assets and liabilities pursuant to the
Assets Transfer Agreement.
1.2. "Assets Transfer Agreement" means that certain
Assets Transfer Agreement dated as of the date hereof between
Figgie and Rawlings under which Figgie transferred the
Rawlings Business to Rawlings in exchange for 7,649,981
shares of common stock of Rawlings, a note in the amount of
$35.0 million and any tax benefits to be paid under this
Agreement.
<PAGE>
<PAGE> 2
1.3. "Change of Control" means the occurrence of
any one or more of the following events: (i) the acquisition
by any person of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 50% or more
of either (a) the then outstanding shares of common stock of
Rawlings (the "Outstanding Rawlings Common Stock") or (b) the
combined voting securities of Rawlings entitled to vote
generally in the election of directors (the "Outstanding
Rawlings Company Voting Securities"); or (ii) any
reorganization (including, but not limited to, transactions
described in Section 368(a) of the Code), merger, share
exchange, or consolidation involving Rawlings or any
subsidiary of Rawlings (each, a "Rawlings Merger"), unless
immediately following any such Rawlings Merger, (a) more than
50% of the then Outstanding Rawlings Company Voting
Securities is then beneficially owned, directly or
indirectly, by persons who were the beneficial owners,
respectively, of the Outstanding Rawlings Company Stock and
the Outstanding Rawlings Company Voting Securities
immediately prior to such Rawlings Merger and (b) no person
beneficially owns (within the meaning of Rule 13d-3
promulgated under the Exchange Act) 25% or more of either (1)
the then Outstanding Rawlings Company Stock or (2) the then
Outstanding Rawlings Company Voting Securities.
1.4. "Closing" means the closing of the Asset Sale
and the sale by Figgie of all of its stock of Rawlings to
underwriters for public sale.
1.5. "Closing Date" means the date on which the
Closing occurs.
1.6. "Code" means the Internal Revenue Code of
1986, as amended.
1.7. "Current Amount" has the meaning specified in
Section 7.2 hereof.
1.8. "Disputed Amount" has the meaning specified in
Section 8.3.3 hereof.
1.9. "Estimated Tax Payment Date" means any of the
dates specified in Section 6655 of the Code for the payment
by Rawlings of estimated U.S. federal income taxes.
1.10. "Interim Period" has the meaning specified in
Section 3 hereof.
1.11. "Rawlings" means Rawlings Sporting Goods
Company, Inc., a Delaware corporation, and any successors
thereto.
1.12. "Rawlings Group" means Rawlings and all of
its subsidiaries or one or more of such entities, as the
context may require.
1.13. "Returns" means all returns, declarations,
reports, statements and other documents required to be filed
in respect of Taxes, and the term "Return" means any one of
the foregoing Returns.
1.14. "Short Period" has the meaning specified in
Section 3 hereof.
1.15. "Tax Allocation Schedule" has the meaning
specified in Section 4 hereof.
1.17. "Tax Authority" means the Internal Revenue
Service or any other comparable state, local or foreign
governmental authority.
<PAGE>
<PAGE> 3
1.18. "Tax Benefit Base Amount" for any Taxable
Period means (i) any net increase or decrease in an
amortization, depreciation or loss or other deduction in such
Taxable Period and any decrease or increase in an item of
income or gain in such Taxable Period arising as a result of
net basis increases or decreases occurring as a result of the
Asset Sale (including the assumption of liabilities)
including any basis increases and decreases arising from
payments made pursuant to this Agreement, (ii) any Rawlings
Group deduction or income arising from a portion of payments
made pursuant to this Agreement being characterized as
interest or original issue discount for federal income tax
purposes, and (iii) any increase or decrease in any net
operating or capital loss carryover or carryback or tax
credit of the Rawlings Group which is carried to such Taxable
Period and which arose or arises in a prior or subsequent
Taxable Period as a result of any such increase or decrease
in deduction or decrease or increase in income or gain
described in (i) above in such prior or subsequent Taxable
Period.
1.19. "Tax Benefit Issue" has the meaning specified
in Section 8.3.1 hereof.
1.20. "Tax Benefits" means, for any Taxable Period,
the excess, if any, of (i) the total amount of federal,
state, local and foreign income and franchise taxes that
would be payable by the Rawlings Group in respect of such
Taxable Period if the Tax Benefit Base Amount for such
Taxable Period were not taken into account, ("Notional Tax
Liability"), over (ii) the total amount of federal, state and
local income and franchise taxes, respectively, payable by
the Rawlings Group in respect of such Taxable Period after
taking into account the Tax Benefit Base Amount for such
Taxable Period (the "Actual Tax Liability"). Any Tax
Benefits hereunder shall be determined using the method of
reporting (i.e., consolidated, combined or separate returns)
actually utilized by the Rawlings Group. For the avoidance
of doubt, in any Taxable Period ending prior to or on the
date of a Change of Control, the Tax Benefits shall equal the
amount by which the tax liabilities of the Rawlings Group are
actually reduced by the Tax Benefit Base Amount. In any
Taxable Period ending subsequent to a Change of Control, the
Tax Benefits shall be the greater of (i) the Tax Benefits
calculated as if a Change of Control had not occurred, with
the Notional Tax Liability and the Actual Tax Liability
calculated by including only items of income, expense, loss,
deduction and credit directly attributable to the businesses
conducted by the Rawlings Group prior to the Change of
Control (the "Historic Businesses") and excluding all items
of income, expense, loss, deduction, and credit not
attributable to the Historic Businesses as conducted by the
Rawlings Group prior to the Change of Control (including,
without limitation, any interest expense incurred by the
Rawlings Group after the Change of Control, whether or not to
a related person, or any fees, expenses or other charges to
any related person unless directly related to the Historic
Businesses as conducted by the Rawlings Group prior to the
Change of Control), and (ii) the excess of the Notional Tax
Liability over the Actual Tax Liability, calculated by
including all items of income, expense, loss, deduction, and
credit of any corporation or group of corporations filing a
federal or other consolidated, combined or unitary income or
franchise tax return entitled to the Tax Benefit Base Amount.
1.21. "Taxable Period" means any taxable year (or
portion thereof) ending after the Closing Date.
<PAGE>
<PAGE> 4
1.22. "Taxes" means all U.S. federal, state and
local taxes, and all foreign taxes, including interest and
penalties, on, based on, measured by or with respect to
income, net worth or capital, and the term "Tax" means any
one of the foregoing Taxes; provided that Taxes shall not
include deferred income taxes.
2. Tax Returns. Figgie agrees to prepare and file or
cause to be prepared and filed timely all appropriate Returns
in respect of the Rawlings Business that (i) are required to
be filed on or before Closing; or (ii) are required to be
filed after Closing that are required to include the
operations of the Rawlings Group for any tax period ending on
or before Closing. To the extent requested by Figgie, the
Rawlings Group shall participate in the filing of and shall
file any required Returns with respect to any period that
ends on or before Closing. To the extent requested by
Figgie, Rawlings shall prepare or cause to be prepared the
schedules in respect of the Rawlings Group containing the
information necessary for Figgie to prepare any Returns.
Returns filed by Figgie pursuant to Section 2(ii) hereof
shall be prepared on a basis consistent with those prepared
for prior tax returns.
3. Obligation for Payment of Taxes. Figgie agrees to
pay timely all Taxes in respect of the Rawlings Group that
are (i) due with respect to Returns that Figgie is required
to prepare and timely file pursuant to Section 2 hereof
(including but not limited to Returns prepared by Figgie but
filed by the Rawlings Group), or (ii) due on or before
Closing for which no Return is required to be filed;
provided, however, that, in respect of both (i) and (ii) the
Rawlings Group shall be responsible for, and shall pay, the
Taxes due with respect to (x) taxable periods beginning the
day after the Closing Date and (y) that portion of any
Interim Period (as defined below) beginning the day after the
Closing Date. In addition, Figgie agrees to pay all other
Taxes that may be due after the Closing Date that are
attributable to the period prior to and including the Closing
Date. The parties hereto will, to the extent permitted by
applicable law, elect with the relevant Tax Authority (other
than the Internal Revenue Service) to treat for all purposes
the day following the Closing Date as the first day of a
taxable period of the Rawlings Group and the taxable period
ending with the Closing Date shall be treated as a "Short
Period" for purposes of this Agreement. In any case where
applicable law does not permit the parties to treat the
Closing Date as the last day of a Short Period and the day
after the Closing Date as the first day of a taxable period
for the Rawlings Group, then for purposes of this Agreement,
the portion of such Taxes that is attributable to the
operations of the Rawlings Business for such Interim Period
(as defined below) shall be (i) in the case of Taxes that are
not based in whole or in part on income or gross receipts,
the total amount of such Taxes for the period in question
multiplied by a fraction, the numerator of which is the
number of days in the Interim Period, and the denominator of
which is the total number of days in the entire period in
question, and (ii) in the case of Taxes that are based in
whole or in part on income or gross receipts, the Taxes that
would be due with respect to the Interim Period, if such
Interim Period were a Short Period. "Interim Period" means
with respect to any Taxes attributable to the operations of
the Rawlings Group on a periodic basis for which the Closing
Date is not the last day of a Short Period, the period of
time beginning on the first day of the actual taxable period
that includes (but does not end on) the Closing Date and
ending on and including the Closing Date. Any franchise tax
shall be allocated to the Taxable Period during which the
right to do business obtained by the payment of such
<PAGE>
<PAGE> 5
franchise tax relates, regardless of whether such franchise
tax is measured by income, operations, assets or capital
relating to another Taxable Period.
4. Valuation and Allocation of Consideration. The
parties agree that the Asset Sale constitutes an "applicable
asset acquisition" as defined in Section 1060(c) of the Code
and that the basis of the assets acquired by the Rawlings
Group in the Asset Sale shall be determined by Figgie, such
determination to be made, in part, based on the trading price
per share of the common stock of Rawlings on the Closing
Date. The value of the consideration shall be allocated
among the assets of the Rawlings Group acquired in the Asset
Sale as indicated on a schedule (the "Tax Allocation
Schedule") to be prepared by Figgie and submitted to Rawlings
within 60 days following the Closing Date, subject to
adjustment by Figgie to the extent necessary to make such
allocations consistent with any post-Closing adjustments made
in accordance with Section 1.9 of the Assets Transfer
Agreement. The parties agree that any inventory acquired by
the Rawlings Group in the Asset Sale shall be recorded on the
Tax Allocation Schedule at its net realizable value (i.e.,
estimated selling price less costs of completion and
disposal) and that the Rawlings Group shall utilize the
"first-in, first-out" method of accounting to determine
taxable gain or loss on the sale or other disposition of
inventory, such method to be used for no less than two tax
years following the Closing. The parties also agree that
with respect to calculating the Tax Benefits, the tax
accounting methods, practices and elections used by Figgie
immediately prior to the Asset Sale shall be used to
determine the Notional Tax Liability and the Actual Tax
Liability. The parties (i) shall be bound by such allocation
for purposes of determining any Taxes and (ii) shall prepare
and file all Returns in a manner consistent with such
allocation; provided, in respect of legal issues under
Section 1060 of the Code, that "substantial authority"
within the meaning of Section 6662 of the Code exists for
such allocation, and, in the case of factual determinations
involving valuation and allocation, a reasonable basis exists
for such determinations which could reasonably be supported
by an appraisal by a third party if an appraisal were
obtained. In the event that no such substantial authority
exists or such allocation is disputed by any Tax Authority,
the party making such determination or receiving notice of
such dispute shall promptly notify and consult with the other
party hereto concerning the existence of such substantial
authority or resolution of such dispute.
5. Tax Reporting. Figgie and the Rawlings Group shall
file their federal income tax Returns treating the Asset Sale
as a purchase of the assets of the Rawlings Business by the
Rawlings Group and treating the Rawlings Group as never
eligible to be included in a consolidated Federal income tax
return filed by Figgie. Figgie and the Rawlings Group shall
file on a similar basis all state and local tax returns to
the extent that such treatment is consistent with such state
and local tax law. All payments made by the Rawlings Group
and Figgie under this Agreement shall be treated as
adjustments to the purchase price in respect of the Asset
Sale.
<PAGE>
<PAGE> 6
6. Liability for Assessments or Refunds. Figgie shall
pay any Taxes and be entitled to receive all refunds of Taxes
(i) with respect to all periods ending on or prior to the
Closing Date; and (ii) with respect to any period beginning
on or before the Closing Date and ending after the Closing
Date, but only with respect to the portion of such period up
to and including the Closing Date allocated in accordance
with Section 3 above. Figgie shall have sole and exclusive
discretion to contest or not to contest, negotiate and settle
proposed adjustments relating to the inclusion in any Return
of the income, deductions, credits, allowances or other tax
items of the Rawlings Group for any period ending prior to or
including the Closing Date. Except as otherwise expressly
modified by this Agreement, all allocations of tax
liabilities and other tax provisions of the Assets Transfer
Agreement shall remain in full force and effect.
7. Tax Benefit Sharing Payment to Figgie.
7.1. Estimated Tax Payments. Rawlings shall pay to
Figgie on the first Estimated Tax Payment Date after the date
of the Closing and thereafter on each subsequent Estimated
Tax Payment Dates, an amount equal to 43% of an estimate of
the Tax Benefits, for the applicable Taxable Period that is
deemed, pursuant to the following sentence, to have accrued
on the Estimated Tax Payment Date. For this purpose, 25%
(or, in the case of Taxable Periods of less than one year,
one divided by the number of Estimated Tax Payment Dates in
such Taxable Period) of Tax Benefits as then estimated for
the applicable Taxable Period shall be deemed to accrue and
the applicable percentage thereof shall be paid at each
Estimated Tax Payment Date. For the avoidance of doubt, the
estimate of Tax Benefits shall be calculated utilizing the
notional/actual method set forth in Section 1.20 above and
using consistent methods and assumptions between periods and
notional/actual comparisons.
7.2. Current Amount Adjustment. At the time
Rawlings files its U.S. federal income tax return for each
Taxable Period (including amended returns, claims for refund
or other modifications to taxable income or liability for
prior Taxable Periods), to the extent that the amounts paid
to Figgie pursuant to Section 7.1 and this Section 7.2 hereof
for such Taxable Period exceeded 43% of an amount equal to
the Tax Benefits for the applicable Taxable Period (the
"Current Amount"), such excess amounts paid shall be refunded
(without interest) by Figgie to Rawlings. To the extent that
the amounts paid to Figgie pursuant to Section 7.1 hereof for
such Taxable Period were less than the Current Amount, such
deficit in amounts paid shall be paid (without interest) to
Figgie by Rawlings. A preliminary Current Amount adjustment
with corresponding payments as described in the preceding
sentences shall be made for each Taxable Period on the due
date of the Return for such Taxable Period determined without
regard to any extension of time to file. Rawlings shall pay
any preliminary Current Amount on such due date of the
Return. Figgie shall pay any preliminary Current Amount
adjustment within five days after notice by Rawlings of the
amount of such adjustment, or on such due date of the Return,
whichever is later. A final Current Amount adjustment shall
be made as set forth above upon the filing of the actual
Returns for the Taxable Period. Rawlings shall pay any final
Current Amount on the filing date of the Return. Figgie
shall pay any final Current Amount adjustment within five
days after notice by Rawlings of the amount of such
adjustment, or on the filing date of the Return, whichever is
later. The Current Amount adjustment for any Taxable Period
<PAGE>
<PAGE> 7
shall be redetermined to the extent necessary to reflect
state tax Returns filed subsequent to the U.S. federal income
tax Return or state amended Returns, claims for refund or
other modifications to taxable income or liability.
7.3. Tax Computation Assumptions. When allocation
and apportionment factors are required for any tax
computation, the factors used in Rawlings or the affected
member of the Rawlings Group's most recently filed Returns in
the relevant jurisdictions shall be used. In addition, any
Tax Benefits with respect to foreign Taxes shall be added to
the Tax Benefits with respect to U.S. federal and state tax
liability.
7.4. Subsequent Transactions by Rawlings. Rawlings
agrees that it shall not enter into any transaction a
significant purpose of which is to reduce the amount of the
Tax Benefits otherwise payable to Figgie under this
Agreement.
7.5. Benefit Estimates. Rawlings shall prepare and
deliver to Figgie no less than 60 days prior to the end of
each calendar year, an estimate of the amount of the Tax
Benefits that will be payable to Figgie during the
immediately following year. Rawlings shall revise and update
each such estimate on a quarterly basis, to be delivered to
Figgie no less than 15 days prior to the end of each quarter.
7.6. Setoff. Notwithstanding any other provision
contained herein, Rawlings shall have the right to offset any
amounts due to Figgie by Rawlings pursuant to Section 7
hereof by any amounts payable by Figgie to Rawlings pursuant
to Section 7.2 hereof or pursuant to Section 1.8, 7.1(c),
7.1(d) or 7.1(e) of the Assets Transfer Agreement. The
parties agree that Rawlings's right of setoff hereunder and
Figgie's rights to the tax benefits hereunder and obligations
to indemnify Rawlings pursuant to the Assets Transfer
Agreement are mutual obligations which are effective as of
the date hereof.
8. Tax Issues Arising After the Closing Date.
8.1. Mutual Cooperation. The parties agree to
consult in good faith and to provide each other with such
assistance as reasonably may be requested in writing by any
of them in connection with (i) the preparation and execution
of any Return, (ii) the negotiation and settlement of any
audit or other examination of any Return by any Tax
Authority, or (iii) the handling of any judicial or
administrative proceeding relating to any Tax liability or
taxable periods prior to the Closing Date. The parties'
general obligation to cooperate shall require, but not be
limited to requiring, each party (i) to notify the other of
any Tax Authority's initiation of an audit, request for
information or proposal of any adjustment, or any extension
of statutes of limitation and of final determinations of
adjustment, (ii) to preserve records, documents and other
information relevant to liabilities for Taxes until the
expiration of the applicable statute of limitations or
extensions thereof and to provide, upon written request,
copies of such records and/or reasonable access thereto,
(iii) to make available without charge at a location
determined by Figgie during normal working hours, upon
written request, personnel responsible for preparing,
maintaining, or explaining information, records and documents
in connection with matters relating to Taxes, and (iv) to
execute and deliver such powers of attorney, consents, and
other documents as are necessary to carry out the intent of
this Agreement.
<PAGE>
<PAGE> 8
8.2. Rawlings Discretion to Contest, Negotiate and
Settle. Rawlings shall have sole and exclusive discretion to
contest or not to contest, negotiate and settle proposed
adjustments relating to the inclusion in any Return of the
income deductions, credits, allowances or other tax items of
the Rawlings Group for any period beginning after the Closing
Date, subject to Sections 7 and 8.3 hereof.
8.3. Contesting Disputed Tax Benefits
8.3.1. Control of Proceedings. In the event
that the Internal Revenue Service or other Tax Authority
disputes the existence or amount of the Tax Benefits (the
"Tax Benefit Issue") Rawlings shall contest the matter on
audit, through Internal Revenue Service or state appellate
proceedings and through judicial proceedings (or comparable
foreign proceedings, if applicable). Representatives of
Figgie shall be allowed to participate in such proceedings in
so far as they relate to the Tax Benefit Issue and such
participation shall be reflected by the grant of appropriate
powers of attorney. Decisions regarding the conduct of a
contest shall be made by Figgie or its representatives after
consultation with Rawlings and its representatives; provided,
however, that ultimate control over contesting the Tax
Benefit Issue, including control over procedural matters that
necessarily relate to all issues being contested (including,
without limitation, choice of forum), shall be exercised in
good faith by Figgie and its representatives and Rawlings
shall take any action as is necessary to effectuate the
decisions of Figgie; provided, further, that decisions
relating solely to tax issues unrelated to the Tax Benefit
Issue shall be made exclusively by Rawlings and its
representatives. Decisions regarding the settlement of a
contest of the Tax Benefit Issue shall be made jointly by
Figgie and Rawlings and their respective representatives;
provided, however, that if Figgie or Rawlings declines a
settlement proposal relating to the Tax Benefit Issue that
the other wishes to accept, the contest will continue and the
declining party will (i) bear all further contest costs, (ii)
indemnify the party wishing to accept the settlement against
any outcome more adverse than that of the proposed
settlement, and (iii) be entitled to all benefits more
advantageous than those of the proposed settlement.
8.3.2. Adverse Outcome and Repayment. If, as
the result of a final determination by the Internal Revenue
Service or other Tax Authority or in connection with a
contest, Tax Benefits are or will be less than those taken
into account in computing any payments made or to be made
under Section 7 hereof such payments will be recomputed on
the basis of such revised Tax Benefits and (i) any excess
payments shall be promptly refunded by Figgie to Rawlings
together with any related penalties and interest imposed by a
Tax Authority on Rawlings and (ii) the amount of any future
payment to be made under Section 7 shall be computed based on
such reduction in Tax Benefits to the extent that such
determination is dispositive of future years.
8.3.3. Resolution of Computational Disputes.
If the parties hereto are unable to agree on the amount of
Tax Benefits (the "Disputed Amount") as determined under
Sections 1.18, 1.20, 7.1, 7.2 and 7.3 hereof, the
determination of such Disputed Amount shall be made by an
independent firm of certified public accountants jointly
selected by Figgie and Rawlings. If Figgie and Rawlings
cannot agree on the selection of an independent firm of
certified public accountants, such firm will be jointly
selected by the firms of certified public accountants that
certify (or selected by the firm of certified public
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accountants that certifies) the financial statements of
Figgie and Rawlings and will be other than the selecting
firm(s). Such accountants shall be given access by Figgie,
Rawlings and their respective subsidiaries to all information
necessary to determine the Disputed Amount, subject to the
agreement of such accountants that such information shall be
kept confidential and shall not be released without the
written consent of Figgie or Rawlings, as appropriate, except
as compelled by legal process. Any amount otherwise due
under this Agreement that is a Disputed Amount shall be paid
together with interest at the Underpayment Rate from the date
on which such payment was originally due, within 10 days of
the determination of such Disputed Amount. Judgment upon the
Disputed Amount as determined by the accountants may be
entered in any court having jurisdiction over the matter.
8.3.4. Expenses. Fees and expenses paid to
third-party service providers and incurred after the date
hereof by Figgie, Rawlings or any of their subsidiaries for
the purpose of obtaining the Tax Benefits, including, without
limitation, legal and accounting expenses relating to (i) the
determination of the amount of Tax Benefits, (ii) the
resolution of any dispute with any Tax Authority regarding
the Tax Benefit Issue or (iii) any related activity, shall be
borne by Figgie in the same percentage as the portion of such
Tax Benefits payable to Figgie pursuant to this Agreement
bears to the total Tax Benefits in controversy, unless
otherwise provided herein. Notwithstanding the above,
Figgie's obligation to bear any portion of such fees or
expenses related to service providers not retained by it
shall be contingent upon Figgie's prior written approval of
the retention of any such advisers which approval shall not
unreasonably be withheld.
8.4. Attorney's Fees. Upon a breach of this
Agreement, in addition to other penalties, damages or
liabilities, the party to breach the Agreement shall be
responsible for and shall pay the other party an amount equal
to reasonable attorney's fees actually incurred by such other
party in its efforts to enforce its rights under the
Agreement.
9. Notice of Change of Control. Rawlings shall notify
Figgie in writing of any Change of Control within 30 days of
the occurrence of such Change of Control and promptly shall
provide Figgie with all information in Rawlings' possession
relating to such Change of Control as Figgie may reasonably
request.
10. Construction. Each of the parties hereto agrees
that (i) the normal rule of construction to the effect that
any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation or construction
of this Agreement, and (ii) except as specifically provided
in this Agreement, no usage of trade, course of dealing,
course of performance or enforcement or surrounding
circumstance shall be used in interpreting or construing this
Agreement. Each of the parties further agrees that the
provisions of this Agreement shall be interpreted and applied
in a manner consistent with the following principles: (i)
Figgie shall be compensated for any tax savings arising from
the net basis increase due to the Asset Sale and (ii) any
such compensation is due only to the extent that a tax
benefit is (x) actually realized or (y) would have been
realized but for a Change of Control.
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11. Notices. Any notice or other communication
required or permitted under any provision of this Agreement
shall be in writing and shall be sufficiently given if sent
by registered or certified mail, postage prepaid, addressed
as follows:
If to Figgie, addressed to:
Figgie International Inc.
4420 Sherwin Road
Willoughby, OH 44094
Attention: Luther A. Harthun
If to Rawlings, addressed to:
Rawlings Company, Inc.
1859 Intertech Drive
Fenton, MO 63026
Attention: Carl J. Shields
12. Governing Law. This Agreement shall be governed by
and construed in accordance with the law of the State of
Delaware applicable to contracts made and to be
performed therein, without effect to its choice of law.
13. Binding Effect: Successors. This Agreement shall
be binding upon and inure to the benefit of any successor, by
merger, acquisition of assets or otherwise, to any of the
parties hereto (including but not limited to any successor of
Rawlings succeeding to the tax attributes of Rawlings under
Section 381 of the Code), to the same extent as if such
successor had been an original party to the Agreement. In
addition, in the event of any acquisition of the assets of
Rawlings in which gain or loss is not recognized, in whole or
in part, for federal income tax purposes, Rawlings shall
ensure that any purchaser of such assets shall assume the
obligations set forth in this Agreement,
14. Severability. In the event that any term or
provision of this Agreement shall for any reason be held
invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect
any other term or provision and this Agreement shall be
interpreted and construed as if such term or provision, to
the extent the same shall have been held to be invalid,
illegal or unenforceable, had never been contained herein.
15. Headings. The headings in the sections of this
Agreement are inserted for convenience of reference only and
shall not constitute a part hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
FIGGIE INTERNATIONAL INC.
By: _____________________
L.A. Harthun
Senior Vice President -
International, General
Counsel and Secretary
RAWLINGS SPORTING GOODS
COMPANY, INC.
By: _______________________
Carl J. Shields
President
