FORM 10-K/A
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended August 31, 1999.
Commission File Number: 0-24450
RAWLINGS SPORTING GOODS COMPANY, INC.
(Exact name of registrant as specified in its charter)
Delaware 43-1674348
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1859 Intertech Drive, Fenton, Missouri 63026
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (636) 349-3500
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
(Title of Class)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to the filing
requirements for at least the past 90 days.
Yes X No _______
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting Common Stock held
by nonaffiliates of the registrant as of October 31, 1999 was
$74,093,953.
The number of shares of the registrant's Common Stock, $.01
par value, outstanding as of October 31, 1999 was 7,903,355.
DOCUMENTS INCORPORATED BY REFERENCE
There are no documents incorporated by reference herein.
<PAGE>
AMENDMENT
The primary purpose of this Amendment is to provide
information required by Items 10, 11, 12 and 13 of Part III of
this report which the registrant intended to incorporate by
reference from the registrant's proxy statement for the annual
meeting of stockholders. In addition this Amendment provides
Exhibits 10.1.4-6 and Exhibit 10.16 that were inadvertently
omitted from the registrant's original filing of Form 10-K on
December 14, 1999.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
(a) IDENTIFICATION OF DIRECTORS
TERM EXPIRES
AT ANNUAL
MEETING OF
STOCKHOLDERS
FOLLOWING THE
SERVED AS FISCAL YEAR
NAME, AGE AND DIRECTOR ENDING
PRINCIPAL OCCUPATION SINCE AUGUST 31,
CHARLES L. JARVIE, 62 1998 2002
President and director of
Host Communications, Inc.
since 1993; director of
Chase Bank of Texas,
Total Sports Manufacturing Co.
and Universal Sports America Co.
MICHAEL MCDONNELL, 60 1994 2002
President of West Union
Corporation, a holding company
for the distribution of hardware
and the manufacturing of building
products, since 1980; director of
National Commerce Bancorp.; part
owner of the St. Louis Cardinals
Major League Baseball team since 1996.
MICHAEL J. ROARTY, 71 1994 2002
Consultant to Anheuser-Busch
Companies, Inc., a brewery,
from October 1994 until
October 1996; previously
Executive Vice President -
Marketing of Anheuser-Busch
Companies, Inc.
<PAGE>
ANDREW N. BAUR, 55 1994 2000
Chairman of Mississippi Valley
Bancshares, a bank holding company,
and Chairman of Southwest Bank of
St. Louis, the bank subsidiary of
Mississippi Valley Bancshares, since
1984; Secretary and Treasurer of the
St. Louis Cardinals Major League
Baseball team since 1996.
STEPHEN M. O'HARA, 44 1998 2000
Chairman of the Board and
Chief Executive Officer of the
Company since November 2, 1998;
previously since 1994 President of
Specialty Catalog Corp., a direct
marketer targeting niche
consumer products.
ROBERT S. PRATHER, JR., 55 1998 2000
President and Chief Executive
Officer of Bull Run Corporation
since 1992; director of Gray
Communications Systems, Inc.
since 1993 and interim Executive
Vice President-Acquisitions since
1996; Chairman of the Board of
Phoenix Corporation, a steel service
center, from 1980 to 1992.
LINDA L. GRIGGS, 50 1996 2001
Partner in the Business and
Finance Section of the law firm of
Morgan, Lewis & Bockius LLP.
WILLIAM C. ROBINSON, 49 1994 2001
President of The Treehouse
Florida Fancy, Inc. since 1990;
a consultant to F.W. Woolworth
Co. from 1988 to 1990; President
and Chief Executive Officer of
Robby's Sports, a 49 store sporting
goods retail chain, from 1973 to 1988.
(b) IDENTIFICATION OF EXECUTIVE OFFICERS
Information with respect to the executive officers of the
Company is set forth under the caption "Executive Officers of the
Registrant" contained in Part I, Item 1 of this report, which
information is incorporated herein by reference.
(c) COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") requires the Company's directors and
executive officers, and persons who own more than 10% of the
Company's outstanding Common Stock, to file with the Securities
and Exchange Commission initial reports of ownership and reports
of changes in ownership in the Company's Common Stock and other
equity securities. In addition, under Section 16(a), a director,
executive officer or 10% stockholder who is a trustee and has a
pecuniary interest (such interest includes situations where a
member of the trustee's immediate family is a beneficiary of the
trust) in any holding or transaction in the Company's securities
held by the trust, must report the holding<PAGE> or transaction
on the trustee's individual form. Securities and Exchange
Commission regulations require directors, executive officers,
greater than 10% stockholders and reporting trusts to furnish the
Company with copies of all Section 16(a) reports they file.
Except as described below, to the Company's knowledge, based
solely on a review of the copies of such reports furnished to the
Company and written representations that no other reports were
required, during the fiscal year ended August 31, 1999, all
Section 16(a) filing requirements applicable to the directors,
executive officers and greater than 10% stockholders were met.
Through a record-keeping error at the Company, one Report on Form
5 of one exempt grant of shares of Common Stock in lieu of
directors' fees pursuant to the Directors' Plan was not timely
filed on behalf of each of Messrs. Andrew N. Bauer, Charles L.
Jarvie, Michael McDonnell, Robert S. Prather, Jr. and Michael J.
Roarty, directors of the Company, one Report on Form 3 was not
timely filed on behalf of each of Messrs. Stanley W. Morrison,
Stephen M. O'Hara and Rexford K. Peterson, each executive
officers of the Company and one Report on Form 4 was not timely
filed on behalf of Mr. J. Michael Thompson, an executive officer
of the Company, reflecting the sale of shares of Common Stock by
his wife.
ITEM 11. EXECUTIVE COMPENSATION.
COMPENSATION OF DIRECTORS
The Company's Directors, except for those who are also
employees of the Company, receive an annual retainer fee of
$15,000 for service as a Director. In addition, each
non-employee Director receives meeting attendance fees of $1,000
per meeting for special Board meetings or Committee meetings not
held in conjunction with a regular Board meeting. In 1999, the
directors elected to receive in lieu of cash payment of their
directors' fees a number of shares of Common Stock having a value
equal to the amount of the cash fees. The Company also
reimburses all of its Directors for their out-of-pocket expenses
incurred in the performance of their duties as Directors of the
Company.
Pursuant to the Rawlings Sporting Goods Company, Inc. 1994
Non-Employee Directors' Stock Plan (the "Directors' Plan"), the
non-employee Directors receive (i) a non-qualified stock option
having an exercise price equal to the fair market value on the
date of grant for 2,500 shares of the Common Stock upon their
initial election or appointment and, thereafter, a non-qualified
stock option for 1,000 shares of the Common Stock annually at the
date of the annual meeting, except that no more than one stock
option award may be granted to each non-employee Director in a
given calendar year, and (ii) the right to defer receipt of fees
in cash, and receive instead the right to delivery at a specified
future date of that number of shares of Common Stock having a
value at the time of deferral equal to the amount of cash
deferred.
<PAGE>
EXECUTIVE COMPENSATION
BACKGROUND
The members of the Company's Compensation Committee during
the Company's fiscal year ended August 31, 1999, who are also
currently members of the Compensation Committee, were Michael
McDonnell, Michael J. Roarty, William C. Robinson and Charles L.
Jarvie.
Set forth below is the Compensation Committee's report on
executive compensation.
Notwithstanding anything to the contrary, the following
report of the Compensation Committee and the Performance
Graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Report
into any filing under the Securities Act of 1933, as
amended, or under the Securities Exchange Act of 1934, as
amended, except to the extent that the Company specifically
incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of
Directors is charged with the responsibility to administer
compensation programs for the Company's executives. To this end,
the Committee has established the following fundamental
philosophy for executive compensation:
An appropriate and significant portion of each
executive's total compensation should be performance-based
and linked to the creation of value for stockholders, and
Market practices and compensation levels must be
considered when establishing an appropriate program for
executives in order to assist the Company in attracting and
retaining high quality talent.
Pursuant to this philosophy, the Company's executive
compensation plans have been designed to remunerate executives
through three primary sources - base salary, annual cash
incentives and long-term equity-oriented incentives. The entire
program has been formulated so that the portion of an executive's
total compensation being derived from variable, performance-based
pay is greater at increasing levels of responsibilities.
Details regarding each of the primary facets of executive
compensation, along with a discussion of the awards made in
fiscal 1999, follows.
Base Salary
The Company targets salaries for executives at the median
(size-adjusted 50th percentile) of the competitive marketplace.
For purposes of each of the primary facets of compensation, the
competitive marketplace includes organizations of similar size in
the sporting goods industry.
In 1994, the Committee retained an independent, executive
compensation consultant. With the assistance of this consultant,
the Committee determined that salaries for the Company's
<PAGE>
top executives needed to be increased to reflect the additional
duties and responsibilities resulting from the Company's spin-off
from Figgie. A multi-year process was implemented to move
salaries for these executives to market median levels within 2-3
years. Since the completion of that process, the Company has
increased salaries on an AD HOC basis, relying to a large extent
in the case of executives other than the Chief Executive Officer,
upon the recommendations of the Chief Executive Officer. The
salary increases depicted in the Summary Compensation Table
reflect this approach. Future increases to executive salaries
will be based on the Committee's discretionary evaluation of
Company and individual performance and increases occurring within
the marketplace.
Annual Cash Incentives
The Company maintains a management incentive plan whose
participants include certain management employees and all of the
Company's executives. The plan provides for the payment of
annual cash awards based upon the achievement of specified
Company goals and an evaluation of each executive's individual
performance.
Incentive opportunities are established for each executive
level at the beginning of each fiscal year, stated as a
percentage of base salary. These opportunities are set at levels
designed to approximate incentive opportunities for similar
positions within the competitive marketplace. Actual awards
earned are a function of the Company's performance; thus, actual
awards to the Company's executives may be below or above actual
median awards in the marketplace depending on how the Company
performs.
Annual incentives earned for fiscal 1999, as shown in the
Summary Compensation Table, reflect the Committee's evaluation of
the Company's performance against stated financial goals for
1999. As the Company did not achieve its planned goals
(primarily based on achievement of specified net income levels),
no incentive awards were granted.
Long-Term Equity-Based Compensation
The Company maintains a long-term incentive plan which
provides for the grant of stock-based incentive awards to certain
management employees and all of the Company's executives.
The Company utilizes nonqualified stock options granted at
fair market value as its primary long-term incentive. From time
to time, executives are granted stock options at levels
determined by the Committee based on a number of subjective
factors, including among other things, a general desire to
approximate median award levels within the competitive
marketplace. Since the executives derive no value from the
options unless the value of the Company's stock increase, these
awards support the Company's objective of linking executive
compensation to the creation of shareholder value.
Awards made to the Company's executives in fiscal 1999,
including the 263,850 options granted to Mr. O'Hara, are believed
to approximate the level of awards made to executives in similar
positions within the competitive marketplace.
<PAGE>
Section 162(m)
In December 1995, the IRS finalized rules regarding the
deductibility of compensation under Internal Revenue Code Section
162(m). The rules state that compensation in excess of $1
million annually to any one executive will be non-deductible for
income tax purposes unless the compensation is "performance
based." At this point, none of the compensation paid by the
Company to its executives is non-deductible. The Committee will
monitor IRS rules and the Company's executive compensation
program to ensure, to the extent appropriate, that full
deductibility for such payments continues.
Michael J. Roarty William C. Robinson
Michael McDonnell Charles L. Jarvie
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As discussed above under "Compensation Committee Report,"
the Compensation Committee has general responsibility for the
establishment, direction and administration of all aspects of the
compensation policies and programs for the Company's executive
officers. During the fiscal year ended August 31, 1999, the
members of the Compensation Committee were Michael McDonnell,
Michael J. Roarty, William C. Robinson and Charles L. Jarvie.
None of the members of the Compensation Committee were, during
the fiscal year ended August 31, 1999, an officer or employee of
the Company or any of its subsidiaries, or otherwise were
formerly an officer of the Company or any of its subsidiaries.
<PAGE>
SUMMARY OF COMPENSATION
The following table shows information concerning
compensation earned by or paid to the Company's Chief Executive
Officer and each of the four other most highly compensated
Executive Officers of the Company whose salary and bonus for the
twelve months ended August 31, 1999 exceeded $100,000. This
information is provided for the fiscal years ended August 31,
1999, 1998 and 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS
________________________________________________________
NAME AND PRINCIPAL ALL OTHER
POSITION SECURITIES COMPENSA-
FISCAL OTHER ANNUAL UNDERLYING TION (1)
YEAR SALARY BONUS COMPENSATION OPTIONS
<C> <S> <S> <S> <S> <S> <S>
Stephen M. O'Hara (2) 1999 229,167 0 86,759(3) 263,850 32,406
Chairman and
Chief Executive Officer
Howard B. Keene 1999 161,250 0 -- 15,000 4,691
President and 1998 206,072 8,126 -- 33,000 4,095
Chief Operating Officer 1997 154,500 11,133 -- 15,384 4,214
Rexford K. Peterson (4) 1999 187,436 0 26,013(5) 0 0
Chief Financial Officer
Stan W. Morrison (6) 1999 145,454 0 94,338 (7) 40,000 400
Executive Vice President
Sales and Marketing
Jonathan Hodgins (8) 1999 150,000 0 87,716(9) 15,000 3,375
Vice President 1998 144,892 0 -- 25,000 3,000
Marketing
</TABLE>
(1) The amounts indicated reflect 401(k) Plan contributions by the
Company on behalf of executive officers O'Hara, Keene, Morrison
and Hodgins of $2,406, $4,691, $400 and $3,375, respectively and
$30,000 in premiums on a life insurance policy for Mr. O'Hara.
(2) Mr. O'Hara was selected as Chairman and Chief Executive Officer
on October 15, 1998.
(3) In connection with Mr. O'Hara's relocation from Massachusetts,
the Company paid $51,781 of relocation expenses (including
airfare and temporary accommodation expenses in St. Louis,
Missouri, real estate commissions and other costs associated
with the sale of Mr. O'Hara's home and an amount equal to one
month's salary for other relocation <PAGE>expenses). In
addition, the Company paid Mr. O'Hara $15,272, which amount
represents the amount recognized by Mr. O'Hara for tax purposes
in connection with the Company's payment of the above-referenced
relocation expenses.
(4) Mr. Rexford K. Peterson was selected as interim Chief Financial
Officer on April 1, 1999. Mr. Peterson resigned as Chief
Financial Officer as of October 14, 1999. Mr. Michael L.
Luetkemeyer was selected by the Board of Directors to succeed
Mr. Peterson.
(5) Mr. Peterson lived in Dallas, Texas while he served as interim
Chief Financial Officer. The Company reimbursed Mr. Peterson
$6,457 for his travel expenses and $13,802 for his living
expenses while working for the Company in St. Louis, Missouri.
(6) Mr. Morrison joined the company in October 1998.
(7) In connection with Mr. Morrison's relocation, the Company paid
$55,543 of relocation expenses (including airfare and temporary
accommodation expenses in St. Louis, Missouri, real estate
commissions and transaction associated costs and an amount equal
to one month's salary for other relocation expenses). In
addition, the Company paid Mr. Morrison $22,149, which amount
represents the amount recognized by Mr. Morrison for tax
purposes in connection with the Company's payment of the
above-referenced relocation expenses.
(8) Mr. Hodgins joined the Company in 1997.
(9) In connection with Mr. Hodgins' relocation from Canada, the
Company paid $46,998 of relocation expenses that included real
estate commissions on the sale of Mr. Hodgins' home as well as
airfare and temporary living expenses in St. Louis, Missouri.
In addition, the Company paid Mr. Hodgins $22,577, which amount
represents the amount recognized by Mr. Hodgins for tax purposes
in connection with the Company's payment of the above-referenced
relocation expenses.
<PAGE>
STOCK OPTIONS
The following tables set forth certain information concerning
options granted during the fiscal year ended August 31, 1999 to the
Executive Officers named in the Summary Compensation Table and the
number and value of the unexercised options held by such persons on
August 31, 1999:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (1)
(a) (b) (c) (d) (e) (g) (h)
% OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARs
UNDERLYING GRANTED TO EXERCISE
NAME OPTION/ EMPLOYEES OR
SARs IN FISCAL BASE PRICE EXPIRATION
GRANTED (#) YEAR ($/Sh) DATE 5% ($) 10% ($)
<C> <S> <S> <S> <S> <S> <S>
Stephen M. O'Hara 50,000 (2) $10.00 11/2/2003 $138,141 $305,255
50,000 (2) $11.00 11/2/2003 $151,955 $335,781
50,000 (2) $12.00 11/2/2003 $165,769 $366,306
50,000 (2) $13.00 11/2/2003 $179,583 $396,832
50,000 (2) $14.00 11/2/2003 $193,397 $427,357
12,000 (3) $10.04 3/14/2004 $ 33,286 $ 73,554
1,850 (3) 65% $10.13 3/14/2004 $ 5,178 $ 11,441
Howard B. Keene 15,000 (4) 4% $ 8.875 4/9/2009 $ 83,722 $212,167
Stan W. Morrison 15,000 (4) $ 9.875 10/14/2008 $ 93,155 $236,073
25,000 (4) 6% $ 8.875 4/9/2009 $139,536 $353,612
Jonathan Hodgins 15,000 (4) 4% $ 8.875 4/9/2009 $ 83,722 $212,167
</TABLE>
(1) The potential realizable value represents the amount each
Executive Officer might realize if the stock appreciates
annually at the assumed rates of 5% and 10% for the full period
of the options (10 years, except the options granted to Mr.
O'Hara which have a period of 5 years). The amounts represent
only hypothetical values and there can be no assurance that such
growth rates in stock price will be achieved. The actual amount
realized by each Executive Officer will be determined at the
time the options are exercised and will be based on the excess
of the fair market value of the stock at the time of exercise
over the exercise price.
<PAGE>
(2) The options granted to Mr. O'Hara become exercisable in 20
percent increments on each of the date of grant and the first,
second, third and fourth anniversary dates of the date of grant,
November 2, 1998, subject to acceleration in the event of death
or disability of Mr. O'Hara, a change in control (as defined in
Mr. O'Hara's Employment Agreement with the Company) or as
otherwise determined by the Compensation Committee.
(3) The options have an exercise price equal to the market price on
the date of grant and become exercisable immediately upon grant.
(4) The options have an exercise price equal to the market price on
the date of grant and become exercisable as to one-third of the
initial number of underlying shares of Common Stock on each of
the first, second and third anniversaries of the date of grant,
subject to acceleration in the event of death or disability of
the optionee, a change in control (as defined in the Stock
Option Plan) or as otherwise determined by the Compensation
Committee.
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARs
SHARES OPTIONS/SARs AT AT
ACQUIRED VALUE FY-END (#) FY-END ($)
NAME ON REALIZED EXERCISABLE/ EXERCISABLE/
EXERCISE ($) UNEXERCISABLE UNEXERCISABLE
(#) (1)
<S> <C> <C> <C> <C>
Stephen M. O'Hara -0- -0- 113,850/150,000 0/0
Rexford K. Peterson -0- -0- 0/0 0/0
Howard B. Keene -0- -0- 84,745/37,000 5,347/6,563
Stan W. Morrison -0- -0- 0/35,000 0/10,938
Jonathan Hodgins -0- -0- 8,750/31,250 0/6,563
</TABLE>
(1) The closing price of the Common Stock on the Nasdaq National
Market on August 31, 1999 was $9.3125 per share. Value is
calculated by determining the difference between the option
exercise price and $9.3125, multiplied by the number of shares
of Common Stock underlying the options.
RETIREMENT PLANS
All of the Executive Officers of Rawlings who were previously
employees of Figgie accrued retirement income credits under Figgie's
Retirement Income Plan II (the "Figgie Plan") until the date of the
initial public offering of the Company's shares (the "IPO"). Such
employees will receive, upon retirement, benefits accrued under the
Figgie Plan up until the date of the IPO. In connection with the
acquisition of the Rawlings Business from Figgie, each of the
Company's employees has been given credit for vesting and eligibility
to receive benefits under the Company's retirement plan for service
as an employee of Figgie. In return, Figgie has provided full
vesting under the Figgie Plan for all employees of Rawlings who were
previously employees of Figgie.
As of July 8, 1994, the date of the IPO, the amount of annual
benefits payable upon retirement under the Figgie Plan, including
accrued benefits from a prior plan which was terminated on November
21, 1988, to Mr. Keene who was an employee of Figgie is $9,372.
The Company has not adopted a retirement plan.
<PAGE>
EMPLOYMENT AGREEMENT
Effective November 2, 1998, the Company entered into an
employment agreement with Stephen M. O'Hara which provides for (i) an
initial annual salary of $275,000, with an annual salary review and
adjustment by the Compensation Committee, (ii) an annual bonus of up
to 75% of salary, which will be based upon subjective and objective
criteria established by the Compensation Committee, (iii) the
issuance of stock options to purchase 250,000 shares of Common Stock
having the terms discussed below, (iv) severance benefits if his
employment with the Company is terminated under certain circumstances
following a change in control of the Company, (v) a termination
benefit, unless Mr. O'Hara is terminated for cause, as defined in the
employment agreement, equal to two times Mr. O'Hara's base salary at
the time of termination and the continuation of certain benefits for
a period of two years following such termination, provided that Mr.
O'Hara may not receive such termination benefit in the event of a
change in control of the Company for which Mr. O'Hara receives the
benefits described below under "Severance Agreements," (vi) a $2
million life insurance policy, (vii) an automobile allowance, and
(viii) certain relocation expenses and miscellaneous perquisites.
The stock options referred to above vest over a four year period
in 20% increments. The options that vest on the date of grant are
exercisable at a price per share equal to the current market price of
the Common Stock on October 30, 1998 ($10.00), and those vesting on
the second, third and fourth anniversaries are exercisable at $11.00,
$12.00, $13.00 and $14.00, respectively. In addition, for each share
of Common Stock purchased by Mr. O'Hara, up to the first 20,000
shares purchased annually, Mr. O'Hara shall receive pursuant to the
employment agreement the option to purchase two shares of Common
Stock at an exercise price equal to the price at which such shares of
Common Stock were purchased.
SEVERANCE AGREEMENTS
The Company has entered into severance agreements with each of
the Executive Officers named in the Summary Compensation Table
(except Mr. Peterson and Mr. Hodgins) which provide various
severance benefits to certain Executive Officers if
their employment with the Company is terminated under certain
circumstances following a change in control of the Company. The
agreements provide that a change in control of the Company is deemed
to have occurred if (i) a person acquires beneficial ownership of 20%
or more of the Company's voting stock, (ii) individuals who, at the
date of the agreement or the beginning of a two-year period
thereafter, constitute the Board of Directors, cease for any reason
to constitute a majority of the Board, (iii) the stockholders approve
a liquidation of the Company, a sale or disposition of all or
substantially all of the Company's assets, or a merger, consolidation
or reorganization of the Company other than one that would result in
(a) the holders of the Company's voting stock continuing to own
beneficially more than 50% of the outstanding stock of the resulting
corporation, (b) no person who did not own voting stock prior to the
transaction owning 20% or more of the outstanding stock of the
resulting corporation, and (c) at least a majority of the board of
directors of the resulting corporation being members of the Board of
Directors of the Company at the date the severance agreement was
signed or at the beginning of a two-year period thereafter that
precedes the corporate transaction, or (iv) the Board concludes that
the Executive Officer is entitled to the benefits because of the
occurrence, threat or imminence of an event with consequences similar
to the foregoing.
<PAGE>
Each of the agreements provides for severance payments in the
event of termination of the Executive Officer's employment within a
specified period after a change in control of the Company (two and
one-half years for Mr. Keene and two years for other Executive
Officers), unless the Executive Officer's employment is terminated by
the Company or its successors for "cause" or "disability", because of
the Executive Officer's death or "retirement" or by the Executive
Officer's voluntary termination for other than "good reason", in each
case as such terms are defined in the agreements. The benefits
consist of the following: (a) an amount equal to (two and one-half
times for Mr. Keene and two times the highest base salary paid to
certain of the other Executive Officers) at any time up to the
termination of such Executive Officer's employment Mr. O'Hara is
equal to two times his base salary at the time of termination; (b)
salary and bonus (prorated assuming annual bonuses were paid at the
target level) to the date of termination (Mr. O'Hara would receive an
amount equal to his prior year's bonus); (c) medical, dental,
long-term disability and group term life insurance benefits for (two
and one-half years for Mr. Keene, one year for Mr. O'Hara, and two
years for other Executive Officers) if the Executive Officer makes
his or her required contribution; and (d) acceleration of the vesting
of all stock options. Under the Deficit Reduction Act of 1984,
severance payments that exceed a certain amount subject both the
Company and the Executive Officer to adverse U.S. federal tax
consequences. Each of the agreements provides that the Company shall
pay the Executive Officer (i) the severance benefits reduced to the
extent necessary to avoid an excise tax or (ii) unreduced severance
benefits if, after application of the excise tax, the severance
benefits would be greater than the severance benefits provided for in
clause (i) above.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder
return on an investment of $100 in the Common Stock on August 31,
1994 to August 31, 1999 with the cumulative total return over the
same period of (i) the Nasdaq Composite Market Index and (ii) the
Standard & Poor's Leisure Time Index and assumes dividend
reinvestment through the fiscal year ending August 31, 1999:
<PAGE>
TOTAL STOCKHOLDER RETURN (6/30/94-8/31/99)
STOCK APPRECIATION AND DIVIDENDS
[graphical information omitted]
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
<C> <S> <S> <S> <S> <S> <S>
Rawlings $100.00 $ 76.00 $ 77.00 $ 85.00 $ 73.00 $ 75.00
Nasdaq Composite
Market Index $100.00 $133.00 $149.00 $207.00 $196.00 $378.00
S & P Leisure Time
(Products) Index $100.00 $118.00 $136.00 $171.00 $158.00 $141.00
</TABLE>
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The stockholders named in the following table are the only
stockholders known to the Company to be the beneficial owners of five
percent (5%) or more of the Company's Common Stock as of November 17,
1999. For purposes of this table, the term "beneficial owner" means
any person who, directly or indirectly, has or shares the power to
vote, or to direct the voting of, a security or the power to dispose,
or to direct the disposition, of a security.
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
BENEFICIAL OWNERS OWNERSHIP OF CLASS
First Pacific Advisors, Inc. 893,500(1) 11.3%
11400 West Olympic Boulevard, Suite 1200
Los Angeles, California 90064
Bull Run Corporation 806,500(2) 10.2%
4370 Peachtree Rd. NE
Atlanta, Georgia 30319
Samuel R. Shapiro 554,650(3) 7.0%
3060 Peachtree Rd. N.W., Suite 1555
Atlanta, Georgia 30305
(1) This amount, as reflected in an amended report on Schedule 13G
dated February 12, 1999, consists of no sole voting power,
shared voting power with respect to 368,500 shares, no sole
dispositive power and shared dispositive power with respect to
893,500 shares.
(2) This amount, as reflected in an amended report on Schedule 13D
dated July 9, 1999, does not include 925,804 shares of Common
Stock issuable to Bull Run Corporation upon exercise of a Common
Stock Purchase Warrant which is not currently exercisable.
Robert S. Prather, Jr. is the President and Chief Executive
Officer of Bull Run Corporation. Pursuant to a Standstill
Agreement, dated November 21, 1998, as amended, between the
Company and Bull Run Corporation, Bull Run Corporation is
entitled to select two nominees to the Board of Directors of the
Company. Mr. Prather and Charles L. Jarvie were selected by
Bull Run Corporation as its nominees and appointed to the Board
of Directors during the Company's fiscal year ended August 31,
1998.
(3) This amount is reflected in an amended report on Schedule 13D
dated November 17, 1999, filed jointly by Samuel R. Shapiro and
Shapiro Capital Management Company, Inc. ("Shapiro Capital").
The Schedule 13D reports that Mr. Shapiro is the president,
director and majority shareholder of Shapiro Capital. Mr.
Shapiro and Shapiro Capital shared voting and dispositive power
with respect to the entire amount of shares of Common Stock.
Shapiro Capital is an investment adviser under the Investment
Advisers Act of 1940, having authority to direct the investments
of its advisory clients.
<PAGE>
STOCK OWNERSHIP OF DIRECTORS,
THE NOMINEES FOR DIRECTOR AND EXECUTIVE OFFICERS
The following table and notes thereto set forth information, as
of October 31, 1999, with respect to the beneficial ownership of
shares of Common Stock by each Director, each person nominated by the
Board for election to the Board of Directors and each Executive
Officer named in the Summary Compensation Table and by the Directors
and Executive Officers of the Company, as a group, based upon
information furnished to the Company by such persons:
AMOUNT OF BENEFICIAL OWNERSHIP
AS OF OCTOBER 31, 1999(1)
AMOUNT AND
NATURE OF
NAME OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
Andrew N. Baur (d) 24,607 (2) *
Linda L. Griggs (d) 4,253 (3) *
Jonathan Hodgins 12,202 (4) *
Charles L. Jarvie (d) 3,356 (5) *
Howard B. Keene 96,942 (6) 1.2%
Michael McDonnell (d) 79,709 (7) *
Stan W. Morrison 5,007 (8) *
Stephen M. O'Hara (d) 120,846 (9) 1.5%
Rexford K. Peterson 0 *
Robert S. Prather, Jr. (d) 812,056 (10) 10.3%
Michael J. Roarty (d) 16,128 (11) *
William C. Robinson (d) 37,628 (12) *
All Current Directors
and Executive
Officers as a Group
(14 persons) 1,294,338 16.4%
______________________________
(d) Director
* Less than 1%
(1) Each Director and Executive Officer owning shares listed or
included in this table exercises sole voting and dispositive
power over such shares, except as otherwise indicated in
footnotes (2) through (12). Included in the table are shares
underlying options that are exercisable within sixty days after
October 31, 1999.
(2) This amount includes 5,000 shares of Common Stock underlying
options granted under the Rawlings Sporting Goods Company, Inc.
Non-Employee Directors' Stock Plan ("Directors' Plan") and 6,607
shares of Common Stock Mr. Baur is entitled to receive in lieu
of directors' fees pursuant to the Directors' Plan.
(3) This amount includes 2,625 shares of Common Stock underlying
options granted under the Directors' Plan and 1,128 shares of
Common Stock Ms. Griggs is entitled to receive in lieu of
directors' fees pursuant to the Directors' Plan.
(4) This amount includes 11,667 shares of Common Stock underlying
options granted under the Stock Option Plan and 535 shares of
Common Stock beneficially owned under the 401(k) Plan as to
which Mr. Hodgins has sole voting and dispositive power.
(5) This amount includes 625 shares of Common Stock underlying
options granted under the Directors' Plan and 2,731 shares
of Common Stock Mr. Jarvie is entitled to receive in lieu of
directors' fees pursuant to the Directors' Plan.
<PAGE>
(6) This amount includes 84,745 shares of Common Stock underlying
options granted under the Stock Option Plan and 12,197 shares
beneficially owned under the 401(k) Plan as to which Mr. Keene
has sole voting and dispositive power.
(7) This amount includes 5,000 shares of Common Stock underlying
options granted under the Director's Plan and 2,731 shares of
Common Stock Mr. McDonnell is entitled to receive in lieu of
directors' fees pursuant to the Directors' Plan.
(8) This amount includes 5,000 shares of Common Stock underlying
options granted under the Stock Option Plan, and 7 shares of
Common Stock beneficially owned under the 401(k) Plan as to
which Mr. Morrison has sole voting and dispositive power.
(9) This amount includes 113,850 shares of Common Stock underlying
options granted under the Rawlings Sporting Goods Company, Inc.
1994 Long-Term Incentive Plan (the "Stock Option Plan") and 71
shares beneficially owned under the Rawlings Sporting Goods
Company, Inc. Savings Plan (the "401(k) Plan") as to which Mr.
O'Hara has sole voting and dispositive power.
(10) This amount does not include Common Stock which may be purchased
by Bull Run Corporation pursuant to Common Stock Purchase
Warrants because such Warrants are not currently exercisable.
Mr. Prather is President and Chief Executive Officer of Bull Run
Corporation. This amount includes 625 shares of Common Stock
underlying options granted under the Director's Plan and 2,731
shares of Common Stock Mr. Prather is entitled to receive in
lieu of directors' fees pursuant to the Directors' Plan.
(11) This amount includes 5,000 shares of Common Stock underlying
options granted under the Directors' Plan and 1,128 shares of
Common Stock Mr. Roarty is entitled to receive in lieu of
directors' fees pursuant to the Directors' Plan.
(12) This amount includes 5,000 shares of Common Stock underlying
options granted under the Directors' Plan and 1,128 shares of
Common Stock Mr. Robinson is entitled to receive in lieu of
directors' fees pursuant to the Directors' Plan.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Mr. Baur is the Secretary and Treasurer of St. Louis Cardinals
L.P. During the fiscal year ended August 31, 1999, the Company sold
approximately $285,000 of product to St. Louis Cardinals L.P. The
Company believes that the terms and prices for the sale of these
products are no less favorable than those obtained from unaffiliated
parties.
Mr. Jarvie is the President and a director of Host
Communications, Inc. During the fiscal year ended August 31, 1999,
the Company purchased approximately $442,000 of catalogues and
promotional posters from Host Communications, Inc.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K.
(a) (1) Financial Statements: The financial statements filed
as a part of this report are listed in Part II, Item 8.
<PAGE>
(a) (2) Financial Statement Schedules: None.
(a) (3) Exhibits
2.1 Asset Purchase Agreement, dated September 10,
1997 among Les Equipments Sportif Davtec, Inc.
USA Skate Corporation, California Pro Sports,
Inc., Rawlings Canada, Inc. and the Company,
included as Exhibit 2.1 to the Company's Form
8-K filed on October 21, 1997 is hereby
incorporated herein by reference.
3.1 Certificate of Incorporation, included as
Exhibit 3.1 to the Company's Registration
Statement on Form S-1 (File No. 33-77906), is
hereby incorporated herein by reference.
3.2 By-Laws, included as Exhibit 3.2 to the
Company's Registration Statement on Form S-1
(File No. 33-77906), is hereby incorporated
herein by reference.
3.3 By-Law amendment included as exhibit 3.3 to the
Company's Form 10-K for the fiscal year ended
August 31, 1996, is hereby incorporated herein
by reference.
4.1 Rights Agreement dated as of July 1, 1994
between the Company and Boatmen's Trust
Company as Rights Agent, included as Exhibit
4.1 to the Company's Form 10-Q for the quarter
ended June 30, 1994, is hereby incorporated
herein by reference.
4.2 Amendment of Rights Agreement dated November
21, 1997 between the Company, Boatmen's Trust
Company and ChaseMellon Shareholder Services,
Inc., included as Exhibit 4.2 to the Company's
Form 8-K dated November 21, 1997 is hereby
incorporated herein by reference.
4.2.1 Second Amendment to Rights Agreement, dated
April 19, 1999, between the Company and the
Rights Agent, included as Exhibit 4.1 to the
Company's Form 8-K dated April 30, 1999, is
hereby incorporated herein by reference.
4.2.2 Third Amendment to Rights Agreement, dated
April 23, 1999, between the Company and the
Rights Agent, included as Exhibit 4.2 to the
Company's Form 8-K dated April 30, 1999, is
hereby incorporated herein by reference.
<PAGE>
4.3 Common Stock Purchase Warrant dated November
21, 1997 issued by the Company to Bull Run
Corporation included as Exhibit 4.1 to the
Company's Form 8-K dated November 21, 1997 is
hereby incorporated herein by reference.
10.1 Amended and Restated Credit Agreement dated as
of September 12, 1997 among the Company, The
First National Bank of Chicago, as agent, and
certain lenders named therein included as
Exhibit 99.1 to the Company's Form 8-K filed on
October 21, 1997 is hereby incorporated herein
by reference.
10.1.1 First Amendment to Amended and Restated Credit
Agreement dated May 31, 1998 by and among
Rawlings Sporting Goods Company, Inc., the
First National Bank of Chicago, as agent, and
certain lenders named therein included as
Exhibit 10 to the Company's Form 10-Q for the
quarter ended May 31, 1998, is hereby
incorporated herein by reference.
10.1.2 Amendment Number 2 to Amended and Restated
Credit Agreement by and between the Company
and the First National Bank of Chicago, as
agent and certain lenders named therein, dated
as of February 28, 1999 included as Exhibit
10.1 to the Company's Form 10-Q for the
quarter ended May 31, 1999, is hereby
incorporated herein by reference.
10.1.3 Amendment Number 3 to Amended and Restated
Credit Agreement by and between the Company
and the First National Bank of Chicago, as
agent and certain lenders named therein, dated
as of July 14, 1999 included as Exhibit 10.2
to the Company's Form 10-Q for the quarter
ended May 31, 1999, is hereby incorporated
herein by reference.
10.1.4 Amendment Number 4 to Amended and Restated
Credit Agreement by and between the Company
and First National Bank of Chicago, as agent
and certain lenders named therein, dated as of
August 11, 1999.
10.1.5 Amendment Number 5 to Amended and Restated
Credit Agreement by and between the Company
and the First National Bank of Chicago, as
agent and certain lenders named therein, dated
as of September 3, 1999.
10.1.6 Amendment Number 6 to Amended and Restated
Credit Agreement by and between the Company
and the First National Bank of Chicago, as
agent and certain lenders named therein, dated
as of September 30, 1999.
10.2 Assets Transfer Agreement dated as of July 8,
1994 by and among Figgie, Figgie Licensing
Corporation, Figgie International Real Estate,
Inc., Figgie Properties, Inc. and the Company,
included as Exhibit 10.1 to the Company's Form
10-Q for the quarter ended June 30, 1994, is
hereby<PAGE> incorporated herein by reference.
10.3 Transitional Services Agreement dated as of
July 8, 1994 between Figgie and the Company,
included as Exhibit 10.2 to the Company's Form
10-Q for the quarter ended June 30, 1994, is
hereby incorporated herein by reference.
10.4 Tax Sharing and Separation Agreement dated
July 8, 1994 between the Company and Figgie,
included as Exhibit 10.3 to the Company's Form
10-Q for the quarter ended June 30, 1994, is
hereby incorporated herein by reference.
* 10.5 The Company's 1994 Long-Term Incentive Plan,
included as Exhibit A to the Company's proxy
statement dated December 9, 1994, is hereby
incorporated herein by reference.
* 10.6 The Company's 1994 Non-Employee Directors'
Stock Plan, included as Exhibit B to the
Company's proxy statement dated December 9,
1994, is hereby incorporated herein by
reference.
10.7 Amendment Agreement between Rawlings Sporting
Goods Company and ASICS Corporation, dated
January 21, 1991, included as Exhibit 10.6 to
the Company's Registration Statement on Form
S-1 (File No. 33-77906), is hereby incorporated
herein by reference.
* 10.8 Form of Indemnity Agreement entered into with
Directors and executive officers, included as
Exhibit 10.7 to the Company's Form 10-K for
the fiscal year ended August 31, 1994, is
hereby incorporated herein by reference.
* 10.9 Form of Severance Agreement entered into with
executive officers included as Exhibit 10.8 to
the Company's Form 10-K for the year ended
August 31, 1995 is hereby incorporated herein
by reference.
10.10 Investment Purchase Agreement dated
November 21, 1997 between the Company and Bull
Run Corporation, included as Exhibit 99.1 to
the Company's Form 8-K dated November 21, 1997
is hereby incorporated herein by reference.
10.11 Standstill Agreement dated November 21, 1997
between the Company and Bull Run Corporation,
included as Exhibit 99.2 to the Company's Form
8-K dated November 21, 1997 is hereby
incorporated herein by reference.
10.11.1 Amendment Number 1 of Standstill Agreement
dated April 23, 1999,<PAGE> between the
Company and Bull Run Corporation included as
Exhibit 99.1 to the Company's Form 8-K dated
April 30, 1999, is hereby incorporated herein
by reference.
10.12 Registration Rights Agreement dated November
21, 1997 between the Company and Bull Run
Corporation, included as Exhibit 99.3 to the
Company's Form 8-K dated November 21, 1997 is
hereby incorporated herein by reference.
10.13 Pledge and Security Agreement by and between
the Company and the First National Bank of
Chicago, as agent and certain lenders named
therein, dated as of July 14, 1999 included as
Exhibit 10.3 to the Company's Form 10-Q for
the quarter ended May 31, 1999, is hereby
incorporated herein by reference.
10.14 Stock Pledge Agreement by and between the
Company and the First National Bank of
Chicago, as agent and certain lenders named
therein, dated as of July 14, 1999 included as
Exhibit 10.4 to the Company's Form 10-Q for
the quarter ended May 31, 1999, is hereby
incorporated herein by reference.
10.15 Intellectual Property Assignment of Security
Interest by and between the Company and the
First National Bank of Chicago, as agent and
certain lenders named therein, dated as of
July 14, 1999 included as Exhibit 10.5 to the
Company's Form 10-Q for the quarter ended May
31, 1999 is hereby incorporated herein by
reference.
* 10.16 Employment Agreement entered into between the
Company and Stephen M. O'Hara, dated as of
November 2, 1998.
10.17 Standstill Agreement, dated April 23, 1999
among the Company and the Shapiro Parties,
included as Exhibit 99.2 to the Company's Form
8-K dated April 30, 1999 is hereby
incorporated herein by reference.
21. Subsidiaries of the Company.
23. Consent of Arthur Andersen LLP.
27. Financial Data Schedule.
* Management contract or compensatory plan or arrangement required
to be filed as an exhibit pursuant to the Item 14(c) of this
report.
(b) REPORTS ON FORM 8K
On June 7, 1999, the Company filed a current report
regarding its voluntary recall of certain aluminum softball
bats.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
RAWLINGS SPORTING GOODS
COMPANY, INC.
Date: December 29, 1999 By: /s/Michael L. Luetkemeyer
Michael L. Luetkemeyer
Chief Financial Officer
<PAGE>
July 31, 1999
VIA FACSIMILE
Rawlings Sporting Goods Company, Inc.
1859 Intertech Drive
Fenton, Missouri 63026
Re: Amendment No. 4 to Amended and
Restated Credit Agreement
Gentlemen:
We refer to the Amended and Restated Credit Agreement, dated as
of September 12, 1997, among Rawlings Sporting Goods Company,
Inc., The First National Bank of Chicago, as agent, and the
lenders parties thereto (as amended, the "Credit Agreement").
Capitalized terms used but not defined herein shall have the
meanings assigned thereto in the Credit Agreement.
Pursuant to your request, the Agent on behalf of itself and the
Lenders hereby agrees to:
(i) amend Section 6.1(m) of the Credit Agreement
by deleting the number "15" appearing therein and
substituting in lieu thereof the number "30".
(ii) amend Section 6.33 of the Credit Agreement by
deleting the date "July 30, 1999" appearing therein
and substituting in lieu thereof the date "August
15, 1999.";
(iii) accept title commitment reports satisfactory
to Agent for the Borrower's U.S. real property and
title opinions and certificates of location
satisfactory to Agent for Rawlings Canada's real
property under Section 6.33 of the Credit Agreement
in lieu of title insurance policies in connection
with the pledge of such property, provided that,
notwithstanding the foregoing, upon not less that
20 Business Days written request by Agent, Borrower
shall deliver title insurance policies in form and
substance satisfactory to Agent and at Borrower's
expense insuring Agent's and Lenders' mortgage lien
on Borrower's real property in the U.S.
<PAGE>
In all other respects, the terms and provisions of the Credit Agreement
and other Loan Documents shall continue and remain in effect, and the
same are hereby ratified and confirmed.
This Amendment No. 4 shall become effective upon receipt by the
Agent of a facsimile copy hereof duly executed by the Borrower and
the Required Lenders.
Very truly yours,
THE FIRST NATIONAL BANK OF
CHICAGO, as Agent
By: /s/ Nathan Bloch
First Vice President
Accepted and Agreed to:
RAWLINGS SPORTING GOODS
COMPANY, INC.
By: /s/ Rexford K. Peterson
Chief Financial Officer
THE FIRST NATIONAL BANK OF CHICAGO
(Name of Lender)
By: /s/ Patricia S. Casper
Its: Vice President
BANK OF AMERICA, N.A.
(f/k/a NationsBank, N.A.)
By: /s/ Keith M. Schroeder
Its: Senior Vice President
COMERICA BANK
By: /s/ Jeffrey E. Peck
Its: Vice President
THE BANK OF NEW YORK
By: /s/ David G. Shedd
Its: Vice President
MERCANTILE BANK, N.A.
By: /s/ D. F. Davis
Its: Vice President
AMENDMENT NO. 5 TO AMENDED AND RESTATED CREDIT AGREEMENT
This Amendment No. 5 to Amended and Restated Credit
Agreement (this "Amendment Agreement") is entered into as of
September 3, 1999 by and among Rawlings Sporting Goods Company,
Inc. (the "Borrower"), the undersigned lenders (the "Lenders")
and The First National Bank of Chicago, as agent (the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders and the Agent entered
into that certain Amended and Restated Credit Agreement dated as
of September 12, 1997 and amended as of May 31, 1998, February
28, 1999, July 14, 1999 and July 31, 1999 (the "Credit
Agreement"); and
WHEREAS, a Default exists under Section 6.33 (the
"Subject Default"), and Borrower has requested that the Lenders
and the Agent waive the Subject Default and, in addition, that
for purposes of Section 6.32 the Borrowing Base be increased by
$4,000,000; and
WHEREAS, the Borrower, the Lenders and the Agent have
agreed to the foregoing on the terms and conditions herein set
forth.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINED TERMS. Capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed to
such terms in the Credit Agreement, as amended hereby.
2. AMENDMENTS TO CREDIT AGREEMENT.
2.1 Section 6.1 of the Credit Agreement is hereby
amended to add at the end thereof the following:
"(n) Not later than Friday of each calendar week,
commencing September 10, 1999, a cash flow forecast for the
following week in form and detail satisfactory to the Agent."
2.2 Section 6.32 of the Credit Agreement is hereby
amended by restating the same in full as follows:
"6.32 Borrowing Base. On and after delivery of the
first borrowing base certificate required by Section
6.1(m), the Borrower will not cause or permit the
aggregate outstanding principal balance of the Loans plus
the aggregate<PAGE> outstanding amount of all Facility Letter
of Credit Obligations at any time to exceed an amount
equal to the sum of (i) the Borrowing Base as in effect
at the end of the calendar month for which the most
recent such certificate has been delivered to the Lenders
pursuant to Section 6.1(m), plus (ii) for the period on
or before December 31, 1999, $4,000,000."
2.3 Section 6.33 of the Credit Agreement is hereby
amended by restating the same in full as follows:
"6.33 ADDITIONAL COLLATERAL. As soon as practicable
and in any event not later than September 30, 1999, the
Borrower shall have (i) pledged to the Agent, for the
benefit of the Agent and Lenders, a first and prior lien
and security interest in all right, title and interest of
the Borrower in and to all real property owned by it,
including, without limitation, its facilities located in
Licking, Missouri; Dolgeville, New York; Tullahoma,
Tennessee; and Springfield, Missouri, all in form and
substance satisfactory to Agent, (ii) caused Rawlings
Canada, Incorporated to guaranty the Obligations and to
secure such guaranty granted (y) to the Agent, for the
benefit of the Agent and Lenders, a first and prior
mortgage and security interest in all real and personal
property of Rawlings Canada, Incorporated located in the
Province of Ontario and (z) to a financial institution
acceptable to Agent, as trustee for the benefit of the
Agent and the Lenders a first and prior moveable and
immovable hypothec in all moveable and immovable property
of Rawlings Canada, Incorporated located in the Province
of Quebec, including, without limitation, its facilities
in Daveluyville, Quebec, and (iii) in connection with the
foregoing, delivered to the Agent such additional
documents, instruments and agreements, including
certified directors resolutions, title commitment reports
for the Borrower's U.S. real property and title opinions
and certificates of location for Rawlings Canada's real
property, surveys and counsel opinions, requested by
Agent and as are customary in connection with obtaining
and maintaining such security in all such property and in
form and substance satisfactory to Agent, provided that
after September 30, 1999, upon not less than 20 Business
Days written request by Agent, Borrower shall deliver
title insurance policies in form and substance
satisfactory to Agent and at Borrower's expense insuring
Agent's and Lenders' mortgage lien on Borrower's real
property in the U.S."
2.4 Borrower acknowledges and agrees that,
notwithstanding any other term or condition of the Credit
Agreement or other Loan Documents to the contrary, each
Eurodollar Advance and Floating Rate Advance shall bear interest
at a rate per annum equal to the rate otherwise applicable plus
(i) until the Agent is satisfied that the Borrower has met all of
the requirements of Section 6.33, two and a half percent (2 1/2%)
per annum, and (ii) thereafter to and including December 31,
1999, one percent (1%) per annum. The Loan Documents shall be
deemed so amended by this paragraph 2.3.
3. WAIVER. Upon the effectiveness of this Amendment
Agreement, the Agent and the Lenders hereby waive the Subject
Default. Such waiver shall extend solely to the<PAGE> Subject Default
and shall not be deemed a waiver of any subsequent breach of
Section 6.33.
4. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
4.1 The Borrower represents and warrants that the
execution, delivery and performance by the Borrower of this
Amendment Agreement have been duly authorized by all necessary
corporate action and that this Amendment Agreement is a legal,
valid and binding obligation of the Borrower, enforceable against
the Borrower in accordance with its terms, except as the
enforcement thereof may be subject to (a) the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors' rights generally and (b) general
principles of equity (regardless of whether such enforcement is
sought in a proceeding in equity or at law).
4.2 The Borrower hereby certifies that, after giving
effect to this Amendment Agreement, each of the representations
and warranties contained in the Credit Agreement is true and
correct in all material respects on and as of the date hereof as
if made on the date hereof, except to the extent that any such
representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty shall
be true and correct on and as of such earlier date, and no
Default or Unmatured Default exists and is continuing.
5. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT.
5.1 Upon the effectiveness of this Amendment Agreement,
each reference in the Credit Agreement to "this Agreement,"
"hereunder," "hereof," "herein" or words of like import and each
reference to the Credit Agreement in each Loan Document shall
mean and be a reference to the Credit Agreement as amended
hereby.
5.2 Except as specifically amended above, all of the
terms, conditions and covenants of the Credit Agreement and the
other Loan Documents shall remain unaltered and in full force and
effect and shall be binding upon the Borrower in all respects and
are hereby ratified and confirmed.
5.3 Except as expressly set forth herein, the execution,
delivery and effectiveness of this Amendment Agreement shall not
operate as a waiver of (a) any right, power or remedy of any
Lender or the Agent under the Credit Agreement or any of the Loan
Documents, or (b) any Default or Unmatured Default under the
Credit Agreement.
6. COSTS AND EXPENSES. The Borrower agrees to pay on demand
all reasonable fees and out-of-pocket expenses of counsel for the
Agent in connection with the preparation, execution and delivery
of this Amendment Agreement.
7. CHOICE OF LAW. THIS AMENDMENT AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE<PAGE> LAW
OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
8. EXECUTION IN COUNTERPARTS; EFFECTIVENESS. This Amendment
Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
This Amendment Agreement shall become effective as of the date
first above written; provided, that Borrower shall have delivered
to Agent, in form and substance satisfactory to Agent:
(a) counterparts of this Amendment Agreement duly
executed by the Borrower and the Lenders;
(b) a certificate of its chief financial officer stating
that, after giving effect to the Amendment Agreement, no
Default or Unmatured Default exists;
(c) a written opinion of counsel to Borrower regarding
the Amendment Agreement; and
(d) the Borrower shall have paid all legal fees and
expenses of the Agent invoiced to Borrower.
9. HEADINGS. Section headings in this Amendment Agreement
are included herein for convenience of reference only and shall
not constitute a part of this Amendment Agreement for any other
purposes.
[signature pages to follow]
<PAGE>
IN WITNESS WHEREOF, the Borrower, the Agent and the
Lenders have executed this Amendment Agreement as of the date
first above written.
RAWLINGS SPORTING
GOODS COMPANY, INC.
By: /s/ Rexford K. Peterson
Title: Chief Financial Officer
THE FIRST NATIONAL BANK OF
CHICAGO, Individually and as
Agent
By: /s/ Nathan Bloch
Title: First Vice President
THE BANK OF NEW YORK
By: /s/ David G. Shedd
Title: Vice President
COMERICA BANK
By: /s/ Jane B. Haffner
Title: First Vice President
MERCANTILE BANK NATIONAL
ASSOCIATION
By: /s/ Edward __________
Title: Vice President
BANK OF AMERICA, N.A.
(f/k/a Bank of America National
Trust and Savings Association,
successor by merger to Bank of
America, N.A., f/k/a
NationsBank, N.A.)
By: Keith M. Schroeder
Title: /s/ Senior Vice President
<PAGE>
AMENDMENT NO. 6 TO AMENDED AND RESTATED CREDIT AGREEMENT
This Amendment No. 6 to Amended and Restated Credit
Agreement (this "Amendment Agreement") is entered into as of
September 30, 1999 by and among Rawlings Sporting Goods Company,
Inc. (the "Borrower"), the undersigned lenders (the "Lenders")
and Bank One, NA (f/k/a The First National Bank of Chicago), as
agent (the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders and the Agent entered
into that certain Amended and Restated Credit Agreement dated as
of September 12, 1997, as amended (the "Credit Agreement"); and
WHEREAS, a Default exists under Sections 6.28.3, 6.28.4 and
6.28.5 for the Borrower's fiscal year ending August 31, 1999 (the
"Subject Defaults"), and Borrower has requested that the Lenders
and the Agent waive the Subject Defaults; and
WHEREAS, the Borrower, the Lenders and the Agent have agreed
to the foregoing on the terms and conditions herein set forth.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINED TERMS. Capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed to
such terms in the Credit Agreement, as amended hereby.
2. AMENDMENTS TO CREDIT AGREEMENT.
2.1 Notwithstanding any term or provision of the Credit
Agreement to the contrary, on and after the effective date
of this Amendment Agreement, the Aggregate Revolving Credit
Commitment shall be permanently reduced to $70,000,000, and
the Revolving Credit Agreement of each Lender shall be as
set forth on the signature pages hereto.
2.2 The definition of "Facility Termination Date" set forth
in Article I of the Credit Agreement is hereby amended to
read in full as follows:
"Facility Termination Date" means April 30, 2000.
2.3 The definition of "Subsidiary Security Documents" set
forth in Article I of the Credit Agreement is hereby amended
to read in full as follows:
<PAGE>
"Subsidiary Security Documents" means, at any time, all
agreements, documents and instruments from time to time
duly executed and delivered to or for the benefit of
the Agent or the Lenders by Rawlings Canada,
Incorporated securing or guaranteeing the Obligations."
2.4 Section 2.1 (a) of the Credit Agreement is amended by
restating the last sentence thereof in full as follows:
"Notwithstanding the foregoing or Section 2.20.1, the
aggregate principal balance of all Loans plus the
aggregate Facility Letter of Credit Obligations
outstanding at any time during any calendar week, after
giving effect to any Advances or Facility Letters of
Credit at the time requested by the Borrower under this
Section 2.1(a) or Section 2.20.1, shall not be
permitted at any time to exceed an amount equal to the
sum of (i) the Borrowing Base as in effect at the end
of the calendar week for which the most recent
borrowing base certificate has been delivered to the
Lenders pursuant to Section 6.1(m)(i), plus (ii) for
the period on or before December 31, 1999,
$10,000,000."
2.5 Section 2.4(a) of the Credit Agreement is amended to
read in full as follows:
"The Borrower agrees to pay to the Agent for the
account of each Lender a commitment fee of thirty basis
points (.30%) per annum on such Lender's pro-rata share
of (i) the Aggregate Revolving Credit Commitment, MINUS
(ii) the sum of the outstanding balance of the
Revolving Credit Loans, calculated on a daily basis
from the date hereof to and including the Facility
Termination Date, payable on each Payment Date
hereafter and on the Facility Termination Date. Until
the Aggregate Revolving Credit Commitment is terminated
and the Obligations paid in full in accordance with the
Credit Agreement, the Borrower further agrees to pay to
the Agent for the account of each Lender on the last
day of each month, commencing December 31, 1999, a
supplemental commitment fee of twenty-five basis points
(.25%) (in each case payable on a gross percentage
basis and not a per annum basis) on the full amount of
the Aggregate Revolving Credit Commitment then in
effect, after giving effect to any Commitment reduction
on such date made in accordance with the Credit
Agreement. All accrued commitment fees shall be
payable on the effective date of any termination of the
obligations of the Lenders to make Loans hereunder."
2.6 Section 6.1(m) of the Credit Agreement is amended to
read in full as follows:
"(m) not later than (i) Monday of each calendar week,
commencing October 11, 1999, a certificate in the form
of Exhibit A to Amendment<PAGE> No. 6 to the Agreement
signed by the Borrower's chief financial officer
setting forth the calculation of the Borrowing Base as
of the Friday of the preceding calendar week and the
Borrower's compliance with Section 6.32 as of such
Friday, and (ii) as soon as practicable and in any
event not later than 15 days after the end of each
calendar month, a certificate in the form of Exhibit B
to Amendment No. 6 to the Agreement signed by the
Borrower's chief financial officer setting forth the
calculation of the Borrowing Base as of the end of such
month and the Borrower's compliance with Section 6.32."
2.7 Section 6.32 of the Credit Agreement is amended to read
in full as follows:
"6.32 BORROWING BASE. The Borrower will not cause
or permit the aggregate outstanding principal balance
of the Loans plus the aggregate outstanding amount of
all Facility Letter of Credit Obligations at any time
to exceed an amount equal to the sum of (i) the
Borrowing Base as in effect as of the Friday for which
the most recent Borrowing Base certificate has been
delivered to the Lenders pursuant to Section 6.1(m),
plus (ii) for the period on or before December 31,
1999, $10,000,000."
2.8 Section 6.33 of the Credit Agreement is amended by
deleting the date "September 30, 1999" appearing therein and
substituting in lieu thereof the date "October 26, 1999".
3. WAIVER. Upon the effectiveness of this Amendment Agreement,
the Agent and the Lenders hereby waive on a temporary basis
the Subject Defaults through November 30, 1999, provided
that on August 31, 1999, Minimum Tangible Net Worth is at
least $41,500,000 as reflected in the Borrower's audited
financial statements for such fiscal year. Such waiver
shall be deemed extended on a temporary basis through
December 31, 1999 if on or prior to November 30, 1999 the
Borrower shall have entered into a definitive purchase
agreement with a buyer to sell all or substantially all of
the assets of the Borrower and that (i) provides upon
closing for repayment in full in cash of the Obligations and
termination of the Commitments, (ii) is to close not later
than December 31, 1999, and (iii) is without a financing
contingency and is otherwise reasonably satisfactory to the
Required Lenders. Such waiver shall extend solely to the
Subject Defaults, shall not be deemed a waiver of any
subsequent breach of Sections 6.28.3, 6.28.4 or 6.28.5 for
any financial reporting period occurring after August 31,
1999, and, at the time of expiration of such waiver as set
forth herein, the Subject Defaults shall be reinstated in
effect and the Agent and the Lenders shall have all rights
and remedies in connection therewith as if the waiver set
forth herein had not been given.
4. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
4.1 The Borrower represents and warrants that the
execution, delivery and performance by the Borrower of this
Amendment Agreement have been duly authorized<PAGE> by all
necessary corporate action and that this Amendment Agreement is a
legal, valid and binding obligation of the Borrower, enforceable
against the Borrower in accordance with its terms, except as the
enforcement thereof may be subject to (a) the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors' rights generally and (b) general
principles of equity (regardless of whether such enforcement is
sought in a proceeding in equity or at law).
4.2 The Borrower hereby certifies that, after giving effect
to this Amendment Agreement, each of the representations and
warranties contained in the Credit Agreement is true and correct
in all material respects on and as of the date hereof as if made
on the date hereof, except to the extent that any such
representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty shall
be true and correct on and as of such earlier date, and no
Default or Unmatured Default exists and is continuing.
5. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT.
5.1 Upon the effectiveness of this Amendment Agreement,
each reference in the Credit Agreement to "this Agreement,"
"hereunder," "hereof," "herein" or words of like import and each
reference to the Credit Agreement in each Loan Document shall
mean and be a reference to the Credit Agreement as amended
hereby.
5.2 Except as specifically amended above, all of the terms,
conditions and covenants of the Credit Agreement and the other
Loan Documents shall remain unaltered and in full force and
effect and shall be binding upon the Borrower in all respects and
are hereby ratified and confirmed.
5.3 Except as expressly set forth herein, the execution,
delivery and effectiveness of this Amendment Agreement shall not
operate as a waiver of (a) any right, power or remedy of any
Lender or the Agent under the Credit Agreement or any of the Loan
Documents, or (b) any Default or Unmatured Default under the
Credit Agreement.
6. COSTS AND EXPENSES. The Borrower agrees to pay on demand
all reasonable fees and out-of-pocket expenses of counsel for the
Agent in connection with the preparation, execution and delivery
of this Amendment Agreement.
7. CHOICE OF LAW. THIS AMENDMENT AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF
CONFLICTS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL
LAWS APPLICABLE TO NATIONAL BANKS.
8. EXECUTION IN COUNTERPARTS; EFFECTIVENESS. This Amendment
Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
This Amendment<PAGE> Agreement shall become effective as of the
date first above written; provided, that Borrower shall have
delivered to Agent, in form and substance satisfactory to Agent:
(a) counterparts of this Amendment Agreement duly executed
by the Borrower, Rawlings Canada, and the Lenders;
(b) copies of the Borrower's and Rawling's Canada,
Incorporated's board of directors resolutions certified by
the Secretary or Assistant Secretary thereof approving this
Amendment Agreement and the terms and provisions hereof;
(c) a certificate of the Borrower's chief financial officer
stating that, after giving effect to the Amendment
Agreement, no Default or Unmatured Default exists;
(d) a written opinion of counsel to Borrower regarding the
Amendment Agreement; and
(e) the Borrower shall have paid in immediately available
funds (i) an amendment fee of $175,000 to the Agent for the
ratable benefit of the Lenders, and (ii) all legal fees and
expenses of counsel to the Agent (including Canadian
counsel) invoiced to Borrower.
9. HEADINGS. Section headings in this Amendment Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Amendment Agreement for any other
purposes.
[signature pages to follow]
<PAGE>
IN WITNESS WHEREOF, the Borrower, the Agent and the Lenders
have executed this Amendment Agreement as of the date first above
written.
RAWLINGS SPORTING
GOODS COMPANY, INC.
By: /s/ Stephen M. O'Hara
Title: Chairman and Chief Executive Officer
REVOLVING CREDIT COMMITMENTS:
$17,108,000 BANK ONE, NA, (f/k/a The First
National Bank of Chicago),
Individually and as Agent
By: /s/ J. P. Yardley
Title: First Vice President
$14,000,000 THE BANK OF NEW YORK
By: /s/ Edward ___________
Title: Vice President
$12,446,000 COMERICA BANK
By: /s/ Jeffrey E. Peck
Title: Vice President
$12,446,000 MERCANTILE BANK NATIONAL
ASSOCIATION
By: /s/ E. ____________
Title: Vice President
$14,000,000 BANK OF AMERICA, N.A.
(f/k/a Bank of America National
Trust and Savings Association,
successor by merger to Bank of
America, N.A., f/k/a NationsBank,
N.A.)
By: /s/ Keith M. Schroeder
Title: Senior Vice President
<PAGE>
REAFFIRMATION
The undersigned acknowledges receipt of a copy of this Amendment
No. 6, consents to the terms and provisions thereof, and ratifies
and confirms each of the Loan Documents to which it is a party.
RAWLINGS CANADA, INCORPORATED
By: /s/ Rexford K. Peterson
Its: Secretary
<PAGE>
EXHIBIT A
RAWLINGS SPORTING GOODS COMPANY, INC.
WEEKLY MODIFIED BORROWING BASE CERTIFICATE
FOR WEEK ENDED ______________ (CURRENT WEEK)
(A) Accounts Receivable Balance
as of ______________
(previous week ended) $___________
Plus (+):
(B) New A/R resulting from product sales
in normal course of business
during week ended ________
(current week) $___________
Less (-):
(C) A/R collected during week
ended __________ (current week) $___________
(D) A/R otherwise reduced (e.g.,
written off) during week
ended __________
(current week) $___________
(A) + (B) - (C) - (D) $___________
times 80%
(E) Availability from A/R $___________
(F) Inventory Balance as of ____________
(previous week ended) $___________
Plus (+):
(G) Purchases physically received in hand for
week ended ___________ (current week) $___________
Less (-):
(H) Inventory sold during week of ___________
(current week) $___________
(I) Inventory reduced (e.g., write-down)
during week ended __________
(current week) $___________
(F) + (G) - (H) - (I) $____________
times 60%
(J) Availability from Inventory $___________
(K) Book Value of Net Property,
Plant and Equipment $___________
times 30% $___________
(L) Availability from PPE $___________
(M) Overadvance amount if prior to
January 1, 2000 $10,000,000
(N) Maximum Available to Borrow
(E) + (J) + (L) + (M) $___________
Less:
(O) Loans outstanding $___________
(P) Facility Letter of Credit Obligations
outstanding $___________
(Q) Total Usage: (O) + (P) $___________
(R) Excess or Amount to be repaid ((Q) - (N) $___________
<PAGE>
THE RAWLINGS SPORTING GOODS COMPANY, INC.
I certify that the foregoing information is true and correct:
By: ________________________________
Its: Chief Financial Officer
Date: _______________________________
<PAGE>
EXHIBIT B
RAWLINGS SPORTING GOODS COMPANY, INC.
BORROWING BASE CERTIFICATE
AS OF ____________, 1999
Borrowing Base:
The sum of:
Book value of Borrower's accounts receivables,
net of allowance $_________
times _________%
(a) Availability from accounts receivable $_________
Book value of Borrower's inventory $_________
times _________%
(b) Availability from inventory $_________
Book value of Borrower's net property,
plant and equipment $_________
times _________%
(c) Availability from property,
plant and equipment $_________
(d) Overadvance amount if prior to
January 1, 2000 $10,000,000
(e) Maximum available to Borrow:
Sum of (a), (b), (c) and (d) $_________
---------
Less:
(f) Loans outstanding $_________
(g) Facility Letter of credit obligations
outstanding $_________
(h) Total Usage: (f)-(g) $_________
(i) Excess or Amount to be repaid (e)-(h) $_________
---------
THE RAWLINGS SPORTING GOODS COMPANY, INC.
I certify that the foregoing information is true and correct:
By: ____________________________
Its: Chief Financial Officer
Date: ___________________________
<PAGE>
578691.10
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of this 2nd day of
November, 1998, between Rawlings Sporting Goods Company, Inc., a
Delaware corporation (the "Company"), and Stephen M. O'Hara (the
"Executive").
1. EMPLOYMENT. The Company agrees to employ the
Executive and the Executive agrees to be employed by the Company
as its Chairman and Chief Executive Officer upon the terms and
conditions of this Agreement commencing as of the date first
above written and continuing until terminated in accordance with
Section 11 hereof.
2. EXECUTIVE'S COMPENSATION.
(a) BASE SALARY. For all services rendered by the
Executive to the Company, the Company shall pay the
Executive a salary of $275,000 per year. Executive's salary
shall be reviewed by the Board of Directors each September
during the term of this Agreement and shall be adjusted as
determined by the Board of Directors of the Company (as
adjusted from time to time, the "Base Salary"). Salary
payments shall be subject to withholding and other
applicable taxes and shall be payable in accordance with the
Company's normal payroll practices.
(b) BONUS. Beginning with the fiscal year ending
August 31, 1999, the Executive shall be eligible to receive
an annual bonus of up to 75% of the Executive's Base Salary
(the "Bonus"). In determining Executive's right to receive
the Bonus, the Company shall rely equally on objective and
subjective factors. The objective standards which must be
achieved shall be determined annually at the end of the
first month of the fiscal year by the Company and the
Executive and shall include, among other things, the
Company's return on investment, return on working capital,
revenue growth, net income growth and other factors mutually
agreeable to Executive and the Company. Executive and the
Company shall use commercially reasonable efforts to agree
to such factors by the end of the first month of the fiscal
year of each year, and a list of such factors shall be
attached hereto and incorporated herein as EXHIBIT A. The
subjective determination of Executive's right to receive the
Bonus shall be made by the Board of Directors of the
Company, taking into account factors such as the Executive's
leadership of the Company, development of the management of
the Company, development and execution of a strategic plan
for the Company, management of customers and vendors,
stockholder relations and management of the Company's
relationships with professional organizations such as Major
League Baseball and the National Collegiate Athletic
Association. On or before December 31 of each year, the
Company shall pay to Executive the amount of any Bonus due
hereunder with respect to the previous fiscal year. All
bonus payments shall be subject to withholding and all other
applicable taxes.
<PAGE>
Except as otherwise expressly provided herein, if
Executive voluntarily terminates employment with the
Company, or is terminated by the Company for Cause (under
Section 11), the Executive shall receive no Bonus for the
year in which he leaves the Company. If the Executive is
terminated by the Company because of what the Company in its
sole discretion deems to be unsatisfactory performance, the
Executive shall receive the prorata portion of the average
Bonus paid to the Executive during the past two years.
(c) REIMBURSEMENT OF EXPENSES. The Company shall
reimburse the Executive for all ordinary and necessary
expenses incurred and paid by the Executive in the course of
the performance of the Executive's duties pursuant to this
Agreement and consistent with the Company's policies in
effect from time to time with respect to travel,
entertainment and other business expenses, and subject to
the Company's requirements with respect to the manner of
reporting such expenses.
3. BENEFITS.
(a) AUTOMOBILE. The Company shall provide to the
Executive every three years during the term hereof a Company
owned or leased automobile produced by an American
manufacturer of year, make and model selected by the
Executive, and the Company shall pay the expenses related to
the use and upkeep thereof and insurance relating thereto.
Initially, the Company shall provide the Executive with a
Lincoln Navigator.
(b) LIFE INSURANCE. Following a medical examination
by an independent physician and upon determination that no
medical condition exists which would make the cost of such
policy commercially unreasonable, the Executive shall obtain
a split dollar policy insuring the life of the Executive,
which shall have death benefits of not less than $2,000,000
(the "Policy"). The Executive or a trust of which he is the
settlor, shall be the owner of the Policy, which shall be
collaterally assigned to the Company. The Company will pay
all premium payments due under the Policy until the earlier
to occur of (i) the death of the Executive, (ii) the
Disability of the Executive (as hereinafter defined), and
(iii) the date on which the Executive's service with the
Company is terminated whether under Section 11 or following
a Change in Control. The portion of the premiums in excess
of the normal term rate on a $2,000,000 policy (the "Excess
Split Dollar Premiums") will be considered a loan to the
Executive secured by the Policy. The premiums for the
normal term rate will be treated as ordinary compensation to
the Executive. In the event of the death of the Executive
during the term of this Agreement, the face amount of the
Policy less the Excess Split Dollar Premiums paid by the
Company on the Policy shall be paid to the spouse of the
Executive or other beneficiary designated by the Executive.
The Excess Split Dollar Premiums will be repaid to the
Company. At no time will Excess Split Dollar Premium
payments made by the Company exceed the cash surrender value
of the Policy. The Company shall release its collateral
position on the Policy to the Executive when its obligations
to make premium payments<PAGE> hereunder have ceased. The
Executive shall thereafter be responsible for all premium
payments, and the Executive shall reimburse the Company for
all Excess Split Dollar Premium payments previously made by
the Company. Reimbursement to the Company may be made in
cash or by execution and delivery of a promissory note
providing for payments over three months.
(c) RELOCATION EXPENSES. The Company will pay the
relocation expenses of the Executive in connection with his
move from North Easton, Massachusetts to St. Louis,
Missouri, including the Executive's out-of-pocket costs, the
real estate commission with respect to the sale of the
Executive's home, temporary living accommodations, airfare
and one month's salary for expenses.
(d) CLUB MEMBERSHIP. The Company will pay the
initiation fee and membership dues on behalf of the
Executive for one private city club and one country club
during the term of this Agreement.
(e) ADDITIONAL BENEFITS. The Executive shall receive
additional benefits such as insurance and hospitalization
consistent with those provided to other Executives in
similar industries having responsibility commensurate to
that of the Executive, and such additional benefits as may
be from time to time agreed upon in writing between the
Executive and the Company. The Executive shall receive four
weeks of vacation annually.
4. STOCK OPTIONS.
(a) The Company hereby grants to Executive as of the
date of this Agreement a nonqualified stock option (the
"Option") to purchase 250,000 shares of the Company's common
stock, par value $.01 per share (the "Shares"), which Option
shall become exercisable so long as Executive is an employee
of the Company as follows: the Executive may purchase up to
20% of the total number of Shares at any time after the date
hereof and an additional 20% of the total number of Shares
on each of the dates set forth below; provided, however,
that the Option shall become fully exercisable under Section
8(b) hereof. The exercise price for the Shares under the
Option shall be as set forth below.
STOCK OPTION VESTING DATE EXERCISE PRICE
November 2, 1998 $10.00
November 2, 1999 $11.00
November 2, 2000 $12.00
November 2, 2001 $13.00
November 2, 2002 $14.00
The Option shall expire at 11:59 p.m. Fenton, Missouri Time
on November 1, 2003. The number of Shares with respect to
which the Option may be exercised shall be cumulative so
that if, in any of the aforementioned periods, the full
number of Shares shall not have been purchased, any such
unpurchased Shares shall continue to be included in the
number of Shares with respect to which the<PAGE> Option
shall then be exercisable along with any other Shares as to
which the Option may become exercisable. The Option shall
be exercisable following the termination of the Executive's
employment with the Company for other than Cause as defined
in Section 11 hereof, for a period of three (3) months from
the date of such termination, to the extent the Option was
exercisable as of the date of such termination. The Option
shall be exercisable following the termination of the
Executive's employment with the Company for Cause as defined
in Section 11 hereof, for a period of forty-eight (48) hours
from the date of such termination, to the extent the Option
was exercisable as of the date of such termination.
(b) Additionally, in the event the Executive purchases
common stock of the Company other than pursuant to the
Option, the Company grants to the Executive an option to
purchase two additional shares of common stock at an
exercise price equal to the price paid by the Executive for
each of the first 20,000 shares of common stock of the
Company purchased by Executive in such fiscal year
(September 1-August 31). Each such option shall expire at
11:59 p.m. Fenton, Missouri time on the day immediately
preceding the fifth anniversary of the date of grant of such
option.
(c) The options described in (a) and (b) above are not
transferable to any third party by the Executive except to a
revocable living trust established by the Executive of which
the Executive is a trustee and the primary beneficiary. The
options may be exercised only to purchase whole shares. No
fractional shares will be issued upon exercise of the
options. The options shall be exercised and payment made to
the Company in accordance with procedures provided by the
Compensation Committee of the Company.
(d) The Company and the Executive acknowledge that the
shares subject to the options in (a) and (b) above have not
been registered under the Securities Act of 1933, as
amended, or any state securities law. The Company will use
its best efforts and take such actions as it deems necessary
to file a registration statement on Form S-8 with the
Securities and Exchange Commission and submit all listing
applications to the NASDAQ National Market System with
respect to such Shares.
5. DUTIES. The Executive agrees that so long as he
is employed under this Agreement he will (i) devote his best
efforts and his entire business time to further properly the
interests of the Company; provided, however, that the Executive
shall be permitted to serve on two (2) boards of directors
selected by Executive and such other boards as the Compensation
Committee of the Company shall approve, (ii) at all times be
subject to the Company's direction and control with respect to
his activities on behalf of the Company, (iii) comply with all
rules, orders and regulations of the Company, (iv) truthfully and
accurately maintain and preserve such records and make all
reports as the Company may require, and (v) fully account for all
monies and other property of the Company of which he may from
time to time have custody and deliver the same to the Company
whenever and however directed to do so.
<PAGE>
6. COVENANT NOT TO DISCLOSE CONFIDENTIAL INFORMATION.
The Executive acknowledges that during the course of his
employment with the Company he has or will have access to and
knowledge of certain information and data which the Company
considers confidential and that the release of such information
or data to unauthorized persons would be extremely detrimental to
the Company. As a consequence, the Executive hereby agrees and
acknowledges that he owes a duty to the Company not to disclose,
and agrees that, during or after the term of his employment,
without the prior written consent of the Company he will not
communicate, publish or disclose, to any person anywhere or use
any Confidential Information (as hereinafter defined) for any
purpose other than carrying out his duties as Chairman and Chief
Executive Officer of the Company. The Executive will return to
the Company all Confidential Information in the Executive's
possession or under the Executive's control whenever the Company
shall so request, and in any event will promptly return all such
Confidential Information if the Executive's relationship with the
Company is terminated for any or no reason and will not retain
any copies thereof. For purposes hereof the term "Confidential
Information" shall mean any information or data used by or
belonging or relating to the Company that is not known generally
to the industry in which the Company is or may be engaged,
including without limitation, any and all trade secrets,
proprietary data and information relating to the Company's past,
present or future business and products, price lists, customer
lists, processes, procedures or standards, know-how, manuals,
business strategies, records, drawings, specifications, designs,
financial information, whether or not reduced to writing, or
information or data which the Company advises the Executive
should be treated as Confidential Information.
7. COVENANT NOT TO COMPETE. The Executive
acknowledges that during his employment with the Company he, at
the expense of the Company, will be specially trained in the
business of the Company, will establish favorable relations with
the customers, clients and accounts of the Company and will have
access to Inventions, trade secrets and Confidential Information
of the Company. Therefore, in consideration of such training and
relations and to further protect the Inventions, trade secrets
and Confidential Information of the Company, the Executive agrees
that during the term of his employment by the Company and for a
period of two (2) years from and after the voluntary or
involuntary termination of such employment for any or no reason,
he will not, directly or indirectly, without the express written
consent of the Company except when and as requested to do in and
about the performing of his duties under this Agreement:
(a) own or have any interest in or act as an officer,
director, partner, principal, employee, agent,
representative, consultant or independent contractor of, or
in any way assist in, any business located in or doing
business in the United States or in any other county,
territory or possession in which the Company has engaged in
business during the Executive's employ which is engaged in
competition in any manner with any business of the Company
at any time during the time of the Executive's employment
hereunder;
(b) divert or attempt to divert clients, customers
(whether or not such persons have done business with the
Company once or more than once), accounts of the Company, or
prospective clients, customers or accounts which the Company
has contacted within the 2 years immediately preceding
Executive's termination; or
<PAGE>
(c) entice or induce or in any manner influence any
person who is or shall be in the employ or service of the
Company to leave such employ or service for the purpose of
engaging in a business which may be in competition with the
Company.
Notwithstanding anything herein to the contrary, Executive may
own up to 1% of the outstanding equity securities of stock in any
corporation which is listed upon a national stock exchange or
actively traded in the over-the-counter market.
8. CHANGE IN CONTROL.
(a) The Executive shall be entitled to receive from
the Company Severance Benefits if there is a Change in
Control of the Company and, if within twenty-four calendar
months thereafter, the Executive's service with the Company
shall end for any Qualifying Termination or the Executive
terminates his service with the Company for Good Reason.
The Company shall pay to Executive and provide him with
Severance Benefits as follows:
(1) an amount equal to two (2) times the Base
Salary in effect at the Effective Date of Termination;
(2) benefits provided pursuant to Section 3
(a),(d) and (e) of this Agreement for a period of one (1)
year from the Effective Date of Termination. These benefits
shall be provided to the Executive at the same premium cost,
and at the same coverage level, as in effect as of the
Executive's Effective Date of Termination. However, in the
event the premium cost and/or level of coverage shall change
for management executives of the Company generally, the cost
and/or coverage level, likewise, shall change in a
corresponding manner. If and to the extent these benefits
are not or cannot be paid under an existing policy, plan or
program of the Company, the Company shall make alternative
arrangements for the provisions of such benefits at no
greater cost to the Executive. These welfare benefits shall
be discontinued in the event the Executive has available
similar benefits from a subsequent employer, as determined
by the Committee; and
(3) an amount equal to the prior year's Bonus.
The Severance Benefits provided in 8(a)(1) and (3) hereof
shall be paid in cash to the Executive in a single lump sum
as soon as practical following the Effective Date of
Termination, but in no event later than thirty (30) days
from such date. The Company shall withhold from any amounts
payable under this Section 8 all federal, state, city or
other taxes as legally shall be required. The Executive
shall not be entitled to receive Severance Benefits under
this Section 8 if employment with the Company ends due to
death, Disability, or voluntary retirement without Good
Reason under a pension plan maintained by the Company, due
to any other<PAGE> voluntary termination of employment by
the Executive without Good Reason, or due to termination of
the Executive's employment by the Company for Cause.
(b) Upon a Change in Control, the Option granted in
Section 4(a) hereof shall immediately vest and become
exercisable.
(c) Any termination of employment by the Company for
any reason following a Change in Control or by the Executive
shall be communicated by Notice of Termination to the other
party. For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice which shall
indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under
the provision so indicated.
(d) For purposes of this Agreement, the following
terms shall have the following meanings:
(1) "Beneficial Ownership" shall mean the
ownership of securities as determined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
(2) "Cause" solely with respect to Section 8 of
this Agreement shall mean any of the following acts by the
Executive:
(i) an intentional act of fraud,
embezzlement or theft in connection with his duties or in
the course of his employment with the Company;
(ii) intentional wrongful damage to property
of the Company;
(iii) intentional wrongful disclosure of
secret processes or of confidential information of the
Company; or
(iv) intentional violation of the Company's
code of conduct or ethics, as in effect immediately prior to
a Change in Control.
(3) "Change in Control" of the Company shall be
deemed to have occurred as of the first day any one or more of
the following conditions is satisfied, except that, if a Change
in Control occurs and if the Executive's employment with the
Company is terminated prior to the date on which the Change in
Control occurs, and if it is reasonably demonstrated by the
Executive that such termination of employment (i) was at the
request of a third party who has taken steps reasonably
calculated to effect a Change in Control or (ii) otherwise arose
in connection with or anticipation of a Change in Control, then
for all purposes of this Agreement the Change in Control shall be
deemed to have occurred on the date immediately prior to the date
of such termination of employment:
(i) The acquisition by any Person (other
than a trustee or other fiduciary holding securities under
an executive benefit plan of the Company, or a corporation
owned solely, directly or indirectly, by the Company<PAGE>
or by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company
90 days prior to such acquisition, or an entity the
ownership by which would not constitute a Change of Control
under (iii) below), of Beneficial Ownership of securities of
the Company representing thirty-three percent (33%) or more
of the combined voting power of the then outstanding
securities of the Company entitled to vote generally in the
election of directors of the Company (the "Voting Stock");
provided, however, that an acquisition of thirty-three
percent (33%) or more of the Voting Stock directly from the
Company shall not constitute a Change in Control; or
(ii) A change in the composition of the Board
of the Company during any period of two (2) consecutive
years (not including any period prior to the date hereof)
such that individuals who at the beginning of such period
constitute the Board, cease for any reason to constitute a
majority thereof; provided, however, that any new Director,
who is elected by the Company's stockholders and who was
approved by a vote of a majority of the members of the Board
in office who were Directors at the beginning of the two
consecutive year period shall not be considered for purposes
of determining a Change in Control hereunder; or
(iii) Approval by the stockholders of the
Company of: (A) a plan of complete liquidation of the
Company; or (B) an agreement for the sale or disposition of
all or substantially all of the Company's assets (except as
otherwise provided in (C)); or (C) a merger, consolidation,
or reorganization of the Company (a "Corporate Transaction")
with or involving any other corporation, OTHER THAN a
Corporate Transaction that would result in (x) the owners of
more than sixty-seven percent (67%) of the Voting Stock
continuing to have (either by such stock remaining
outstanding or by being converted into common stock of
another entity or entities) more than sixty-seven percent
(67%) of the Voting Stock immediately after such Corporate
Transaction of either (A) the Company or (B) an entity or
all entities, if more than one, which own(s) more than
sixty-seven percent (67%) of the Voting Stock or which has
(have) acquired all or part of the assets of the Company by
sale, transfer, or Corporate Transaction; (y) no Person
(excluding any corporation resulting from such Corporate
Transaction or any Executive benefit plan (or related trust)
of the Company or such corporation resulting from such
Corporate Transaction) beneficially owning, directly or
indirectly, twenty percent (20%) or more of, respectively,
the then outstanding shares of common stock of the
corporation resulting from such Corporate Transaction or the
combined voting power of the then outstanding voting
securities of such corporation except to the extent that
such ownership existed prior to the Corporate Transaction;
and (z) at least a majority of the members of the board of
directors of the corporation resulting from such Corporate
Transaction being members of the Board at the time of the
execution of the initial agreement, or of the action of the
Board, providing for such Corporation Transaction;
<PAGE>
(iv) The determination by a majority of the
Board that, because of the occurrence, threat or imminence
of an event with consequences similar to the foregoing, the
Executive is entitled to the protection of this Section 8.
However, in no event shall a Change in Control be deemed to have
occurred, if the Executive is part of a purchasing group which
consummates the Change in Control transaction. The Executive
shall be deemed "part of a purchasing group" for purposes of the
preceding sentence if the Executive is an equity participant in
the purchasing company or group (except for: (i) passive
ownership of less than three percent (3%) of the stock of the
purchasing company; or (ii) ownership of equity participation in
the purchasing company or group which is otherwise not
significant, as determined prior to the Change in Control by a
majority of the Company's non-employee continuing directors).
(4) "Code" means the Internal Revenue Code of
1986, as amended.
(5) "Committee" means the Compensation Committee
of the Board of Directors of Rawlings Sporting Goods Company,
Inc.
(6) "Disability" means permanent and total
disability, within the meaning of Section 22(e)(3) of the Code,
as determined by the Committee in the exercise of good faith and
reasonable judgment, upon receipt of and in reliance on
sufficient competent medical advice from one or more individuals,
selected by the Committee, who are qualified to give professional
medical advice.
(7) "Effective Date of Termination" means the
date on which a Qualifying Termination occurs which triggers the
payment of Severance Benefits hereunder.
(8) "Good Reason" means, without the Executive's
express written consent, the occurrence after a Change in Control
of the Company of any one or more of the following:
(i) The assignment of the Executive to
duties materially inconsistent with the Executive's
authorities, duties, responsibilities, and status (including
offices, titles, and reporting requirements) as Chairman and
Chief Executive Officer of the Company, or a reduction or
alteration in the nature or status of the Executive's
authorities, duties, or responsibilities from those in
effect as of ninety (90) days prior to the Change in
Control, other than an insubstantial and inadvertent act
that is remedied by the Company or the entity succeeding to
the Company's responsibilities after the Change in Control
(such "Successor" is referred to herein also as the
"Company") promptly after receipt of notice thereof given by
the Executive and other than any such alteration primarily
attributable to the fact that the Company may no longer be a
public company;
(ii) The relocation of the Executive to a
worksite more than thirty-five (35) miles from the office at
which the Executive was based as of the date hereof, except
for required travel on the business of the Company to an
extent substantially consistent with the Executive's present
business obligations;
<PAGE>
(iii) A reduction by the Company in the
Executive's Base Salary as in effect on the date immediately
preceding a Change in Control;
(iv) The failure of the Company to continue
in effect any of the Company's benefit or compensation
plans, or retirement plans, policies, practices, or
arrangements in which the Executive participates, or the
failure by the Company to continue the Executive's
participation in such plans on substantially the same basis,
both in terms of the amount of benefits provided and the
level of the Executive's participation relative to other
participants, as existed immediately prior to the Change in
Control of the Company;
(v) The failure of the Company to obtain a
satisfactory agreement from any Successor to the Company to
assume and agree to perform the obligations under Section 8
of this Agreement; or
(vi) Any purported termination by the Company
of the Executive's employment that is not effected pursuant
to a Notice of Termination. The Executive's determination
of Good Reason shall be conclusive, if made in good faith.
The Executive's right to terminate employment for Good
Reason shall not be affected by the Executive's incapacity
due to physical or mental illness. The Executive's
continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstance
constituting Good Reason.
(9) "Person" shall have the meaning ascribed to
such term in Section 3(a)(9) of the Exchange Act as used in
Sections 13(d) and 14(d) thereof, including a "group" as defined
in Section 13(d).
(10) "Qualifying Termination" means any of the
following events, the occurrence of which triggers the payment of
Severance Benefits hereunder:
(i) A termination of the Executive's
employment with the Company for reasons other than death,
Disability, normal retirement (as defined under any pension
plan maintained by the Company), any other voluntary
termination of employment by the Executive without Good
Reason, or termination of the Executive's employment by the
Company for Cause;
(ii) A termination of the Executive's
employment with the Company, by the Executive, for Good
Reason;
(iii) The failure or refusal of a
Successor to assume the Company's obligations under Section
8 of this Agreement; or
(iv) The breach by the Company of any of the
provisions of Section 8 of this Agreement.
(d) SUCCESSORS. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation,
or otherwise) of all or substantially all of the business and/or
assets of the Company or of any division or subsidiary thereof to
expressly<PAGE> assume and agree to perform Section 8 of this
Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall
be a breach of Section 8 of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and
on the same terms as he would be entitled hereunder if terminated
voluntarily for Good Reason, except that for the purposes of
implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Effective Date of
Termination.
Section 8 of this Agreement shall inure to the benefit
of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees, and legatees. If the Executive should die
while any amount would still be payable to him hereunder had he
continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of Section 8
of this Agreement, to the Executive's devisee, legatee, or other
designee, or if there is no such designee, to the Executive's
estate.
(e) BENEFICIARIES. The Executive may designate one or
more persons or entities as the primary and/or contingent
beneficiaries of any Severance Benefits, other than as provided
in Section 4(c), to be made under Section 8 of this Agreement.
Such designation must be in the form of a signed writing
acceptable to the Committee. The Executive may make or change
such designation at any time.
9. SPECIFIC PERFORMANCE. Recognizing that
irreparable damage will result to the Company in the event of the
breach or threatened breach of any of the foregoing covenants and
assurances by the Executive contained in Sections 6 or 7 hereof,
and that the Company's remedies at law for any such breach or
threatened breach will be inadequate, the Company and its
successors and assigns, in addition to such other remedies which
may be available to them, shall be entitled to an injunction,
including a mandatory injunction, to be issued by any court of
competent jurisdiction ordering compliance with this Agreement or
enjoining and restraining the Executive, and each and every
person, firm or company acting in concert or participation with
him, from the continuation of such breach and, in addition
thereto, he shall pay to the Company all ascertainable damages,
including costs and reasonable attorneys' fees sustained by the
Company by reason of the breach or threatened breach of said
covenants and assurances. The obligations of the Executive and
the rights of the Company, its successors and assigns under
Sections 6, 7, 9, 10, 12, 16, 18 and 19 of this Agreement shall
survive the termination of this Agreement. The covenants and
obligations of the Executive set forth in Sections 6 and 7 hereof
are in addition to and not in lieu of or exclusive of any other
obligations and duties of the Executive to the Company, whether
express or implied in fact or in law.
10. POTENTIAL UNENFORCEABILITY OF ANY PROVISION. If a
final judicial determination is made that any provision of this
Agreement is an unenforceable restriction against the Executive,
the provisions hereof shall be rendered void only to the extent
that such judicial determination finds such provisions
unenforceable, and such unenforceable provisions shall
automatically be reconstituted and become a part of this
Agreement, effective as of the date first written above, to the
maximum extent that is lawfully enforceable. A judicial
determination that any provision of this Agreement is
unenforceable shall in no instance render the entire<PAGE>
Agreement unenforceable, but rather the Agreement will continue
in full force and effect absent any unenforceable provision to
the maximum extent permitted by law.
11. TERMINATION.
(a) This Agreement shall terminate immediately
upon the death, Disability or adjudication of legal
incompetence of the Executive, or upon the Company's ceasing
to carry on its business or becoming bankrupt.
(b) This Agreement may be terminated by either
the Company or the Executive upon 60 days notice at any time
with or without Cause and for any or no reason. Nothing in
this Agreement shall be deemed or construed to require the
Company to employ, or to continue to employ, the Executive
for any specified period of time and, regardless of the
manner or duration of the Executive's compensation, nothing
contained herein shall create employment for a definite
term. The Executive acknowledges that no representative of
the Company has any authority to make any agreement contrary
to the foregoing.
(c) In the event this Agreement is terminated,
the parties' obligations under this Agreement shall
terminate immediately (except as otherwise provided herein),
and neither the Executive nor his estate, heirs, successors
or assigns shall be entitled to any further compensation
hereunder. If the Company terminates the Executive's
employment, other than for Cause (as defined below), at a
time when the Executive is fully willing and able to perform
his duties as an employee of the Company or if the Executive
voluntarily terminates his employment with the Company
because the Company has assigned the Executive to duties
materially inconsistent with the Executive's authorities,
duties, responsibilities, and status (including offices,
titles, and reporting requirements) as Chairman and Chief
Executive Officer of the Company, or has reduced or
alterated in nature or status the Executive's authorities,
duties, or responsibilities, other than an insubstantial and
inadvertent act that is remedied by the Company, or the
Company has reduced Executive's Base Salary and in no other
circumstances during the term hereof (e.g., the Executive's
death or disability or voluntary termination for any reason
other than hereinbefore set forth); the Company shall be
required to pay Executive an amount equal to his Base Salary
for twenty-four (24) months at the rate then in effect
pursuant to Section 2 above and Executive shall continue to
receive for a twenty-four (24) month period the medical
benefits Executive was receiving at the time of termination
under Section 3(e) hereof. Notwithstanding the foregoing or
anything herein to the contrary, in the event the Executive
is receiving Severance Benefits provided in Section 8
hereof, the Executive shall NOT also receive the payments
described in this Section 11(c). For purposes of this
Section 11, "Cause" shall mean the occurrence of any of the
following events:
(1) Performance by the Executive of illegal
or fraudulent acts, criminal conduct or willful misconduct,
or gross negligence relating to the activities of the
Company;
<PAGE>
(2) Willful or grossly negligent failure by
the Executive to perform his duties in a manner which he
knows, or has reason to know, to be in the Company's best
interests;
(3) Willful and bad faith refusal by the
Executive to carry out reasonable instructions of the Board
of Directors of the Company not inconsistent with the
provisions of this Agreement;
(4) Violation by the Executive of the
covenants and agreements contained in Section 7 hereof;
(5) Any other material breach of the
Executive's obligations hereunder which are incurable or
which he fails to cure promptly after receiving written
notice thereof; or
(6) The Company ceases operations due to a
voluntary or involuntary discontinuance of its business
operations.
12. WAIVER OF BREACH. Failure of the Company to
demand strict compliance with any of the terms, covenants or
conditions hereof shall not be deemed a waiver of the term,
covenant or condition, nor shall any waiver or relinquishment by
the Company of any right or power hereunder at any one time or
more times be deemed a waiver or relinquishment of the right or
power at any other time or times.
13. NO CONFLICTS. The Executive represents and
warrants to the Company that neither the execution nor delivery
of this Agreement, nor the performance of the Executive's
obligations hereunder will conflict with, or result in a breach
of, any term, condition, or provision of, or constitute a default
under, any obligation, contract, agreement, covenant or
instrument to which the Executive is a party or under which the
Executive is bound, including without limitation, the breach by
the Executive of a fiduciary duty to any former employers.
14. ENTIRE AGREEMENT; AMENDMENT. This Agreement
cancels and supersedes all previous agreements relating to the
subject matter of this Agreement, written or oral, between the
parties hereto and contains the entire understanding of the
parties hereto and shall not be amended, modified or supplemented
in any manner whatsoever except as otherwise provided herein or
in writing signed by each of the parties hereto.
15. CAPTIONS. The headings of the sections of this
Agreement have been inserted for convenience of reference only
and shall in no way restrict or otherwise modify any of the terms
or provisions hereof.
16. GOVERNING LAW. This Agreement and all rights and
obligations of the parties hereunder shall be governed by, and
construed and interpreted in accordance with, the laws of the
State of Missouri applicable to agreements made and to be
performed entirely within the State, including all matters of
enforcement, validity and performance.
<PAGE>
17. NOTICE. All notices, requests, demands and other
communications hereunder shall be deemed duly given if delivered
by hand or if mailed by certified or registered mail with postage
prepaid as follows:
If to the Company:
Rawlings Sporting Goods Company, Inc.
P.O. Box 22000
St. Louis, Missouri 63126
Attn:Corporate Secretary
If to the Executive:
Stephen M. O'Hara
945 Delvin Drive
Town and Country, Missouri 63131
With a copy to:
Phillip Jameson
GW & Wade
621 Walnut Street
Wellesley, Massachusetts 02181
or to any other address as either party may provide to the other
in writing.
18. ASSIGNMENT. This Agreement is personal and not
assignable by the Executive but it may be assigned by the Company
without notice to or consent of the Executive to, and shall
thereafter be binding upon and enforceable by any person which
shall acquire or succeed to substantially all of the business or
assets of the Company (and such person shall be deemed included
in the definition of the "Company" for all purposes of this
Agreement) but is not otherwise assignable by the Company.
19. ARBITRATION. Except with respect to disputes or
controversies arising out of Sections 6 and 7 hereof, any dispute
between any of the parties hereto or claim by a party against
another party arising out of or in relation to this Agreement or
in relation to any alleged breach thereof shall be finally
determined by arbitration in accordance with the rules then in
force of the American Arbitration Association. The arbitration
proceedings shall take place in St. Louis, Missouri, or such
other location as the parties in dispute hereafter may agree
upon; and such proceedings shall be governed by the laws of the
State of Missouri as such laws are applied to agreements between
residents of such State entered into and to be performed entirely
within that State.
The parties shall agree upon one arbitrator, who shall
be an individual skilled in the legal and business aspects of the
subject matter of this Agreement and of the dispute. If the
parties cannot agree upon one arbitrator, each party in dispute
shall select one arbitrator and the arbitrators so selected shall
select a third arbitrator. In the event the arbitrators cannot
agree upon the selection of a third arbitrator, the third
arbitrator shall be appointed by the American<PAGE> Arbitration
Association at the request of any of the parties in dispute. The
arbitrators shall, if possible, be individuals skilled in the
legal and business aspects of the subject matter of this
Agreement and of the dispute.
The decision rendered by the arbitrator or arbitrators
shall be accompanied by a written opinion in support thereof.
The decision shall be final and binding upon the parties in
dispute without right of appeal. Judgment upon the decision may
be entered into in any court having jurisdiction thereof, or
application may be made to that court for a judicial acceptance
of the decision and an order of enforcement. Costs of the
arbitration shall be assessed by the arbitrator or arbitrators
against any or all of the parties in dispute, and shall be paid
promptly by the party or parties so assessed.
IN WITNESS WHEREOF, the Company has caused this
Agreement to be duly executed in duplicate, and the Executive has
hereunto set his hand, on the day and year first above written.
RAWLINGS SPORTING GOODS
COMPANY, INC.
By: /s/ Andrew N. Baur
Name: Andrew N. Baur
Title: Chairman of the Board
/s/ Stephen M. O'Hara
Stephen M. O'Hara
<PAGE>
