1
EXHIBIT 10.2
WARRANT AGREEMENT
------------
RACING CHAMPIONS CORPORATION
AND
BANKBOSTON, N.A.
WARRANT AGENT
AUGUST 5, 1998
------------
2
WARRANT AGREEMENT
THIS AGREEMENT dated as of August 5, 1998, between Racing Champions
Corporation, a Delaware corporation (the "Company"), and BankBoston, N.A. (the
"Warrant Agent").
WHEREAS:
In connection with a public offering (the "Public Offering"), Wheels Sports
Group, Inc., a North Carolina corporation ("Wheels"), issued 1,035,000 shares
(the "Shares") of Common Stock of Wheels, $.01 par value ("Wheels Common Stock")
and 1,035,000 warrants ("Wheels Warrants"), each two Wheels Warrants entitling
the Registered Owner thereof to purchase one share of Wheels Common Stock, or an
aggregate of 517,500 shares of Wheels Common Stock on exercise of all Wheels
Warrants; and
Pursuant to the Amended and Restated Agreement and Plan of Merger, dated as
of December 4, 1997 (the "Merger Agreement"), among the Company, WSG
Acquisition, Inc., a North Carolina corporation and a wholly owned subsidiary of
the Company ("Acquisition"), and Wheels, Acquisition was merged (the "Merger")
effective June 12, 1998 with and into Wheels, with Wheels being the surviving
corporation and becoming a wholly owned subsidiary of the Company, and each
share of Wheels Common Stock issued and outstanding at the effective time of the
Merger was converted into the right to receive 0.51 shares (the "Exchange
Ratio") of Common Stock, par value $0.01, of the Company (the "Common Stock");
and
Pursuant to the Merger Agreement and the Warrant Agreement, dated as of
April 16, 1997 (the "Old Warrant Agreement"), between Wheels and American
Securities Transfer & Trust, Inc. (the "Old Warrant Agent"), upon the effective
time of the Merger, the Wheels Warrant were converted into warrants to purchase
shares of Common Stock (the "Warrants"), with each two Warrants entitling the
Registered Owner thereof to purchase 0.51 shares of Common Stock, or an
aggregate of 263,925 shares of Common Stock on exercise of all Warrants; and
3
The Company has provided notice to the Old Warrant Agent terminating its
services pursuant to the Old Warrant Agreement and desires to enter into this
Agreement with the Warrant Agent to supercede the Old Warrant Agreement and to
provide for the issuance, registration, transfer, exchange and exercise of
certificates (the "Warrant Certificates") representing Warrants and for the
exercise of the Warrants;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth and for the purpose of defining the terms and provisions
of the Warrant Certificates and the Warrants, and the respective rights and
obligations thereunder of the Company, the registered holders of the Warrant
Certificates and the Warrant Agent, the parties hereto agree as follows:
l. Definitions. As used herein:
(a) "Common Stock" shall mean Common Stock, $.01 par value per share,
of the Company, whether now or hereafter authorized, holders of which have the
right to participate in the distribution of earnings and assets of the Company
without limit as to amount or percentage.
(b) "Corporate Office" shall mean the place of business of the
Warrant Agent (or its successor) located in Canton, Massachusetts, which office
is presently located at 000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
(c) "Effective Date" shall mean April 16, 1997, the date on which
Wheels' Registration Statement was declared effective by the Securities and
Exchange Commission.
(d) "Exercise Date" shall mean the date of surrender for exercise of
any Warrant Certificate, provided the exercise form on the back of the Warrant
Certificate or a form substantially similar thereto has been completed in full
by the Registered Owner or a duly appointed attorney and the Warrant Certificate
is accompanied by payment in full of the Exercise Price.
(e) "Exercise Period" shall mean the period commencing on the
Effective Date and extending to and through the Expiration Date.
2
4
(f) "Exercise Price" shall mean a purchase price of $13.88 per share
of Common Stock; provided, however, that in the event the Company reduces the
Exercise Price in accordance with Section 9(i) hereof, the Exercise Price shall
be as established by the Company in accordance with such Section.
(g) "Expiration Date" shall mean 5:00 P.M. Eastern Standard or
Daylight Time on the last day of the 5 year period commencing on the Effective
Date, subject to the terms provided in Section 5 herein for redemption and
subject to extension by the Board of Directors of the Company; provided however,
if such date shall be a holiday or a day on which banks are authorized to close,
then Expiration Date shall mean 5:00 p.m., Eastern Standard or Daylight Time on
the next following day which in the State of Colorado is not a holiday or a day
on which banks are authorized to close. The Expiration Date may be extended from
time to time, by resolution of the Board of Directors of the Company, to a later
date upon giving notice to the Warrant Agent and the Registered Owners;
provided, however, that notice to the Registered Owners of an extension of the
Expiration Date may be made by publication or by release to Dow Xxxxx, X.X.
Newswire or other means of general distribution. If the Company redeems the
Warrants as provided in Section 5 of this agreement, the Expiration Date shall
be the date fixed for redemption.
(h) "Registered Owner" shall mean the person in whose name any
Warrant Certificate shall be registered on the books maintained by the Warrant
Agent pursuant to Section 6 of this Agreement.
(i) "Registration Statement" shall mean Wheels' Registration
Statement on Form SB-2 (S.E.C. File No. 333-6340), as amended.
(j) "Subsidiary" shall mean any corporation of which shares having
ordinary voting power to elect a majority of the Board of Directors of such
corporation (regardless of whether the shares of any other class or classes of
such corporation shall have or may have voting power by reason of the happening
of any contingency) is at the time directly or indirectly owned by the Company
or one or more subsidiaries of the Company.
3
5
(k) "Warrant" or the "Warrants" shall mean and include up to
1,035,000 Warrants to purchase 263,295 authorized and unissued shares of Common
Stock.
(l) "Warrant Agent" shall mean BankBoston, N.A. (or its service agent
Boston EquiServe Limited Partnership), or its successor, as the transfer agent
and registrar of the Warrants.
(m) "Warrant Shares" shall mean and include up to 263,295 authorized
and unissued shares of Common Stock reserved for issuance on exercise of the
Warrants, and unless otherwise noted, shall include any additional shares of
Common Stock or other property which may hereafter be issuable or deliverable on
exercise of the Warrants pursuant to Section 9 of this Agreement.
2. Warrants and Issuance of Warrant Certificates. Each two Warrants shall
initially entitle the Registered Owner of the Warrant Certificates representing
such Warrants to purchase 0.51 shares of Common Stock on exercise thereof,
subject to modification and adjustment as hereinafter provided in Section 9.
Warrant Certificates representing the Warrants shall be executed by the proper
officers of the Company and delivered to the Warrant Agent for countersignature.
The Warrant Agent shall deliver Warrant Certificates in required whole number
denominations to the persons entitled thereto in connection with any transfer or
exchange permitted under this Agreement.
Except as provided in Section 8 hereof, share certificates representing the
Warrant Shares shall be issued only on or after the Exercise Date on exercise of
the Warrants or on transfer or exchange of the Warrant Shares. The Warrant
Agent, if other than the Company's Transfer Agent, shall arrange with the
Transfer Agent for the issuance and registration of all Warrant Shares.
3. Form and Execution of Warrant Certificates. The Warrant Certificates
shall be substantially in the form attached as Exhibit "A" and may have such
letters, numbers or other marks of identification and such legends, summaries or
endorsements printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement.
The Warrant Certificates shall be dated as of the date of issuance, whether on
initial issuance, transfer, exchange or in lieu of mutilated, lost, stolen or
destroyed Warrant Certificates.
4
6
The Warrant Certificates shall be executed on behalf of the Company by its
Chief Executive Officer or President and by its Secretary, by manual signatures
or by facsimile signatures printed thereon. The Warrant Certificates shall be
manually countersigned by the Warrant Agent and shall not be valid for any
purpose unless so countersigned. In the event any officer of the Company who
executed the Warrant Certificates shall cease to be an officer of the Company
before the date of issuance of the Warrant Certificates or before
countersignature and delivery by the Warrant Agent, such Warrant Certificates
may be countersigned, issued and delivered by the Warrant Agent with the same
force and effect as though the person who signed such Warrant Certificates had
not ceased to be an officer of the Company.
4. Exercise. The exercise of Warrants in accordance with this Agreement
shall only be permitted during the Exercise Period.
Warrants shall be deemed to have been exercised immediately prior to the
close of business on the Exercise Date. The exercise form shall be executed by
the Registered Owner thereof or his attorney duly authorized in writing and
shall be delivered together with payment to the Warrant Agent, in cash or by
official bank or certified check, of an amount in lawful money of the United
States of America. Such payment shall be in an amount equal to the Exercise
Price as hereinabove defined.
The person entitled to receive the number of Warrant Shares deliverable on
such exercise shall be treated for all purposes as the Registered Owner of such
Warrant Shares as of the close of business on the Exercise Date. The Company
shall not be obligated to issue any fractional share interests in Warrant
Shares. If Warrants represented by more than one Warrant Certificate shall be
exercised at one time by the same Registered Owner, the number of full Warrant
Shares which shall be issuable on exercise thereof shall be computed on the
basis of the aggregate number of full Warrant Shares issuable on such exercise.
As soon as practicable on or after the Exercise Date and in any event
within 30 days after such date, the Warrant Agent shall cause to be issued and
delivered by the Transfer Agent to the person or persons entitled to receive the
same, a certificate or certificates for the number of Warrant Shares deliverable
on such exercise. No adjustment shall be made in respect of cash dividends on
Warrant Shares deliverable on
5
7
exercise of any Warrant. The Warrant Agent shall promptly notify the Company
in writing of any exercise and of the number of Warrant Shares caused to
be delivered and shall cause payment of an amount in cash equal to the Exercise
Price to be made promptly to the order of the Company. The parties contemplate
such payments will be made by the Warrant Agent to the Company on a weekly basis
and will consist of collected funds only. The Warrant Agent shall hold any
proceeds collected and not yet paid to the Company in a Federally-insured escrow
account at a commercial bank selected by agreement of the Company and the
Warrant Agent, at all times relevant hereto. Following a determination by the
Warrant Agent that collected funds have been received, the Warrant Agent shall
cause the Transfer Agent to issue share certificates representing the number of
Warrant Shares purchased by the Registered Owner.
Expenses incurred by the Warrant Agent, including administrative costs,
costs of maintaining records and other expenses, shall be paid by the Company
according to the standard fees imposed by the Warrant Agent for such services.
All expenses incurred by the Warrant Agent and to be paid by the Company shall
be deducted from the Escrow Account prior to distribution of funds to the
Company.
A detailed accounting statement setting forth the number of Warrants
exercised, the number of Warrant Shares issued, the net amount of exercised
funds and all expenses incurred by the Warrant Agent shall be transmitted to the
Company on payment of each exercise amount. Such accounting statement shall
serve as an interim accounting for the Company during the Exercise Period. The
Warrant Agent shall render to the Company, at the completion of the Exercise
Period, a complete accounting setting forth the number of Warrants exercised,
the identity of persons exercising such Warrants, the number of Warrant Shares
issued, the amounts distributed to the Company, and all expenses incurred by the
Warrant Agent.
The Company may be required to deliver a prospectus that satisfies the
requirements of Section 10 of the Securities Act of 1933, as amended (the "1933
Act") with delivery of the Warrant Shares and must have a registration statement
(or a post-effective amendment to an existing registration statement) effective
under the 1933 Act in order for the Company to comply with any such prospectus
delivery requirements. The Company will advise the Warrant Agent of the status
of any such registration statement under the 1933 Act and of the effectiveness
of the Company's registration statement or lapse of effectiveness.
6
8
No issuance of Warrant Shares shall be made unless there is an effective
registration statement under the 1933 Act, and registration or qualification of
the Warrant Shares, or an exemption therefrom, has been obtained from state or
other regulatory authorities in the jurisdiction in which such Warrant Shares
are sold. The Company will provide to the Warrant Agent written confirmation of
all such registration or qualification, or an exemption therefrom, when
requested by the Warrant Agent.
5. Redemption. Commencing one year from the Effective Date, the Company
may, at its option, redeem the Warrant in whole, but not in part, for a
redemption price of $.05 per Warrant, on not less than 30 days' notice to the
Registered Owners. The right to redeem the Warrants may be exercised by the
Company following such one year period and during the Exercise Period only in
the event (i) the closing bid price for Company's shares of Common Stock has
equaled or exceeded $17.35 (125% of the Warrant Exercise Price) for 20
consecutive trading days, (ii) any notice of the call for redemption is given
not more than five (5) business days after the conclusion of the 20 consecutive
trading days referred to in the foregoing (i), (iii) the Company has a
registration statement (or a post-effective amendment to an existing
registration statement) pertaining to the Warrant Shares effective with the
Securities and Exchange Commission, which registration statement would enable a
Registered Owner to exercise the Warrants, and (iv) the expiration of the 30 day
notice period is within the Exercise Period. In the event the Company exercises
its right to redeem the Warrants, the Expiration Date will be deemed to be, and
the Warrants will be exercisable until the close of business on, the date fixed
for redemption in such notice. If any Warrant called for redemption is not
exercised by such time, it will cease to be exercisable and the Registered Owner
thereof will be entitled only to the redemption price.
6. Reservation of Shares and Payment of Taxes. The Company covenants that
it will at all times reserve and have available from its authorized shares of
Common Stock such number of shares of Common Stock as shall then be issuable on
exercise of all outstanding Warrants. The Company covenants that all Warrant
Shares issuable shall be duly and validly issued, fully paid and nonassessable,
and free from all taxes, liens and charges with respect to the issue thereof
The Registered Owner shall pay all documentary, stamp or similar taxes and
other government charges that may be imposed with respect to the issuance of the
Warrants, or
7
9
the issuance, transfer or delivery of any Warrant Shares on exercise of the
Warrants. In the event the Warrant Shares are to be delivered in a name other
than the name of the Registered Owner of the Warrant Certificates, no such
delivery shall be made unless the person requesting the same has paid to the
Warrant Agent or Transfer Agent the amount of any such taxes or charges incident
thereto.
The Company will supply the Warrant Agent with blank Warrant Certificates,
so as to maintain an inventory satisfactory to the Warrant Agent. The Company
will file with the Warrant Agent a statement setting forth the name and address
of its Transfer Agent for Warrant Shares and of each successor Transfer Agent,
if any.
7. Registration of Transfer. The Warrant Certificates may be transferred
in whole or in part and may be separately transferred from the Common Stock
share certificate to which such Warrant Certificate is attached upon initial
issuance, if any, at any time during the Exercise Period. Warrant Certificates
to be exchanged shall be surrendered to the Warrant Agent at its corporate
office. The Company shall execute and the Warrant Agent shall countersign, issue
and deliver in exchange therefor, the Warrant Certificate or Certificates which
the holder making the transfer shall be entitled to receive.
The Warrant Agent shall keep transfer books at its corporate office on
which Warrant Certificates and the transfer thereof shall be registered. On due
presentment for registration of transfer of any Warrant Certificate at such
office, the Company shall execute and the Warrant Agent shall issue and deliver
to the transferee or transferees a new Warrant Certificate or Certificates
representing an equal aggregate number of Warrants.
All Warrant Certificates presented for registration of transfer or exercise
shall be duly endorsed or be accompanied by a written instrument or instruments
of transfer in form satisfactory to the Company and the Warrant Agent.
Prior to due presentment for registration of transfer thereof, the Company
and the Warrant Agent may treat the Registered Owner of any Warrant Certificate
as the absolute owner thereof (notwithstanding any notations of ownership or
writing thereon made by anyone other than the Company or the Warrant Agent) and
the parties hereto shall not be affected by any notice to the contrary.
8
10
8. Loss or Mutilation. On receipt by the Company and the Warrant Agent of
evidence satisfactory as to the ownership of and the loss, theft, destruction or
mutilation of any Warrant Certificate, the Company shall execute and the Warrant
Agent shall countersign and deliver in lieu thereof, a new Warrant Certificate
representing an equal aggregate number of Warrants. In the case of loss, theft
or destruction of any Warrant Certificate, the Registered Owner requesting
issuance of a new Warrant Certificate shall be required to secure an indemnity
bond in favor of the Company and Warrant Agent in an amount satisfactory to each
of them. In the event a Warrant Certificate is mutilated, such Certificate shall
be surrendered and canceled by the Warrant Agent prior to delivery of a new
Warrant Certificate. Applicants for a substitute Warrant Certificate shall also
comply with such other regulations and pay such other reasonable charges as the
Company may prescribe.
9. Adjustment of Exercise Price and Shares.
(a) If at any time prior to the expiration of the Warrants by their
terms or by exercise, the Company increases or decreases the number of its
issued and outstanding shares of Common Stock, or changes in any way the rights
and privileges of such shares of Common Stock, by means of (i) the payment of a
share dividend or the making of any other distribution on such shares of Common
Stock payable in its shares of Common Stock, (ii) a split or subdivision of
shares of Common Stock, or (iii) a consolidation or combination of shares of
Common Stock, then the Exercise Price in effect at the time of such action and
the number of Warrants required to purchase each Warrant Share at that time
shall be proportionately adjusted so that the numbers, rights and privileges
relating to the Warrant Shares then purchasable upon the exercise of the
Warrants shall be increased, decreased or changed in like manner, for the same
aggregate purchase price set forth in the Warrants, as if the Warrant Shares
purchasable upon the exercise of the Warrants immediately prior to the event had
been issued, outstanding, fully paid and nonassessable at the time of that
event. Any dividend paid or distributed on the shares of Common Stock in shares
of any other class of shares of the Company or securities convertible into
shares of Common Stock shall be treated as a dividend paid in shares of Common
Stock to the extent shares of Common Stock are issuable on the payment or
conversion thereof.
9
11
(b) In the event, prior to the expiration of the Warrants by exercise
or by their terms, the Company shall be recapitalized by reclassifying its
outstanding shares of Common Stock into shares with a different par value, or by
changing its outstanding shares of Common Stock to shares without par value or
in the event of any other material change in the capital structure of the
Company or of any successor corporation by reason of any reclassification,
recapitalization or conveyance, prompt, proportionate, equitable, lawful and
adequate provision shall be made whereby any Registered Owner of the Warrants
shall thereafter have the right to purchase, on the basis and the terms and
conditions specified in this Agreement, in lieu of the Warrant Shares
theretofore purchasable on the exercise of any Warrant, such securities or
assets as may be issued or payable with respect to or in exchange for the number
of Warrant Shares theretofore purchasable on exercise of the Warrants had such
reclassification, recapitalization or conveyance not taken place; and in any
such event, the rights of any Registered Owner of a Warrant to any adjustment in
the number of Warrant Shares purchasable on exercise of such Warrant, as set
forth above, shall continue and be preserved in respect of any stock, securities
or assets which the Registered Owner becomes entitled to purchase.
(c) In the event the Company, at any time while the Warrants shall
remain unexpired and unexercised, shall sell all or substantially all of its
property, or dissolves, liquidates or winds up its affairs, prompt,
proportionate, equitable, lawful and adequate provision shall be made as part of
the terms of such sale, dissolution, liquidation or winding up such that the
Registered Owner of a Warrant may thereafter receive, on exercise thereof, in
lieu of each Warrant Share which he would have been entitled to receive, the
same kind and amount of any stock, securities or assets as may be issuable,
distributable or payable on any such sale, dissolution, liquidation or winding
up with respect to each share of Common Stock of the Company; provided, however,
that in the event of any such sale, dissolution, liquidation or winding up, the
right to exercise the Warrants shall terminate on a date fixed by the Company,
such date to be not earlier than 5:00 P.M., Eastern Time, on the 30th day next
succeeding the date on which notice of such termination of the right to exercise
the Warrants has been given by mail to the Registered Owners thereof at such
addresses as may appear on the books of the Company.
(d) In the event prior to the expiration of the Warrants by exercise
or by their terms, the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to purchase its shares of Common Stock
at a price per share
10
12
more than 10% below the then-current market price per share (as defined below)
at the date of taking such record, then, (i) the number of Warrant Shares
purchasable pursuant to the Warrants shall be redetermined as follows: the
number of Warrant Shares purchasable pursuant to a Warrant immediately prior to
such adjustment (taking into account fractional interests to the nearest 1,000th
of a share) shall be multiplied by a fraction, the numerator of which shall be
the number of shares of Common Stock of the Company outstanding (excluding
shares of Common Stock then owned by the Company) immediately prior to the
taking of such record, plus the number of additional shares offered for
purchase, and the denominator of which shall be the number of shares of Common
Stock of the Company outstanding (excluding shares of Common Stock owned by the
Company) immediately prior to the taking of such record, plus the number of
shares which the aggregate offering price of the total number of additional
shares so offered would purchase at such current market price; and (ii) the
Exercise Price per Warrant Share purchasable pursuant to a Warrant shall be
redetermined as follows: the Exercise Price in effect immediately prior to the
taking of such record shall be multiplied by a fraction, the numerator of which
is the number of Warrant Shares purchasable immediately prior to the taking of
such record, and the denominator of which is the number of Warrant Shares
purchasable immediately after the taking of such record as determined pursuant
to clause (i) above; provided, however, (i) that any adjustment in the number of
shares issuable as set forth above shall be effective only to the extent
sufficient shares of Common Stock have been registered through a registration
statement effective under the 1933 Act, and (ii) that any adjustment in the
Exercise Price does not cause the Company to receive proceeds in excess of the
amount authorized by any such registration statement. For the purpose hereof,
the current market price per share at any date shall be deemed to be the average
of (i) the highest bid-and-asked prices as reported by The NASDAQ Stock Market,
Inc. if the Common Stock is quoted thereon, or (ii) if no such quotation is
available, the average of the mean between the bid and asked prices as quoted by
any two independent persons or entities making a market for the Common Stock.
Such bid and asked prices shall be for 10 consecutive business days commencing
30 business days prior to the record date.
(e) On exercise of the Warrants by the Registered Owners, the Company
shall not be required to deliver fractions of Warrant Shares; provided, however,
that the Company shall make prompt, proportionate, equitable, lawful and
adequate provisions in respect of any such fraction of one Warrant Share either
on the basis of adjustment in the then applicable Exercise Price or a purchase
of the fractional interest at
11
13
the price of the Company's shares of Common Stock or such other reasonable basis
as the Company may determine.
(f) In the event, prior to expiration of the Warrants by exercise or
by their terms, the Company shall determine to take a record of the holders of
its shares of Common Stock for the purpose of determining shareholders entitled
to receive any stock dividend, distribution or other right which will cause any
change or adjustment in the number, amount, price or nature of the shares of
Common Stock or other stock, securities or assets deliverable on exercise of the
Warrants pursuant to the foregoing provisions, the Company shall give to the
Registered Owners of the Warrants at the addresses as may appear on the books of
the Company at least 30 days' prior written notice to the effect that it intends
to take such a record provided, however, that notice to the Registered Owners of
an extension of the Expiration Date may be made by publication or by release to
Dow Xxxxx, X.X. Newswire or other means of general distribution. Such notice
shall specify the date as of which such record is to be taken; the purpose for
which such record is to be taken; and the number, amount, price and nature of
the shares of Common Stock or other stock, securities or assets which will be
deliverable on exercise of the Warrants after the action for which such record
will be taken has been completed. Without limiting the obligation of the Company
to provide notice to the Registered Owners of the Warrants of any corporate
action hereunder, the failure of the Company to give notice shall not invalidate
such corporate action of the Company.
(g) The Warrants shall not entitle the Registered Owner thereof to
any of the rights of shareholders or to any dividend declared on the shares of
Common Stock unless the Warrant is exercised and the Warrant Shares purchased
prior to the record date fixed by the Board of Directors of the Company for the
determination of holders of shares of Common Stock entitled to such dividend or
other right.
(h) No adjustment of the Exercise Price shall be made as a result of
or in connection with (i) the issuance of shares of Common Stock of the Company
pursuant to options, warrants, employee stock ownership plans and share purchase
agreements outstanding or in effect on the date hereof, (ii) the establishment
of additional option plans of the Company, the modification, renewal or
extension of any plan now in effect or hereafter created, or the issuance of
shares of Common Stock on exercise of any options pursuant to such plans, and
(iii) the issuance of shares of Common Stock in
12
14
connection with compensation arrangements for officers, employees or agents of
the Company or any subsidiary, and the like.
(i) The Company shall be empowered, in the sole and unconditional
discretion of the Board of Directors, at any time during the Exercise Period, to
reduce the applicable Exercise Price of the Warrants. Any such reduction in the
applicable Exercise Price shall be effective upon written notice to the Warrant
Agent, which notice shall be given pursuant to a duly and validly authorized
resolution of the Board of Directors of the Company. Any such reduction in the
Exercise Price shall not entitle the Registered Owners to issuance of any
additional Common Shares pursuant to the adjustment provisions set forth
elsewhere herein, regardless of whether the reduction in the Exercise Price was
effected either prior to or following exercise of Warrants by the Registered
Owners thereof. A nonexercising Registered Owner shall have no remedy or rights
to receive any additional Warrant Shares as a result of any reduction in any
applicable Exercise Price pursuant to this subsection.
(j) In the event, prior to the expiration of the Warrants by exercise
or by their terms, of any merger of the Company with or into another entity (the
"Successor Corporation") then, in such event, as condition to such merger, the
Company or the Successor Corporation, as the case may be, shall make prompt,
proportionate, equitable, lawful and adequate provision whereby any Registered
Owner of the Warrants shall thereafter have the right to purchase, on the basis
and the terms and conditions specified in this Agreement, in lieu of the Warrant
Shares theretofore purchasable on the exercise of any Warrant, such securities
or assets as may be issued or payable with respect to or in exchange for the
number of Warrant Shares theretofore purchasable on exercise of the Warrants had
such merger not taken place; and in any such event, the rights of any Registered
Owner of a Warrant to any adjustment in the number of Warrant Shares purchasable
on exercise of such Warrant, as set forth above, shall continue and be preserved
in respect of any stock, securities or assets which the Registered Owner becomes
entitled to purchase as a result of such merger. Subject to confirmation by the
Company to the Warrant Agent that the merger will not result in the receipt by
stockholders of any stock dividend, distribution or other rights which would
require prior notice to the Registered Owners of the Warrants of a record date
taken for such purpose, then, in such event, no prior notice of the intent to
take a record with respect to such merger shall be required to be given by the
Company to the Registered Owners of the Warrants. The Company shall instruct the
Warrant Agent to forward copies of the proxy
13
15
statement for any special or annual meeting of stockholders to the Registered
Owners of the Warrants in order to provide such Registered Owners notice of any
merger, which notice for all purposes shall be deemed adequate notice to the
Registered Owners of the Warrants of such merger.
10. Duties, Compensation and Termination of Warrant Agent. The Warrant
Agent shall act hereunder as agent and in a ministerial capacity for the
Company, and its duties shall be determined solely by the provisions hereof. The
Warrant Agent shall not, by issuing and delivering Warrant Certificates or by
any other act hereunder, be deemed to make any representations as to the
validity, value or authorization of the Warrant Certificate or the Warrants
represented thereby or of the Warrant Shares or other property delivered on
exercise of any Warrant. The Warrant Agent shall not be under any duty or
responsibility to any holder of the Warrant Certificates to make or cause to be
made any adjustment of the Exercise Price or to determine whether any fact
exists which may require any such adjustments.
The Warrant Agent shall not (i) be liable for any recital or statement of
fact contained herein or for any action taken or omitted by it in reliance on
any Warrant Certificate or other document or instrument believed by it in good
faith to be genuine and to have been signed or presented by the proper party or
parties, (ii) be responsible for any failure on the part of the Company to
comply with any of its covenants and obligations contained in this Agreement or
in the Warrant Certificates, or (iii) be liable for any act or omission in
connection with this Agreement except for its own negligence or willful
misconduct.
The Warrant Agent may at any time consult with counsel satisfactory to it
(who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken or omitted by it in good faith in accordance
with the opinion or advice of such counsel.
Any notice, statement, instruction, request, direction, order or demand of
the Company shall be sufficiently evidenced by an instrument signed by its
President and attested by its Secretary or Assistant Secretary. The Warrant
Agent shall not be liable for any action taken or omitted by it in accordance
with such notice, statement, instruction, request, direction, order or demand.
14
16
The Company agrees to pay the Warrant Agent reasonable compensation for its
services hereunder and to reimburse the Warrant Agent for its reasonable
expenses. The Company further agrees to indemnify the Warrant Agent against any
and all losses, expenses and liabilities, including judgments, costs and counsel
fees, for any action taken or omitted by the Warrant Agent in the execution of
its duties and powers hereunder, excepting losses, expenses and liabilities
arising as a result of the Warrant Agent's negligence or willful misconduct.
The Warrant Agent may resign its duties or the Company may terminate the
Warrant Agent and the Warrant Agent shall be discharged from all further duties
and liabilities hereunder (except liabilities arising as a result of the Warrant
Agent's own negligence or willful misconduct) on 30 days' prior written notice
to the other party. At least 12 days prior to the date such resignation is to
become effective, the Warrant Agent shall cause a copy of such notice of
resignation to be mailed to the Registered Owner of each Warrant Certificate. On
such resignation or termination, the Company shall appoint a new Warrant Agent.
If the Company shall fail to make such appointment within a period of 30 days
after it has been notified in writing of the resignation by the Warrant Agent,
then the Registered Owner of any Warrant Certificate may apply to any court of
competent jurisdiction for the appointment of a new Warrant Agent. Any new
Warrant Agent, whether appointed by the Company or by such court, shall be a
bank or trust company having a capital and surplus, as shown by its last
published report to its shareholders, of not less than $1,000,000, and having
its principal office in the United States.
After acceptance in writing of an appointment of a new Warrant Agent is
received by the Company, such new Warrant Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
herein as the Warrant Agent, without any further assurance, conveyance, act or
deed; provided, however, if it shall be necessary or expedient to execute and
deliver any further assurance, conveyance, act or deed, the same shall be done
at the expense of the Company and shall be legally and validly executed. The
Company shall file a notice of appointment of a new Warrant Agent with the
resigning Warrant Agent and shall forthwith cause a copy of such notice to be
mailed to the Registered Owner of each Warrant Certificate.
Any corporation into which the Warrant Agent or any new Warrant Agent may
be converted or merged, or any corporation resulting from any consolidation to
which the
15
17
Warrant Agent or any new Warrant Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Warrant Agent shall be a
successor Warrant Agent under this Agreement, provided that such corporation is
eligible for appointment as a successor to the Warrant Agent. Any such successor
Warrant Agent shall promptly cause notice of its succession as Warrant Agent to
be mailed to the Company and to the Registered Owner of each Warrant
Certificate. No further action shall be required for establishment and
authorization of such successor Warrant Agent.
The Warrant Agent, its officers or directors and it subsidiaries or
affiliates may buy, hold or sell Warrants or other securities of the Company and
otherwise deal with the Company in the same manner and to the same extent and
with like effect as though it were not the Warrant Agent. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the Company.
11. Modification of Agreement. The Warrant Agent and the Company may by
supplemental agreement make any changes or corrections in this Agreement they
shall deem appropriate to cure any ambiguity or to correct any defective or
inconsistent provision or mistake or error herein contained. Additionally, the
parties may make any changes or corrections deemed necessary which shall not
adversely affect the interests of the Registered Owners of Warrant Certificates;
provided, however, this Agreement shall not otherwise be modified, supplemented
or altered in any respect except with the consent in writing of the Registered
Owners of Warrant Certificates representing not less than a majority of the
Warrants outstanding. Additionally, no change in the number or nature of the
Warrant Shares purchasable on exercise of a Warrant or the Exercise Price
therefor shall be made without the consent in writing of the Registered Owner of
the Warrant Certificate representing such Warrant, other than such changes as
are specifically prescribed by this Agreement.
12. Notices. All notices, demands, elections, opinions or requests
(however characterized or described) required or authorized hereunder shall be
deemed given sufficiently in writing and sent by registered or certified mail,
return receipt requested and postage prepaid, or by tested telex, telegram or
cable to, in the case of the Company:
16
18
Racing Champions Corporation
000 Xxxxxxxxx Xxxx
Xxxxxxxx X, Xxxxx 000
Glen Ellyn, Illinois 60137
Attention: Chief Executive Officer
and in the case of the Warrant Agent:
BankBoston, N.A.
c/o Boston EquiServe Limited Partnership
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Client Administration
with a copy to:
Xxxxx X. Xxxxxx, Esq.
Reinhart, Boerner, Van Deuren, Xxxxxx &
Rieselbach, s.c.
0000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
and if to the Registered Owner of a Warrant Certificate, at the address of such
Registered Owner as set forth on the books maintained by the Warrant Agent.
13. Persons Benefiting. This Agreement shall be binding upon and inure to
the benefit of the Company, the Warrant Agent and their respective successors
and assigns, and the Registered Owners and beneficial owners from time to time
of the Warrant Certificates. Nothing in this Agreement is intended or shall be
construed to confer on any other person any right, remedy or claim or to impose
on any other person any duty, liability or obligation.
14. Further Instruments. The parties shall execute and deliver any and all
such other instruments and shall take any and all such other actions as may be
reasonable or necessary to carry out the intention of this Agreement.
15. Severability. If any provision of this Agreement shall be held,
declared or pronounced void, voidable, invalid, unenforceable or inoperative for
any reason by any
17
19
court of competent jurisdiction, government authority or otherwise, such
holding, declaration or pronouncement shall not affect adversely any other
provision of this Agreement, which shall otherwise remain in full force and
effect and be enforced in accordance with its terms, and the effect of such
holding, declaration or pronouncement shall be limited to the territory or
jurisdiction in which made.
16. Waiver. All the rights and remedies of either party under this
Agreement are cumulative and not exclusive of any other rights and remedies as
provided by law. No delay or failure on the part of either party in the exercise
of any right or remedy arising from a breach of this Agreement shall operate as
a waiver of any subsequent right or remedy arising from a subsequent breach of
this Agreement. The consent of any party where required hereunder to any act or
occurrence shall not be deemed to be a consent to any other action or
occurrence.
17. General Provisions. This Agreement shall be construed and enforced in
accordance with, and governed by, the laws of the Commonwealth of Massachusetts.
Except as otherwise expressly stated herein, time is of the essence in
performing hereunder. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof, and this Agreement may not
be modified or amended or any term or provision hereof waived or discharged
except in writing signed by the party against whom such amendment, modification,
waiver or discharge is sought to be enforced. The headings of this Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning thereof. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above mentioned.
THE COMPANY:
RACING CHAMPIONS CORPORATION
By:
------------------------------------------
Xxxxxx X. Xxxx, Chief Executive Officer
18
20
THE WARRANT AGENT:
BANKBOSTON, N.A.
By:
------------------------------------------
Title:
---------------------------------------
ATTEST:
-----------------------------
Title:
-----------------------
19
