EXHIBIT 99.(G)
AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of November 6, 1998 by
and between Xxxxxxxx X. Xxxxxxx ("Xx. Xxxxxxx") and Coastcast Corporation, a
California corporation (the "Company"), and shall become effective subject to
and in accordance with Section 6.11 hereof.
RECITALS:
A. Xx. Xxxxxxx is the beneficial owner of 911,000 shares of common stock,
no par value, of the Company (the "Shares"). As used herein, the term
"beneficial owner" shall have the meaning set forth in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
B. Xx. Xxxxxxx has demanded a special meeting of shareholders of the
Company (the "Special Meeting") and commenced steps looking toward the
solicitation of proxies to be voted at such meeting.
C. Litigation is pending between the parties in the United States District
Court in Los Angeles, California, entitled Coastcast Corporation x. Xxxxxxx
--------------------------------
(Case No. 98-6625-WMB (Mcx), including certain counterclaims by Xx. Xxxxxxx
---------------------------
against the Company and Xxxx Xxxxxxx (the "Litigation").
D. In consideration of the representations and covenants of the Company
set forth herein, Xx. Xxxxxxx has agreed to withdraw his demand for a Special
Meeting; abandon all efforts to acquire shares of stock of the Company, solicit
proxies or affect control of the Company; settle the Litigation; and release
certain claims; on the terms and conditions hereinafter set forth.
E. In consideration of the representations and covenants of Xx. Xxxxxxx
set forth herein, the Company has agreed to make certain covenants; settle the
Litigation; and release certain claims; on the terms and conditions hereinafter
set forth.
AGREEMENTS:
SECTION 1. REPRESENTATIONS AND COVENANTS OF THE COMPANY. The Company
--------------------------------------------
hereby represents to Xx. Xxxxxxx and, during the term and subject to all of the
provisions hereof, hereby covenants as follows:
SECTION 1.1 STOCK OPTION REPRICING. The Company's employee stock option
----------------------
plan and non-employee director stock option plan have been amended by the board
of directors of the Company to prohibit repricing of outstanding stock options
without shareholder approval. No modification or withdrawal of such amendment
will be made without shareholder approval.
SECTION 1.2 COMPENSATION OF CHAIRMAN. Xxxx Xxxxxxx, the Chairman of the
------------------------
Board of the Company, has resumed the position and duties of Chief Executive
Officer of the Company. The annual salary rate of Xxxx Xxxxxxx has been
voluntarily reduced by him by 20%. No increase will be made in the salary rate
of Xx. Xxxxxxx until at least one year from the date hereof.
SECTION 1.3 RELINQUISHMENT OF SERP BENEFITS. Xxxx Xxxxxxx has voluntarily
-------------------------------
relinquished all of his benefits under the Company's supplemental executive
retirement plan (the "SERP"). Such benefits will not be restored without
shareholder approval.
SECTION 1.4 CURTAILMENT OF SERP. Xxxx Xxxxxxx has recommended to the
-------------------
board of directors of the Company curtailment or modification of the SERP to
reduce costs to the Company. A detailed proposal regarding any future SERP or
other benefits will be presented to the board of directors for evaluation and
possible implementation.
SECTION 1.5 ELECTION OF DIRECTORS. The authorized number of directors
---------------------
provided by the bylaws of the Company is seven and there are currently seven
directors. In the event of a vacancy on the board of directors prior to the
1999 annual meeting of shareholders of the Company and upon the effectiveness of
this Agreement pursuant to Section 6.11 hereof, Xx. Xxxxxxx will be elected
forthwith by the board of directors to fill such vacancy and to serve as a
director of the Company until the next annual meeting of shareholders and until
his successor is elected and qualifies. Thereafter, Xx. Xxxxxxx will be included
on the slate of director-nominees of the board of directors for election at the
1999 annual meeting of shareholders and at each subsequent annual meeting of
shareholders during the term of this Agreement for as long as Xx. Xxxxxxx
beneficially owns not less than 8% of the outstanding common stock of the
Company (as adjusted for any issuances of shares after the date hereof). In
addition to Xx. Xxxxxxx, the slate of director-nominees of the board of
directors for election at the 1999 annual meeting of shareholders and at each
subsequent annual meeting of shareholders during the term of this Agreement for
as long as Xx. Xxxxxxx beneficially owns not less than 8% of the outstanding
common stock of the Company (as adjusted for any issuances of shares after the
date hereof) shall include one person selected by the board of directors subject
to the approval of Xx. Xxxxxxx (the "Vannini-approved director"), which approval
will not unreasonably be withheld. If the Vannini-approved director ceases to
be a director after his or her election as a director and prior to an annual
meeting of shareholders at which directors are to be elected, the person elected
to fill the resulting vacancy on the board of directors shall be selected by the
board of directors subject to the approval of Xx. Xxxxxxx, which approval will
not unreasonably be withheld.
SECTION 1.6 STOCK REPURCHASE PROGRAM. The Company has been authorized by
------------------------
the board of directors to repurchase 457,000 shares of its outstanding common
stock in addition to shares which have already been repurchased by the Company.
The Company will continue to repurchase shares of its stock at such times and
such prices as management and the board of directors deem advantageous and
prudent.
SECTION 1.7 REIMBURSEMENT OF EXPENSES. Upon the effectiveness of this
-------------------------
Agreement, the Company will reimburse Xx. Xxxxxxx the sum of $400,000 for a
portion of
his expenses in connection with the Litigation and the Special Meeting.
SECTION 2. REPRESENTATIONS AND COVENANTS OF XX. XXXXXXX. Xx. Xxxxxxx
--------------------------------------------
hereby represents to, and covenants with, the Company as follows:
SECTION 2.1 OWNERSHIP OF SHARES. Xx. Xxxxxxx represents and warrants that
-------------------
he beneficially owns all of the Shares free and clear of interests of others
except for a lien held by Xxxxx Xxxxxx, Inc. for margin credit extended to Xx.
Xxxxxxx.
SECTION 2.2 ABANDONMENT OF SPECIAL MEETING AND PROXY SOLICITATION.
-----------------------------------------------------
Promptly following the effectiveness of this Agreement, Xx. Xxxxxxx shall take
all such action as may be necessary and appropriate to cause to be canceled and
withdrawn all demands made by him, or on his behalf in respect of the Shares,
pertaining to a special meeting of shareholders of the Company and inspection or
delivery of shareholder records of the Company, and terminate or cause to be
terminated all efforts to solicit proxies for such special meeting. Xx. Xxxxxxx
will not, directly or indirectly, acquire beneficial ownership of additional
shares or any other securities of the Company (collectively "Securities") which
would result in him beneficially owning more than 20% of the outstanding shares.
Any additional Securities acquired by Xx. Xxxxxxx will constitute Shares subject
to the provisions of this Agreement.
SECTION 2.3 VOTING OF SHARES. In connection with every future meeting of
----------------
shareholders of the Company during the term of this Agreement, Xx. Xxxxxxx shall
take all such action as may be necessary and appropriate so that all shares of
the Company owned beneficially, directly or indirectly, by him are voted for and
against each proposal or nominee for director in the same proportion as the
votes cast by holders of shares other than Xx. Xxxxxxx. During the term of this
Agreement, Xx. Xxxxxxx shall not contest any proxies received by the Company
with respect to, or submit, any proposal for vote of shareholders at any annual
or other meeting of shareholders of the Company.
SECTION 2.4 NO SOLICITATION OF PROXIES. During the term of this
--------------------------
Agreement, Xx. Xxxxxxx shall not directly or indirectly solicit proxies or
written consents or become a "participant" in a "solicitation" with respect to
any matter or with respect to any "election contest" relating to the election of
directors of the Company (as such terms are defined in Regulation 14A under the
Exchange Act), except to the extent that Xx. Xxxxxxx may be deemed a participant
in any solicitation by the board of directors of the Company.
SECTION 2.5 NO PARTICIPATION IN GROUP. During the term of this Agreement,
-------------------------
and except as otherwise provided in this Agreement, Xx. Xxxxxxx shall not
directly or indirectly join, or assist or encourage in any respect the formation
of, a partnership, syndicate or other group (within the meaning of the Exchange
Act and Rule 13d-5 thereunder), or otherwise act in concert with any other
person, to affect control of the Company or to acquire, hold, vote or dispose of
Securities.
SECTION 2.6 TRANSFERS OF SHARES. During the term of this Agreement, and
-------------------
except as otherwise provided in this Agreement, Xx. Xxxxxxx shall not directly
or indirectly sell or otherwise transfer in any manner any shares of the Company
(or enter into
agreements or undertakings with respect to any of the foregoing) except for
sales in the open market or in privately negotiated transactions to persons who
do not, and will not as the result of any such sale, own more than 5% of the
outstanding shares of the Company. This provision shall not restrict the right
of Xxxxx Xxxxxx, Inc. to exercise its rights in respect of any Shares in which
it may hold a security interest; provided that any sale or transfer of any such
Shares by Xxxxx Xxxxxx, Inc. is made independently by it solely in the exercise
of its rights as secured party and creditor. This provision shall also not
restrict the right of Xx. Xxxxxxx to tender any or all of the Shares in response
to a tender offer made in compliance with Section 14(d)(1) of the Exchange Act.
SECTION 2.7 SALE OR CONTROL OF THE COMPANY. During the term of this
------------------------------
Agreement, Xx. Xxxxxxx shall not (i) propose any business combination or similar
transaction with, or a change of control of, the Company to anyone other than
the board of directors of the Company, (ii) make or propose a tender offer for
Securities, (iii) otherwise act to seek control or influence the management,
board of directors, policies or affairs of the Company (other than in his
capacity as a director of the Company), or (iv) solicit or encourage any person
(other than the board of directors of the Company) to do any of the foregoing.
Xx. Xxxxxxx will promptly disclose to the board of directors of the Company any
proposals that he receives regarding the sale or control of the Company.
SECTION 2.8 NO DERIVATIVE SUITS. Xx. Xxxxxxx shall not directly or
-------------------
indirectly initiate, join in, assist or encourage in any respect any shareholder
derivative suit against any of the officers or directors of the Company relating
to any matter, cause or thing whatsoever
from the beginning of time to the date of this Agreement.
SECTION 2.9 ACTIONS OF CONTROLLED PERSONS. Xx. Xxxxxxx will cause each
-----------------------------
person over whom he may have control or share control to observe the foregoing
provisions of Section 2 of this Agreement as if they were bound thereby.
SECTION 3. DISMISSAL OF LITIGATION AND RELEASES.
------------------------------------
SECTION 3.1 DISMISSAL OF LITIGATION. Forthwith following the
-----------------------
effectiveness of this Agreement, Xx. Xxxxxxx and the Company will dismiss with
prejudice the Litigation and all claims subject thereto, including, without
limitation, the counterclaim and claims for costs, expenses and attorneys' fees.
SECTION 3.2 RELEASE BY THE COMPANY. Upon the effectiveness of this
----------------------
Agreement, the Company hereby forever releases and discharges Xx. Xxxxxxx and
his representatives, employees, attorneys, advisors, successors and assigns and
all persons acting in concert with any such person from all manner of claims,
actions, causes of action or suits, at law or in equity, which the Company now
has or hereafter can, shall or may have by reason of any matter, cause or thing
whatsoever from the beginning of time to the date of this Agreement, arising out
of, in connection with, or in any way related to Xx. Xxxxxxx'x acquisition or
ownership of shares of the Company, demand for a special meeting of shareholders
of the Company, solicitation of proxies in connection therewith, or which are
the subject of the Company's claims in the Litigation, whether or not they
were pleaded in the Litigation, excepting only any action, cause of action or
suit arising by virtue of an undertaking, covenant, promise or representation
contained in this Agreement.
SECTION 3.3 RELEASE BY XX. XXXXXXX. Upon the effectiveness of this
----------------------
Agreement, Xx. Xxxxxxx hereby forever releases and discharges Xxxx Xxxxxxx and
his representatives, employees, attorneys, advisors, successors and assigns and
all persons acting in concert with any such person and the Company and its
present and former directors, officers, representatives, employees, attorneys,
advisors, parents, subsidiaries, affiliated companies, predecessors, successors
and assigns and all persons acting in concert with any such person from all
manner of claims, actions, causes of action or suits, at law or in equity, which
Xx. Xxxxxxx now has or hereafter can, shall or may have by reason of any matter,
cause or thing whatsoever from the beginning of time to the date of this
Agreement, arising out of, in connection with, or in any way related to Xx.
Xxxxxxx'x acquisition or ownership of shares of the Company, demand for a
special meeting of shareholders of the Company, solicitation of proxies in
connection therewith, or which are the subject of Xx. Xxxxxxx'x claims in the
Litigation, whether or not they were pleaded in the Litigation, excepting only
any action, cause of action or suit arising by virtue of an undertaking,
covenant, promise or representation contained in this Agreement.
SECTION 3.4 RELEASE OF UNKNOWN CLAIMS. Each of the parties hereby waives
-------------------------
the benefits of California Civil Code Section 1542 which provides as follows:
Section 1542. Certain Claims Not Affected By General Release. A general
----------------------------------------------
release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which
if known by him must have materially affected his settlement with the
debtor.
SECTION 4. TERM OF AGREEMENT. The term of this Agreement will end on the
-----------------
earlier to occur of (i) August 31, 2000 and (ii) the date of the Company's
disclosure to its shareholders of commencement of a "going private" transaction
subject to Rule 13e-3 under the Exchange Act.
SECTION 5. PUBLICITY. Promptly following the effectiveness of this
---------
Agreement, the parties shall issue a joint press release in the form of Annex 1
attached hereto. Thereafter, neither party shall make any public disclosure or
statement concerning the matters referred to herein (including, but not limited
to, confidential information produced in the Litigation), except that (i) Xx.
Xxxxxxx shall file a copy of this Agreement as an exhibit to his statement on
Schedule 13D, filed with the Securities and Exchange Commission and shall make
such disclosures as his counsel may advise are required by law in his
preliminary proxy statements and other documents filed with the Securities and
Exchange Commission, (ii) the Company shall file a copy of this Agreement as an
exhibit to a report on Form 8A or 10-Q with the Securities and Exchange
Commission and shall make such disclosures as its counsel may advise are
required by law in its proxy statements and reports filed under the Securities
Act of 1933, as amended, of the Exchange Act, and (iii) nothing herein shall be
construed to prevent
either of the parties from making any other disclosures as may be required by
law.
SECTION 6. MISCELLANEOUS.
-------------
SECTION 6.1 INJUNCTIONS. Each of the Company and Xx. Xxxxxxx acknowledge
-----------
and agree that irreparable damage would occur in the event any of the provisions
of this Agreement were not performed in accordance with their specific terms or
were otherwise breached and that such damage would not be compensable in
damages. It is accordingly agreed that each of the parties hereto shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction, in
addition to any other remedy to which it may be entitled at law or equity,
without furnishing an undertaking or bond and without proof of irreparable
damage, both of which are hereby waived.
SECTION 6.2 NOTICES. All notices, requests and other communications to
-------
any person named hereunder shall be in writing (including wire, telecopier or
similar writing) and shall be given to such person at its or his address or
telecopier number set forth below or such address or telecopier numbers as such
person may hereafter specify for the purpose by notice to the other person:
If to the Company: Coastcast Corporation
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxx Xxxxxxxxx, XX 00000
Telecopier No. (000) 000-0000
If to Xx. Xxxxxxx: Xx. Xxxxxxxx X. Xxxxxxx
000 Xxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Telecopier No. (000) 000-0000
Each such notice, request or other communication shall be effective (a) if given
by telecopier, when such telecopier is transmitted to the telecopier number
specified in this subsection and the appropriate answer back is received or (b)
if given by any other means, when actually received at the address specified in
this subsection, provided a notice given other than during normal business hours
--------
or on a business day at the place of receipt shall not be effective until the
opening of business on the next business day.
SECTION 6.3 GOVERNING LAW AND FORUM. This Agreement shall be construed in
-----------------------
accordance with and governed by the internal laws of the State of California.
Each of the parties hereby agrees that any litigation concerning this Agreement
shall be conducted exclusively in the Superior Court of the State of California
in Los Angeles County or the United States District Court located in Los
Angeles, and no such action shall be commenced in any other court. The parties
hereby irrevocably consent to the jurisdiction and venue of the foregoing courts
and waive any objection thereto.
SECTION 6.4 AMENDMENTS. This Agreement may be amended, modified or
----------
supplemented only by written agreement of the parties hereto.
SECTION 6.5 WAIVER OF BREACH. Any failure of any party to comply with any
----------------
obligation, covenant, agreement or condition herein may be waived by the party
entitled to the benefit of such obligation, covenant, agreement or condition
only by a written instrument signed by such party, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. Whenever this Agreement requires or permits
consent by or on behalf of any party hereto, such consent shall be effective
only if given in writing in a manner consistent with the requirements for a
waiver of compliance as set forth in this Section.
SECTION 6.6 SUCCESSORS AND ASSIGNS. This Agreement and all of the
----------------------
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
SECTION 6.7 COUNTERPARTS. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 6.8 ENTIRE AGREEMENT. This Agreement embodies the entire
----------------
agreement and understanding of the parties hereto in respect to the subject
matter contained herein. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth or
referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
SECTION 6.9 INVALID PROVISIONS. If any provision of this Agreement shall
------------------
be deemed or declared to be unenforceable, invalid or void, the same shall not
impair any of the other provisions of this Agreement.
SECTION 6.10 AUTHORITY. Each of the parties represents and warrants with
---------
respect to itself or himself that it or he is duly authorized to execute,
deliver and perform this Agreement, that this Agreement has been duly executed
by such party, and that this Agreement is a valid and binding agreement of such
party, enforceable against such party in accordance with its terms.
SECTION 6.11 EFFECTIVENESS OF AGREEMENT. This Agreement will become
--------------------------
effective on the date that Xx. Xxxxxxx is elected to serve as a director of the
Company to fill a vacancy on the board of directors resulting from the
resignation of a current director. If Xx. Xxxxxxx is not elected to serve as a
director of the Company by November 9, 1998, this Agreement will not become
effective and will be of no further force or effect after that date.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the day and year first above written.
COASTCAST CORPORATION
____________________________ By:________________________
XXXXXXXX X. XXXXXXX Xxxx X. Xxxxxxx
Chairman and Chief Executive Officer
