Item 5. Other Information
Item 5. Other Information
As disclosed above, on May 3, 2022, we entered into a common unit subscription agreement with FAH, LLC pursuant to which we purchased 4,251,701 newly issued common units in exchange for a capital contribution of approximately $74.0 million. Following the Capital Contribution, we executed the Recapitalization as described above in Part II, Item 1A, “Risk Factors – In certain circumstances, FAH, LLC will be required to make distributions to us and the Continuing Equity Owners, and the distributions that FAH, LLC will be required to make may be substantial.” The issuance of the common units was exempt from registration under Section 4(a)(2) under of the Securities Act, as transactions by an issuer not involving any public offering.
Also as disclosed above, on May 3, 2022, ACON entered into a Stock Purchase Agreement with an affiliate of TCG, pursuant to which ACON has agreed to sell 12,520,559 shares of our Class A common stock (including shares of Class A common stock to be issued upon the redemption of common units of FAH, LLC and the cancellation of shares of our Class B common stock) to TCG. The shares of Class A common stock proposed to be acquired by TCG represent approximately 25.0% of the combined voting power of our common stock as of May 3, 2022. Accordingly, from and after the closing of the ACON Sale, we expect TCG to have significant influence over us, including over decisions that require the approval of stockholders, and its interests in our business may conflict with the interests of our other stockholders. The consummation of the transaction is subject to customary closing conditions and is expected to close on or around May 19, 2022.
In addition, our Stockholders Agreement with ACON is expected to terminate in accordance with its terms in connection with the closing of the ACON Sale. On May 4, 2022, Ken Brotman and Adam Kriger resigned from our board, contingent on and effective upon the closing of the ACON Sale.
In connection with the ACON Sale, we have entered into the New Stockholders Agreement, as well as a Joinder and Amendment to our Registration Rights Agreement, both of which contain operative provisions that will become effective at the closing of the ACON Sale. Pursuant to the New Stockholders Agreement, TCG will have the right to designate two TCG Directors for as long as the TCG Related Parties beneficially own, directly or indirectly, in the aggregate, at least 20% of our Class A common stock, and one TCG Director for as long as the TCG Related Parties beneficially own, directly or indirectly, in the aggregate, less than 20% but at least 10% or more of our Class A common stock (assuming in each such case that all outstanding common units in FAH, LLC are redeemed for newly issued shares of our Class A common stock on a one-for-one basis). Consistent with the New Stockholders Agreement, TCG has designated, and the board has elected, Jesse Jacobs to serve as a Class III director of the Company to fill the vacancy created by Mr. Brotman’s resignation, effective upon the closing of the ACON Sale.
Mr. Jacobs, 46, co-founded and has served as Managing Partner of TCG since 2010. Prior to TCG. Mr. Jacobs was a senior member of the media, entertainment and sports advisory, investing and financing team at Goldman Sachs. Mr. Jacobs has served on the board of directors of former public company Collectors Universe, Inc. since November 2020 and sits on a number of private company boards of directors including Hodinkee, Inc., Exploding Kittens, Inc. and Barstool Sports, Inc. Mr. Jacobs received his B.A. and M.B.A. from the University of Pennsylvania. Mr. Jacobs will be compensated consistent with the Company’s Non-Employee Director Compensation Policy.
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Following the effectiveness of the New Stockholders Agreement, we will be required to take all commercially reasonable action to cause (1) the board of directors to be comprised of at least seven directors or such other number of directors as our board of directors may determine; (2) the individuals designated in accordance with the terms of the New Stockholders Agreement to be included in the slate of nominees to be elected to the board of directors at each annual meeting of our stockholders at which a director’s term expires; and (3) the individuals designated in accordance with the terms of the New Stockholders Agreement to fill the applicable vacancies on the board of directors.
In addition, the New Stockholders Agreement provides that for as long as the TCG Related Parties beneficially own, directly or indirectly, in the aggregate, 22% or more of all issued and outstanding shares of our Class A common stock (assuming that all outstanding common units in FAH, LLC are redeemed for newly issued shares of our Class A common stock on a one-for-one basis), we will not take, and will cause our subsidiaries not to take, certain actions or enter into certain transactions (whether by merger, consolidation, or otherwise) without the prior written approval of TCG, as described above in Part II, Item 1A, “Risk Factors – ACON has entered into an agreement to sell a majority of the Class A common stock it beneficially owns to an affiliate of The Chernin Group (“TCG”). In connection with such transaction, TCG is expected to become entitled to similar rights as ACON and have similar influence over us.”
Pursuant to the New Stockholders Agreement, we have agreed to amend our amended and restated certificate of incorporation at a future date to, among other things, carve out TCG and any of their respective affiliates and any of their respective direct transferees of Class A common stock from the provisions in our charter that are similar to Section 203 of the DGCL. Pursuant to the New Stockholders Agreement, we have also agreed to amend our bylaws at a future date to remove certain provisions that fall away once ACON owns under certain thresholds of our Class A common stock and to otherwise make changes consistent with the terms of the New Stockholders Agreement.
TCG has also agreed to certain standstill provisions, prohibiting, among other things, TCG from acquiring equity of the Company, other than as provided in the New Stockholders Agreement, such that the aggregate number of shares of Class A common stock beneficially owned by TCG Related Parties and their controlled affiliates following such acquisition exceeds 31.3% of all issued and outstanding shares of Class A common stock.
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Item 6. Exhibits
EXHIBIT INDEX
Exhibit
Number Exhibit Description Incorporated by Reference
Form File No. Exhibit Filing
Date Filed/
Furnished
Herewith
3.1 Amended and Restated Certificate of Incorporation of Funko, Inc.
S-8 333-221390 4.1 11/7/2017
3.2 Amended and Restated Bylaws of Funko, Inc.
S-8 333-221390 4.2 11/7/2017
10.1 Amendment No. 1, dated as of April 26, 2022, to Credit Agreement by and between Funko Acquisition Holdings, L.L.C., subsid i ary borrowers party thereto, lenders party thereto and JPMorgan Chase Bank, N.A. as administrative agent.
*
10.2 Stockholders Agreement, dated May 3, 2022, between the Company and TCG 3.0 Fuji, LP.
*
10.3 Registration Rights Agreement Joinder and Amendment, date May 3, 2022, between TCG 3.0 Fuji, LP and the Company.
*
31.1 Certification of Chief Executive Officer pursuant to Rules 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended.
*
31.2 Certification of Chief Financial Officer pursuant to Rules 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended.
*
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**
101.INS Inline XBRL Instance Document -
the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. *
101.SCH Inline XBRL Taxonomy Extension Schema Document. *
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101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. *
101.DEF Inline XBRL Taxonomy Definition Linkbase Document. *
101.LAB Inline XBRL Taxonomy Label Linkbase Document. *
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. *
104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
______________
* Filed herewith
** Furnished herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
FUNKO, INC.
(Registrant)
Date: May 5, 2022 By: /s/ Jennifer Fall Jung
Jennifer Fall Jung
Chief Financial Officer (Principal Financial Officer)
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.