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EXHIBIT 2.4
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT dated as of the 4th day of December, 1997 ("this
Agreement"), by and between the Principal Stockholder (as defined herein) of
Wheels Sports Group, Inc., a North Carolina corporation (the "Company"), and
Racing Champions Corporation, a Delaware corporation ("Parent").
RECITALS
A. Parent, Parent's wholly owned subsidiary, WSG Acquisition, Inc., a
Delaware corporation ("Acquisition"), and the Company have entered into an
Agreement and Plan of Merger dated as of December 4, 1997 (the "Merger
Agreement") which provides, among other things, that Acquisition will merge
with and into the Company on the terms and subject to the conditions set forth
in the Merger Agreement (the "Merger").
B. As a condition to the willingness of Parent and Acquisition to enter
into the Merger Agreement, the Principal Stockholder has agreed to grant Parent
an option to purchase all Option Shares and an irrevocable proxy with respect
to all Option Shares over which the Principal Stockholder possesses voting
power, upon the terms and subject to the conditions of this Agreement.
C. The Board of Directors of the Company has approved the Merger and the
acquisition of Option Shares by Parent pursuant to this Agreement.
The parties therefore agree as follows:
1. Certain Definitions.
(a) The term "Principal Stockholder", as used herein, shall mean Xx.
Xxxxxx X. Xxxxxxx, Xx. and each of the Persons set forth on the signature pages
hereof as Xxxxxxx Owners, and each reference to the Principal Stockholder is
intended to encompass both Xx. Xxxxxx X. Xxxxxxx, Xx. and each of such Persons.
The term "Option Shares", as used herein, shall mean any and all shares of the
Company's Stock, par value $.01 per share (the "Common Stock") now owned and/or
subsequently acquired by the Principal Stockholder through purchase, gift,
stock splits, stock dividends and exercise of stock options.
(b) "Affiliate" shall, with respect to any Person, mean any other Person
that controls, is controlled by or is under common control with the former.
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The term "control" and correlative terms shall have the meanings ascribed to
them in Rule 405 under the Securities Act.
(c) "Permitted Transferee" means, with respect to any particular Xxxxxxx
Owner, (i) Xx. Xxxxxx X. Xxxxxxx, Xx. and his spouse, lineal descendants,
executor, administrator or testamentary trustee; (ii) any trust established
solely for the benefit of any of the Persons named in clause (i); (iii) any
partnership, the general or limited partners of which include only Persons
named in clauses (i) and (ii); or (iv) any Person controlled, directly or
indirectly, by Xx. Xxxxxx X. Xxxxxxx, Xx.
(d) "Person" shall mean an individual, partnership, limited liability
company, corporation, joint stock company, trust, estate, joint venture,
association or unincorporated organization, or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
(e) "Subsidiary" shall mean any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are directly or indirectly owned by a Person.
(f) Other capitalized terms used but not defined in this Agreement shall
have the meanings assigned to such terms in the Merger Agreement.
2. Grant of Option. The Principal Stockholder hereby grants to Parent an
irrevocable option (the "Option") to purchase all of the Option Shares which
shall be not less than the number (as adjusted pursuant to Section 6 of this
Agreement) of Option Shares reflected next to the Principal Stockholder's name
on the signature page of this Agreement, and Parent will, subject to the
provisions hereof, purchase and pay for such Option Shares by issuing to
Principal Stockholder .8 (eight-tenths) fully paid and nonassessable shares of
Parent Common Stock for each Option Share (the "Exercise Price").
3. Exercise of Option. The Option may be exercised by Parent, in whole at
any time or in part from time to time from and after the date of this Agreement
upon the occurrence or non-occurrence of any event listed on Annex I. In the
event Parent wishes to exercise all or any part of the Option, Parent shall
send a written notice to the Principal Stockholder specifying the number of
Option Shares Parent intends to purchase and the place, date and time (but not
later than 10 business days from the date such notice is given) for the
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closing of such purchase. Parent's obligations to purchase and pay for Option
Shares upon any exercise of the Option are subject to the expiration or
termination of any applicable waiting period under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "Xxxx-Xxxxx Act"). Upon
request of Parent, the Principal Stockholder shall promptly take all action
required to effect all necessary filings by the Principal Stockholder under the
Xxxx-Xxxxx Act.
4. Registration of Parent Company Stock.
(a) The Principal Stockholder agrees not to transfer or otherwise dispose
of the shares of Parent Company Stock, or any interest therein, without first
providing to Parent an opinion of counsel for the Principal Stockholder,
reasonably satisfactory in form and substance to counsel for Parent, to the
effect that such transfer or disposition will not violate the Securities Act of
1933, as amended (the "Securities Act"), or any applicable state law governing
the offer and sale of securities, and the rules and regulations thereunder. The
Principal Stockholder further agrees to the placement of the following legend
on the certificate(s) representing the shares:
"The Shares represented by this certificate have not been registered
under either (i) the Securities Act of 1933 (the "Act") or (ii) any
applicable state law governing the offer and sale of securities. No
transfer or other disposition of these Shares, or of any interest
therein, may be made except pursuant to an effective registration
statement under the Act and such other state laws, unless the issuer has
received an opinion of counsel, reasonably satisfactory to the issuer, to
the effect that such transfer or other disposition of these Shares, or of
any interest therein, will not violate the Act, such other state laws,
and the rules and regulations promulgated thereunder."
provided that upon provision to Parent of any opinion of counsel for the
Principal Stockholder, reasonably satisfactory in form and substance to counsel
for Parent, to the effect that such legend is no longer required under the
provisions of the Securities Act or applicable state securities laws, Parent
shall promptly cause new certificates representing such shares to be issued to
the Principal Stockholder against surrender of such legended certificates.
(b) Notwithstanding the foregoing, Parent shall include such issuance of
shares of Parent Common Stock in the Registration Statement on Form S-4 being
filed pursuant to the Merger Agreement.
(c) If the shares of Parent Common Stock are not otherwise registered as
provided in paragraph (b) of Section 4, upon the demand of the
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Principal Stockholder, Parent agrees to effect two registrations of shares
held by the Principal Stockholder under the Securities Act. In each such case:
(i) each registration statement and each prospectus included therein or
relating to the shares of Parent Common Stock registered thereunder and each
amendment or supplement thereto shall at all times comply with the requirements
of the Securities Act and will not, at any time, contain any misstatement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading (and if an
event occurs as a result of which a registration statement or prospectus no
longer complies with this subclause (i), Parent shall promptly (A) so notify
the Principal Stockholder and (B) amend such registration statement or
supplement such prospectus so that the requirements of this subclause (i) are
met); (ii) Parent shall register or qualify all such shares under the blue sky
or securities laws of any jurisdiction as the Principal Stockholder may
reasonably request and shall maintain such registrations and qualifications in
effect so long as is necessary to permit the sale of such shares by the
Principal Stockholder in compliance with such laws; (iii) Parent shall supply
to the Principal Stockholder, or its underwriters, such number of prospectuses,
as amended and supplemented from time to time, as the Principal Stockholder may
reasonably request, during the period of nine months after the effectiveness of
the such registration statement or amendment; (iv) shall indemnify and hold the
Principal Stockholder harmless against any and all losses, claims, damages or
liabilities, joint or several, to which the Principal Stockholder may become
subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus referred to in this
paragraph (c) (including any preliminary prospectus contained in any such
registration statement), or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse the Principal Stockholder, on
demand, for any legal or other expenses reasonably incurred by the Principal
Stockholder in connection with investigating or defending any such action or
claim; and (v) at the request of the Principal Stockholder, the Parent will
execute and deliver (A) an agreement with any broker or dealer effecting a sale
(whether as principal or agent) of such shares confirming for the benefit of
such broker or dealer Parent's agreements contained in this Section 3(c) and/or
(B) one or more underwriting agreements with one or more underwriters (whether
acting for themselves or as representative(s) of a group of underwriters)
providing for an underwritten public offering of such shares for the account of
the Principal Stockholder, each such underwriting agreement to contain such
representations, warranties, covenants, agreements and indemnities as are
customary in "firm commitment" underwriting agreements used by so-called
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"major bracket" investment banking firms for public offerings of common stock
of companies which were not previously subject to the reporting requirements of
section 13 or 15(d) of the Exchange Act and Parent will use its commercially
reasonable efforts to cause the conditions to the underwriters' obligations
thereunder to be satisfied and will otherwise cooperate with the underwriters
in their investigation of Parent's business, property, financial condition and
prospects and in successfully concluding such public offering. In addition to
such demand registrations, in the event Parent effects a registration of Parent
Common Stock for its own account or for any other shareholder of Parent, Parent
shall use its commercially reasonable efforts to include therein all shares
requested by the Principal Stockholder to be so included; provided, however,
that (A) if the managing underwriters in such offering advise Parent in writing
that in their opinion the number of shares of Parent Common Stock requested to
be included in such registration exceeds the number which can be sold in such
offering, Parent will include the securities requested to be included therein
pro rata. Parent will pay all expenses of performing its obligations under
this Section 4(c), except underwriting commissions and (B) the Principal
Stockholder shall be entitled to have its shares of Parent Common Stock
included in no more than two such registrations effected by the Company.
5. Purchase of Option Shares.
(a) At each closing under Section 3 of this Agreement (each a "Closing
Date"), the Principal Stockholder shall deliver to Parent the certificate or
certificates representing the number of Option Shares being purchased in proper
form for transfer, and Parent will, subject to the provisions hereof, deliver
to the Principal Stockholder the Exercise Price and a certificate signed by the
President or Chief Executive Officer of Parent to the effect that Parent and
Acquisition have complied all material respects with all covenants and
agreements set forth in the Merger Agreement and that all representations and
warranties of the Parent and Acquisition under Article III of the Merger
Agreement and of the Parent under Section 7 of this Agreement were true in all
material respects when made.
(b) No certificates or scrip representing less than one share of Parent
Common Stock shall be issued upon the exercise of the Option. In lieu of any
such fractional share, the Principal Stockholder who would otherwise have been
entitled to a fraction of a share of Parent Common Stock upon exercise of the
Option shall be paid at the Closing in cash (without interest) in an amount
equal to such Principal Stockholder's fractional part of a share of Parent
Common Stock multiplied by the last reported sale price of Parent Common Stock,
as reported on the Nasdaq National Market, on the day prior to the Closing
Date.
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6. Certain Option Adjustments.
(a) In the event of any change in the number of issued and outstanding
shares of Common Stock or Parent Common Stock by reason of any stock dividends,
split-up, recapitalization, merger or other change in the corporate or capital
structure of the Company or Parent, as the case may be, Parent and Principal
Stockholder, as the case may be, each shall receive, upon exercise of the
Option: (i) in the case of a change in the Company's capital structure, the
stock or other securities, cash or property which the Principal Stockholder
received or is entitled to receive as a consequence of such change to the
Company's capital structure, or (ii) in the case of a change in Parent's
capital structure, the stock or other securities, cash or property into which
the Parent Common Stock has been converted as a consequence of such change to
the Parent's capital structure.
(b) If, on or after the date hereof, the Company should declare or pay any
cash dividend or other distribution or issue any rights with respect to the
Option Shares, payable or distributable to shareholders of record on a date
prior to the transfer to the name of Parent or its nominee or transferee on the
Company's stock transfer records of the Option Shares purchased pursuant to the
Option, then, without limiting any of the rights of Parent and Acquisition
under the Merger Agreement and without limiting the rights of Parent described
in the preceding paragraph, (i) the purchase price per Option Share payable by
Parent pursuant to the Option will be reduced by the amount of any such cash
dividend or cash distribution, and (ii) the whole of any such non-cash
dividend, distribution or right will be received and held by the Principal
Stockholder for the account of Parent and shall be required to be promptly
remitted and transferred by the Principal Stockholder to Parent of its designee
or transferee, accompanied by appropriate documentation of transfer. Pending
such remittance, Parent shall be entitled to all rights and privileges as owner
of any such non-cash dividend, distribution or right and may withhold the
entire purchase price or deduct from the purchase price the amount or value
thereof, as determined by Parent in its sole discretion.
7. Representations and Warranties of Parent. Parent represents and
warrants to the Principal Stockholder as follows:
(a) Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the requisite
corporate power to enter into and perform this Agreement.
(b) Parent has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the
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consummation of the transactions contemplated hereby have been duly and validly
authorized by the board of directors of Parent and no other corporate
proceedings on the part of Parent are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Parent and constitutes a valid,
legal and binding agreement of Parent enforceable against it in accordance with
its terms.
(c) Parent is not subject to or obligated under any provision of (i) its
Certificate of Incorporation or By-Laws, (ii) any contract, (iii) any license,
franchise or permit or (iv) any law, regulation, order, judgment or decree,
which would be breached or violated by its execution, delivery and performance
of this Agreement and the consummation by it of the transactions contemplated
hereby, other than any such breaches or violations which will not, individually
or in the aggregate, have a material adverse effect on the business, operations
or financial condition of Parent and its Subsidiaries, taken as a whole. Other
than in connection with or in compliance with the provisions of the Delaware
General Corporation Law, as amended, the Securities Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Xxxx-Xxxxx Act and
the securities or blue sky laws of the various states, no authorization,
consent or approval of, or filing with, any public body, court or authority is
necessary on the part of Parent for the consummation by Parent of the
transactions contemplated by this Agreement, except for such authorizations,
consents, approvals and filings as to which the failure to obtain or make would
not, individually or in the aggregate, have a material adverse effect on the
business, operations or financial condition of Parent and its subsidiaries,
taken as a whole. Such representations and warranties shall be deemed to be
made again upon and as of the date of any and all Closing Dates under Section 3
of this Agreement.
(d) The authorized capital stock of Parent consists of 20,000,000 shares
of Parent Common Stock, of which, as of the date of this Agreement, 13,242,382
shares of Parent Common stock were issued and outstanding. All of the
outstanding shares of Parent Common Stock are validly issued and are fully
paid, nonassessable and free of preemptive rights. As of the date of this
Agreement, 486,785 shares of Parent Common Stock were reserved for issuance and
issuable upon or with the exercise of outstanding options. Except as disclosed
in Section 3.02 of the Parent Disclosure Schedule, between October 31, 1997 and
the date hereof, no shares of Parent's capital stock have been issued other
than pursuant to stock options already in existence and except for grants of
stock options to employees, officers and directors in the ordinary course of
business consistent with past practice, and between October 31, 1997 and the
date hereof, no other stock options have been granted. Except as set forth
above and as of the Effective Time, there are outstanding: (i) no shares of
capital stock or other voting
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securities of Parent; (ii) no securities of Parent or its Subsidiaries
convertible into or exchangeable for shares of capital stock, or voting
securities of Parent; (iii) no options, warrants, subscriptions, calls, rights
or other agreements to acquire from Parent or its Subsidiaries and no
obligation of Parent or its subsidiaries to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of Parent; and (iv) no equity equivalent interests or rights
to acquire equity equivalent interests in ownership or earnings of Parent or
its Subsidiaries or other similar rights (collectively, "Parent Securities").
As of the date hereof, there are no outstanding obligations of Parent or any of
its subsidiaries to purchase, redeem or otherwise acquire any Parent
Securities. Except as set forth in Section 3.02(a) of the Parent Disclosure
Schedule, there are no stockholder agreements, voting trusts or other
agreements or understandings to which Parent is a party or by which it is bound
relating to the voting of any shares of capital stock of Parent or other Parent
Securities, and to the knowledge of Parent, no such agreements have been
entered into by the stockholders of Parent.
(e) All of the outstanding capital stock of Parent's subsidiaries is owned
by Parent, directly or indirectly, free and clear of any Lien or any other
limitation or restriction (including any restriction on the right to vote or
sell the same except as may be provided as a matter of law). There are no
securities of Parent or its Subsidiaries convertible into or exchangeable for,
no options or other rights to acquire from Parent or its Subsidiaries and no
other contract, understanding, arrangement or obligation (whether or not
contingent) providing for, the issuance or sale, directly or indirectly, of any
capital stock or other ownership interests in or any other securities of any
subsidiary of Parent. There are no outstanding contractual obligations of
Parent or its Subsidiaries to repurchase, redeem or otherwise acquire any
outstanding shares of capital stock or other ownership interests in Parent or
in any subsidiary of Parent.
(f) The Parent Common Stock constitutes the only class of equity
securities of Parent or its Subsidiaries registered or required to be
registered under the Exchange Act.
(g) When issued to the Principal Stockholder upon exercise of the Option,
the shares of Parent Common Stock will be duly issued, fully paid and
nonassessable.
8. Representations and Warranties of the Principal Stockholder.
(a) The Principal Stockholder is the true and lawful owner of 100% of the
Option Shares set forth next to the name of the Principal Stockholder
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on the signature page to this Agreement with full power to vote and dispose of
such Option Shares and there are no restrictions on the Principal Stockholder's
voting rights or rights of disposition pertaining thereto except as set forth
in this Agreement or imposed by federal and state securities law. None of the
Option Shares is subject to any voting trust or other agreement or arrangement
with respect to the voting of such shares.
(b) The execution, delivery and performance by the Principal Stockholder
of this Agreement and the consummation of the transactions contemplated hereby,
do not and will not contravene or constitute a default under or give rise to a
right of termination, cancellation or acceleration of any material right or
obligation of the Principal Stockholder or to a loss of any material benefit of
the Principal Stockholder under any provision of applicable law or regulation
or of any agreement, judgment, injunction, order, decree or other instrument
binding on the Principal Stockholder.
(c) The execution, delivery and performance by the Principal Stockholder
of this Agreement and the consummation of the transactions contemplated by this
Agreement are within the Principal Stockholder's powers and have been duly
authorized by all necessary actions, if any, including all necessary actions by
the trustees, partners, members, officers, directors or shareholders, as
appropriate, of the Principal Stockholder, if the Principal Stockholder is
other than an individual.
(d) This Agreement constitutes a valid and binding agreement of the
Principal Stockholder, enforceable against the Principal Stockholder in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights
generally. If the Principal Stockholder is married and the Option Shares set
forth on the signature pages hereto next to the Principal Stockholder's name
constitute community property under applicable laws, this Agreement has been
duly authorized, executed and delivered by, and constitutes the valid and
binding agreement of, the Principal Stockholder's spouse, enforceable in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights
generally. If this Agreement is being executed in a representative or
fiduciary capacity, the person signing this Agreement has full power and
authority to enter into and perform this Agreement and has obtained any
necessary consents in connection with execution of this Agreement.
(e) The number of Option Shares set forth next to the name of the
Principal Stockholder on the signature page to this Agreement are the only
Option
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Shares owned by the Principal Stockholder. Except as set forth next to the
name of the Principal Stockholder on the signature page to this Agreement, the
Principal Stockholder owns no options to purchase or rights to subscribe for or
otherwise acquire any securities of the Company and has or have no other
interest in or voting rights with respect to any securities of the Company.
(f) No investment banker, broker, finder or other intermediary is or may
be entitled to a commission or fee from Parent, Acquisition, the Company or any
of their respective Subsidiaries in respect of this Agreement based upon any
arrangement or agreement made by or on behalf of the Principal Stockholder.
(g) Other than in connection with or in compliance with the provisions of
the Exchange Act and the Xxxx-Xxxxx Act, no authorization, consent or approval
of, or any filing with, any public body or authority is necessary for
consummation by him of the transactions contemplated by this Agreement.
(h) When delivered by the Principal Stockholder to Parent upon exercise of
the Option, good, valid and marketable title in and to the Option Shares will
be vested in Parent, free and clear of any claims, liens, encumbrances,
security interests and charges of any nature whatsoever. Such representations
and warranties shall be deemed to be made again upon and as of the date of any
and all Closing Dates under Section 3 of this Agreement.
9. Voting of Option Shares. At any meeting of the stockholders of the
Company, however called, and at every adjournment thereof, or in connection
with any written consent of the stockholders of the Company, the Principal
Stockholder will cause all of its Option Shares to be voted, during the term of
this Agreement, in favor of (i) the Merger and the approval and adoption of the
Merger Agreement, and (ii) all other transactions as to which stockholders of
the Company are called upon to vote to effectuate the Merger. The Principal
Stockholder agrees that during the term of this Agreement, the Principal
Stockholder shall attend or otherwise participate in all duly called
stockholder meetings and any adjournments thereof and in all actions by written
consent of stockholders.
10. No Proxies or Encumbrances. Other than as provided in this Agreement,
the Principal Stockholder, until the termination of this Agreement, shall not
(i) grant any proxies or enter into any voting trust or other agreement or
arrangement with respect to the voting of any of the Option Shares, (ii) sell,
assign, transfer, encumber or otherwise dispose of or enter into any contract,
option or other arrangement or understanding with respect to, the direct or
indirect sale, assignment, transfer, encumbrance or other disposition of any of
its Option
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Shares or any interest therein except for Permitted Transfers to Permitted
Transferees (as such terms are defined below) or (iii) seek or solicit any of
the foregoing. The Principal Stockholder shall notify Parent promptly and
provide all details requested by Parent if the Principal Stockholder shall be
approached or solicited, directly or indirectly, by any Person with respect to
any of the foregoing.
Each transfer of Option Shares to a Permitted Transferee shall constitute
a "Permitted Transfer" only if it is a transfer to a Permitted Transferee of
such Xxxxxxx Owner and, in the case of a Permitted Transferee, transfer to the
Xxxxxxx Owner who transferred such securities to the Permitted Transferee or to
other Permitted Transferees of such Xxxxxxx Owner; provided that, any such
Permitted Transferee shall enter into an agreement supplemental hereto,
consented to in writing by Parent, agreeing to be bound by the terms of this
Agreement; and provided further that no such transfer is in violation of
applicable federal or state securities laws.
11. No Solicitation. The Principal Stockholder shall not, during the term
of this Agreement, directly or indirectly encourage, solicit, participate in or
initiate discussions or negotiations with or provide any non-public information
to (or authorize any other Person to encourage, solicit, participate in or
initiate discussions or negotiations with or provide any non-public information
to) any Person or group (other than Parent and Acquisition or any designees of
Parent or Acquisition) concerning any Third Party Acquisition or any
Acquisition Proposal.
12. Dissenters' Rights. None of the Xxxxxxx Owners shall, nor shall the
Principal Stockholder permit any Xxxxxxx Owner to, give notice pursuant to the
NCBC of such Person's intent to demand payment for any Option Shares, or take
any other action to exercise dissenters' rights, if the Merger is effected.
13. Reasonable Efforts. During the term of this Agreement, the Principal
Stockholder shall use reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with
Parent in doing, all things necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the Merger and the
other transactions contemplated by the Merger Agreement and this Agreement,
including (i) the obtaining of all necessary actions or nonactions, waivers,
consents and approvals from Governmental Entities and the making of all
necessary registrations and filings (including any necessary filings under the
Xxxx-Xxxxx Act relating to the acquisition of the Company or relating to the
acquisition of Parent Common Stock in the Merger and all other necessary
filings with Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii)
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the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) cooperation in the defense of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging the Merger
Agreement or this Agreement or the consummation of any of the transactions
contemplated by the Merger Agreement and this Agreement, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed, and (iv) the execution and delivery of
any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, the Merger Agreement
and this Agreement.
14. Legend. Simultaneously with the execution of this Agreement, the
Principal Stockholder shall cause all certificates representing Option Shares
to bear in a conspicuous place the following legend:
"The Shares represented by the within certificate may not be sold,
exchanged or otherwise transferred or disposed of except in compliance
with the terms and conditions of that certain Stockholder Agreement dated
as of December 4, 1997, by and between Racing Champions Corporation and
the registered holder of the within Certificate."
15. Expenses. Except as otherwise provided, all costs and expenses
incurred in connection with herewith, this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
16. Amendment; Assignment. This Agreement may not be modified, amended,
altered or supplemented except by a writing signed by Parent and the Principal
Stockholder. Except for a Permitted Transfer as provided in Section 8, no
party to this Agreement may assign any of its rights or obligations under this
Agreement without the prior written consent of the other parties hereto, except
that the rights and obligations of Parent hereunder may be assigned by Parent
to any of its affiliates, but no such transfer shall relieve Parent of its
obligations hereunder if such transferee does not perform such obligations.
17. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and, except as
otherwise provided in this Agreement, shall be deemed to have been duly given
if so given) if delivered in person, by cable, telegram or telex, or sent by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties as follows:
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If to the Principal Stockholder:
Xx. Xxxxxx X. Xxxxxxx, Xx.
c/o Wheels Sports Group, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
with a copy to:
Berliner Xxxxxx Xxxxxx & Xxxxxxxx, P.C.
0000 Xxxxxxx Xx., Xxxxx 0000
Xxxxxx, XX 00000
fax: 000-000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
If to Parent:
Racing Champions Corporation
000 Xxxxxxxxx Xxxx
Xxxxxxxx X, #000
Xxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxx
with a copy to:
Reinhart, Boerner, Van Deuren,
Xxxxxx & Rieselbach, s.c.
0000 Xxxxx Xxxxx Xxxxxx
X.X. Xxx 00000
Xxxxxxxxx, XX 00000-0000
Fax: 000-000-0000
Attention: Xxxxx X. Xxxxxx. Esq.
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
18. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original, but each of which together
shall constitute one and the same document.
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19. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of North Carolina, without
giving effect to the principles of conflicts of laws thereof.
20. Binding Effect. This Agreement shall be binding upon, inure to the
benefit of, and be enforceable by the heirs, personal representatives,
successors and assigns of the parties hereto. Nothing expressed or referred to
in this Agreement is intended or shall be construed to give any person other
than the parties to this Agreement, or their respective heirs, personal
representatives, successors or assigns, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
21. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof.
22. Termination. This Agreement shall terminate upon the earlier of (a)
the Effective Time (as defined in the Merger Agreement) and (b) the termination
of the Merger Agreement, provided that this Agreement shall not terminate until
45 days after the termination of the Merger Agreement in connection with an
occurrence of an Event (as defined). In the event of the termination of this
Agreement, this Agreement shall forthwith become void and there shall be no
liability on the part of either Parent or the Principal Stockholder under this
Agreement, except that no such termination shall affect the obligations of the
Principal Stockholder or Parent with respect to any prior exercise of the
Option.
23. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
24. Further Assurances. The Principal Stockholder and Parent will, upon
the request of the other, execute and deliver such documents and take such
action reasonably deemed by Parent or the Principal Stockholder, as the case
may be, to be necessary or desirable to more effectively complete and evidence
the sale and transfer of any Option Shares purchased by Parent pursuant to this
Agreement.
25. Miscellaneous. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections, subsections
14
15
and clauses refer to Sections, subsections and clauses of this Agreement unless
otherwise stated.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
RACING CHAMPIONS CORPORATION
By: /s/ Xxxxxx X. Xxxx
------------------------------
Xxxxxxx Owners:
/s/ Xxxxxx X. Xxxxxxx, Xx.
-------------------------------------
Xxxxxx X. Xxxxxxx, Xx.
Xxxxxxx Owners: Number of Shares Number of Options/Warrants
---------------- --------------------------
Xx. Xxxxxx X. Xxxxxxx, Xx. 689,737 232,500
15
16
Annex I
1. The Merger has not been consummated by April 30, 1998, unless the failure
to so consummate the Merger by such date shall have been caused by the
action or failure to act of Parent, which action or failure to act
constitutes a breach of the Merger Agreement.
2. There has been a material breach of any representation or warranty of the
Company set forth in the Merger Agreement and the Company has not cured
such breach within 20 business days after written notice of such breach is
given by Parent to the Company.
3. The Company Board (x) withdraws or modifies in a manner adverse to Parent
or Acquisition its recommendation or approval with respect to the
Agreement or the Merger, (y) makes any recommendation with respect to a
Third Party Acquisition (including making no recommendation or stating an
inability to make a recommendation), other than a recommendation to reject
such Third Party Acquisition, or (z) takes any action prohibited by
Section 4.03.
4. Any Third Party Acquisition occurs or the Company or any of its
subsidiaries or Affiliates enters into any agreement with respect to a
Third Party Acquisition.
5. The Company shall have convened a meeting of its stockholders to vote
upon the Merger and shall have failed to obtain the requisite vote of its
stockholders at such meeting (including any adjournments thereof) or the
Company fails to convene such a meeting by April 30, l998.
