EXHIBIT (c)(2)
STOCKHOLDER AGREEMENT
Stockholder Agreement (together with Annex I attached hereto, this
"Agreement"), dated as of June 28, 1998 by and among Fremont Acquisition Company
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III, LLC, a Delaware limited liability company ("Purchaser") and each individual
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whose name appears on the signatures pages to this Agreement (each in his
individual capacity, the "Management Stockholder", and collectively, the
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"Management Stockholders"). Capitalized terms used and not otherwise defined
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in this Agreement shall have the respective meanings assigned to such terms in
an Agreement and Plan of Merger (the "Merger Agreement") dated as of the date
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hereof, among Purchaser, Global Motorsport Group, Inc., a Delaware corporation,
formerly known as Custom Chrome, Inc. (the "Company") and GMS Acquisition Corp.,
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a Delaware corporation and a wholly owned subsidiary of the Company
("Acquisition Sub").
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WHEREAS, each of the Management Stockholders is, as of the date
hereof, the record and beneficial owner of the number of shares (the "Shares")
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of common stock, par value $0.001 per Share (the "Common Stock"), of the
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Company, as set forth opposite his name in column A on Annex I hereto, and the
holder of Stock Options (as such term is defined in the Merger Agreement), as
set forth opposite his name in column B on Annex I hereto; and
WHEREAS, Purchaser, the Company and Acquisition Sub concurrently
herewith are entering into the Merger Agreement, which provides, among other
things, (i) for a recapitalization of the Company involving Purchaser, (ii) for
a cash tender offer (the "Offer") to be made by the Company for up to the number
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of Shares equal to the Tender Offer Number, including the associated preferred
stock purchase rights, for the Per Share Amount (as such terms are defined in
the Merger Agreement) and (iii) for the merger, if necessary (the "Merger") of
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Acquisition Sub with and into the Company following consummation of the Offer
and upon the terms and subject to the conditions set forth in the Merger
Agreement; and
WHEREAS, the parties to the Merger Agreement intend that the
acquisition be treated as a recapitalization for financial accounting purposes;
and
WHEREAS, as a condition to the willingness of Purchaser to enter into
the Merger Agreement, and in order to induce Purchaser to enter into the Merger
Agreement, the Management Stockholders have agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by
Purchaser of the Merger Agreement and the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein and
therein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Representations and Warranties of the Management
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Stockholders. Each of the Management Stockholders hereby represents and
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warrants, to Purchaser as follows:
(a) Such Management Stockholder is the record and beneficial
owner of the number of Shares of Common Stock set forth opposite his name in
column A on Annex I hereto, and the holder of Stock Options as set forth
opposite his name in Column B on Annex I hereto (in each case, as may be
adjusted from time to time pursuant to Section 5 hereof).
(b) Such Management Stockholder has the legal capacity to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby.
(c) This Agreement has been validly executed and delivered by
such Management Stockholder and constitutes the legal, valid and binding
obligation of such Management Stockholder, enforceable against such Management
Stockholder in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally, and (ii) the
availability of the remedy of specific performance or injunctive or other forms
of equitable relief may be subject to equitable defenses and
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would be subject to the discretion of the court before which any proceeding
therefor may be brought.
(d) Neither the execution and delivery of this Agreement nor
the consummation by such Management Stockholder of the transactions contemplated
hereby will violate any other agreement to which such Management Stockholder is
a party.
(e) The Shares (including the Management Option Shares as
defined in Section 3 below) and the certificates representing such Shares are
now (or upon issuance will be) and at all subsequent times during the term
hereof will be held by such Management Stockholder, or by a nominee or custodian
for the benefit of such Management Stockholder, free and clear of all Liens,
proxies, voting trusts or agreements, understandings or arrangements or any
other encumbrances whatsoever, except for any such encumbrances or proxies
arising hereunder.
SECTION 2. Representations and Warranties of Purchaser. Purchaser
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hereby represents and warrants to the Management Stockholders as follows:
(a) Purchaser is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware,
has all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby, and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Agreement.
(b) This Agreement has been duly authorized, executed and
delivered by Purchaser and constitutes the legal, valid and binding obligation
of Purchaser, enforceable against Purchaser in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally and (ii) the availability of the remedy of specific
performance or injunctive or other forms of equitable relief may be subject to
equitable defenses and would be subject to the discretion of the court before
which any proceeding therefor may be brought.
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(c) Neither the execution and delivery of this Agreement nor
the consummation by Purchaser of the transactions contemplated hereby will
result in a violation of, or a default under, or conflict with, any contract,
trust, commitment, agreement, understanding, arrangement or restriction of any
kind to which Purchaser is a party or bound. The consummation by Purchaser of
the transactions contemplated hereby will not violate, or require any consent,
approval, or notice under, any provision of any judgment, order, decree,
statute, law, rule or regulation applicable to Purchaser, except for any
necessary filing under the HSR Act or state takeover laws.
SECTION 3. Exercise of Stock Options; Tender of Shares. Each of the
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Management Stockholders hereby agrees as follows:
(a) Not later than immediately prior to consummation of the
Offer, each Management Stockholder shall exercise (or shall be deemed to have
exercised) his Stock Options as set forth on Annex I hereto pursuant to a
cashless exercise procedure whereby that number of Shares set forth in Column C
of Annex I hereto shall be issued by the Company to such Management Stockholder
(individually and collectively, the "Management Option Shares"). The number of
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Shares so issuable shall be determined by (i) multiplying (x) the number of
Shares subject to each Stock Option so exercised by (y) the excess, if any, of
the Per Share Amount over the per Share exercise price of such Stock Option,
(ii) dividing such product by the Per Share Amount, and (iii) rounding down to
the nearest whole Share. With respect to any Stock Option not so exercised,
each Management Stockholder agrees and consents to the cancellation of such
Stock Option in exchange for certain consideration as set forth in Section 4.9
of the Merger Agreement.
(b) Each Management Stockholder shall not tender into the Offer the
number of Shares set forth opposite his name in Column D of Annex I hereto.
(c) Each Management Stockholder shall tender into the Offer all
remaining Shares set forth on Annex I as being owned by or issuable to such
Management Stockholder, including all of his Management Option Shares (the
result of the foregoing being that the number
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of Shares so tendered shall be equal to the amount in Column A plus the amount
in Column C, less the amount in Column D).
SECTION 4. Transfer of the Shares. Prior to the termination of this
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Agreement, except as otherwise provided herein, none of the Management
Stockholders shall: (i) transfer (which term shall include, without limitation,
for the purposes of this Agreement, any sale, gift, pledge or other
disposition), or consent to any transfer of, any or all of the Shares; (ii)
enter into any contract, option or other agreement or understanding with respect
to any transfer of any or all of the Shares or any interest therein; (iii) grant
any proxy, power-of-attorney or other authorization or consent in or with
respect to the Shares; (iv) deposit the Shares into a voting trust or enter into
a voting agreement or arrangement with respect to the Shares or (v) take any
other action that would in any way restrict, limit or interfere with the
performance of such Management Stockholder's obligations hereunder or the
transactions contemplated hereby.
SECTION 5. Certain Events. In the event of any stock split, stock
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dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Common Stock or the acquisition
of additional shares of Common Stock or other securities or rights of the
Company by any of the Management Stockholders, the number of Shares shall be
adjusted appropriately, and this Agreement and the obligations hereunder shall
attach to any additional shares of Common Stock or other securities or rights of
the Company issued to or acquired by such Management Stockholder.
SECTION 6. Certain Other Agreements.
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(a) Each of the Management Stockholders hereby agrees to
comply with and be bound by the provisions of Section 8.2 of the Merger
Agreement as an officer, director, employee or agent of the Company, as the case
may be.
(b) Prior to consummation of the Offer, each of the Management
Stockholders and Purchaser agrees to use their good faith to negotiate and enter
into arrangements with respect to the Shares that will be
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retained by such Management Stockholders following the consummation of the
Transactions, substantially in accordance with the terms and conditions set
forth in Exhibit A hereto.
SECTION 7. Further Assurances; Management Stockholder Capacity.
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Each of the Management Stockholders shall, upon request of Purchaser, execute
and deliver any additional documents and take such further actions as may
reasonably be deemed by Purchaser to be necessary or desirable to carry out the
provisions hereof.
SECTION 8. Termination. This Agreement, and all rights and
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obligations of the parties hereunder, shall terminate immediately upon the
earlier of (a) the date (the "Termination Date") that is six months following
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the date upon which the Merger Agreement is terminated in accordance with its
terms or (b) the consummation of the last to occur of any of the Transactions
(as such term is defined in the Merger Agreement); provided, however, that (i)
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Section 7 and Section 9 shall survive any termination of this Agreement.
SECTION 9. Expenses. All fees and expenses incurred by any one
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party hereto shall be borne by the party incurring such fees and expenses.
SECTION 10. Public Announcements. Each of Purchaser and the
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Management Stockholders agrees that it will not issue any press release or
otherwise make any public statement with respect to this Agreement or the
transactions contemplated hereby without the prior consent of the other
parties, which consent shall not be unreasonably withheld or delayed; provided,
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however, that such disclosure can be made without obtaining such prior consent
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if (i) the disclosure is required by law or by obligations imposed pursuant to
any listing agreement with the Nasdaq National Market and (ii) the party making
such disclosure has first used its best efforts to consult with the other
parties about the form and substance of such disclosure.
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SECTION 11. Miscellaneous.
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(a) All notices and other communications hereunder shall be in
writing and shall be deemed given upon (i) transmitter's confirmation of a
receipt of a facsimile transmission, (ii) confirmed delivery by a standard
overnight carrier or when delivered by hand or (iii) the expiration of five (5)
business days after the day when mailed in the United States by certified or
registered mail, postage prepaid, addressed at the following addresses (or at
such other address for a party as shall be specified by like notice):
(i) if to the Purchaser or Acquisition Sub, to:
Fremont Acquisition Company, LLC
c/o Fremont Partners, L.P.
00 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxxx and
Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
With a copy to:
Skadden,Arps,Slate,Xxxxxxx & Xxxx LLP
Xxxx Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
and
(ii) if to any of Management Stockholders, to the address set
forth on signature pages hereto,
With a copy to:
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Xxxxxx, Xxxx & Xxxxxxxx, LLP
0 Xxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile Number: (000) 000-0000
(b) 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.
(c) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall be considered one
and the same agreement.
(d) This Agreement (including the Merger Agreement and any other
documents and instruments referred to herein) constitutes the entire
agreement, and supersedes all prior agreements and understandings, whether
written and oral, among the parties hereto with respect to the subject matter
hereof.
(e) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware without giving effect to the principles
of conflicts of laws thereof.
(f) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by, the parties and their
respective successors and assigns, and the provisions of this Agreement are
not intended to confer any rights or remedies hereunder upon any person other
than the parties hereto and their respective successors and assigns.
(g) If any term, provision, covenant or restriction herein is held by
a court of competent jurisdiction or other authority to be invalid, void or
unenforceable or against its regulatory policy, the remainder of the terms,
provisions, covenants and restrictions of
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this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
(h) Each of the parties hereto acknowledges and agrees that in the
event of any breach of this Agreement, each non-breaching party would be
irreparably and immediately harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto (i) will waive, in any
action for specific performance, the defense of adequacy of a remedy at law and
(ii) shall be entitled, in addition to any other remedy to which they may be
entitled at law or in equity, to compel specific performance of this Agreement
in any action instituted in any state or federal court sitting in Wilmington,
Delaware.
(i) No amendment, modification or waiver in respect of this Agreement
shall be effective against any party unless it shall be in writing and signed by
such party.
(j) The obligations of each of the Management Stockholders pursuant
to this Agreement shall be several, not joint.
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IN WITNESS WHEREOF, Purchaser and each of the Management Stockholders
has caused this Agreement to be duly executed and delivered as of the date first
written above.
FREMONT ACQUISITION COMPANY III, LLC
By
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Name:
Title:
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Xxxxxx Xxxxxx
Address:
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Xxxxx X. Xxxxx, Xx.
Address:
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Xxxxxx X. Xxxxx
Address:
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Xxxxxx X. Xxxxxx
Address:
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R. Xxxxxx Xxxx
Address:
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Xxxxxx X. Xxxxxx, Xx.
Address:
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Xxxxx Xxxxx
Address:
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Xxx Xxxxxxx
Address:
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Xxxxxxx Xxxx
Address:
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Xxxxxx Xxxxxxx
Address:
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Xxxx Xxxxxxxx
Address:
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Xxxx Xxxx
Address:
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Xxxx Xxxxxxx
Address:
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ANNEX I.
Ownership of Company Common Stock
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A B C D
(1) Number
of Shares
Subject to
Outstanding
Stock
Number of Options,
Shares Owned and (2)
(Excluding Exercise Net Number of
Shares Price (List Shares to Be
Issuable upon each option Issued upon Number of
the Exercise grant on Cashless Shares Not to
of Stock separate Exercise of Be Tendered in
Options) line) Stock Options the Offer
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(1) (2)
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1. Xxxxxx Xxxxxx 0 * * 13,000 13,000
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2. Xxxxx X. Xxxxx, Xx. 3,897 * * 16,103 20,000
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3. Xxxxxx X. Xxxxx 6,500 0 6,500
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4. Xxxxxx X. Xxxxxx 2,500 * * 7,500 10,000
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5. R. Xxxxxx Xxxx 14,694 * * 5,306 20,000
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6. Xxxxxx X. Xxxxxx, Xx. 0 * * 1,579 1,579
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7. Xxxxx Xxxxx 7,500 * * 7,500
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8. Xxx Xxxxxxx 0 * * 600 600
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9. Xxxxxxx Xxxx 13 * * 487 500
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10. Xxxxxx Xxxxxxx 684 * * 5,316 6,000
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11. Xxxx Xxxx 0 * * 1,000 1,000
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12. Xxxx Xxxxxxx 0 * * 300 300
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13. Xxxx Xxxxxxxx 0 * * 1,000 1,000
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* See attached
EXHIBIT A
PUT/CALL
ARRANGEMENTS
As a means to provide liquidity to management upon any separation from
the Company, the Company will enter into agreements with management providing
for the following:
Put/Call Rights In the event of a termination of the
executive's service for any reason
prior to an initial public offering
of the Company's common stock, all
shares and options owned by the
executive will be subject to a put
right exercisable by the executive
and a call right exercisable by the
Company in each case within 90 days
of the relevant termination date.
Purchase Price
a. On or Prior to the First If a termination of an executive's
Anniversary service occurs on or prior to the
first anniversary of the closing of
the acquisition (the "Closing"), then
the price per share paid upon the
exercise of a put right or a call
right will be $21.75 (less the
exercise price in the case of a put
or a call of an option).
b. After the First If a termination of an executive's
Anniversary but Prior to the service occurs after the first
Third Anniversary Other than anniversary of the Closing but prior
as a Consequence of An to the third anniversary and was a
Involuntary Termination result of executive's resignation or
executive's termination for cause by
the Company, then the price per share
paid upon exercise of a put right or
call right will be the lesser of (x)
$21.75 plus 7% compounded annually
from the Closing or (y) fair market
value as determined in good faith by
the Board based upon the enterprise
value of the Company divided by its
fully diluted shares outstanding
("Fair Market Value") (less the
exercise price in the case of a put
or call of an option).
c. On or After the Third If a termination of an executive's
Anniversary or as a service occurs after the first
Consequence of an anniversary of the Closing and was a
Involuntary Termination consequence of death, permanent
After the First disability or a termination
Anniversary by the Company other than for cause
or occurs for any reason on or after
the third anniversary of the
Closing, then the price per share
paid upon the exercise of a put
right or call right will be Fair
Market Value (less the exercise
price in the case of a put or call
of an option).
