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EXHIBIT 10.2
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT, dated as of April 30, 1996 (this
"Agreement"), is made by and among Collectible Champions, Inc., a Delaware
corporation (the "Company"), ▇▇▇▇▇▇ ▇▇▇▇▇ & Partners, L.P., a Delaware limited
partnership ("▇▇▇▇▇▇ ▇▇▇▇▇"), ▇▇▇▇▇ Capital Partners II Limited Partnership, a
Wisconsin Limited Partnership ("▇▇▇▇▇"), BCP II Affiliates Fund Limited
Partnership, a Wisconsin limited partnership ("BCP II"), Nassau Capital
Partners L.P., a Delaware limited partnership ("Nassau"), NAS Partners I
L.L.C., a Delaware limited liability company ("NAS"), ▇▇▇▇▇▇ ▇▇▇▇ ("Dods"),
▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇-▇▇▇▇▇, Ltd., an Illinois
corporation ("DM"), Racing Champions Limited, a Hong Kong corporation ("RCL"),
▇▇▇▇▇▇▇ Services, Inc., a British Virgin Island corporation ("GSI"), Hosten
Investment Limited, a Hong Kong corporation ("HIL"), ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇▇▇"), ▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇") and ▇▇▇▇▇ ▇▇▇▇
("Camp"). ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, BCP II, Nassau and NAS are referred to herein
collectively as the "Investors." Dods, Meyer, ▇▇▇▇▇, ▇▇, RCL, GSI and HIL are
referred to herein collectively as the "Founders." Stoelting, Olsen, ▇▇▇▇▇▇▇▇
and Camp are referred to herein collectively as the "Executives." The
Investors, the Founders and the Executives are referred to herein collectively
as the "Stockholders," and each individually as a "Stockholder." Certain
capitalized terms used herein are defined in Section 10 below.
WHEREAS, the Company and the Stockholders desire to enter into this
Agreement for the purposes, among others, of (i) establishing the composition
of the Company's board of directors (the "Board"), (ii) assuring continuity in
the management and ownership of the Company and (iii) limiting the manner and
terms by which the Stockholder Shares may be transferred.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Board of Directors and Other Matters.
(a) From and after the date hereof and until the provisions of this
Section 1 cease to be effective, each holder of Stockholder Shares shall vote
all of the voting securities of the Company over which such Person has voting
control and shall take all other necessary or desirable actions within his or
its control (whether in his or its capacity as a stockholder, director, member
of a board committee or officer of the Company or otherwise, and including,
without limitation, attendance at meetings in person or by proxy for purposes
of obtaining a quorum and execution of written consents in lieu of meetings),
and the Company shall take all necessary or desirable actions within its
control (including, without limitation, calling special board and stockholder
meetings), so that:
(i) the authorized number of directors on the Board shall be
established at seven directors;
(ii) the following persons shall be elected to the Board at each
election of directors:
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(A) up to four representatives designated by the holders of a
majority of the Investor Shares from time to time (the "Investor
Directors"), with Avy ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ serving
as the initial Investor Directors;
(B) one representative designated by Dods (the "Dods
Director"), with Dods serving as the initial Dods Director, for so
long as Dods and his Permitted Transferees collectively hold directly
or indirectly more than 25% of the Stockholder Shares issued to DM
pursuant to the DM Securities Purchase Agreement, after which time
such position shall be filled by the holders of a majority of the
Investor Shares from time to time (in which case such director shall
be deemed to be an Investor Director and shall no longer be deemed to
be the Dods Director);
(C) one representative designated by ▇▇▇▇▇ (the "▇▇▇▇▇
Director"), with ▇▇▇▇▇ serving as the initial ▇▇▇▇▇ Director, for so
long as ▇▇▇▇▇ and his Permitted Transferees collectively hold
directly or indirectly more than 25% of the Stockholder Shares issued
to DM pursuant to the DM Securities Purchase Agreement, after which
time such position shall be filled by the holders of a majority of
the Investor Shares from time to time (in which case such director
shall be deemed to be an Investor Director and shall no longer be
deemed to be the ▇▇▇▇▇ Director); and
(D) one representative designated by ▇▇▇▇▇ (the "▇▇▇▇▇
Director"), with ▇▇▇▇▇ serving as the initial ▇▇▇▇▇ Director, for so
long as ▇▇▇▇▇ and his Permitted Transferees collectively hold
directly or indirectly a majority of the Stockholder Shares issued to
RCL, GSI and HIL pursuant to the Acquisition Agreement, after which
time such position shall be filled by the holders of a majority of
the Investor Shares from time to time (in which case such director
shall be deemed to be an Investor Director and shall no longer be
deemed to be the ▇▇▇▇▇ Director);
(iii) the composition of the board of directors of each of the
Company's Subsidiaries (each, a "Sub Board") shall be the same as that of
the Board;
(iv) any committees of the Board or a Sub Board shall be created
only upon the approval of at least a majority of the Board;
(v) any director designated hereunder shall be removed from the
Board (and thereupon from all Sub Boards and all committees of the
Board or any Sub Board) (with or without cause) at the written request of
the Person or Persons entitled to designate such director pursuant to (ii)
above, but only upon such written request and under no other circumstances;
and
(vi) in the event that any director designated hereunder for any
reason ceases to serve as a member of the Board or a Sub Board or any
committee thereof during
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such director's term of office, the resulting vacancy on the Board or
such Sub Board or committee shall be filled by a representative designated
by the Person or Persons entitled to designate such director pursuant to
subparagraph (ii) above.
(b) The Company shall give each of Nassau and ▇▇▇▇▇ (so long as such
Stockholder holds any Stockholder Shares) notice of each meeting of its board
of directors and each committee thereof at the same time and in the same manner
as notice is given to the directors, and the Company shall permit a
representative of each such Person to attend as an observer all meetings of its
board of directors and all committees thereof. Each representative shall be
entitled to receive all written materials and other information (including,
without limitation, copies of meeting minutes) given to directors in connection
with such meetings at the same time such materials and information are given to
the directors. If the Company proposes to take any action by written consent
in lieu of a meeting of its board of directors or of any committee thereof, the
Company shall give notice thereof to each such Person at the same time and in
the same manner as notice is given to the directors.
(c) The Company shall pay the reasonable out-of-pocket expenses
incurred by each director named hereunder in connection with attending the
meetings of the Board, any Sub Board and any committee thereof.
(d) The provisions of this Section 1 will terminate upon the
completion of a Qualified Public Offering or a Sale of the Company.
(e) If any party fails to designate a representative to fill a
directorship pursuant to the terms of this Section 1, the election of a person
to such directorship shall be accomplished in accordance with the Company's
bylaws and applicable law.
2. Restrictions on Transfer of Stockholder Shares.
(a) Participation Rights. At least 40 days prior to any sale,
transfer, assignment, pledge or other disposal (a "Transfer") of any ▇▇▇▇▇▇
▇▇▇▇▇ Shares of a certain class (other than (i) pursuant to a Public Sale or
(ii) a Transfer pursuant to Section 2(c) or Section 3), the transferring
Stockholder (the "▇▇▇▇▇▇ ▇▇▇▇▇ Transferor") shall deliver a written notice (the
"Sale Notice") to the Company and each of the other Stockholders (the "Other
Stockholders"), specifying in reasonable detail the number of such class of
Stockholder Shares to be transferred, the identity of the prospective
transferee(s) and the terms and conditions of the Transfer, including the price
per Stockholder Share of such class. The Other Stockholders may elect to
participate in the contemplated Transfer by delivering written notice to the
▇▇▇▇▇▇ ▇▇▇▇▇ Transferor within 30 days after delivery of the Sale Notice;
provided that if the ▇▇▇▇▇▇ ▇▇▇▇▇ Transferor intends to Transfer a strip of two
or more classes of Stockholder Shares and any Other Stockholder (including his
or its Permitted Transferees) holds all such classes of Stockholder Shares,
such Other Stockholder may only participate in such Transfer if such Other
Stockholder Transfers all such classes of Stockholder Shares in accordance with
the formula set forth in the following sentence. With respect to each class
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of Stockholder Shares to be Transferred, if any Other Stockholders have elected
to participate in such Transfer, the ▇▇▇▇▇▇ ▇▇▇▇▇ Transferor and each
participating Other Stockholder shall be entitled to sell in the contemplated
Transfer, at the same price and on the same terms, a number of Stockholder
Shares of such class equal to the product of (i) the quotient determined by
dividing (1) the number of Stockholder Shares of such class held by such Person
by (2) the aggregate number of Stockholder Shares of such class owned by the
▇▇▇▇▇▇ ▇▇▇▇▇ Transferor and the Other Stockholders participating in such sale
and (ii) the aggregate number of Stockholder Shares of such class to be sold in
the contemplated Transfer. For purposes of the preceding sentence, (I) Common
Stock issuable upon exercise of employee stock options which have not vested
and become exercisable shall not be considered to be Stockholder Shares and
(II) all Stockholder Shares held by any Permitted Transferee of any Other
Stockholder shall be deemed held by such Other Stockholder himself or itself.
For purposes of this Agreement, references to Stockholder Shares of a certain
"class" means Stockholder Shares which are Notes, Preferred Stock or Common
Stock; provided that Voting Common and Nonvoting Common will be deemed to be of
the same "class;" provided further that Series B Subordinated Promissory Notes
will be deemed to be of the same class as Preferred Stock (rather than Series A
Subordinated Promissory Notes).
(b) First Refusal Rights. At least 40 days prior to any Transfer of
Minority Shares of a certain class (other than (i) pursuant to a Public Sale,
(ii) a Transfer to the Company, or (iii) a Transfer pursuant to Section 2(a),
Section 2(c) or Section 3), the Stockholder making such Transfer (the "Minority
Transferor") shall deliver a written notice (the "Transfer Notice") to the
Company and the holder(s) of ▇▇▇▇▇▇ ▇▇▇▇▇ Shares that it desires to Transfer
Stockholder Shares of such class, specifying in reasonable detail the identity
of the prospective transferee(s), the number to be transferred and the terms
and conditions of the Transfer, including the proposed price per Stockholder
Share of such class. The Company may elect to purchase all or any portion of
the Minority Shares to be transferred, upon the same terms and conditions as
those set forth in the Transfer Notice, by delivering a written notice of such
election to the Minority Transferor within 15 days after the Transfer Notice
has been given to the Company. If for any reason the Company does not elect to
purchase all of the Minority Shares to be transferred, the holders of ▇▇▇▇▇▇
▇▇▇▇▇ Shares shall be entitled to purchase the Minority Shares which the
Company has not elected to purchase (the "Available Shares"), upon the same
terms and conditions as those set forth in the Transfer Notice, by giving
written notice of such election to the Minority Transferor within 30 days after
the Transfer Notice has been given to holder(s) of ▇▇▇▇▇▇ ▇▇▇▇▇ Shares. If
more than one holder of ▇▇▇▇▇▇ ▇▇▇▇▇ Shares elects to purchase the Available
Shares, the Available Shares will be allocated among such electing holders pro
rata according to the number of Common Stockholder Shares on a Fully-Diluted
Basis owned by each such electing holder. The closing of the purchase of any
Minority Shares pursuant to this Section 2(b) shall take place within 60 days
after the date on which the parties to such purchase have been finally
determined pursuant to this Section 2(b). Notwithstanding the foregoing, if
the Company and the holders of ▇▇▇▇▇▇ ▇▇▇▇▇ Shares do not elect to purchase,
collectively, all of the Stockholder Shares of a class specified in the
Transfer Notice, then the Minority Transferor may transfer all of the
Stockholder Shares of such class specified in the Transfer Notice to the
transferee(s) identified in the Transfer Notice for (i) an amount of
consideration (whether in cash and/or property) which has a fair market value
no less than the price specified in
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the Transfer Notice and (ii) other terms no more favorable to the transferee(s)
thereof than specified in the Transfer Notice, during the 90-day period
immediately following the date on which the Transfer Notice has been given to
the Company and the holder(s) of ▇▇▇▇▇▇ ▇▇▇▇▇ Shares. Any Minority Shares not
transferred within such 90-day period will be subject to the provisions of this
Section 2(b) upon subsequent transfer.
(c) Permitted Transfers. The restrictions contained in this Section
2 shall not apply with respect to any Transfer of Stockholder Shares by any
Stockholder (i) in the case of a Stockholder who is an individual, pursuant to
applicable laws of descent and distribution, or among such individual's Family
Group, (ii) in the case of a Stockholder which is an entity, among such
entity's Affiliates, and (iii) in the case of each Investor, up to ten percent
of each class of Stockholder Shares held by such Investor on the date hereof,
to employees of, consultants to and advisors to (or any entity formed for their
benefit) such Investor or any of its Affiliates; provided that the restrictions
contained in this Section 2 shall continue to be applicable to the Stockholder
Shares after any of the foregoing Transfers, and provided further that the
transferees of such Stockholder Shares shall have agreed in writing to be bound
by the provisions of this Agreement which affect the Stockholder Shares so
transferred. All transferees permitted under this Section 2(c) are
collectively referred to herein as "Permitted Transferees." Each Permitted
Transferee shall be deemed a Stockholder for purposes of this Agreement.
(d) Termination of Restrictions. The restrictions set forth in this
Section 2 shall continue with respect to each Stockholder Share until the
earlier of (i) the transfer of such Stockholder Share in a Public Sale, or (ii)
the consummation of a Sale of the Company or a Qualified Public Offering.
3. Sale of the Company.
(a) If the Board and the holders of a majority of the Investor Shares
approve a Sale of the Company (the "Approved Sale"), all holders of Stockholder
Shares will consent to and not impede such Approved Sale. If the Approved Sale
is structured as a (i) merger or consolidation, each holder of Stockholder
Shares shall waive any dissenters rights, appraisal rights or similar rights in
connection with such merger or consolidation or (ii) sale of stock, each holder
of Stockholder Shares will agree to sell all of his or its Stockholder Shares
on the terms and conditions approved by the Board and the holders of a majority
of the Investor Shares. In furtherance of the foregoing, (A) each holder of
Stockholder Shares will take all necessary or desirable actions reasonably
requested by the Board in connection with the consummation of the Approved Sale
of the Company and (B) each holder of Stockholder Shares will make the same
representations, warranties and indemnities regarding the Company and its
business (the "Company Reps"). In the event the proceeds to the holders of
Stockholder Shares as a group are reduced (a "Loss") due to a claim under the
Company Reps by the purchaser or purchasers in such Approved Sale, each holder
of Stockholder Shares will be liable for a pro rata portion of such Loss (based
upon the net amount of proceeds received by the holders of Stockholder Shares
in connection with such Approved Sale),
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up to a maximum equal to the net amount of proceeds received by such holder of
Stockholder Shares in connection with such Approved Sale.
(b) The obligations of the holders of Stockholder Shares with respect
to the Approved Sale of the Company are subject to the satisfaction of the
following conditions: (i) upon the consummation of the Approved Sale, each
holder of each class of Stockholder Shares shall receive in exchange for the
Stockholder Shares of such class held by such Person the same portion of the
aggregate consideration from such Approved Sale that such Stockholder would
have received if such consideration had been distributed by the Company in a
complete liquidation pursuant to the rights and preferences set forth in the
Company's certificate of incorporation as in effect immediately prior to such
Approved Sale; (ii) if any holders of any class of Stockholder Shares are given
an option as to the form and amount of consideration to be received, all
holders of such class will be given the same option; (iii) with respect to any
consideration (the "Additional Consideration") to be paid to any Stockholder
and/or any of its Affiliates with respect to, arising out of, or in connection
with the Approved Sale which is in addition to the consideration paid to such
Person as payment for, or distribution on, his or its Stockholder Shares
(including, without limitation, consulting fees, management fees,
noncompetition payments and transition service fees, but not including bona
fide employee wages and similar bona fide payments), each holder of Stockholder
Shares shall receive a portion of such Additional Consideration equal to the
amount that such Stockholder would have received if such Additional
Consideration had been distributed by the Company in a complete liquidation
pursuant to the rights and preferences set forth in the Company's certificate
of incorporation as in effect immediately prior to such Approved Sale; and (iv)
each holder of then currently exercisable rights to acquire shares of any class
of Stockholder Shares (including the Vested Options) will be given an
opportunity to exercise such rights prior to the consummation of the Approved
Sale and participate in such sale as holders of such class of Stockholder
Shares.
(c) If the Company or the holders of the Company's securities enter
into any negotiation or transaction for which Rule 506 (or any similar rule
then in effect) promulgated by the Securities Exchange Commission may be
available with respect to such negotiation or transaction (including a merger,
consolidation or other reorganization), the holders of Stockholder Shares will,
at the request of the Company, appoint a purchaser representative (as such term
is defined in Rule 501) reasonably acceptable to the Company. If any holder of
Stockholder Shares appoints a purchaser representative designated by the
Company, the Company will pay the fees of such purchaser representative, but if
any holder of Stockholder Shares declines to appoint the purchaser
representative designated by the Company such holder will appoint another
purchaser representative (reasonably acceptable to the Company), and such
holder will be responsible for the fees of the purchaser representative so
appointed.
(d) The Company will pay the costs of any sale of Stockholder Shares
pursuant to an Approved Sale to the extent such costs are incurred for the
benefit of all holders of Stockholder Shares and are not otherwise paid by the
acquiring party, including the reasonable fees and disbursements of one counsel
chosen by the holders of a majority of the Stockholder Shares. Costs
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incurred by any holder of Stockholder Shares on its own behalf will not be
considered costs of the transaction hereunder.
(e) The provisions of this Section 3 will terminate upon the
completion of a Qualified Public Offering or a Sale of the Company.
4. Limited Preemptive Rights.
(a) Generally. If the Company authorizes the issuance or sale of any
of its equity securities or any securities containing options or rights to
acquire any equity securities (other than as a dividend on the outstanding
Common Stock or pursuant to exercise, conversion or exchange of securities or
rights previously issued by the Company subject to this Section 4) to any
Investor or any of its Affiliates, the Company shall first offer to sell to
each holder of Stockholder Shares a portion of such stock or securities equal
to the quotient determined by dividing (1) the number of Common Stockholder
Shares on a Fully-Diluted Basis then held by such holder by (2) the total
number of Common Stockholder Shares on a Fully-Diluted Basis then held by all
holders of Stockholder Shares. Each holder of Stockholder Shares shall be
entitled to purchase such stock or securities at the most favorable price and
on the most favorable terms as such stock or securities are to be offered to
any other Persons; provided that if all Persons entitled to purchase or receive
such stock or securities are required to also purchase other securities of the
Company, the holders of Stockholder Shares exercising their rights pursuant to
this Section shall also be required to purchase the same strip of securities
(on the same terms and conditions) that such other Persons are required to
purchase. The purchase price for all stock and securities offered to the
holders of Stockholder Shares shall be payable in cash.
(b) Notice. In order to exercise its purchase rights hereunder, a
holder of Stockholder Shares must within 15 days after receipt of written
notice from the Company describing in reasonable detail the stock or securities
being offered, the purchase price thereof, the payment terms and such holder's
percentage allotment deliver a written notice to the Company describing its
election hereunder. If all of the stock and securities offered to the holders
of Stockholder Shares is not fully subscribed by such holders, the remaining
stock and securities shall be reoffered by the Company to the holders
purchasing their full allotment upon the terms set forth in this Section,
except that such holders must exercise their purchase rights within five days
after receipt of such reoffer.
(c) Sale to the Investors or their Affiliates. Upon the expiration
of the offering periods described above, the Company shall be entitled to sell
such stock or securities which the holders of Stockholder Shares have not
elected to purchase during the 180 days following such expiration on terms and
conditions no more favorable to the Investors or their Affiliates than those
offered to such holders. Any stock or securities offered or sold by the
Company after such 180-day period must be reoffered to the holders of
Stockholder Shares pursuant to the terms of this Section.
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(d) Termination. The provisions of this Section 4 will terminate
upon the completion of a Qualified Public Offering or a Sale of the Company.
5. Initial Public Offering. In the event that the Board and the
holders of a majority of the Investor Shares approve an initial public offering
and sale of the Company's equity securities (a "Public Offering") pursuant to
an effective registration statement under the Securities Act, the holders of
Stockholder Shares shall take all necessary or desirable actions in connection
with the consummation of the Public Offering. In the event that such Public
Offering is an underwritten offering and the managing underwriters advise the
Company in writing that in their opinion the Company's capital stock structure
would adversely affect the marketability of the offering, each holder of
Stockholder Shares shall consent to and vote for a recapitalization,
reorganization and/or exchange of the Stockholder Shares into securities that
the managing underwriters, the Board and holders of a majority of the shares of
Investor Shares find acceptable and shall take all necessary or desirable
actions in connection with the consummation of the recapitalization,
reorganization and/or exchange; provided that the resulting securities reflect
and are consistent with the rights and preferences set forth in the Company's
Certificate of Incorporation as in effect immediately prior to such Public
Offering.
6. Financial Statements and Other Information. The Company shall,
during such periods of time as any Stockholder may request (so long as such
Stockholder holds any Stockholder Shares), deliver to such Stockholder:
(a) as soon as available but in any event within 45 days after the
end of each monthly accounting period in each fiscal year, unaudited
consolidating and consolidated statements of income and cash flows of the
Company and its Subsidiaries for such monthly period and for the period from
the beginning of the fiscal year to the end of such month, and consolidating
and consolidated balance sheets of the Company and its Subsidiaries as of the
end of such monthly period, setting forth in each case comparisons to the
annual budget and to the corresponding period in the preceding fiscal year, and
all such statements shall be prepared in accordance with generally accepted
accounting principles, consistently applied, subject to the absence of footnote
disclosures and to normal year-end adjustments;
(b) within 90 days after the end of each fiscal year, consolidating
and consolidated statements of income and cash flows of the Company and its
Subsidiaries for such fiscal year, and consolidating and consolidated balance
sheets of the Company and its Subsidiaries as of the end of such fiscal year,
setting forth in each case comparisons to the annual budget and to the
preceding fiscal year, all prepared in accordance with generally accepted
accounting principles, consistently applied, and accompanied by (a) with
respect to the consolidated portions of such statements, an opinion of an
independent accounting firm of recognized national standing, and (b) a copy of
such firm's annual management letter to the board of directors;
(c) promptly upon receipt thereof, any additional reports, management
letters or other detailed information concerning significant aspects of the
Company's operations or financial
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affairs given to the Company by its independent accountants (and not otherwise
contained in other materials provided hereunder);
(d) at least 30 days prior to the beginning of each fiscal year, an
annual budget prepared on a monthly basis for the Company and its Subsidiaries
for such fiscal year (displaying anticipated statements of income and cash
flows and balance sheets), and promptly upon preparation thereof any other
significant budgets prepared by the Company and any revisions of such annual or
other budgets, and within 30 days after any monthly period in which there is a
material adverse deviation from the annual budget, an Officer's Certificate
explaining the deviation and what actions the Company has taken and proposes to
take with respect thereto;
(e) promptly (but in any event within five business days) after the
discovery or receipt of notice of any default under any material agreement to
which it or any of its Subsidiaries is a party or any other material adverse
event or circumstance affecting the Company or any Subsidiary (including the
filing of any material litigation against the Company or any Subsidiary or the
existence of any dispute with any Person which involves a reasonable likelihood
of such litigation being commenced), an Officer's Certificate specifying the
nature and period of existence thereof and what actions the Company and its
Subsidiaries have taken and propose to take with respect thereto;
(f) within ten days after transmission thereof, copies of all
financial statements, proxy statements, reports and any other general written
communications which the Company sends to its stockholders and copies of all
registration statements and all regular, special or periodic reports which it
files, or any of its officers or directors file with respect to the Company,
with the Securities and Exchange Commission or with any securities exchange on
which any of its securities are then listed, and copies of all press releases
and other statements made available generally by the Company to the public
concerning material developments in the Company's businesses; and
(g) with reasonable promptness, such other information and financial
data concerning the Company and its Subsidiaries as any Person entitled to
receive information under this Section 6 may reasonably request.
Notwithstanding the foregoing, the provisions of this Section 6 shall cease to
be effective so long as the Company (a) is subject to the periodic reporting
requirements of the Securities Exchange Act and continues to comply with such
requirements and (b) promptly provides to each Person otherwise entitled to
receive information pursuant to this Section 6 all reports and other materials
filed by the Company with the Securities and Exchange Commission pursuant to
the periodic reporting requirements of the Securities Exchange Act.
7. Inspection Rights. The Company shall permit any representatives
designated by any Stockholder (so long as such Stockholder holds any
Stockholder Shares), upon reasonable notice and during normal business hours,
to (i) visit and inspect any of the properties of the Company and its
Subsidiaries, (ii) examine the corporate and financial records of the Company
and
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its Subsidiaries and make copies thereof or extracts therefrom and (iii)
discuss the affairs, finances and accounts of any such corporations with the
directors, officers, key employees and independent accountants of the Company
and its Subsidiaries.
8. Legend. Each certificate evidencing Stockholder Shares and each
certificate issued in exchange for or upon the transfer of any Stockholder
Shares (if such shares remain Stockholder Shares as defined herein after such
transfer) shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER SPECIFIED IN THE STOCKHOLDERS AGREEMENT,
DATED AS OF APRIL 30, 1996 AND AS AMENDED AND MODIFIED FROM TIME TO TIME,
BETWEEN THE ISSUER (THE "COMPANY") AND CERTAIN INVESTORS, AND THE COMPANY
RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH
CONDITIONS SHALL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON
WRITTEN REQUEST AND WITHOUT CHARGE."
The Company shall imprint such legend on certificates evidencing Stockholder
Shares. The legend set forth above shall be removed from the certificates
evidencing any shares which cease to be Stockholder Shares in accordance with
the definition thereof in Section 10 hereof. In addition, upon consummation of
a Qualified Public Offering, the legend set forth above shall be removed from
all the certificates evidencing Stockholder Shares.
9. Transfer. Prior to transferring any Stockholder Shares (other than
in a Public Sale or subsequent to a Qualified Public Offering) to any person or
entity, the transferring Stockholder shall cause the prospective transferee to
execute and deliver to the Company and the other Stockholders a counterpart of
this Agreement.
10. Definitions.
"Acquisition Agreement" means the Asset and Stock Purchase Agreement, dated
as of the date hereof, by and among the Company, Racing Champions, Inc., the
Founders and Banerjan Company Limited.
"Affiliate" means, with respect to any Person, any other Person controlling,
controlled by or under common control with such Person and any partner of a
Person which is a partnership (so long as all distributions made by such
partnership are made pro rata among its partners based upon the economic
ownership of such partnership).
"Common Stock" means the Voting Common and the Nonvoting Common.
- 10 -
11
"Common Stockholder Shares" means Stockholder Shares which are (i) Common
Stock, (ii) warrants, options or other rights to subscribe for or to acquire,
directly or indirectly, Common Stock, whether or not then exercisable or
convertible, and (iii) stock or other securities which are convertible into or
exchangeable for, directly or indirectly, Common Stock, whether or not then
convertible or exchangeable. As to any particular Common Stockholder Shares,
such shares shall cease to be Common Stockholder Shares when they have been
disposed of in a Public Sale or repurchased by the Company or any Subsidiary.
"DM Securities Purchase Agreement" means the Securities Purchase Agreement,
dated as of the date hereof, between the Company and DM.
"Family Group" means, with respect to an individual, such individual's
spouse and descendants (whether natural or adopted) and any trust solely for
the benefit of such individual and/or such individual's spouse and/or
descendants.
"Fully-Diluted Basis" includes, without duplication, (i) all shares of
Common Stock outstanding at the time of determination, (ii) all shares of
Common Stock issuable upon the exercise, conversion or exchange of all
warrants, options or other rights to subscribe for or to acquire, directly or
indirectly, Common Stock, whether or not then exercisable or convertible, and
(iii) all shares of Common Stock issuable upon the conversion or exchange of
all stock or other securities which are convertible into or exchangeable for,
directly or indirectly, Common Stock, whether or not then convertible or
exchangeable.
"Independent Third Party" means any Person who, immediately prior to the
contemplated transaction, does not own in excess of 15% of the Common Stock on
a Fully-Diluted Basis, who is not controlling, controlled by or under common
control with any such 15% owner of the Common Stock and who is not the spouse
or descendent (by birth or adoption) of any such 15% owner of the Common Stock.
"Investor Shares" means (i) the shares of Stock issued to the Investors
pursuant to the Securities Purchase Agreement and (ii) any shares of Stock
otherwise acquired by or issuable to the Investors, and (iii) all equity
securities issued or issuable directly or indirectly with respect to the
securities referred to in clauses (i) and (ii) above by way of a stock dividend
or stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. For purposes of this Agreement,
a Person shall be deemed to be a holder of Investor Shares whenever such Person
has the right to acquire such shares (upon conversion, exercise or exchange in
connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected. As to any particular Investor
Shares, such securities shall cease to be Investor Shares when they have been
sold in a Public Sale or repurchased by the Company or any Subsidiary of the
Company. References in this Agreement to "a majority of the Investor Shares"
shall be deemed to be references to a majority of the Investor Shares which are
Common Stockholder Shares (calculated on a Fully-Diluted Basis).
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12
"Minority Shares" means (i) the shares of Stock or Notes issued to Baird,
Nassau, NAS, and the Executives pursuant to the Securities Purchase Agreement,
(ii) the shares of Stock or Notes issued to the Founders pursuant to the
Acquisition Agreement, (iii) the shares of Stock issued to DM pursuant to the
Securities Purchase Agreement, dated as of the date hereof, by and between DM
and the Company, (iv) any shares of Stock or Notes otherwise acquired by or
issuable to Baird, Nassau, NAS, the Executives or the Founders, (v) all
securities issued or issuable directly or indirectly with respect to the
securities referred to in clauses (i), (ii), (iii) and (iv) above by way of a
dividend or split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. For purposes
of this Agreement, a Person shall be deemed to be a holder of Minority Shares
whenever such Person has the right to acquire such shares (upon conversion,
exercise or exchange in connection with a transfer of securities or otherwise,
but disregarding any restrictions or limitations upon the exercise of such
right), whether or not such acquisition has actually been effected. As to any
particular Minority Shares, such securities shall cease to be Minority Shares
when they have been sold in a Public Sale or Sale of the Company or repurchased
by ▇▇▇▇▇▇ ▇▇▇▇▇, the Company, or any Subsidiary of the Company.
"Nonvoting Common" means the Company's Nonvoting Common Stock, par value
$.01 per share.
"Notes" means the Company's Series A Junior Subordinated Notes issued on the
date hereof and the Company's Series B Junior Subordinated Notes issued on the
date hereof.
"Officer's Certificate" means a certificate signed on behalf of the Company
by the Company's president or its chief financial officer, in his capacity as
such, stating that, to the best of such officer's knowledge, (i) the officer
signing such certificate has made or has caused to be made such investigations
as are necessary in order to permit him to verify the accuracy of the
information set forth in such certificate and (ii) such certificate does not
misstate any material fact and does not omit to state any fact necessary to
make the certificate not misleading.
"Person" means any individual, partnership, corporation, limited liability
company, association, joint stock company, trust, joint venture, unincorporated
organization and any governmental entity or any department, agency or political
subdivision thereof.
"Preferred Stock" means the Company's Class A Preferred Stock, par value
$.01 per share and the Company's Class B Preferred Stock, par value $.01 per
share.
"Public Sale" means any sale of capital stock to the public pursuant to an
offering registered under the Securities Act, or to the public through a
broker, dealer or market maker pursuant to the provisions of Rule 144 or Rule
144A adopted under the Securities Act.
"Qualified Public Offering" means the sale in a firm commitment underwritten
public offering registered under the Securities Act of shares of Common Stock
to the public in which the aggregate offering price paid by the public is not
less than $20 million.
- 12 -
13
"Sale of the Company" means the sale of the Company to an Independent Third
Party or group of Independent Third Parties pursuant to which such party or
parties acquire (i) capital stock of the Company possessing the voting power to
elect a majority of the Board (whether by merger, consolidation or sale or
transfer of the Company's capital stock) or (ii) all or substantially all of
the Company's assets determined on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase Agreement" means the Securities Purchase Agreement,
dated as of the date hereof, by and among the Company, the Investors and the
Executives.
"Stock" means the Common Stock and the Preferred Stock.
"Stockholder Shares" means the ▇▇▇▇▇▇ ▇▇▇▇▇ Shares and the Minority Shares.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a partnership, association
or other business entity, a majority of the partnership or other similar
ownership interest thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more Subsidiaries of that Person or a
combination thereof. For purposes hereof, a Person or Persons shall be deemed
to have a majority ownership interest in a partnership, association or other
business entity if such Person or Persons shall be allocated a majority of
partnership, association or other business entity gains or losses or shall be
or control any managing director or general partner of such partnership,
association or other business entity.
"Voting Common" means the Company's Common Stock, par value $.01 per share.
"▇▇▇▇▇▇ ▇▇▇▇▇ Shares" means (i) the shares of Stock and Notes issued to
▇▇▇▇▇▇ ▇▇▇▇▇ pursuant to the Securities Purchase Agreement, (ii) any shares of
Stock or Notes otherwise acquired by or issuable to ▇▇▇▇▇▇ ▇▇▇▇▇, and (iii) all
securities issued or issuable directly or indirectly with respect to the
securities referred to in clauses (i) and (ii) above by way of a dividend or
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. For purposes of this Agreement, a
Person shall be deemed to be a holder of ▇▇▇▇▇▇ ▇▇▇▇▇ Shares whenever such
Person has the right to acquire such shares (upon conversion, exercise or
exchange in connection with a transfer of securities or otherwise, but
disregarding any restrictions or limitations upon the exercise of such right),
whether or not such acquisition has actually been effected. As to any
particular ▇▇▇▇▇▇ ▇▇▇▇▇ Shares, such securities shall cease to be ▇▇▇▇▇▇ ▇▇▇▇▇
Shares when they have been sold in a Public Sale or Sale of the Company or
repurchased by the Company or any Subsidiary of the Company.
- 13 -
14
11. Representation and Agreement Regarding Stockholder Shares Issued
to GSI. ▇▇▇▇▇ and GSI hereby represent and warrant, jointly and severally, to
the Company and each of the other Stockholders that ▇▇▇▇▇ and members of his
immediate family , or a trust, the sole benefiaries of which are ▇▇▇▇▇ and his
immediate family, are the sole beneficial owners of the Stockholder Shares
issued to GSI pursuant to the Purchase Agreement (the "GSI Shares"). To
effectuate the purposes of this Agreement, ▇▇▇▇▇ and GSI each agrees with the
Company and each of the other Stockholders that it will take all steps
necessary to ensure that ▇▇▇▇▇ and his immediate family family , or a trust,
the sole benefiaries of which are ▇▇▇▇▇ and his immediate family, will continue
to be the sole beneficial owners of the GSI Shares, so long as such GSI Shares
are Stockholder Shares. Further, GSI agrees that, in the event of any breach
of any of the representations, warranties or covenants set forth in this
Section 11, the Company shall be entitled to repurchase all or any portion of
the GSI Shares from the holder thereof at a price not greater than the lesser
of (a) the fair market value of the GSI Shares so repurchased, as determined by
the Company's board of directors in good faith, or (b) the lowest value thereof
reflected in any direct or indirect transfer of interests in such GSI Shares by
GSI or the holder of any interest in GSI, also as determined by the Company's
board of directors in good faith. To the extent that at the time of any such
repurchase the Company is subject to any agreement prohibiting such a
repurchase for cash, the Company may repurchase such GSI Shares and pay the
purchase price thereof in promissory notes of the Company which are
subordinated to the prior payment in full of all of the Company's indebtedness
for borrowed money on terms satisfactory to the holders of such other
indebtedness, which note shall be repaid in three equal annual installments
commencing after repayment in full of all such indebtedness for borrowed money,
and shall bear interest at the Prime Rate as announced from time to time in the
U.S. edition of the Wall Street Journal. The Company may assign all or any
portion of its rights pursuant to this Section 11 to the Investors, in
proportion to their holdings of Common Stockholder Shares, and may exercise
such repurchase rights by written notice to the holder of the GSI Shares, and
at such holder's address, each as reflected on the Company's books. Each
certificate representing GSI Shares that are Stockholder Shares, and each
certificate issued in exchange for or upon the transfer of any GSI Shares that
are Stockholder Shares, shall bear a legend identifying such shares as GSI
Shares within the meaning of this Section 11.
12. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by the Company and the holders of at
least a majority of the shares of Common Stock represented by Common
Stockholder Shares, calculated on a Fully-Diluted Basis; provided that no such
amendment or action which materially adversely affects any one holder of
Stockholder Shares, as such, vis-a-vis the other holders of Stockholder Shares,
as such, shall be effective against such holder of Stockholder Shares without
the prior written consent of such holder.
13. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
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15
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
14. Entire Agreement. Except as otherwise expressly set forth
herein, this agreement embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof in any way.
15. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable overnight courier service
(charges prepaid) or mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to each holder of Stockholder Shares at the
address indicated on the books and records of the Company and to the Company at
the address indicated below:
Collectible Champions, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇
Glen Ellyn, Illinois 60137
Attn: President
with copies to:
▇▇▇▇▇▇ ▇▇▇▇▇ & Partners, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: Avy ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
and
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. Perl
- 15 -
16
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
16. Successors and Assigns; No Third Party Beneficiaries. Except as
otherwise expressly provided herein, this Agreement shall bind and inure to the
benefit of and be enforceable by the Company and its successors and assigns and
the Stockholders and any subsequent holders of Stockholder Shares and the
respective successors and assigns of each of them, so long as they hold
Stockholder Shares; provided that the rights set forth in Sections 6 and 7 are
not transferrable without the Company's prior written consent. Subject to the
preceding sentence, this Agreement shall not confer any rights or remedies upon
any Person other than the parties hereto and their respective successors and
assigns.
17. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.
18. Remedies. Any Person having rights under any provision of this
Agreement shall be entitled to enforce such rights specifically, to recover
damages caused by reason of any breach of any provision of this Agreement, and
to exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
19. Governing Law. The corporate law of Delaware will govern all
issues concerning the relative rights of the Company and its stockholders. All
other issues concerning this Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of
Illinois or any other jurisdiction) that would cause the application of the law
of any jurisdiction other than the State of Illinois.
20. Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
* * * * *
- 16 -
17
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement on the day and year first above written.
COLLECTIBLE CHAMPIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Its: President
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ & PARTNERS, L.P.
By: ▇▇▇▇▇▇ ▇▇▇▇▇ & Partners, L.L.C.
Its: General Partner
By: /s/ Avy ▇. ▇▇▇▇▇
------------------------------
Its: Managing Director
-----------------------------
▇▇▇▇▇ CAPITAL PARTNERS II LIMITED PARTNERSHIP
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated
Its: General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Its: Managing Director
-----------------------------
BCP II AFFILIATES FUND LIMITED PARTNERSHIP
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated
Its: General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Its: Managing Director
-----------------------------
NASSAU CAPITAL PARTNERS L.P.
By: Nassau Capital L.L.C.
Its: General Partner
By: /s/ ▇▇▇▇▇▇▇▇▇ Sweemar
------------------------------
Its: Member
-----------------------------
NAS PARTNERS I L.L.C.
By: ▇▇▇▇▇▇▇▇▇ Sweemar
-------------------------------------
Its: Member
------------------------------------
18
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇
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/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇
▇▇▇▇-▇▇▇▇▇, LTD.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
Its:
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RACING CHAMPIONS LIMITED
By: /s/ ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
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Its:
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▇▇▇▇▇▇▇ SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
-------------------------------
Its:
------------------------------
HOSTEN INVESTMENT LIMITED
By: /s/ ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
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Its
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