Exhibit 10.2
SHAREHOLDERS
AGREEMENT
THIS SHAREHOLDERS
AGREEMENT (the
“Agreement”) is entered into to be effective as of
December 21, 2005 (the “Effective Date”), by and
among COMPUCREDIT CORPORATION , a Georgia corporation
(collectively with any Affiliates that acquire Shares pursuant to
an Affiliate Transfer or any permitted successors and assigns,
“CCRT”), ML IBK POSITIONS, INC. , a Delaware
corporation (collectively with any Affiliates that acquire Shares
pursuant to an Affiliate Transfer or any permitted successors and
assigns, “Merrill Lynch”) and LIBERTY ACQUISITION,
INC. , a Georgia corporation (the
“Corporation”). CCRT, Merrill Lynch and each
holder of Shares who may become a party hereto and execute a
joinder to this Agreement are sometimes hereinafter referred to
collectively as the “Shareholders” and individually as
a “Shareholder.” The Shareholders and the
Corporation are sometimes hereinafter referred to collectively as
the “Parties” and individually as a
“Party.”
BACKGROUND
:
A.
As of the date hereof CCRT owns all
of the issued and outstanding shares (the “Voting
Shares”) of the Class A voting common stock, $0.01 par
value per share (the “Voting Common Stock”), and
Merrill Lynch owns all of the issued and outstanding shares (the
“Non-Voting Shares,” and together with the Voting
Shares, the “Shares”) of the Class B non-voting
common stock, $0.01 par value per share (the “Non-Voting
Common Stock,” and together with the Voting Common Stock, the
“Common Stock”), of the Corporation in the following
amounts:
|
CCRT
|
|
1000 Class A Voting Shares (80%
of the outstanding Shares)
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Merrill Lynch
|
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250 Class B Non-Voting Shares
(20% of the outstanding Shares)
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B.
The Parties believe that it is in
their best interests to make provisions for the future disposition
of the Common Stock of the Corporation and to make certain other
agreements.
NOW, THEREFORE, FOR AND IN
CONSIDERATION of the
premises, the mutual promises, covenants and agreements contained
herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby
covenant and agree as follows:
1.
Definitions
. For purposes of this
Agreement, the terms set forth below shall be defined as
follows:
“Affected Shares” shall
have the meaning set forth in Section 3.1.
“Affiliate” shall mean
(a) any Person directly or indirectly owning, controlling or
holding with power to vote more than 20% of the outstanding voting
securities of, or interests in, such
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other Person; (b) any Person
more than 20% of whose outstanding voting securities or interests
are directly or indirectly owned, controlled or held with power to
vote by such other Person; (c) any Person directly or
indirectly controlling, controlled by or under common control with
such other Person; (d) any officer, director, partner or
member of such other Person; and (e) if such other Person is
an officer, director, partner or member, any company for which such
Person acts in any such capacity. As used in this definition,
the term “control” means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or
otherwise.
“Affiliate Transfer”
shall have the meaning set forth in Section 2.1.
“Anniversary Period”
shall have the meaning set forth in the definition of Optional
Conversion Date.
“Buy-Sell Notice” shall
have the meaning set forth in Section 5.1.
“Buy-Sell Right” shall
have the meaning set forth in Section 5.1.
“CardWorks” shall have
the meaning set forth in Section 9.1(b).
“CardWorks Acquisition”
shall have the meaning set forth in Section 9.1(b).
“CardWorks Agreement”
shall have the meaning set forth in Section 9.1(b).
“CCRT Common Stock”
shall mean the common stock, no par value, of CompuCredit
Corporation existing on the date of this Agreement or any other
shares of capital stock or interests of CompuCredit Corporation
into which such common stock shall be reclassified or changed,
including in the event of a merger, consolidation or other similar
transaction involving CompuCredit Corporation in which CompuCredit
Corporation is not the surviving Person, the common stock of such
surviving corporation.
“CCRT Conversion Shares”
shall mean an amount equal to the quotient of (a) the ML
Outstanding Principal Investment; and (b) the Conversion
Price.
“Change of Control of
CCRT” shall mean:
(a)
the direct or indirect disposition
of substantially all the assets of CompuCredit Corporation (whether
by sale, lease, transfer, conveyance or other disposition), in one
or a series of related transactions to any person (as such term is
used in Section 13(d)(3) of the Exchange Act) (excluding,
for the avoidance of doubt, portfolio sales to the extent such
sales would be customary for a business comparable to CompuCredit
Corporation);
(b)
the consummation of any transaction
or series of related transactions (including any merger or
consolidation) resulting in any Person (other than Key
CCRT
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Stockholders and their Affiliates)
becoming the beneficial owner (as determined in accordance with
Rules 13d-3 and 13d-5 under the Exchange Act, except that a
Person will be deemed to have beneficial ownership of all shares
that such Person has the right to acquire, whether such right is
exercisable immediately or only after passage of time) of more than
50% of the voting stock of CompuCredit Corporation; provided
, however , that no Change of Control shall be deemed to
have occurred pursuant to this clause (b) if the Key CCRT
Stockholders and entities controlled by them hold, in aggregate for
all such individuals and their controlled entities, beneficial
ownership of the voting stock of CompuCredit Corporation in a
percentage greater than the percentage of such Person’s
beneficial ownership of the voting stock of CompuCredit
Corporation; and
(c)
the first day on which the majority
of the directors of CompuCredit Corporation are not Continuing
Directors.
“Common Stock” shall
have the meaning set forth in the Background to this
Agreement.
“Continuing Directors”
shall mean individuals who constituted the Board of Directors of
CompuCredit Corporation as of the date of this Agreement (the
“Incumbent Directors”); provided that any
individual becoming a director during any year shall be considered
to be an Incumbent Director if such individual’s election,
appointment or nomination was recommended or approved by at least
two-thirds of the other Incumbent Directors continuing in office
following such election, appointment or nomination present, in
person or by telephone, at any meeting of the Board of Directors of
CompuCredit Corporation, after the giving of a sufficient notice to
each Incumbent Director so as to provide a reasonable opportunity
for such Incumbent Directors to be present at such
meeting.
“Conversion Price,” as
of any date, shall mean $1,000 divided by the Conversion Rate as of
such date.
“Conversion Rate,” as of
any date, shall mean (a) with respect to a Time Conversion,
initially 20.0000 shares of CCRT Common Stock; (b) with
respect to a Dimunition Action Conversion, initially, 23.3754
shares of CCRT Common Stock; or (c) with respect to a Material
Action Conversion, the quotient of (i) $1,000 over
(ii) the volume weighted average closing price for CCRT Common
Stock for the 30-trading days immediately prior to the Optional
Conversion Date. The Conversion Rate shall be subject to
standard weighted average anti-dilution adjustments as set forth in
Section 6.5 hereof; provided, however, that with respect to a
Material Action Conversion, the standard weighted average
anti-dilution adjustments shall only be for the 30-trading day
period immediately prior to the Optional Conversion
Date.
“Corporation Offered
Securities” shall have the meaning set forth in
Section 10.1.
“CSSI Note” shall have
the meaning set forth in Section 9.2.
“Dimunition Action”
shall mean any action that CardWorks or any of its Affiliates takes
or permits that causes, directly or indirectly, (a) the
transfer of CardWorks’ or any of its
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subsidiaries’ businesses in
any material respect or (b) results in the transfer of all or
substantially all of CardWorks’ or any of its
subsidiaries’ assets, in each case, to CompuCredit
Corporation or any of CompuCredit Corporation’s non-CardWorks
Affiliates in a transaction other than on an arm’s-length
basis.
“Dimunition Action
Conversion” shall mean a conversion pursuant to paragraph
(c) of the definition of “Optional Conversion
Date”.
“Dimunition Action
Period” shall have the meaning set forth in the definition of
Optional Conversion Date.
“Dividend Reduction
Amount” shall mean (a) for a Time Conversion or
Dimunition Action Conversion, an amount equal to the aggregate
amount of distributions made by the Corporation to Merrill Lynch
from the date Merrill Lynch first acquires its Shares until the
Optional Conversion Date; and (b) for a Material Action
Conversion, zero.
“Fair Market Value”
shall have the meaning set forth in Section 7.1.
“FMV of ML Shares” shall
have the meaning set forth in Section 5.1.
“Fundamental
Transaction” means any (i) reorganization or
reclassification of the Corporation’s Shares, share exchange,
merger or consolidation of the Corporation into or with another
Person, that would result in the transfer of 50% or more of the
outstanding voting power of the Corporation or in which the
Shareholders immediately prior to such transaction would own,
directly or indirectly, as a result of such transaction, less than
50% of the voting securities of the successor entity or surviving
company immediately thereafter or (ii) sale, transfer or other
disposition of all or substantially all of the Corporation’s
property, assets or business to a non-Affiliate.
“Initial Term” shall
have the meaning set forth in Section 11.1.
“Key CCRT Stockholders”
shall mean David G. Hanna, Frank J. Hanna III, Richard W. Gilbert
and Richard R. House.
“Management Issuance”
means any issuance by the Corporation of any shares of Common
Stock, or any rights, options or warrants directly or indirectly to
purchase shares of Common Stock, pursuant to any employee benefit
plan of the Corporation or its subsidiaries, or pursuant to any
employment agreement or arrangement between the Corporation (or its
subsidiaries) and any employee thereof, approved by the Board of
Directors of the Corporation, which issuances, if any, in the
aggregate shall not exceed five percent (5%) of the outstanding
shares of Common Stock on a fully diluted basis.
“Material Action” shall
mean any of the following actions taken by the Corporation, or,
with respect to clause (e) below, the Corporation or the
applicable regulatory body: (a) the liquidation, dissolution,
winding-up of the Corporation’s business or otherwise
terminating the
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Corporation’s existence other
than pursuant to a Fundamental Transaction, (b) the issuance,
agreement to issue or granting of an option to acquire any security
of the Corporation (including any securities that are convertible
into or exchangeable for other securities or interests of the
Corporation) that rank senior to the Common Stock (other than any
CSSI Note); (c) the redemption, purchase, acquisition or
making of a liquidation payment with respect to any of the
Corporation’s capital stock other than on a pro rata basis
based on each Shareholder’s Share Ownership Percentage;
(d) the carrying on of any business other than that of holding
the capital stock of CardWorks or any successor entity thereto or
(e) the taking of any action by the Corporation that would
cause Merrill Lynch to be deemed to “control” the
Corporation under the Bank Holding Company Act, the Federal Deposit
Insurance Act or the Utah Code, or any determination by a
regulatory body that Merrill Lynch has such “control”
of the Corporation (such action or determination, a
“Regulatory Event”).
“Material Action
Conversion” shall mean a conversion pursuant to paragraph
(b) of the definition of “Optional Conversion
Date”.
“Material Action Period”
shall have the meaning set forth in the definition of Optional
Conversion Date.
“ML Original Investment”
shall mean an amount equal to 20% of the Purchase Price (as such
term is defined in the CardWorks Acquisition Agreement, or such
other amount as agreed to be paid by Corporation).
“ML Outstanding Principal
Investment” shall mean an amount equal to the positive
difference, if any, between (i) (a) for a Time Conversion
or Dimunition Action Conversion, an amount equal to the ML Original
Investment, or (b) for a Material Action Conversion, the FMV
of ML Shares immediately prior to the Optional Conversion Date; and
(ii) the Dividend Reduction Amount at the Optional Conversion
Date.
“Non-Voting Common
Stock” shall have the meaning set forth in the Background to
this Agreement.
“Non-Voting Shares”
shall have the meaning set forth in the Background to this
Agreement.
“Nonoffering
Shareholder” shall have the meaning set forth in
Section 3.1.
“Objecting Shareholder”
shall have the meaning set forth in Section 7.1.
“Offering Shareholder”
shall have the meaning set forth in Section 3.1.
“Offer Notice” shall
have the meaning set forth in Section 3.1.
“Optional Conversion
Date” shall mean any date on which Merrill Lynch exercises
its right to convert its Shares into CCRT Common Stock or cash, as
applicable (a) that is during the
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period commencing on the Three Year
Anniversary and ending on the date that is three years after the
Three Year Anniversary (the “Anniversary Period”);
(b) that is within 60 days following Merrill Lynch having
actual knowledge (by delivery of notice by the Corporation or
otherwise) that a Material Action has occurred (a “Material
Action Period”); or (c) that is within 60 days following
Merrill Lynch having actual knowledge (by delivery of notice by
CompuCredit Corporation or otherwise) that a Dimunition Action has
occurred (a “Dimunition Action Period”).
“Organizational
Documents” shall mean the Articles of Incorporation and
Bylaws of the Corporation, and this Agreement, as each shall be
amended from time to time.
“Person” shall mean an
individual, limited liability company, partnership, corporation,
trust, unincorporated association, joint stock company or other
entity or association.
“Preemptive Rights
Notice” shall have the meaning set forth in
Section 10.2.
“Regulatory Event” shall
have the meaning set forth in the definition of Material
Action.
“Right of First Refusal”
shall have the meaning set forth in Section 3.2.
“Share Ownership
Percentage” shall mean the quotient obtained by dividing the
total number of Shares held by a Shareholder by the total number of
Shares then outstanding.
“Shares” shall have the
meaning set forth in the Background to the Agreement.
“Share Transfer” shall
have the meaning set forth in Section 2.1.
“Stock Purchase
Agreement” shall mean the Stock Purchase Agreement, dated as
of the date hereof, between CompuCredit Corporation and ML IBK
Positions, Inc.
“Tag-Along Right” shall
have the meaning set forth in Section 3.2.
“Three-month LIBOR”
means the London interbank offered rate (expressed as percentage
per annum) for U.S. dollar deposits of an amount equal to or
comparable to the principal amount of the CSSI Note having a
three-month maturity that appears on Telerate Page 3750 as of
11:00 a.m. (London time) on the date of determination.
As used herein, “Telerate Page 3750” means the
display designated as “Page 3750” on the Moneyline
Telerate Service or such other page as may replace
Page 3750 on that service or such other service or services as
may be nominated by the British Bankers’ Association as the
information vendor for purposes of displaying London interbank
offered rates for U.S. dollar deposits.
“Three Year Anniversary”
shall mean the date that is three years after the closing date of
the CardWorks Acquisition.
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“Time Conversion” shall
mean a conversion pursuant to paragraph (a) of the definition
of “Optional Conversion Date”.
“Transfer Notice” shall
have the meaning set forth in Section 7.1.
“Valuation Period” shall
have the meaning set forth in Section 7.2.
“Voting Common Stock”
shall have the meaning set forth in the Background to this
Agreement.
“Voting Shares” shall
have the meaning set forth in the Background to this
Agreement.
2.
Share Transfer
Restrictions .
2.1
No Shareholder shall, directly or
indirectly, sell, assign, transfer, convey (by gift, testamentary
disposition, the laws of intestate succession or otherwise),
pledge, hypothecate, encumber or otherwise dispose of any or all of
its Shares (each a “Share Transfer”), whether directly
or indirectly, without first complying with the terms of this
Agreement; provided , however , that no Shareholder
will be restricted from (a) selling or otherwise transferring
any of its Shares to any of its Affiliates (an “Affiliate
Transfer”) or (b) pledging, mortgaging or otherwise
encumbering all or any part of its rights with respect to its
Shares as security for borrowed funds or other obligations incurred
by such Shareholder. Any Share Transfer or attempted Share
Transfer not in accordance herewith shall be null and void and of
no force or effect.
2.2
The holder of the Shares pursuant to
any Affiliate Transfer or other permitted Share Transfer, or any
holder of any shares of Common Stock issued by the Corporation
subsequent to the date of this Agreement, including any Person who
becomes a Shareholder as a result of a Management Issuance, shall
become a Party hereto and shall be subject to the provisions of
this Agreement. Any additional shares of Common Stock issued
by the Corporation shall constitute “Shares” hereunder
and the certificates representing any such Shares shall bear the
legend required by Section 8 hereof.
3.
Right of First
Refusal .
3.1
In the event any Shareholder (an
“Offering Shareholder”) desires to make a Share
Transfer (the Shares subject to such Share Transfer hereinafter
referred to as the “Affected Shares”) to a
non-Affiliate, the Offering Shareholder must first deliver written
notice thereof (an “Offer Notice”) to the Corporation
and the other Shareholders (referred to as the “Nonoffering
Shareholders”). The Offer Notice must:
(a)
state the price, measured in dollars
and payable solely in cash or immediately available funds, for
which the Offering Shareholder is willing to sell, and the third
party is willing to buy, the Affected Shares, the number of
Affected Shares to be transferred and all other material economic
terms of the proposed Share Transfer; and
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(b)
include by attachment all documents
and such other information as may be material to the Nonoffering
Shareholders, including such document or information as provided by
or to be provided by the Offering Shareholder to the Person to whom
the Offering Shareholder is considering selling its Affected
Shares.
3.2
(a)
The Nonoffering Shareholders may
elect: (i) to purchase the portion of such Offering
Shareholder’s Affected Shares set forth in
Section 3.2(b) (the “Right of First Refusal”)
at a price equal to the product of (A) the Fair Market Value
of all outstanding Shares, and (B) the quotient obtained by
dividing the Affected Shares being purchased by such Nonoffering
Shareholder by the total number of outstanding Shares; or
(ii) to require such Offering Shareholder to permit the
Nonoffering Shareholders to participate in such Share Transfer (the
“Tag-Along Right”) pro rata with the Offering
Shareholder based on each Shareholder’s respective Share
Ownership Percentage at the time of the applicable Offer Notice at
an aggregate price equal to the product of (A) the Fair Market
Value of all outstanding Shares and (B) the percentage of
outstanding Shares being transferred pursuant to the Share
Transfer. If Merrill Lynch exercises its Tag-Along Right with
respect to a Share Transfer initiated by CCRT, the purchaser of any
Non-Voting Shares from Merrill Lynch shall have the right to
exchange, and the Corporation hereby agrees to exchange, its
Non-Voting Shares into Voting Shares.
(b)
With respect to the exercise of any
Right of First Refusal, the number of Shares each Shareholder shall
be entitled to purchase shall be as follows: (i) if the
Offering Shareholder is Merrill Lynch, then CCRT shall have the
right to acquire one hundred percent (100%) of the Affected Shares,
and no other Shareholder shall have a Right of First Refusal with
respect to such Affected Shares; (ii) if the Offering
Shareholder is CCRT, then Merrill Lynch shall have the right to
acquire one hundred percent (100%) of the Affected Shares, and no
other Shareholder shall have a Right of First Refusal with respect
to such Affected Shares; and (iii) if the Offering Shareholder
is any Person other than CCRT or Merrill Lynch, then CCRT and
Merrill Lynch shall have the right to acquire the Affected Shares
on a pro rata basis as between CCRT and Merrill Lynch. In the
event either CCRT or Merrill Lynch does not purchase its entire pro
rata share of the Affect Shares pursuant to clause
(iii) above, then, if the other party has purchased its full
pro rata share, it may elect to purchase any remaining Affected
Shares.
(c)
Each Nonoffering Shareholder shall
notify the Offering Shareholder of such Nonoffering
Shareholder’s election to exercise its Right of First Refusal
or its Tag-Along Right by delivering written notice of such
election to the Offering Shareholder as soon as practicable but in
any event within 10 business days after delivery of the Offer
Notice. All transfers pursuant to this Section 3.2 shall
be made on the terms specified in the Offer Notice; provided
, however , that the price shall be determined in accordance
with Section 3.2(a).
3.3
If the Nonoffering Shareholders have
elected to purchase the Affected Shares from the Offering
Shareholder, the transfer of such Affected Shares shall be
consummated as soon as practicable after the delivery of the
election notices provided in Section 3.2, but in any event
within 60 days after the delivery of the Offer Notice. All
sales made pursuant to
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Section 3.2(a)(ii) shall
be made simultaneously with the transfer by the Offering
Shareholder.
3.4
After expiration of the
10-business-day period referred to in Section 3.2, the rights
afforded to the Nonoffering Shareholders shall terminate and the
Offering Shareholder shall have the right for a period of 60 days
to effect the Share Transfer on the terms and conditions stated in
the Offer Notice.
3.5
Notwithstanding anything set forth
herein to the contrary, without CCRT’s consent Merrill Lynch
shall not participate in a Share Transfer to a Person other than
CCRT to the extent (a) it would cause such third party to be
deemed to “control” Merrick Bank Corporation, a
subsidiary of the Corporation, under the Bank Holding Company Act,
the Federal Deposit Insurance Act or the Utah Code, and
(b) such Person is subject to the provisions of the Bank
Holding Company Act, the Federal Deposit Insurance Act or the Utah
Code, as applicable.
4.
Drag-Along
Rights .
4.1
To the extent the
Corporation’s Board of Directors approves a Fundamental
Transaction, the Corporation shall have the right to require all
other Shareholders to consent to the Fundamental Transaction,
including, without limitation, (i) becoming a party to any and
all agreements to which CCRT becomes a party, including agreements
providing for indemnification to which CCRT is subject; provided
that (A) in no event shall a Shareholder be required to
provide indemnification in an amount greater than such
Shareholder’s pro rata share (based upon the Share Ownership
Percentage of such Shareholder) of the total indemnification being
provided by all Shareholders and (
