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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 5)*
COASTCAST CORP.
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(Name of Issuer)
SHARES OF COMMON STOCK, NO PAR VALUE
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(Title of Class of Securities)
19057T 10 8
(CUSIP Number)
JONATHAN P. VANNINI
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828 Irwin Drive
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Hillsborough, CA 94010
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(650) 347-1800
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
- with copies to -
Bernard J. Cassidy, Esq.
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
(650) 493-9300
November 17, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with the statement [_].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
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CUSIP NO. 19057T 10 8
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<TABLE>
<S> <C> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
JONATHAN P. VANNINI
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_]
(b) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
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7 SOLE VOTING POWER
911,000
NUMBER OF -------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY -------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 911,000
PERSON -------------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
911,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.38%
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14 TYPE OF REPORTING PERSON*
IN
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</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP NO. 19057T 10 8
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ITEM 1. SECURITY AND ISSUER.
Securities acquired: Shares of common stock, no par value per
share ("Common Stock")
Issuer: Coastcast Corp.
3025 East Victoria Street
Rancho Dominguez, CA 90221
Tel. No. (310) 638-0595
ITEM 2. IDENTITY AND BACKGROUND.
This Schedule 13D is filed on behalf of Jonathan P. Vannini (the
"Purchaser").
The business address of the Purchaser is 828 Irwin Drive,
Hillsborough, California 94010. The Purchaser's principal business is
that of a private investor. The Purchaser is a citizen of the United
States.
The Purchaser has not during the past five years been convicted in a
criminal proceeding (excluding traffic violations or similar
misdemeanors) or been a party to a civil proceeding of a judicial or
an administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation
with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS.
Since the filing of the fourth amendment to the initial Schedule 13D
on October 16, 1998, the Purchaser has not engaged in any
transactions involving the Common Stock of Coastcast Corp. (the
"Issuer") as described below in Item 5. Purchaser acquired
beneficial ownership of his Common Stock of Coastcast through his
personal brokerage account at Smith Barney Inc. The source of funds
for the Purchaser's previous transactions was in part the
Purchaser's personal funds and in part margin credit extended to
Purchaser by Smith Barney Inc. through the Purchaser's personal
brokerage account, which is subject to the client agreement between
Purchaser and Shearson Lehman Brothers Inc., the predecessor-in-
interest of Smith Barney Inc., attached to the fourth amendment to the
Schedule 13D filed on October 16, 1998.
ITEM 4. PURPOSE OF TRANSACTION.
The Purchaser acquired shares of the Issuer's Common Stock as an
investment in order (a) to obtain an equity position in the Issuer
whose Common Stock the Purchaser believes to be presently undervalued,
and (b) to maximize the value of that investment.
3
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CUSIP NO. 19057T 10 8
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The Purchaser has a present intention to influence control of the Issuer.
Pursuant to an agreement entered into on November 6, 1998 by the Purchaser and
Coastcast (the "Agreement") (attached hereto under Item 7), Mr. Vannini has been
elected to the Board of Directors of Coastcast and will serve as director until
the next annual meeting of shareholders and until his successor is elected and
qualifies. Thereafter, Mr. Vannini will be included on the slate of director-
nominees of the board of directors for election and the 1999 annual meeting of
the shareholders and at each subsequent annual meeting of shareholders during
the term of the Agreement for as long as Mr. Vannini beneficially owns not less
that 8% of the outstanding common stock of the Company (as adjusted for any
issuances of shares after the date hereof).
In the Agreement of November 6, 1998, Coastcast also represented
. that in addition to Mr. Vannini, the slate of director-nominees of the
board of directors for election at the 1999 annual meeting of shareholders
and at each subsequent annual meeting of shareholders during the term of the
Agreement for so long as Mr. Vannini beneficially owns not less than 8% of
the Company shall include one person selected by the board of directors
subject to approval by Mr. Vannini,
. that the Company's employee stock option plan and non-employee director
stock option plan have been amended by the board of directors of the
Company to prohibit repricing of outstanding stock options without
shareholder approval, and that no modification or withdrawal of such
amendments will be made without shareholder approval,
. that Hans Buehler, the Chairman of the Board of the Company, has resumed
the position and duties of Chief Executive Officer of the Company, that the
annual salary rate of Hans Buehler has been voluntarily reduced by him by
20%, and that no increase will be made in the salary rate of Mr. Buehler
until at least one year from the date of the Agreement,
. that Hans Buehler has voluntarily relinquished all of his benefits under
the Company's supplemental executive retirement plan (the "SERP"), and that
such benefits will not be restored without shareholder approval,
. that Hans Buehler has recommended to the board of directors of the Company
curtailment or modification of the SERP to reduce costs to the Company and
that a detailed proposal regarding any future SERP or other benefits will
be presented to the board of directors for evaluation and possible
implementation,
. that the Company will continue to repurchase shares of its stock at such
times and such prices as management and the board of directors deem
advantageous and prudent,
. that the Company will reimburse Mr. Vannini the sum of $400,000 for a
portion of his expenses in connection with the litigation entitled
COASTCAST CORPORATION V.
4
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CUSIP NO. 19057T 10 8
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VANNINI (Case No. 98-6625-WMB (Mcx), (the "Litigation") and with Mr.
Vannini's efforts to call a special meeting of the shareholders of the
Company,
. and that the Company hereby forever releases and discharges Mr. Vannini
and his representatives, employees, attorneys, advisors, successors and
assigns and all persons acting in concert with any such person from all
manner of claims, actions, causes of action or suits, at law or in equity,
which the Company now has or hereafter can, shall or may have by reason of
the matter, cause or thing whatsoever from the beginning of time to the date
of the Agreement, arising out of, in connection with, or in any way related
to Mr. Vannini's acquisition or ownership of shares of the Company, demand
for a special meeting of the shareholders of the Company, solicitation of
proxies in connection therewith, or which are the subject of the Company's
claims in the litigation, whether or not they were pleaded in the Litigation,
excepting only any action, cause of action or suit arising by virtue of an
undertaking, covenant, promise or representation contained in the Agreement.
In exchange, the Purchaser agreed
. that he represents and warrants that he beneficially owns all of his
shares of Common Stock free and clear of interests of others except for a
lien held by Smith Barney, Inc. for margin credit extended to him,
. that he shall take all such action as may be necessary and appropriate to
cause to be canceled and withdrawn all demands made by him, or on his
behalf in respect to the shares of common stock beneficially owned by him,
pertaining to a special meeting of the shareholders of the Company and
inspection or delivery of shareholder records of the Company, and terminate
or cause to be terminated all efforts to solicit proxies for such special
meeting, and that he will not, directly or indirectly, acquire beneficial
ownership of additional shares or any other securities which would result
in him beneficially owning more than 20% of the outstanding shares,
. that in connection with every future meeting of shareholders of the
Company, he shall take all action as may be necessary and appropriate so
that all shares of the Company owned beneficially, directly or indirectly,
by him, are voted for and against each proposal or nominee for director in
the same proportion as the votes cast by holders of shares other than Mr.
Vannini, and that during the term of the Agreement, Mr. Vannini shall not
contest any proxies received by the Company with respect to, or submit, any
proposal for vote of shareholders at any annual or other meeting of
shareholders of the Company,
. that during the term of the Agreement, he shall not directly or indirectly
solicit proxies or written consents or become a "participant" in a
"solicitation" with respect to any matter or with respect to any "election
contest" relating to the election of directors of the Company ( as such
terms are defined in Regulation 14A under the Exchange Act) except to the
extent that Mr. Vannini may be deemed a participant in any solicitation by
the board of directors of the Company,
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CUSIP NO. 19057T 10 8
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. that during the term of the Agreement, and except as otherwise provided in
the Agreement, he shall not directly or indirectly join, or assist or
encourage in any respect the formation of, a partnership, syndicate or
other group (within the meaning of the Exchange Act and Rule 13d-5
thereunder), or otherwise act in concert with any other person, to affect
control of the Company or to acquire, hold, vote or dispose of Securities,
. that during the term of the Agreement, and except as otherwise provided in
the Agreement, he shall not directly or indirectly sell or otherwise
transfer in any manner any shares of the Company (or enter into agreements
or undertakings with respect to any of the foregoing) except for sales in
the open market or in privately negotiated transactions pursuant to persons
who do not, and will not as the result of any such sale own more than 5% of
the outstanding shares of the Company,
. that, during the term of the Agreement, he shall not (i) propose any
business combination or similar transaction with, or a change of control
of, the Company to anyone other than the board of directors of the Company,
(ii) make or propose a tender offer for Securities, (iii) otherwise act to
seek control or influence the management, board of directors, policies or
affairs of the Company (other than in his capacity as a director of the
Company), or (iv) solicit or encourage any person (other than the board of
directors of the Company) to do any of the foregoing, and that he will
promptly disclose to the board of directors of the Company any proposals
that he receives regarding the sale or control of the Company,
. that he shall not directly or indirectly initiate, join in, assist, or
encourage in any respect any shareholder derivative suit against any of the
officers or directors of the Company relating to any matter, cause or thing
whatsoever from the beginning of time to the date of the Agreement,
. that he will cause each person over whom he may have control or share
control to observe the foregoing provisions of the Agreement as if they
were bound thereby,
. and that he hereby forever releases and discharges Hans Buehler and his
representatives, employees, attorneys, advisors, successors and assigns and
all persons acting in concert with any such person and the Company and its
present and former directors, officers, representatives, employees,
attorneys, advisors, parents, subsidiaries, affiliated companies,
predecessors, successors, and assigns and all person acting in concert with
any such person from all manner of claims, actions, causes of action or
suits, at law or in equity which Mr. Vannini now has or hereafter can, shall
or may have by reason of any matter, cause or thing whatsoever from the
beginning of time to the date of the Agreement, rising out of, in connection
with, or in any way related to Mr. Vannini's acquisition or ownership of
shares of the Company, demand for a special meeting of shareholders of the
Company, solicitation of proxies in connection therewith, or which are
subject to Mr. Vannini's claims in the Litigation, excepting only action,
cause of action or suit arising by virtue of an undertaking, covenant,
promise or representation contained in the Agreement
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CUSIP NO. 19057T 10 8
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The parties also agreed
. that Mr. Vannini and the Company will dismiss with prejudice the
litigation and all claims subject thereto, including, without limitation,
the counterclaim and claims for costs, expenses and attorney's fees.
. that each of the parties hereby waives the benefits of California Civil
Code Section 1542 which provides as follows:
Section 1542. Certain Claims Not Affected by General Release. A
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general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the
release, which, if known by him must have materially affected his
settlement with the debtor.
In addition, the parties issued a joint press release, attached hereto under
Item 7.
At the time of the filing of the third amendment to the initial
Schedule 13D on August 17, 1998, and at the time the Purchaser signed
a declaration before a United States District Court in California, the
Purchaser believed in good faith that he had been granted a Master of
Business Administration from Columbia University's Graduate School of
Business (the "Columbia Business School"). The Purchaser stated in the
aforementioned 13D and declaration that he had received a Master's
Degree in Business Administration from Columbia Business School. Since
then, the Purchaser has reviewed his status as an alumnus of the
Columbia Business School with the school, and on September 16, 1998,
Professor Meyer Feldberg, the Dean of the Columbia Business School,
wrote a letter which states in its entirety:
To whom it may concern;
Mr. Jonathan Patrick Vannini was a full-time graduate student in
good standing for four semesters: Autumn 1985; Spring 1986;
Autumn 1986; Spring 1987 at Columbia University's Graduate School
of Business. In May 1987 he completed all of the requirements to
be awarded a Master of Science in Business Administration.
Due to an oversight, Mr. Vannini was not initially given his
Master's degree. This issue has now been resolved, and Mr.
Vannini has been awarded his degree retroactively to May 1987.
Yours sincerely,
/s/ Meyer Feldberg
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Professor Meyer Feldberg
Dean
7
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CUSIP NO. 19057T 10 8
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The degree actually received by the Purchaser from Columbia
University, a Master of Science in Business Administration, materially
differs from a Master of Business Administration in that it requires
fewer credit hours and does not require the completion of a core
curriculum.
At the time of the filing of the third amendment to the initial
Schedule 13D on August 17, 1998, and at the time the Purchaser signed
a declaration before a United States District Court in California, the
Purchaser believed in good faith that he had been granted a Bachelor
of Arts degree in Economics from the University of California, Los
Angeles ("UCLA"). The Purchaser stated in the aforementioned 13D and
declaration that he had received a Bachelor of Arts degree in
Economics from UCLA. Since then, the Purchaser has been informed that
he has not been granted a degree from UCLA. Purchaser is currently
cooperating with UCLA officials in a review of his undergraduate
records to determine whether UCLA will grant his degree retroactively.
In response to Purchaser's inquiry, UCLA has reviewed Purchaser's
academic record and discovered an error had occurred in the posting of
transfer credits from the University of California, San Diego, which
Purchaser attended before transferring in 1980 to UCLA. UCLA
discovered that the transferred units should have totaled 76 units
rather than 56 units, and has made corrections to Mr Vannini's
transcript record to include the additional 20 units. As a result, as
of October 8, 1998, UCLA's review had established that Purchaser had
earned 172 of the 180 units required to graduate.
Purchaser continues to believe he completed all the requirements for
the Bachelor of Arts degree in Economics from UCLA. UCLA's review is
continuing, and UCLA is now examining whether its transcript record is
in error with respect to a 4-unit Geography course and a 4-unit
Economics course Purchaser took in 1980 and 1981, respectively.
Purchaser believes he successfully completed the requirements of each
of these courses, even though the UCLA transcript, corrected as of
October 9, 1998, does not indicate that Purchaser successfully
completed those requirements. Purchaser believes that upon completing
its review of the fully corrected records, UCLA will grant him the BA
degree retroactively. There is no assurance, however, that UCLA will
award Mr. Vannini a Bachelor of Arts degree in the future despite Mr.
Vannini's request that UCLA continue its review.
The Purchaser reserves the right to acquire, or dispose of, additional
securities of the Issuer, to the extent
8
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CUSIP NO. 19057T 10 8
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deemed advisable in light of his general investment and trading
policies, market conditions, or other factors, and to the extent such
acquisition or disposal of securities does not violate the Agreement
between the Purchaser and Coastcast.
Other than as described above, the Purchaser has no present plans or
proposals which would result in any of the following:
1) any extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its
subsidiaries;
2) any sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries;
3) any material change in the dividend policy of the Issuer;
4) any other material change in the Issuer's business or
corporate structure;
5) any change in the Issuer's charter, by-laws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of the Issuer by any person;
6) causing a class of securities of the Issuer to be delisted
from a national securities exchange or to cease to be authorized to be
quoted in an interdealer quotation system of a registered national
securities association;
7) causing a class of securities of the Issuer to become
eligible for termination of registration pursuant to Section 12(g)(4)
of the Act; or
8) any action similar to any of those enumerated above.
On August 13, 1998, Coastcast filed suit (COASTCAST CORPORATION v.
JONATHAN VANNINI) in the United States District Court for the
Central District of California against the Purchaser seeking
injunctive and declaratory relief for alleged violations of the
federal securities laws and the California Corporations Code.
On September 18, 1998, Coastcast filed its First Amended Complaint for
Injunctive Relief for Violation of Federal Securities Laws and for
Declaratory Relief in COASTCAST CORPORATION v. JONATHAN VANNINI.
On October 5, 1998, the Purchaser and Coastcast entered into a
Stipulation and Proposed Order Re Case Management Schedule in
COASTCAST CORPORATION v. JONATHAN VANNINI.
On October 5, 1998, the Purchaser filed Defendant's Answer and
Counterclaims to First Amended Complaint in COASTCAST CORPORATION v.
JONATHAN VANNINI.
On November 17, 1998, the United States District Court for the Central
District of California entered an order in COASTCAST V. JONATHAN
VANNINI, dimissing with prejudice the entire action, including the
first amended complaint filed by Coastcast Corporation and the
counterclaims filed by the Purchaser.
On August 14, 1998, the Purchaser filed a Non-Management Preliminary
Proxy Statement with the Securities and Exchange Commission ("SEC") on
Schedule 14A.
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CUSIP NO. 19057T 10 8
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On August 29, 1998, the Purchaser filed an Amended Non-Management
Preliminary Proxy Statement with the SEC on Schedule 14A.
On October 16, 1998, the Purchaser filed an Amended Non-Management
Preliminary Proxy Statement with the SEC on Schedule 14A.
On November 16, 1998, pursuant to the Agreement, the Purchaser
requested that the SEC withdraw the Amended Non-Management Preliminary
Proxy Statement filed with the SEC on Schedule 14A.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) According to the Issuer's most recent Quarterly Report on
Form 10-Q, filed on November 12, 1998, there were issued and
outstanding 8,006,404 shares of Common Stock. As of the date hereof,
the Purchaser has beneficial ownership of 911,000 such shares,
representing approximately 11.38% of the Common Stock of the Issuer.
(b) The Purchaser has the sole power to vote or to direct the
vote of and the sole power to dispose or to direct the disposition of
a total of 911,000 shares of Common Stock of the Issuer.
(c) The Purchaser has not engaged in any transactions involving
the Issuer's securities since the filing of the fourth amendment to
the initial Schedule 13D on October 16, 1998.
(d) Not Applicable.
(e) Not Applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Not Applicable.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
Attached hereto as "Exhibit 99.(G)" is the Agreement entered into as
of November 6, 1998 by and between the Purchaser and Coastcast.
Attached hereto as "Exhibit 99.(H)" is the press release issued
jointly by the Purchaser and Coastcast on November 6, 1998 regarding
the Agreement of November 6, 1998.
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CUSIP NO. 19057T 10 8
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SIGNATURE
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: November 24, 1998
By: /s/ Jonathan P. Vannini
---------------------------
Jonathan P. Vannini
11
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EXHIBIT 99.(G)
AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of November 6, 1998 by
and between Jonathan P. Vannini ("Mr. Vannini") and Coastcast Corporation, a
California corporation (the "Company"), and shall become effective subject to
and in accordance with Section 6.11 hereof.
RECITALS:
A. Mr. Vannini is the beneficial owner of 911,000 shares of common stock,
no par value, of the Company (the "Shares"). As used herein, the term
"beneficial owner" shall have the meaning set forth in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
B. Mr. Vannini has demanded a special meeting of shareholders of the
Company (the "Special Meeting") and commenced steps looking toward the
solicitation of proxies to be voted at such meeting.
C. Litigation is pending between the parties in the United States District
Court in Los Angeles, California, entitled Coastcast Corporation v. Vannini
--------------------------------
(Case No. 98-6625-WMB (Mcx), including certain counterclaims by Mr. Vannini
- ---------------------------
against the Company and Hans Buehler (the "Litigation").
D. In consideration of the representations and covenants of the Company
set forth herein, Mr. Vannini has agreed to withdraw his demand for a Special
Meeting; abandon all efforts to acquire shares of stock of the Company, solicit
proxies or affect control of the Company; settle the Litigation; and release
certain claims; on the terms and conditions hereinafter set forth.
E. In consideration of the representations and covenants of Mr. Vannini
set forth herein, the Company has agreed to make certain covenants; settle the
Litigation; and release certain claims; on the terms and conditions hereinafter
set forth.
AGREEMENTS:
SECTION 1. REPRESENTATIONS AND COVENANTS OF THE COMPANY. The Company
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hereby represents to Mr. Vannini and, during the term and subject to all of the
provisions hereof, hereby covenants as follows:
SECTION 1.1 STOCK OPTION REPRICING. The Company's employee stock option
----------------------
plan and non-employee director stock option plan have been amended by the board
of directors of the Company to prohibit repricing of outstanding stock options
without shareholder approval. No modification or withdrawal of such amendment
will be made without shareholder approval.
SECTION 1.2 COMPENSATION OF CHAIRMAN. Hans Buehler, the Chairman of the
------------------------
Board of the Company, has resumed the position and duties of Chief Executive
<PAGE>
Officer of the Company. The annual salary rate of Hans Buehler has been
voluntarily reduced by him by 20%. No increase will be made in the salary rate
of Mr. Buehler until at least one year from the date hereof.
SECTION 1.3 RELINQUISHMENT OF SERP BENEFITS. Hans Buehler has voluntarily
-------------------------------
relinquished all of his benefits under the Company's supplemental executive
retirement plan (the "SERP"). Such benefits will not be restored without
shareholder approval.
SECTION 1.4 CURTAILMENT OF SERP. Hans Buehler has recommended to the
-------------------
board of directors of the Company curtailment or modification of the SERP to
reduce costs to the Company. A detailed proposal regarding any future SERP or
other benefits will be presented to the board of directors for evaluation and
possible implementation.
SECTION 1.5 ELECTION OF DIRECTORS. The authorized number of directors
---------------------
provided by the bylaws of the Company is seven and there are currently seven
directors. In the event of a vacancy on the board of directors prior to the
1999 annual meeting of shareholders of the Company and upon the effectiveness of
this Agreement pursuant to Section 6.11 hereof, Mr. Vannini will be elected
forthwith by the board of directors to fill such vacancy and to serve as a
director of the Company until the next annual meeting of shareholders and until
his successor is elected and qualifies. Thereafter, Mr. Vannini will be included
on the slate of director-nominees of the board of directors for election at the
1999 annual meeting of shareholders and at each subsequent annual meeting of
shareholders during the term of this Agreement for as long as Mr. Vannini
beneficially owns not less than 8% of the outstanding common stock of the
Company (as adjusted for any issuances of shares after the date hereof). In
addition to Mr. Vannini, the slate of director-nominees of the board of
directors for election at the 1999 annual meeting of shareholders and at each
subsequent annual meeting of shareholders during the term of this Agreement for
as long as Mr. Vannini beneficially owns not less than 8% of the outstanding
common stock of the Company (as adjusted for any issuances of shares after the
date hereof) shall include one person selected by the board of directors subject
to the approval of Mr. Vannini (the "Vannini-approved director"), which approval
will not unreasonably be withheld. If the Vannini-approved director ceases to
be a director after his or her election as a director and prior to an annual
meeting of shareholders at which directors are to be elected, the person elected
to fill the resulting vacancy on the board of directors shall be selected by the
board of directors subject to the approval of Mr. Vannini, which approval will
not unreasonably be withheld.
SECTION 1.6 STOCK REPURCHASE PROGRAM. The Company has been authorized by
------------------------
the board of directors to repurchase 457,000 shares of its outstanding common
stock in addition to shares which have already been repurchased by the Company.
The Company will continue to repurchase shares of its stock at such times and
such prices as management and the board of directors deem advantageous and
prudent.
SECTION 1.7 REIMBURSEMENT OF EXPENSES. Upon the effectiveness of this
-------------------------
Agreement, the Company will reimburse Mr. Vannini the sum of $400,000 for a
portion of
<PAGE>
his expenses in connection with the Litigation and the Special Meeting.
SECTION 2. REPRESENTATIONS AND COVENANTS OF MR. VANNINI. Mr. Vannini
--------------------------------------------
hereby represents to, and covenants with, the Company as follows:
SECTION 2.1 OWNERSHIP OF SHARES. Mr. Vannini represents and warrants that
-------------------
he beneficially owns all of the Shares free and clear of interests of others
except for a lien held by Smith Barney, Inc. for margin credit extended to Mr.
Vannini.
SECTION 2.2 ABANDONMENT OF SPECIAL MEETING AND PROXY SOLICITATION.
-----------------------------------------------------
Promptly following the effectiveness of this Agreement, Mr. Vannini shall take
all such action as may be necessary and appropriate to cause to be canceled and
withdrawn all demands made by him, or on his behalf in respect of the Shares,
pertaining to a special meeting of shareholders of the Company and inspection or
delivery of shareholder records of the Company, and terminate or cause to be
terminated all efforts to solicit proxies for such special meeting. Mr. Vannini
will not, directly or indirectly, acquire beneficial ownership of additional
shares or any other securities of the Company (collectively "Securities") which
would result in him beneficially owning more than 20% of the outstanding shares.
Any additional Securities acquired by Mr. Vannini will constitute Shares subject
to the provisions of this Agreement.
SECTION 2.3 VOTING OF SHARES. In connection with every future meeting of
----------------
shareholders of the Company during the term of this Agreement, Mr. Vannini shall
take all such action as may be necessary and appropriate so that all shares of
the Company owned beneficially, directly or indirectly, by him are voted for and
against each proposal or nominee for director in the same proportion as the
votes cast by holders of shares other than Mr. Vannini. During the term of this
Agreement, Mr. Vannini shall not contest any proxies received by the Company
with respect to, or submit, any proposal for vote of shareholders at any annual
or other meeting of shareholders of the Company.
SECTION 2.4 NO SOLICITATION OF PROXIES. During the term of this
--------------------------
Agreement, Mr. Vannini shall not directly or indirectly solicit proxies or
written consents or become a "participant" in a "solicitation" with respect to
any matter or with respect to any "election contest" relating to the election of
directors of the Company (as such terms are defined in Regulation 14A under the
Exchange Act), except to the extent that Mr. Vannini may be deemed a participant
in any solicitation by the board of directors of the Company.
SECTION 2.5 NO PARTICIPATION IN GROUP. During the term of this Agreement,
-------------------------
and except as otherwise provided in this Agreement, Mr. Vannini shall not
directly or indirectly join, or assist or encourage in any respect the formation
of, a partnership, syndicate or other group (within the meaning of the Exchange
Act and Rule 13d-5 thereunder), or otherwise act in concert with any other
person, to affect control of the Company or to acquire, hold, vote or dispose of
Securities.
SECTION 2.6 TRANSFERS OF SHARES. During the term of this Agreement, and
-------------------
except as otherwise provided in this Agreement, Mr. Vannini shall not directly
or indirectly sell or otherwise transfer in any manner any shares of the Company
(or enter into
<PAGE>
agreements or undertakings with respect to any of the foregoing) except for
sales in the open market or in privately negotiated transactions to persons who
do not, and will not as the result of any such sale, own more than 5% of the
outstanding shares of the Company. This provision shall not restrict the right
of Smith Barney, Inc. to exercise its rights in respect of any Shares in which
it may hold a security interest; provided that any sale or transfer of any such
Shares by Smith Barney, Inc. is made independently by it solely in the exercise
of its rights as secured party and creditor. This provision shall also not
restrict the right of Mr. Vannini to tender any or all of the Shares in response
to a tender offer made in compliance with Section 14(d)(1) of the Exchange Act.
SECTION 2.7 SALE OR CONTROL OF THE COMPANY. During the term of this
------------------------------
Agreement, Mr. Vannini shall not (i) propose any business combination or similar
transaction with, or a change of control of, the Company to anyone other than
the board of directors of the Company, (ii) make or propose a tender offer for
Securities, (iii) otherwise act to seek control or influence the management,
board of directors, policies or affairs of the Company (other than in his
capacity as a director of the Company), or (iv) solicit or encourage any person
(other than the board of directors of the Company) to do any of the foregoing.
Mr. Vannini will promptly disclose to the board of directors of the Company any
proposals that he receives regarding the sale or control of the Company.
SECTION 2.8 NO DERIVATIVE SUITS. Mr. Vannini shall not directly or
-------------------
indirectly initiate, join in, assist or encourage in any respect any shareholder
derivative suit against any of the officers or directors of the Company relating
to any matter, cause or thing whatsoever
from the beginning of time to the date of this Agreement.
SECTION 2.9 ACTIONS OF CONTROLLED PERSONS. Mr. Vannini will cause each
-----------------------------
person over whom he may have control or share control to observe the foregoing
provisions of Section 2 of this Agreement as if they were bound thereby.
SECTION 3. DISMISSAL OF LITIGATION AND RELEASES.
------------------------------------
SECTION 3.1 DISMISSAL OF LITIGATION. Forthwith following the
-----------------------
effectiveness of this Agreement, Mr. Vannini and the Company will dismiss with
prejudice the Litigation and all claims subject thereto, including, without
limitation, the counterclaim and claims for costs, expenses and attorneys' fees.
SECTION 3.2 RELEASE BY THE COMPANY. Upon the effectiveness of this
----------------------
Agreement, the Company hereby forever releases and discharges Mr. Vannini and
his representatives, employees, attorneys, advisors, successors and assigns and
all persons acting in concert with any such person from all manner of claims,
actions, causes of action or suits, at law or in equity, which the Company now
has or hereafter can, shall or may have by reason of any matter, cause or thing
whatsoever from the beginning of time to the date of this Agreement, arising out
of, in connection with, or in any way related to Mr. Vannini's acquisition or
ownership of shares of the Company, demand for a special meeting of shareholders
of the Company, solicitation of proxies in connection therewith, or which are
the subject of the Company's claims in the Litigation, whether or not they
<PAGE>
were pleaded in the Litigation, excepting only any action, cause of action or
suit arising by virtue of an undertaking, covenant, promise or representation
contained in this Agreement.
SECTION 3.3 RELEASE BY MR. VANNINI. Upon the effectiveness of this
----------------------
Agreement, Mr. Vannini hereby forever releases and discharges Hans Buehler and
his representatives, employees, attorneys, advisors, successors and assigns and
all persons acting in concert with any such person and the Company and its
present and former directors, officers, representatives, employees, attorneys,
advisors, parents, subsidiaries, affiliated companies, predecessors, successors
and assigns and all persons acting in concert with any such person from all
manner of claims, actions, causes of action or suits, at law or in equity, which
Mr. Vannini now has or hereafter can, shall or may have by reason of any matter,
cause or thing whatsoever from the beginning of time to the date of this
Agreement, arising out of, in connection with, or in any way related to Mr.
Vannini's acquisition or ownership of shares of the Company, demand for a
special meeting of shareholders of the Company, solicitation of proxies in
connection therewith, or which are the subject of Mr. Vannini's claims in the
Litigation, whether or not they were pleaded in the Litigation, excepting only
any action, cause of action or suit arising by virtue of an undertaking,
covenant, promise or representation contained in this Agreement.
SECTION 3.4 RELEASE OF UNKNOWN CLAIMS. Each of the parties hereby waives
-------------------------
the benefits of California Civil Code Section 1542 which provides as follows:
Section 1542. Certain Claims Not Affected By General Release. A general
----------------------------------------------
release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which
if known by him must have materially affected his settlement with the
debtor.
SECTION 4. TERM OF AGREEMENT. The term of this Agreement will end on the
-----------------
earlier to occur of (i) August 31, 2000 and (ii) the date of the Company's
disclosure to its shareholders of commencement of a "going private" transaction
subject to Rule 13e-3 under the Exchange Act.
SECTION 5. PUBLICITY. Promptly following the effectiveness of this
---------
Agreement, the parties shall issue a joint press release in the form of Annex 1
attached hereto. Thereafter, neither party shall make any public disclosure or
statement concerning the matters referred to herein (including, but not limited
to, confidential information produced in the Litigation), except that (i) Mr.
Vannini shall file a copy of this Agreement as an exhibit to his statement on
Schedule 13D, filed with the Securities and Exchange Commission and shall make
such disclosures as his counsel may advise are required by law in his
preliminary proxy statements and other documents filed with the Securities and
Exchange Commission, (ii) the Company shall file a copy of this Agreement as an
exhibit to a report on Form 8A or 10-Q with the Securities and Exchange
Commission and shall make such disclosures as its counsel may advise are
required by law in its proxy statements and reports filed under the Securities
Act of 1933, as amended, of the Exchange Act, and (iii) nothing herein shall be
construed to prevent
<PAGE>
either of the parties from making any other disclosures as may be required by
law.
SECTION 6. MISCELLANEOUS.
-------------
SECTION 6.1 INJUNCTIONS. Each of the Company and Mr. Vannini acknowledge
-----------
and agree that irreparable damage would occur in the event any of the provisions
of this Agreement were not performed in accordance with their specific terms or
were otherwise breached and that such damage would not be compensable in
damages. It is accordingly agreed that each of the parties hereto shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction, in
addition to any other remedy to which it may be entitled at law or equity,
without furnishing an undertaking or bond and without proof of irreparable
damage, both of which are hereby waived.
SECTION 6.2 NOTICES. All notices, requests and other communications to
-------
any person named hereunder shall be in writing (including wire, telecopier or
similar writing) and shall be given to such person at its or his address or
telecopier number set forth below or such address or telecopier numbers as such
person may hereafter specify for the purpose by notice to the other person:
If to the Company: Coastcast Corporation
3025 East Victoria Street
Rancho Dominguez, CA 90221
Telecopier No. (310) 631-2884
If to Mr. Vannini: Mr. Jonathan P. Vannini
828 Irwin Drive
Hillsborough, CA 94010
Telecopier No. (650) 347-2181
Each such notice, request or other communication shall be effective (a) if given
by telecopier, when such telecopier is transmitted to the telecopier number
specified in this subsection and the appropriate answer back is received or (b)
if given by any other means, when actually received at the address specified in
this subsection, provided a notice given other than during normal business hours
--------
or on a business day at the place of receipt shall not be effective until the
opening of business on the next business day.
SECTION 6.3 GOVERNING LAW AND FORUM. This Agreement shall be construed in
-----------------------
accordance with and governed by the internal laws of the State of California.
Each of the parties hereby agrees that any litigation concerning this Agreement
shall be conducted exclusively in the Superior Court of the State of California
in Los Angeles County or the United States District Court located in Los
Angeles, and no such action shall be commenced in any other court. The parties
hereby irrevocably consent to the jurisdiction and venue of the foregoing courts
and waive any objection thereto.
<PAGE>
SECTION 6.4 AMENDMENTS. This Agreement may be amended, modified or
----------
supplemented only by written agreement of the parties hereto.
SECTION 6.5 WAIVER OF BREACH. Any failure of any party to comply with any
----------------
obligation, covenant, agreement or condition herein may be waived by the party
entitled to the benefit of such obligation, covenant, agreement or condition
only by a written instrument signed by such party, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. Whenever this Agreement requires or permits
consent by or on behalf of any party hereto, such consent shall be effective
only if given in writing in a manner consistent with the requirements for a
waiver of compliance as set forth in this Section.
SECTION 6.6 SUCCESSORS AND ASSIGNS. This Agreement and all of the
----------------------
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
SECTION 6.7 COUNTERPARTS. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 6.8 ENTIRE AGREEMENT. This Agreement embodies the entire
----------------
agreement and understanding of the parties hereto in respect to the subject
matter contained herein. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth or
referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
SECTION 6.9 INVALID PROVISIONS. If any provision of this Agreement shall
------------------
be deemed or declared to be unenforceable, invalid or void, the same shall not
impair any of the other provisions of this Agreement.
SECTION 6.10 AUTHORITY. Each of the parties represents and warrants with
---------
respect to itself or himself that it or he is duly authorized to execute,
deliver and perform this Agreement, that this Agreement has been duly executed
by such party, and that this Agreement is a valid and binding agreement of such
party, enforceable against such party in accordance with its terms.
SECTION 6.11 EFFECTIVENESS OF AGREEMENT. This Agreement will become
--------------------------
effective on the date that Mr. Vannini is elected to serve as a director of the
Company to fill a vacancy on the board of directors resulting from the
resignation of a current director. If Mr. Vannini is not elected to serve as a
director of the Company by November 9, 1998, this Agreement will not become
effective and will be of no further force or effect after that date.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
<PAGE>
as of the day and year first above written.
COASTCAST CORPORATION
____________________________ By:________________________
JONATHAN P. VANNINI Hans H. Buehler
Chairman and Chief Executive Officer
<PAGE>
EXHIBIT 99.(H)
Coastcast Corporation and Jonathan Vannini Announce Settlement
Rancho Dominguez, California-November 6, 1998--Coastcast Corporation (NYSE:PAR)
and Jonathan Vannini today announced as part of an overall settlement between
them that Mr. Vannini has withdrawn his demand for a special meeting of
shareholders of Coastcast and that the litigation between them has been settled.
The vacancy on the board of directors created by the resignation of Richard W.
Mora as an officer and director of Coastcast has been filled by the election of
Mr. Vannini to serve as a director of Coastcast. Mr. Vannini will also be
included on the slate of director-nominees of the board of directors of
Coastcast for election at the 1999 and 2000 annual meetings of shareholders for
as long as he continues to own not less than 8% of the outstanding common stock
of Coastcast. In addition to Mr. Vannini, the slate of director-nominees of the
board of directors for election at the 1999 and 2000 annual meetings of
shareholders will include one person selected by the board of directors subject
to the approval of Mr. Vannini.
Mr. Vannini has withdrawn his demand for a special meeting of shareholders of
Coastcast. He has agreed that until August 31, 2000 he will refrain from
soliciting proxies or initiating or participating in efforts to affect control
or influence the affairs of Coastcast. He has also agreed to vote his Coastcast
shares at all meetings of shareholders of Coastcast during that period in the
same proportions as the votes cast by other shareholders.
Coastcast and Mr. Vannini have agreed to dismiss the litigation between them,
including Mr. Vannini's counterclaim against Coastcast and Hans Buehler,
Chairman and Chief Executive Officer. The parties have also exchanged releases
of all claims relating to the litigation and Mr. Vannini's ownership of
Coastcast shares. Coastcast has agreed to reimburse Mr. Vannini the sum of
$400,000 for a portion of the expenses incurred by him in connection with the
proposed special meeting of shareholders and the related litigation.
Mr. Buehler stated: "We are pleased to have resolved the differences with Mr.
Vannini so that the management of Coastcast may devote undivided attention to
running the company's business. We credit Mr. Vannini with focusing attention
on some important compensation issues which has resulted in substantial cost
reductions to the company. I expect him to make additional contributions to
Coastcast's future as a member of our board."
Mr. Buehler further stated: "Within the last several months, the board of
directors has rescinded amendments to the company's two stock option plans which
were approved at the 1998 annual meeting of shareholders, amended those plans to
preclude repricing of options without shareholder approval, and curtailed the
company's supplemental executive retirement plan which will result in
substantial savings to Coastcast. I personally have voluntarily relinquished
all of my rights under that plan and reduced my annual salary rate by 20%.
Compensation of other salaried employees has also been reduced."
<PAGE>
Mr. Vannini added: "I am pleased by the actions taken by Mr. Buehler and the
Coastcast board in response to my recommendations. They have justified the
confidence I have shown in the Company by my substantial investment in Coastcast
stock. I look forward to working with the directors of Coastcast in an effort
to enhance shareholder value."
Coastcast, a leading manufacturer of golf clubheads, produces metal woods, irons
and putters in a variety of metals, including stainless steel and titanium.
Customers include Callaway, Cleveland, Cobra, Daiwa, Odyssey, Taylor Made,
Titleist and Wilson. The Company also manufactures a variety of investment-cast
orthopedic implants and surgical tools that are made to customer specifications.
