Exhibit 1.1
3,500,000 Shares of Common Stock
JAKKS PACIFIC, INC.
UNDERWRITING AGREEMENT
April___, 2002
BEAR, XXXXXXX & CO. INC.
as Representative of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
JAKKS Pacific, Inc., a corporation organized and existing under
the laws of Delaware (the "Company"), and the Selling Stockholders listed on
Schedule II hereto (the "Selling Stockholders"), propose, subject to the terms
and conditions stated herein, to sell to the several underwriters named in
Schedule I hereto (the "Underwriters") an aggregate of 3,500,000 shares (the
"Firm Shares") of the Company's voting common stock, par value $0.001 per share
(the "Common Stock"). The Company proposes to sell, for the sole purpose of
covering over-allotments in connection with the sale of the Firm Shares, at the
option of the Underwriters, up to an additional 525,000 shares (the "Additional
Shares") of Common Stock. The Firm Shares and any Additional Shares purchased by
the Underwriters are referred to herein as the "Shares." The Shares are more
fully described in the Registration Statement referred to below.
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters as of the
date hereof and as of each Closing Date and Additional Closing Date (as defined
below) that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
333-86800), and amendments thereto, and related preliminary prospectuses for the
registration under the Securities Act of 1933, as amended (the "Securities
Act"), of the Shares which registration statement, as so amended (including
post-effective amendments, if any), has been declared effective by the
Commission and copies of which have heretofore been delivered to the
Underwriters. The registration statement, as amended at the time it
became effective, including the exhibits and information (if any) deemed to be
part of the registration statement at the time of effectiveness pursuant to Rule
430A or 434(d) under the Securities Act, is hereinafter referred to as the
"Registration Statement." If the Company has filed or is required pursuant to
the terms hereof to file a registration statement pursuant to Rule 462(b) under
the Securities Act registering additional shares of Common Stock (a "Rule 462(b)
Registration Statement"), then, unless otherwise specified, any reference herein
to the term "Registration Statement" shall be deemed to include such Rule 462(b)
Registration Statement. Other than a Rule 462(b) Registration Statement, which
became effective upon filing, no other document with respect to the Registration
Statement has heretofore been filed with the Commission. No stop order
suspending the effectiveness of either the Registration Statement or the Rule
462(b) Registration Statement, if any, has been issued and no proceeding for
that purpose has been initiated or threatened by the Commission. The Company, if
required by the Securities Act and rules and regulations of the Commission
(together, the "Rules and Regulations"), proposes to file the Prospectus with
the Commission pursuant to Rule 424(b) of the Rules and Regulations. The
Prospectus, in the form in which it is to be filed with the Commission pursuant
to Rule 424(b) of the Rules and Regulations, or, if the Prospectus is not to be
filed with the Commission pursuant to Rule 424(b), the Prospectus in the form
included as part of the Registration Statement at the time the Registration
Statement became effective, is hereinafter referred to as the "Prospectus,"
except that if any revised prospectus or prospectus supplement shall be provided
to the Underwriters by the Company for use in connection with the offering and
sale of the Shares (the "Offering") which differs from the Prospectus (whether
or not such revised prospectus or prospectus supplement is required to be filed
by the Company pursuant to Rule 424(b) of the Rules and Regulations), the term
"Prospectus" shall refer to such revised prospectus or prospectus supplement, as
the case may be, from and after the time it is first provided to the
Underwriters for such use. Any preliminary prospectus or prospectus subject to
completion included in the Registration Statement, or filed with the Commission
pursuant to Rule 424 under the Securities Act, is hereafter called a
"Preliminary Prospectus." Any reference herein to the Registration Statement,
any Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 which were filed under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") on or before the effective date of the Registration
Statement, the date of such Preliminary Prospectus or the date of the
Prospectus, as the case may be, and any reference herein to the terms "amend",
"amendment" or "supplement" with respect to the Registration Statement, any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include
(i) the filing of any document under the Exchange Act after the effective date
of the Registration Statement, the date of such Preliminary Prospectus or the
date of the Prospectus, as the case may be, which is incorporated therein by
reference and (ii) any such document so filed. All references in this Agreement
to the Registration Statement, the Rule 462(b) Registration Statement, the
Preliminary Prospectus and the Prospectus, or any amendments or supplements to
any of the foregoing, shall be deemed to include
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any copy thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval System ("XXXXX").
(b) At the time of the effectiveness of the Registration
Statement or the effectiveness of any post-effective amendment to the
Registration Statement, when the Prospectus is first filed with the Commission
pursuant to Rule 424(b) or Rule 434 of the Rules and Regulations, when any
supplement to or amendment of the Prospectus is filed with the Commission, when
any document filed under the Exchange Act was or is filed and at the Closing
Date and the Additional Closing Date, if any (as hereinafter respectively
defined), the Registration Statement and the Prospectus and any amendments
thereof and supplements thereto complied or will comply in all material respects
with the applicable provisions of the Securities Act, the Exchange Act and the
Rules and Regulations and did not and will not contain an untrue statement of a
material fact and did not and will not omit to state any material fact required
to be stated therein or necessary in order to make the statements therein (i) in
the case of the Registration Statement, not misleading and (ii) in the case of
the Prospectus or any related Preliminary Prospectus, in light of the
circumstances under which they were made, not misleading. When any related
preliminary prospectus was first filed with the Commission (whether filed as
part of the registration statement for the registration of the Shares or any
amendment thereto or pursuant to Rule 424(a) of the Rules and Regulations) and
when any amendment thereof or supplement thereto was first filed with the
Commission, such Preliminary Prospectus and any amendments thereof and
supplements thereto complied in all material respects with the applicable
provisions of the Securities Act and the Rules and Regulations and the Exchange
Act and the respective rules and regulations thereunder and did not contain an
untrue statement of a material fact and did not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein in light of the circumstances under which they were made not misleading.
No representation and warranty is made in this subsection (b), however, with
respect to any information contained in or omitted from the Registration
Statement or the Prospectus or any related Preliminary Prospectus or any
amendment thereof or supplement thereto in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter through the Representative specifically for use therein
("Underwriters' Information") or any Selling Stockholder. The parties
acknowledge and agree that the Underwriters' Information consists solely of the
material included in the third paragraph under the caption "Underwriting" in the
Prospectus. If Rule 434 is used, the Company will comply with the requirements
of Rule 434 and the Prospectus shall not be "materially different," as such term
is used in Rule 434, from the Prospectus included in the Registration Statement
at the time it became effective.
(c) The Company is subject to the reporting requirements
of either Section 13 or Section 15(d) of the Exchange Act and files reports with
the Commission on the XXXXX system.
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(d) Xxxxxxx Xxxx Xxxxxxx, Certified Public Accountants, A
Professional Corporation ("PKF"), who have certified the financial statements
and supporting schedules included or incorporated in the Registration Statement
or underlying financial information included or incorporated in the Registration
Statement, are independent public accountants as required by the Securities Act
and the Rules and Regulations.
(e) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, except as
set forth in the Registration Statement and the Prospectus, the Company has not
paid any dividends on its capital stock and there has been no material adverse
change or any development involving a prospective material adverse change on (i)
the business, prospects, properties, operations, condition (financial or other),
stockholders' equity or results of operations of the Company and each subsidiary
of the Company listed on Exhibit 21 of the Company's Annual Report on Form 10-K
as amended for the fiscal year ended December 31, 2001 (the "Subsidiaries"),
individually or taken as a whole; (ii) the capital stock of the Company; (iii)
the Company's ability to consummate the transactions contemplated by this
Agreement and the Prospectus; or (iv) the validity or enforceability of the
Company's obligations hereunder or under the Prospectus (a "Material Adverse
Change" or "Material Adverse Effect"), whether or not arising from transactions
in the ordinary course of business, and since the date of the latest balance
sheet presented in the Registration Statement and the Prospectus, neither the
Company nor any of the Subsidiaries has incurred or undertaken any liabilities
or obligations, direct or contingent, or entered into any transactions that are
material to the Company and the Subsidiaries taken as a whole, except for
liabilities or obligations that are reflected in the Registration Statement and
the Prospectus or other documents publicly filed by the Company with the
Commission.
(f) This Agreement and the transactions contemplated
herein have been duly and validly authorized by the Company and this Agreement
has been duly and validly executed and delivered by the Company.
(g) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not (i) conflict with, require consent under or result in a breach of
any of the terms and provisions of, or constitute a default (or an event which
with notice or lapse of time, or both, would constitute a default) under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of the Subsidiaries pursuant to any
indenture, mortgage, deed of trust, loan agreement or other agreement,
instrument, franchise, license or permit to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries or
their respective properties or assets may be bound or (ii) violate or conflict
with any provision of the certificate or articles of incorporation, by-laws,
certificate of formation, limited liability company agreement, partnership
agreement or other organizational documents of
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the Company or any of the Subsidiaries, or any judgment, decree, order, statute,
rule or regulation of any court or any public, governmental or regulatory agency
or body, domestic or foreign, having jurisdiction over the Company or any of the
Subsidiaries or any of their respective properties, operations or assets the
violation of which would have a Material Adverse Effect. No consent, approval,
authorization, order, registration, filing, qualification, license or permit of
or with any court or any public, governmental or regulatory agency or body
having jurisdiction over the Company or any of the Subsidiaries or any of their
respective operations, properties or assets or from any third party is required
for the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, by the Registration
Statement and by the Prospectus, including the issuance, sale and delivery of
the Shares to be issued, sold and delivered by the Company hereunder, except the
registration under the Securities Act of the Shares, which has been obtained,
and except for those the absence of which could have a Material Adverse Effect,
and such consents, approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of the Shares
by the Underwriters, which shall have been obtained on or prior to the Closing
Date.
(h) The authorized, issued and outstanding capital stock
of the Company is as set forth in the Prospectus in the column entitled "Actual"
under the caption "Capitalization" and, after giving effect to the Offering and
the other events (if any) specified under the caption "Capitalization", will be
as set forth in the column entitled "As Adjusted" thereunder. All of the issued
shares of capital stock of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and were not issued in violation of or
subject to any preemptive or similar rights that entitle or will entitle any
person to acquire any Shares from the Company upon issuance or sale of Shares in
the Offering, except for such rights as may have been fully satisfied or waived
prior to the effectiveness of the Registration Statement; the Shares to be
delivered on the Closing Date and the Additional Closing Date, if any (as
hereinafter respectively defined), have been duly and validly authorized and,
when delivered in accordance with this Agreement, will be duly and validly
issued, fully paid and non-assessable and will not have been issued in violation
of or subject to any preemptive or similar rights that entitle or will entitle
any person to acquire any Shares from the Company upon issuance or sale thereof
in the Offering; and the Common Stock, the Firm Shares and the Additional Shares
conform to the descriptions thereof contained in the Registration Statement and
the Prospectus. Except as disclosed in or specifically contemplated by the
Prospectus, the Company has no outstanding options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, any shares of
its capital stock or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any such options,
rights convertible securities or obligations.
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(i) The Subsidiaries are the only subsidiaries (as defined
in Rule 405 of the Securities Act) of the Company. All of the issued shares of
capital stock of each of its Subsidiaries, except for (i) those shares of common
stock of Toymax International, Inc. ("Toymax") currently not owned by the
Company, and (ii) those shares of common stock owned by the Company nominees in
compliance with Hong Kong or equivalent law, has been duly and validly
authorized and issued and are fully paid and non-assessable and are owned
directly by the Company free and clear of all liens, encumbrances, equities or
claims.
(j) Each of the Company and the Subsidiaries has been duly
organized or formed and is validly existing as a corporation, partnership or
limited liability company (or foreign equivalent of such entity forms) in good
standing under the laws of its jurisdiction of incorporation or formation. Each
of the Company and the Subsidiaries is duly qualified to do business and is in
good standing as a foreign corporation, partnership or limited liability company
in each jurisdiction in which the character or location of its properties
(owned, leased or licensed) or the nature or conduct of its business makes such
qualification necessary, except for those failures to be so qualified or in good
standing that will not in the aggregate have a Material Adverse Effect. Each of
the Company and the Subsidiaries has all requisite power and authority, and all
necessary consents, approvals, authorizations, orders, registrations,
qualifications, licenses and permits (collectively, the "Consents") of and from
all public, regulatory or governmental agencies and bodies and third parties, to
own, lease and operate its properties and conduct its business as now being
conducted and as described in the Registration Statement and the Prospectus
except for those the absence of which will not in the aggregate have a Material
Adverse Effect. No Consent contains a materially burdensome restriction not
adequately disclosed in the Registration Statement and the Prospectus.
(k) Except as described in the Prospectus, there is no
legal or governmental proceeding, including routine litigation, to which the
Company or any of the Subsidiaries is a party or of which any property of the
Company or any of the Subsidiaries is the subject which, singularly or in the
aggregate, if determined adversely to the Company or any of the Subsidiaries, is
reasonably likely to have a Material Adverse Effect, and to the best of the
Company's knowledge, no such proceeding is threatened or contemplated by
governmental authorities or threatened or contemplated by others, and the
defense of all such claims against the Company in the aggregate, including
routine litigation, will not have a Material Adverse Effect.
(l) Neither the Company nor any of its Affiliates (as such
term is defined under Rule 144 of the Securities Act) has taken, nor will any of
them take, directly or indirectly, any action designed to cause or result in, or
that constitutes or might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common Stock to
facilitate the sale or resale of the Shares.
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(m) Except for the Subsidiaries, and except for marketable
securities reflected on the Company's balance sheet, the Company owns no capital
stock or other beneficial interest, directly or indirectly, in any corporation,
partnership, joint venture or other business entity, except for its interests in
the joint venture with THQ, Inc., as described in the Prospectus.
(n) The financial statements, including the notes thereto,
and supporting schedules included or incorporated by reference in the
Registration Statement and the Prospectus present fairly the financial position
of the Company and its consolidated subsidiaries and the other entities for
which financial statements are included in the Registration Statement and the
Prospectus as of the dates indicated and the condition and results of operations
for the periods specified; except as otherwise stated in the Registration
Statement, said financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved; and the supporting schedules included in the
Registration Statement present fairly the information required to be stated
therein. The other financial and statistical information and data included in
the Registration Statement and the Prospectus present fairly the information
included therein and have been prepared on a basis consistent with that of the
financial statements included or incorporated by reference in the Registration
Statement and the Prospectus and the books and records of the respective
entities presented therein. The pro forma and as-adjusted financial information
included in the Prospectus has been properly compiled, and prepared in
accordance with the applicable requirements of the Securities Act and the Rules
and Regulations and includes all adjustments necessary to present fairly the pro
forma financial position of the respective entity or entities presented therein
at the respective dates indicated and the results of their operations for the
respective periods specified. There are no historical or pro forma financial
statements which are required to be included in the Registration Statement and
Prospectus in accordance with Regulation S-X that have not been included as so
required.
(o) The assumptions used in preparing the pro forma and as
adjusted financial information included in each of the Registration Statement
and the Prospectus provide a reasonable basis for presenting the significant
effects directly attributable to the transactions or events described therein,
the related pro forma and as adjusted adjustments give appropriate effect to
those assumptions, and the pro forma and as adjusted columns therein reflect the
proper application of those adjustments to the corresponding historical
financial statement amounts.
(p) No holder of securities of the Company has any rights
to the registration of securities of the Company because of the filing of the
Registration Statement or otherwise in connection with the sale of the Shares
contemplated hereby, and any such rights so disclosed have either been fully
complied with by the Company or effectively waived by the holders thereof.
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(q) The Company is not, and upon consummation of the
transactions contemplated hereby, and at all times up to and including the
application of net proceeds as described in the Prospectus, will not be, subject
to registration as an "investment company" under the Investment Company Act of
1940.
(r) The Company and the Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them, respectively, in each case free
and clear of all liens, encumbrances and defects except such as are described in
the Registration Statement and the Prospectus, or as disclosed in the Company's
public filings, or such as could not have a Material Adverse Effect; and any
real property and buildings held under lease or sublease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as would not have a Material Adverse Effect. Neither the
Company nor any of the Subsidiaries has received any notice of any claim adverse
to its ownership of any real or personal property or of any claim against the
continued possession of any real property, whether owned or held under lease or
sublease by the Company or any of the Subsidiaries.
(s) The Company and each of the Subsidiaries has
accurately prepared and timely filed all federal, state and other tax returns
that are required to be filed by it and has paid or made provision for the
payment of all taxes, assessments, governmental or other similar charges,
including without limitation, all sales and use taxes and all taxes which the
Company and each of the Subsidiaries is obligated to withhold from amounts
owning to employees, creditors and third parties, with respect to the periods
covered by such tax returns (whether or not such amounts are shown as due on any
tax return). No deficiency assessment with respect to a proposed adjustment of
the Company's or any of the Subsidiaries' Federal, state, or other taxes is
pending or, to the best of the Company's knowledge, threatened. There is no tax
lien, whether imposed by any federal, state, or other taxing authority,
outstanding against the assets, properties or business of the Company or any of
the Subsidiaries.
(t) The Common Stock is registered pursuant to Section
12(g) of the Exchange Act and the outstanding shares of Common Stock (including
the Shares) are listed for quotation on the NASDAQ National Market ("NASDAQ"),
and the Company has taken no action designed to, or likely to have the effect
of, terminating the registration of the Common Stock under the Exchange Act or
de-listing the Common Stock from the NASDAQ, nor has the Company received any
notification that the Commission or the NASDAQ is contemplating terminating such
registration or listing.
(u) The conditions for use of Form S-3, as set forth in
the General Instructions thereto, have been satisfied.
(v) The documents incorporated or deemed to be
incorporated by reference in the Prospectus, at the time they were or hereafter
are filed with the Commission, complied and will comply in all respects with the
requirements of the
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Exchange Act and the rules and regulations of the Commission under the Exchange
Act, and, when read together with the other information in the Prospectus, at
the time the Registration Statement and any amendments thereto become effective
and at the Closing Date and Additional Closing Date, if any, will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(w) There are no contracts or other documents (including,
without limitation, any voting agreement), which are required to be described in
the Prospectus or filed as exhibits to the Registration Statement or the
Prospectus by the Securities Act or by the Rules and Regulations and which have
not been so described or filed.
(x) The Company and its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(y) Neither the Company nor any of the Subsidiaries (i) is
in violation of its charter or by-laws, partnership agreement, limited liability
company agreement or other organizational documents, (ii) is in default under,
and no event has occurred which, with notice or lapse of time or both, would
constitute such a default or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which it is a party or by which it is bound
or to which any of its property or assets is subject or (iii) is in violation in
any respect of any statute or any judgment, decree, order, rule or regulation of
any court or governmental or regulatory agency or body having jurisdiction over
the Company or any of the Subsidiaries or any of their properties or assets,
except any violation or default that would not have a Material Adverse Effect.
(z) The Company and each of the Subsidiaries owns or
possesses adequate right to use all patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service xxxx registrations,
copyrights, licenses, formulae, customer lists, and know-how and other
intellectual property (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures)
necessary for the conduct of their respective businesses as being conducted and
as described in the Registration Statement and Prospectus and have no
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reason to believe that the conduct of their respective businesses will conflict
with, and have not received any notice of any claim of conflict with, any such
right of others except for such violations that do not result in a Material
Adverse Effect. To the best of the Company's knowledge, all material technical
information developed by and belonging to the Company that has not been patented
is subject to the provisions of enforceable confidentiality and non- disclosure
agreements. Except as described in the Prospectus, neither the Company nor any
of its subsidiaries has granted or assigned to any other person or entity any
right to manufacture, have manufactured, assemble or sell the current products
and services of the Company or those products and services described in the
Registration Statement and Prospectus. There is no infringement by third parties
of any such Intellectual Property; there is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others challenging
the Company's or any Subsidiary's rights in or to any such Intellectual
Property, and the Company is unaware of any facts which would form a reasonable
basis for any such claim; and there is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others that the
Company infringes or otherwise violates any patent, trademark, copyright, trade
secret or other proprietary rights of others, and the Company is unaware of any
other fact that would form a reasonable basis for any such claim that if
adversely determined against the Company is likely to result in a Material
Adverse Effect.
(aa) No labor disturbance by the employees of the Company
or any of the Subsidiaries exists or, to the best of the Company's knowledge, is
imminent and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or any Subsidiary's principal
suppliers, manufacturers', customers or contractors, which might be expected to
have a Material Adverse Effect.
(bb) No "prohibited transaction" (as defined in Section
406 of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder ("ERISA"), or
Section 4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code"), or "accumulated funding deficiency" (as defined in Section 302 of
ERISA) or any of the events set forth in Section 4043(b) of ERISA (other than
events with respect to which the 30-day notice requirement under Section 4043 of
ERISA has been waived) has occurred with respect to any employee benefit plan
which could have a Material Adverse Effect; each employee benefit plan is in
compliance in all material respects with applicable law including ERISA and the
Code; the Company has not incurred and does not expect to incur liability under
Title IV of ERISA with respect to the termination of, or withdrawal from any
"pension plan;" and each "pension plan" (as defined in ERISA) for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which could cause the loss of
such qualification.
(cc) Neither the Company nor any of its subsidiaries has
violated any provisions of the Foreign Corrupt Practices Act, or the rules and
regulations
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promulgated thereunder, except for such violations which, singly or in the
aggregate, would not have a Material Adverse Effect.
(dd) There has been no storage, generation,
transportation, handling, treatment, disposal, discharge, emission, or other
release of any kind of toxic or other wastes or other hazardous substances by,
due to, or caused by the Company (or, to the Company's knowledge, any other
entity for whose acts or omissions the Company is or may be liable) upon any
other property now or previously owned or leased by the Company or any of the
Subsidiaries, or upon any other property, in violation of any statute or any
ordinance, rule, regulation, order, judgment, decree or permit or which would,
under any statute or any ordinance, rule (including rule of common law),
regulation, order, judgment, decree or permit, give rise to any liability,
except for any violation or liability which would not have, singularly or in the
aggregate with all such violations and liabilities, a Material Adverse Effect;
there has been no disposal discharge, emission or other release of any kind onto
such property or into the environment surrounding such property of any toxic or
other wastes or other hazardous substances with respect to which the Company or
any of the Subsidiaries has knowledge. The Company has not agreed to assume,
undertake or provide indemnification for any liability of any other person under
any Environmental Law, including any obligation for cleanup or remedial action,
except as would not reasonably be expected to have a Material Adverse Effect.
(ee) The Company has not prior to the date hereof offered
or sold any securities which would be "integrated" with the offer and sale of
the Shares pursuant to the Registration Statement.
(ff) No relationship, direct or indirect, exists between
or among any of the Company or any affiliate of the Company, on the one hand,
and any director, officer, stockholder, customer or supplier of any of them, on
the other hand, which is required by the Securities Act or by the Rules and
Regulations to be described in the Registration Statement or the Prospectus or
incorporated therein by reference that is not so described or is not described
as required.
(gg) The statistical and market-related data included in
the Prospectus are based on or derived from sources that are reliable and
accurate.
(hh) Neither the Company, any of the Subsidiaries nor, to
the Company's knowledge, any of its employees or agents has at any time during
the last five years (i) made any unlawful contribution to any candidate for
foreign office, or failed to disclose fully any contribution in violation of law
or (ii) made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United States or
any jurisdiction thereof.
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Any certificate signed by or on behalf of the Company and
delivered to the Representative or to counsel for the Underwriters' shall be
deemed to be a representation and warranty by the Company to each Underwriter as
to the matters covered thereby.
2. Representations and Warranties of the Selling Stockholders.
Each Selling Stockholder severally and not jointly represents and warrants to,
and agrees with, each of the Underwriters that:
(a) This Agreement has been duly and validly authorized,
executed and delivered by or on behalf of each Selling Stockholder and is a
valid and binding agreement of each of the Selling Stockholders.
(b) Each of the Custody Agreements and Powers of Attorney
(each, a "Custody Agreement and Power of Attorney") signed by (i) each Selling
Stockholder, (ii) U.S. Stock Transfer Corporation, as custodian (in such
capacity, the "Custodian"), and (iii) Xxxxxx Xxxxx as the Selling Stockholders'
attorney-in-fact (in such capacity, the "Attorney-In-Fact"), has been duly and
validly authorized, executed and delivered by each Selling Stockholder and is a
valid and binding agreement of each Selling Stockholder, enforceable against
such Selling Stockholder in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights and remedies of creditors
or by general equitable principles. Each Selling Stockholder agrees that the
Shares, to be sold by each Selling Stockholder on deposit with the Custodian are
subject to the interests of the Underwriters, that the arrangements made for
such custody are to that extent irrevocable, and that the obligations of each
Selling Stockholder hereunder shall not be terminated, except as provided in
this Agreement or in the Custody Agreement and Power of Attorney, by any act of
the Selling Stockholder, by operation of law or by the occurrence of any other
event. If any event should occur impacting the legal status or capacity of the
Selling Stockholder, before the delivery of the Shares, if any, to be sold by a
Selling Stockholder hereunder, the documents evidencing the Shares, if any, to
be sold by such Selling Stockholder then on deposit with the Custodian shall be
delivered by the Custodian in accordance with the terms and conditions of this
Agreement as if such event had not occurred, regardless of whether or not the
Custodian shall have received notice thereof.
(c ) Each Selling Stockholder is the lawful owner of the
Shares to be sold by such Selling Stockholder hereunder and upon sale and
delivery of, and payment for, such Shares, as provided herein, each Selling
Stockholder will convey to the Underwriters good and marketable title to such
Shares, free and clear of all liens, encumbrances, equities, claims and security
interests whatsoever.
(d) Each Selling Stockholder has, and on the Closing Date,
will have, good and valid title to all of the Shares, which are to be sold by
such Selling Stockholder pursuant to this Agreement on such date and the legal
right and power, and
12
all authorizations and approvals required by law, to enter into this Agreement
and the applicable Custody Agreement and Power of Attorney, to sell, transfer
and deliver all of the Shares that may be sold by such Selling Stockholder
pursuant to this Agreement and to comply with his other obligations hereunder
and thereunder.
(e) No consent, approval, authorization or order of any
court or governmental agency or body or any third party is required for the
consummation by the Selling Stockholders of the transactions contemplated
herein, except such as have been obtained under the Securities Act and such as
may be required under the state securities laws or the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the Shares by
the Underwriters.
(f) Neither the sale of the Shares, being sold by the
Selling Stockholders nor the consummation of any of the other transactions
contemplated herein by the Selling Stockholders or the fulfillment of the terms
hereof by the Selling Stockholders will conflict with, result in a breach or
violation of, or constitute a default under any law, statute, rule or regulation
or the terms of any indenture or other agreement or instrument to which any
Selling Stockholder is party or bound, or any judgment, order or decree
applicable to any Selling Stockholder of any court or regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction over
any Selling Stockholder.
(g) None of the Selling Stockholders has any registration
or other similar rights to have any equity or debt securities registered for
sale by the Company under the Registration Statement or included in the offering
of the Shares, except for such rights as have been waived or which are described
in the Prospectus.
(h) The Selling Stockholders do not have, or have waived
prior to the date hereof, any preemptive right, co-sale right or right of first
refusal or other similar right to purchase any of the Shares, if any, that are
to be sold by the Company to the Underwriters pursuant to this Agreement; and
the Selling Stockholders do not own any warrants, options or similar rights to
acquire, and do not have any right or arrangement to acquire, any capital stock,
right, warrants, options or other securities from the Company, other than those
described in the Registration Statement and the Prospectus.
(i) All information furnished by or on behalf of the
Selling Stockholders in writing for use in the Registration Statement and
Prospectus, or any document incorporated by reference into the Registration
Statement and Prospectus is, and on the Closing Date, will be, true, correct,
and complete in all material respects, and does not, and on the Closing Date,
will not, contain any untrue statement of a material fact or omit to state any
material fact necessary to make such information not misleading. To the extent
such information appears in the Prospectus, each Selling Stockholder confirms as
accurate the number of shares of Common Stock set forth opposite such Selling
Stockholder's name and the information described in the related footnote in the
13
Prospectus under the caption "Principal and Selling Stockholders" (both prior to
and after giving effect to the sale of the Shares.
(j) The Selling Stockholders have not taken and will not
take, directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or manipulation of the
price of the Common Stock to facilitate the sale or resale of the Shares.
(k) The Selling Stockholders have not distributed and will
not distribute, prior to the Closing Date, and the completion of the
Underwriters' distribution of the Shares, any offering material in connection
with the offering and sale of the Shares, to be sold by the Selling Stockholders
other than a Preliminary Prospectus, the Prospectus or the Registration
Statement.
(l) Each Selling Stockholder has reviewed and is familiar
with the Registration Statement and the Prospectus and (i) has no knowledge of
any material adverse information with regard to the Company or the Subsidiaries
that is not disclosed in the Registration Statement and the Prospectus, (ii) has
no knowledge of any misstatement of a material fact or failure to state a
material fact necessary to make the statements in the Prospectus, in light of
the circumstances under which they were made, not misleading, and (iii) is not
prompted to sell the Shares, if any, to be sold by the Selling Stockholders by
any information concerning the Company or any of the Subsidiaries that is not
set forth in the Registration Statement and the Prospectus.
(m) The representations and warranties of the Selling
Stockholders in the respective Custody Agreements and Powers of Attorney are,
and on the Closing Date, will be, true and correct.
Any certificate signed by or on behalf of the Selling
Stockholders and delivered to the Representative or to counsel for the
Underwriters' shall be deemed to be a representation and warranty by each such
Selling Stockholder to each Underwriter as to the matters covered thereby.
3. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company and the Selling Stockholders agree to
sell to each Underwriter and each Underwriter, severally and not jointly, agrees
to purchase from the Company and the Selling Stockholders, at a purchase price
per share of $_______, that proportion of the number of Firm Shares set forth in
Schedule II opposite the name of the Company or such Selling Stockholder, as the
case may be, which the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto plus any additional number of Shares which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof, bears to the total number of Firm Shares.
14
(b) Payment of the purchase price for, and delivery of
certificates for, the Shares shall be made at the office of Manatt, Xxxxxx &
Xxxxxxx, LLP, 00000 X. Xxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000
("Underwriters' Counsel") or at such other place as shall be agreed upon by the
Representative and the Company, at 9:00 A.M., New York City time, on the third
or fourth business day (as permitted under Rule 15c6-1 under the Exchange Act)
(unless postponed in accordance with the provisions of Section 10 hereof)
following the date of the effectiveness of the Registration Statement (or, if
the Company has elected to rely upon Rule 430A of the Rules and Regulations, the
third or fourth business day (as permitted under Rule 15c6-1 under the Exchange
Act) after the determination of the public offering price of the Shares), or
such other time not later than ten business days after the date on which the
offering price is determined shall be agreed upon by the Representative and the
Company (such time and date of payment and delivery being herein called the
"Closing Date").
(c) Payment for the Shares shall be made to or upon the
order of the Company and the Selling Stockholders by wire transfer in U.S.
Federal (same day) funds to bank accounts designated by the Company and the
Custodian (pursuant to each Selling Stockholder's Power of Attorney and Custody
Agreement, as the case may be), upon delivery of certificates for the Shares to
the Representative through the facilities of The Depository Trust Company for
the respective accounts of the several Underwriters against receipt therefor
signed by the Representative. Certificates for the Shares to be delivered to the
Representative shall be registered in such name or names and shall be in such
denominations as the Representative may request at least one business day before
the Closing Date. The Company will permit the Representative to examine and
package such certificates for delivery at least one full business day prior to
the Closing Date.
(d) In addition, the Company hereby grants to the
Underwriters, acting severally and not jointly, the option to purchase up to
525,000 Additional Shares at the same purchase price per share to be paid by the
Underwriters to the Company and the Selling Stockholders for the Firm Shares as
set forth in Section 3(a), for the sole purpose of covering over-allotments in
the sale of Firm Shares by the Underwriters. This option may be exercised at any
time and from time to time, in whole or in part on one or more occasions, on or
before the thirtieth day following the date of the Prospectus, by written notice
from the Representative to the Company. Such notice shall set forth the
aggregate number of Additional Shares as to which the option is being exercised
and the date and time, as reasonably determined by the Representative, when the
Additional Shares are to be delivered (any such date and time being herein
sometimes referred to as the "Additional Closing Date"); provided, however, that
the Additional Closing Date shall not be earlier than the Closing Date (in which
case the option may be exercised on any day preceding the Closing Date) or
earlier than the business day after the date on which the option shall have been
exercised nor later than the eighth full business day after the date on which
the option shall have been exercised (unless such time and date are postponed in
accordance with the provisions of Section 9 hereof). Certificates for the
Additional Shares shall be registered in such name or names and in
15
such authorized denominations as the Representative may request in writing at
least one full business day prior to the Additional Closing Date. The Company
will permit the Representative to examine and package such certificates for
delivery at least one full business day prior to the Additional Closing Date.
If the option is exercised as to all or any portion of the
Additional Shares, each Underwriter, acting severally and not jointly, will
purchase from the Company that proportion of the total number of Additional
Shares then being purchased which the number of Firm Shares set forth opposite
the name of such Underwriter in Schedule I hereto (or such number increased as
set forth in Section 10 hereof) bears to the total number of Firm Shares,
subject, however, to such adjustments to eliminate any fractional shares as the
Representative in its sole discretion shall make.
Payment for the Additional Shares to be sold by the Company shall
be made to the Company, by wire transfer in U.S. Federal (same day) funds to
bank accounts designated by the Company, at the offices of Underwriters'
Counsel, as may be mutually acceptable upon delivery of the certificates for the
Additional Shares to the Representative for the respective accounts of the
Underwriters.
(e) Each Selling Stockholder hereby agrees that (i) it
will pay all stock transfer taxes, stamp duties and other similar taxes, if any,
payable upon the sale or delivery of the Shares to be sold by the Selling
Stockholders to the several Underwriters, or otherwise in connection with the
performance of the Selling Stockholders' obligations hereunder and (ii) the
Custodian is authorized to deduct for such payment any such amounts from the
proceeds to the Selling Stockholders hereunder and to hold such amounts for the
account of the Selling Stockholders with the Custodian under the Custody
Agreement and Power of Attorney.
4. Offering. The Underwriters propose to offer the Shares for
sale to the public upon the terms and conditions set forth in the Prospectus.
16
5. Covenants of the Company; Covenants of the Selling
Stockholders.
A. The Company covenants and agrees with each of the
Underwriters that:
(a) The Registration Statement and any amendments thereto
have become effective, and if Rule 430A is used or the filing of the Prospectus
is otherwise required under Rule 424(b), or Rule 434, the Company will file the
Prospectus (properly completed if Rule 430A has been used) pursuant to Rule
424(b) within the prescribed time period and will provide evidence reasonably
satisfactory to the Representative of such timely filing. If the Company elects
to rely on Rule 434, the Company will prepare and file a Term Sheet that
complies with requirements of Rule 434 and provide the Underwriters with copies
of such filings prior to their use.
The Company will notify the Representative immediately (and, if
requested by the Representative, will confirm such notice in writing) (i) when
the Registration Statement and any amendments thereto become effective, (ii) of
any request by the Commission for any amendment of or supplement to the
Registration Statement or the Prospectus or for any additional information,
(iii) of the Company's intention to file or prepare any amendments to the
Registration Statement (including pursuant to rule 462(b)), the Term Sheet or
any supplement, revision or amendment to the Registration Statement or the
Prospectus, (iv) of the mailing or the delivery to the Commission for filing of
any amendment of or supplement to the Registration Statement or the Prospectus,
(v) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or of the initiation, or the threatening, of any proceedings therefor,
it being understood that the Company shall use reasonable best efforts to avoid
the issuance of any such stop order, (v) of the receipt of any comments from the
Commission, and (vi) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for that
purpose. If the Commission shall propose or enter a stop order at any time, the
Company shall make every reasonable effort to prevent the issuance of any such
stop order and, if issued, to obtain the lifting of such order as soon as
possible. The Company will not file any amendment to the Registration Statement
or any amendment of or supplement to the Prospectus (including the prospectus
required to be filed pursuant to Rule 424(b) or Rule 434) that differs from the
prospectus on file at the time of the effectiveness of the Registration
Statement before or after the effective date of the Registration Statement, or
file any document under the Exchange Act if such document would be deemed to be
incorporated by reference into the Prospectus, to which the Representative shall
object in writing after being timely furnished in advance a copy thereof.
17
(b) The Company shall comply with the Securities Act and
the Exchange Act to permit completion of the distribution as contemplated in
this Agreement, the Registration Statement and the Prospectus. If at any time
when a prospectus relating to the Shares is required to be delivered under the
Securities Act or the Exchange Act in connection with the sales of Shares, any
event shall have occurred as a result of which the Prospectus as then amended or
supplemented would, in the judgment of the Underwriters or the Company, include
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances existing at the time of delivery to the
purchaser, not misleading, or if it shall be necessary at any time to amend or
supplement the Prospectus or Registration Statement to comply with the
Securities Act or the Rules and Regulations, or to file under the Exchange Act
so as to comply therewith any document incorporated by reference in the
Registration Statement or the Prospectus or in any amendment thereof or
supplement thereto, the Company will notify the Representative promptly and
prepare and file with the Commission, subject to the second paragraph of Section
5(A)(a) hereof, an appropriate amendment or supplement (in form and substance
reasonably satisfactory to the Representative) which will correct such statement
or omission or which will effect such compliance and will use its best efforts
to have any amendment to the Registration Statement declared effective as soon
as possible.
(c) The Company will promptly deliver to each of the
Underwriters and Underwriters' Counsel a signed copy of the Registration
Statement, including all consents and exhibits filed therewith and all documents
incorporated by reference therein and all amendments thereto, and the Company
will promptly deliver to each of the Underwriters such number of copies of any
Preliminary Prospectus, the Prospectus, the Registration Statement, and all
amendments of and supplements to such documents, if any, all documents
incorporated by reference in the Registration Statement and Prospectus or any
amendment thereof or supplement thereto, as the Representative may reasonably
request. Prior to 10:00 A.M., New York time, on the business day next succeeding
the date of this Agreement and from time to time thereafter, the Company will
furnish the Underwriters with copies of the Prospectus in New York City at such
address(es) as the Representative specifies, and in such quantities as the
Representative may reasonably request.
(d) The Company shall promptly deliver to each of the
Underwriters and to Underwriters' Counsel copies of the Preliminary Prospectus,
and the Company consents to the use and delivery of the Preliminary Prospectus
by the Underwriters in accordance with Rule 430 and Section 5(b) of the
Securities Act. The Company shall also furnish to each of the Underwriters
copies of the Final Prospectus as requested by any of the Underwriters.
(e) The Company will use its best efforts, in cooperation
with the Representative, at or prior to the time of effectiveness of the
Registration Statement, to qualify the Shares for offering and sale under the
securities laws relating to the
18
offering or sale of the Shares of such jurisdictions as the Representative may
designate and to maintain such qualification in effect for so long as required
for the distribution thereof; except that in no event shall the Company be
obligated in connection therewith to qualify as a foreign corporation or to
execute a general consent to service of process.
(f) The Company will make generally available to its
security holders and to the Underwriters as soon as practicable, but in any
event not later than twelve months after the effective date of the Registration
Statement (as defined in Rule 158(c) under the Securities Act), an earnings
statement of the Company and the Subsidiaries (which need not be audited)
complying with Section 11(a) of the Securities Act and the rules and regulations
of the Commission thereunder (including, at the option of the Company, Rule
158).
(g) During the period of 90 days from the date of the
Prospectus, the Company will not, directly or indirectly, without prior written
consent of the Representative, issue, sell, offer or agree to sell, grant any
option for the sale of, pledge, make any short sale or maintain any short
position, establish or maintain a "put equivalent position" (within the meaning
of Rule 16-a-1(h) under the Exchange Act), enter into any swap, derivative
transaction or other arrangement that transfers to another, in whole or in part,
any of the economic consequences of ownership of the Common Stock (whether any
such transaction is to be settled by delivery of Common Stock, other securities,
cash or other consideration) or otherwise dispose of, any Common Stock (or any
securities convertible into, exercisable for or exchangeable for Common Stock)
or interest therein of the Company or of any of the Subsidiaries, and, other
than for the Registration Statement, the Company will not file a registration
statement under the Securities Act in connection with any of the foregoing by
the Company or for any shareholder, except for registration statements on Form
S-8 relating to employee benefit plans or Form S-4 relating to corporate
reorganizations or other transactions under Rule 145, and the Company will
obtain the undertaking of each of its officers and directors, and each of the
Selling Stockholders not to engage in any of the aforementioned transactions on
their own behalf for a period of ninety [90] days, other than the Company's and
the Selling Stockholders' sale of Shares hereunder and the Company's issuance of
(a) Common Stock upon (i) the conversion or exchange of convertible or
exchangeable securities outstanding on the date hereof; (ii) the exercise of
currently outstanding options; (iii) the grant and exercise of options under, or
the issuance and sale of shares pursuant to, employee stock option and
equivalent employee benefit plans in effect on the date hereof; and (iv) the
issuance of Common Stock to the shareholders of Toymax pursuant to the Merger
Agreement dated February 10, 2002, among the Company, its wholly-owned
subsidiary and Toymax.
(h) During the period of five years from the effective
date of the Registration Statement, the Company will furnish to the
Representative copies of all reports or other communications (financial or
other) furnished to security holders, and will deliver to the Representative (i)
to the extent not publicly filed with the Commission,
19
as soon as they are available, copies of any reports and financial statements
furnished to or filed with the Commission or any national securities exchange on
which any class of securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the Company as
the Representative may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and the Subsidiaries are consolidated in reports furnished to its
security holders generally or to the Commission).
(i) The Company will apply the net proceeds it receives
from the sale of the Shares as set forth under the caption "Use of Proceeds" in
the Prospectus.
(j) The Company will use its best efforts to maintain the
listing of the Shares on NASDAQ.
(k) The Company, during the period when the Prospectus is
required to be delivered under the Securities Act or the Exchange Act, will file
all documents required to be filed with the Commission pursuant to Section 13,
14 or 15 of the Exchange Act within the time periods required by the Exchange
Act and the rules and regulations thereunder.
B. Each Selling Stockholder, severally and not jointly, covenants
and agrees with each Underwriter:
(a) To deliver to the Representative prior to the Closing
Date, a properly completed and executed United States Treasury Department Form
W-8 (if the Selling Stockholder is a non-United States Person) or Form W-9 (if
the Selling Stockholder is a United States Person)
(b) If, at any time prior to the date on which the
distribution of the Shares as contemplated herein and in the Prospectus has been
completed, as determined by the Representative, such Selling Stockholder has
knowledge of the occurrence of any event as a result of which the Prospectus or
the Registration Statement, in each case as then amended or supplemented, would
include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, such Selling Stockholder will
promptly notify the Company and the Representative.
(c) To cooperate to the extent reasonably necessary to
cause the Registration Statement or any post-effective amendment thereto to
become effective at the earliest possible time and to do and perform all things
to be done and performed prior to the Closing Date under this Agreement and to
satisfy all conditions precedent to the delivery of the Shares pursuant to this
Agreement.
(d) To pay or to cause to be paid all transfer taxes with
respect to the Shares to be sold by such Selling Stockholder.
20
(e) To deliver to the Representative on or prior to the
date of this Agreement such Selling Stockholders' lock-up agreement referenced
in Section 7(h) hereof.
6. Payment of Expenses. Whether or not the transactions
contemplated in this Agreement are consummated or this Agreement is terminated,
the Company hereby agrees to pay all costs and expenses incident to the
performance of the obligations of the Company hereunder, including the
following: (i) the fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the Shares under the
Securities Act and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, any Preliminary Prospectus
and the Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers; (ii) the cost of
printing any Agreement among Underwriters, this Agreement, the blue sky
memoranda, closing documents (including any compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of the
Shares; (iii) all expenses in connection with the qualification of the Shares
for offering and sale under state securities laws as provided in Section 5(A)(e)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the blue sky survey;
(iv) all fees and expenses in connection with listing the Shares on the NASDAQ;
(v) all travel expenses of the Company's officers and employees and any other
expense of the Company incurred in connection with attending or hosting meetings
with prospective purchasers of the Shares; (vi) any stock transfer taxes
incurred in connection with this Agreement or the Offering; (vii) the filing
fees incident to, and the fees and disbursements of counsel for the Underwriters
in connection with, securing any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Shares; and (viii) fees
of the Custodian in connection with the offering of the Shares by the Selling
Stockholders, The Company also will pay or cause to be paid: (A) the cost of
preparing stock certificates; (B) the cost and charges of any transfer agent or
registrar; and (C) all other costs and expenses incident to the performance of
its obligations hereunder which are not otherwise specifically provided for in
this Section 6. It is understood, however, that except as provided in this
Section, and Sections 8 and 12 hereof, the Underwriters will pay all of their
own costs and expenses, including the fees of their counsel and stock transfer
taxes on resale of any of the Shares by them. Notwithstanding anything to the
contrary in this Section 6, in the event that this Agreement is terminated
pursuant to Section 7 or 12(b) hereof, or subsequent to a Material Adverse
Change, in each case other than as a result of a breach by the Underwriters of
their obligations under Section 3(a) hereof, the Company will pay all out-of
pocket expenses of the Underwriters incurred in connection herewith.
The Selling Stockholders will pay all fees and expenses related
to the offering of the Shares to be sold by them, including (i) the fees and
disbursements of their counsel, if any, and (ii) any applicable stock transfer
or other taxes related to the offering
21
of their Shares. Notwithstanding the foregoing, nothing herein shall affect any
agreement that the Company and the Selling Stockholders may make for the sharing
or allocation of such costs and expenses set forth in this Section 6.
7. Conditions of Underwriters' Obligations. The obligations of
the Underwriters to purchase and pay for the Firm Shares and the Additional
Shares, as provided herein, shall be subject to the accuracy of the
representations and warranties of the Company and the Selling Stockholders
herein contained, as of the date hereof and as of the Closing Date (for purposes
of this Section 7 "Closing Date" shall refer to the Closing Date for the Firm
Shares and any Additional Closing Date, if different, for the Additional
Shares), to the absence from any certificates, opinions, written statements or
letters furnished to the Representative or to Underwriters' Counsel pursuant to
this Section 7 of any misstatement or omission, to the performance by the
Company and the Selling Stockholders of their respective obligations hereunder,
and to each of the following additional terms and conditions:
(a) The Registration Statement shall have become effective
and all necessary approvals from the NASDAQ shall have been received not later
than, if pricing pursuant to Rule 430A, 5:30 P.M., New York time, on the date of
this Agreement or at such later time and date as shall have been consented to in
writing by the Representative; if the Company shall have elected to rely upon
Rule 430A or Rule 434 of the Rules and Regulations, the Prospectus shall have
been filed with the Commission in a timely fashion in accordance with Section
5(A)(a) hereof and a form of the Prospectus containing information relating to
the description of the Shares and the method of distribution and similar matters
shall have been filed with the Commission pursuant to Rule 424(b) within the
applicable time period; and, at or prior to the Closing Date, no stop order
suspending the effectiveness of the Registration Statement or any post-effective
amendment thereof shall have been issued and no proceedings therefor shall have
been initiated or threatened by the Commission.
(b) At the Closing Date, the Representative shall have
received the favorable written opinion of Feder, Kaszovitz, Isaacson, Weber,
Xxxxx, Bass & Rhine LLP, counsel for the Company, dated the Closing Date,
addressed to the Underwriters in the form attached hereto as Annex I.
(c) At the Closing Date, the Representative shall have
received the favorable written opinion of, Feder, Kaszovitz, Isaacson, Weber,
Xxxxx, Bass & Rhine LLP, counsel for each of the Selling Stockholders, dated the
Closing Date, addressed to the Underwriters in the form attached hereto as Annex
II.
(d) All proceedings taken in connection with the sale of
the Firm Shares and the Additional Shares as herein contemplated shall be
reasonably satisfactory in form and substance to the Representative and to
Underwriters' Counsel, and the Underwriters shall have received from said
Underwriters' Counsel a favorable opinion, dated as of the Closing Date with
respect to the issuance and sale of the Shares,
22
the Registration Statement and the Prospectus and such other related matters as
the Representative may require, and the Company shall have furnished to
Underwriters' Counsel such documents as they reasonably request for the purpose
of enabling them to pass upon such matters.
(e) At the Closing Date, the Representative shall have
received a certificate of the Chief Executive Officer and Chief Financial
Officer of the Company, dated the Closing Date, to the effect that (i) the
condition set forth in subsection (a) of this Section 7 has been satisfied, (ii)
as of the date hereof and as of the Closing Date the representations and
warranties of the Company set forth in Section 1 hereof are accurate, (iii) as
of the Closing Date all agreements, conditions and obligations of the Company to
be performed or complied with hereunder on or prior thereto have been duly
performed or complied with, (iv) the Company and the Subsidiaries have not
sustained any material loss or interference with their respective businesses or
properties from fire, flood, hurricane, accident or other calamity, whether or
not covered by insurance, or from any labor dispute or any legal or governmental
proceeding, and (v) subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus there has not been any
Material Adverse Change in the capital stock or long-term debt, if any, of the
Company or any of the Subsidiaries or any change, or any development involving a
prospective change, in the business, prospects, properties, operations,
condition (financial or otherwise) or results of operations of the Company and
the Subsidiaries when taken as a whole, would result in a Material Adverse
Change except in each case as described in or contemplated by the Prospectus.
(f) At the time this Agreement is executed and at the
Closing Date, the Representative shall have received a comfort letter, from PKF
dated, respectively, as of the date of this Agreement and as of the Closing Date
addressed to the Underwriters and in form and substance reasonably satisfactory
to the Underwriters and Underwriters' Counsel.
(g) The Representative shall have also received from PKF,
a letter stating that the Company's system of internal accounting controls taken
as a whole is sufficient to meet the broad objectives of internal accounting
control insofar as those objectives pertain to the prevention or detection of
errors or irregularities in amounts that would be material in relation to the
financial statements of the Company and its subsidiaries.
(h) Subsequent to the execution and delivery of this
Agreement or, if earlier, the dates as of which information is given in the
Registration Statement (exclusive of any amendment thereof) and the Prospectus
(exclusive of any supplement thereto), there shall not have been any change in
the capital stock or long-term debt, if any, of the Company or any of the
Subsidiaries or any change, or any development involving a prospective change,
in or affecting the condition (financial or otherwise), results of operations,
business, properties or prospects of the Company and the
23
Subsidiaries taken as a whole, including, without limitation, the occurrence of
a fire, flood, explosion or other calamity at any of the properties owned or
leased by the Company or any of its Subsidiaries, the effect of which, in any
such case described above, is, in the judgment of the Underwriters, so material
and adverse as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares on the terms and in the manner
contemplated in the Prospectus (exclusive of any supplement).
(i) The Representative shall have received a lock-up
agreement from each person who is a director or an executive officer of the
Company, each Selling Stockholder and each other person listed on Schedule III
hereto substantially in the form attached hereto as Annex III.
(j) At the Closing Date, the Shares shall have been
approved for listing on the NASDAQ.
(k) At the Closing Date, the NASD shall have confirmed
that it has not raised any objection with respect to the fairness and
reasonableness of the underwriting terms and arrangements.
(l) At the Closing Date, the Representative shall have
received a certificate of an authorized representative of the Selling
Stockholders, dated the Closing Date, to the effect that the representations and
warranties of the Selling Stockholders set forth in Section 2 hereof are
accurate and that each of the Selling Stockholders has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date.
(m) On or prior to the Closing Date, the Representative
shall have received a properly completed and executed United States Treasury
Department Form W-8 (if the Selling Stockholder is a non-United States Person)
or Form W-9 (if the Selling Stockholder is a United States Person) (or other
applicable form or statement specified by Treasury Department regulations in
lieu thereof) from each Selling Stockholder.
(n) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses.
(o) The Company shall have furnished the Underwriters and
Underwriters' Counsel with such other certificates, opinions or other documents
as they may have reasonably requested.
In the event the Underwriters exercise their option to purchase
the Additional Shares, all of the conditions in this Section 7 must be satisfied
in connection with such Additional Shares on or prior to the Additional Closing
Date.
24
If any of the conditions specified in this Section 7 shall not
have been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to the
Representative or to Underwriters' Counsel pursuant to this Section 7 shall not
be reasonably satisfactory in form and substance to the Representative and to
Underwriters' Counsel, all obligations of the Underwriters hereunder may be
cancelled by the Representative at, or at any time prior to, the Closing Date
and the obligations of the Underwriters to purchase the Additional Shares may be
cancelled by the Representative at, or at any time prior to, the Additional
Closing Date. Notice of such cancellation shall be given to the Company in
writing or by telephone. Any such telephone notice shall be confirmed promptly
thereafter in writing.
8. Indemnification.
(a) The Company shall indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act
against any and all losses, liabilities, claims, damages and expenses whatsoever
as incurred (including but not limited to reasonable attorneys' fees and any and
all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement for the registration of the Shares, as
originally filed or any amendment thereof, or any related Preliminary Prospectus
or the Prospectus, or in any supplement thereto or amendment thereof, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Company will not be liable
in any such case to the extent but only to the extent that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter through the
Representative expressly for use therein (which the Company and the Underwriters
agree is limited to the "Underwriter's Information" as defined in Section 1(b)
hereof). This indemnity agreement will be in addition to any liability that the
Company may otherwise have including under this Agreement.
(b) Each Selling Stockholder, jointly and not severally,
agrees to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Exchange Act against any and all losses,
liabilities, claims, damages and expenses whatsoever as incurred (including but
not limited to reasonable attorneys' fees and any
25
and all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever and any
and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact that
was provided by such Selling Stockholder and contained in the Registration
Statement for the registration of the Shares, as originally filed or any
amendment thereof, or any related Preliminary Prospectus or the Prospectus, or
in any supplement thereto or amendment thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact relating
to such Selling Stockholder required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that in no such case
shall any Selling Stockholder be liable or responsible for any amount in excess
of the proceeds (net of the underwriting discount but before deducting other
expenses) applicable to the Shares sold by such Selling Stockholder pursuant to
the transactions contemplated hereby. This indemnity agreement will be in
addition to any liability that the Selling Stockholders may otherwise have
including under this Agreement.
(c) Each Underwriter severally, and not jointly, shall
indemnify and hold harmless the Company and each Selling Shareholder, each of
the directors of the Company, each of the officers of the Company who shall have
signed the Registration Statement, and each other person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act, against any losses, liabilities, claims, damages and
expenses whatsoever as incurred (including but not limited to reasonable
attorneys' fees and any and all expenses whatsoever incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or any
claim, and any and all amounts paid in settlement of any claim or litigation),
jointly or severally, to which they or any of them may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement for the registration of
the Shares, as originally filed or any amendment thereof, or any related
preliminary prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter through the Representative expressly for use
therein(which the Company and the Underwriters agree is limited to the
"Underwriter's Information" as defined in Section 1(b) hereof); provided,
however, that in no case shall any Underwriter be liable or responsible for any
26
amount in excess of the underwriting discount applicable to the Shares purchased
by such Underwriter hereunder. This indemnity will be in addition to any
liability that any Underwriter may otherwise have including under this
Agreement.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of any claims or the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify each party
against whom indemnification is to be sought in writing of the claim or the
commencement thereof (but the failure so to notify an indemnifying party shall
not relieve the indemnifying party from any liability which it may have under
this Section 8 to the extent that it is not materially prejudiced as a result
thereof and in any event shall not relieve it from any liability that such
indemnifying party may have otherwise than on account of the indemnity agreement
hereunder). In case any such claim or action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, an
indemnifying party may participate, at its own expense in the defense of such
action, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided however, that counsel to the
indemnifying party shall not (except with the written consent of the indemnified
party) also be counsel to the indemnified party. Notwithstanding the foregoing,
the indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action,
(iii) the indemnifying party does not diligently defend the action after
assumption of the defense, or (iv) such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by the
indemnifying parties. No indemnifying party shall, without the prior written
consent of the indemnified parties, effect any settlement or compromise of, or
consent to the entry of judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could have been sought under Section 8 or 9 hereof (whether or not
the indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of the
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim, (ii) does not include a statement as to, or
an admission of, fault, culpability or a failure to act, by or on behalf of
27
the indemnified party and (iii) the indemnifying party reaffirms its
indemnification obligations pursuant to this Agreement.
9. Contribution. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 8 hereof is
for any reason held to be unavailable from any indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company, the
Selling Stockholders and the Underwriters shall contribute to the aggregate
losses, claims, damages, liabilities and expenses of the nature contemplated by
such indemnification provision (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claims asserted, but after deducting in the
case of losses, claims, damages, liabilities and expenses suffered by the
Company and each Selling Stockholder, any contribution received by the Company
and/or the Selling Stockholder from persons, other than the Underwriters, who
may also be liable for contribution, including persons who control the Company
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, officers of the Company who signed the Registration Statement and
directors of the Company) as incurred to which the Company, each Selling
Stockholder and one or more of the Underwriters may be subject, in such
proportions as are appropriate to reflect the relative benefits received by the
Company and the Selling Stockholders, on the one hand, and the Underwriters, on
the other hand, from the offering of the Shares or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in Section 8
hereof, in such proportions as are appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company and the
Selling Stockholders on the one hand and the Underwriters on the other hand in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company and the Selling
Stockholders, on the one hand, and the Underwriters, on the other hand, shall be
deemed to be in the same proportion as (x) the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting expenses)
received by the Company and the Selling Stockholders bear to (y) the
underwriting discount received by the respective Underwriters, respectively, in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault of each of the Company, any Selling Stockholder and of the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company, the Selling Stockholder or the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company, the Selling Stockholders and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 9 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by
28
any other method of allocation which does not take account of the equitable
considerations referred to above in this Section 9. The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 9 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission. Notwithstanding the provisions of
this Section 9, (i) no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission and (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 9, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act shall have the same rights to contribution as
such Underwriter, and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
each officer of the Company who shall have signed the Registration Statement and
each director of the Company shall have the same rights to contribution as the
Company, subject in each case to clauses (i) and (ii) of this Section 9. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties,
notify each party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 9 or otherwise. The obligations of the Underwriters to
contribute pursuant to this Section 9 are several in proportion to the
respective number of Shares purchased by each of the Underwriters hereunder and
not joint.
29
10. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in
its or their obligation to purchase Firm Shares or Additional Shares hereunder,
and if the Firm Shares or Additional Shares with respect to which such default
relates do not (after giving effect to arrangements, if any, made by the
Representative pursuant to subsection (b) below) exceed in the aggregate 10% of
the number of Firm Shares or Additional Shares, the Firm Shares or Additional
Shares to which the default relates shall be purchased by the non-defaulting
Underwriters in proportion to the respective proportions which the numbers of
Firm Shares set forth opposite their respective names in Schedule I hereto bear
to the aggregate number of Firm Shares set forth opposite the names of the
non-defaulting Underwriters.
(b) In the event that such default relates to more than
10% of the Firm Shares or Additional Shares, as the case may be, the
Representative may in its sole discretion arrange for itself or for another
party or parties (including any non-defaulting Underwriter or Underwriters who
so agree) to purchase such Firm Shares or Additional Shares, as the case may be,
to which such default relates on the terms contained herein. In the event that
within five calendar days after such a default the Representative does not
arrange for the purchase of the Firm Shares or Additional Shares, as the case
may be, to which such default relates as provided in this Section 10, this
Agreement or, in the case of a default with respect to the Additional Shares,
the obligations of the Underwriters to purchase and of the Company to sell the
Additional Shares shall thereupon terminate, without liability on the part of
the Company or the Selling Stockholders with respect thereto (except in each
case as provided in Sections 6, [except for the last sentence thereof] 8(a) and
9 hereof with respect to the Company and Sections 8(b) and 9 hereof with respect
to the Selling Stockholders) or the Underwriters, but nothing in this Agreement
shall relieve a defaulting Underwriter or Underwriters of its or their
liability, if any, to the other Underwriters and the Company and the Selling
Stockholders for damages occasioned by its or their default hereunder.
(c) In the event that the Firm Shares or Additional Shares
to which the default relates are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as aforesaid,
the Representative or the Company shall have the right to postpone the Closing
Date or Additional Closing Date, as the case may be for a period, not exceeding
five business days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements, and the Company agrees to file promptly any
amendment or supplement to the Registration Statement or the Prospectus, which,
in the opinion of Underwriters' Counsel, may thereby be made necessary or
advisable. The term "Underwriter" as used in this Agreement shall include any
party substituted under this Section 10 with like effect as if it had originally
been a party to this Agreement with respect to such Firm Shares and Additional
Shares.
30
11. Survival of Representations and Agreements. All
representations and warranties, covenants and agreements of the Underwriters,
the Company and the Selling Stockholders contained in this Agreement or in
certificates of officers of the Company or any Subsidiary or of the Selling
Stockholders submitted hereto or thereto, including the agreements contained in
Section 6, the indemnity agreements contained in Section 8 and the contribution
agreements contained in Section 9, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Underwriter
or any controlling person thereof or by or on behalf of the Company or the
Selling Stockholders, any of their officers and directors or any controlling
person thereof, and shall survive delivery of and payment for the Shares to and
by the Underwriters. The representations contained in Sections 1 and 2 and the
agreements contained in Sections 6, 8, 9 11 and 12(d) hereof shall survive the
termination of this Agreement, including termination pursuant to Section 10 or
12 hereof.
12. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective, upon the later
of (i) when the Representative and the Company shall have received notification
of the effectiveness of the Registration Statement or (ii) the execution of this
Agreement. If either the public offering price or the purchase price per Share
has not been agreed upon prior to 5:00 P.M., New York City time, on the fifth
full business day after the Registration Statement shall have become effective,
this Agreement shall thereupon terminate without liability to the Company, the
Selling Stockholders or the Underwriters except as herein expressly provided.
Until this Agreement becomes effective as aforesaid, it may be terminated by the
Company by notifying the Representative or by the Representative notifying the
Company. Notwithstanding the foregoing, the provisions of this Section 12 and of
Sections 1, 2, 6, 8 and 9 hereof shall at all times be in full force and effect.
(b) The Representative shall have the right to terminate
this Agreement at any time prior to the Closing Date or to terminate the
obligations of the Underwriters to purchase the Additional Shares at any time
prior to the Additional Closing Date, as the case may be, if (A) any domestic or
international event or act or occurrence has materially disrupted, or in the
opinion of the Representative will in the immediate future materially disrupt,
the market for the Company's securities or securities in general; or (B) if
trading on the New York Stock Exchange, the NASDAQ or the American Stock
Exchange shall have been suspended, or minimum or maximum prices for trading
shall have been fixed, or maximum ranges for prices for securities shall have
been required, on the New York Stock Exchange, the NASDAQ or the American Stock
Exchange by the New York Stock Exchange, the NASDAQ or the American Stock
Exchange or by order of the Commission or any other governmental authority
having jurisdiction; or (C) if a banking moratorium has been declared by any
state or federal authority or if any material disruption in commercial banking
or securities settlement or clearance services shall have occurred; or (D) any
downgrading shall have occurred in
31
the Company's corporate credit rating or the rating accorded the Company's debt
securities, if any, by any "nationally recognized statistical rating
organization" as that term is defined by the Commission for purposes of Rule
436(g)(2) under the Securities Act or if any such organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's debt securities; or
(E) (i) if there shall have occurred any outbreak or escalation of hostilities
or acts of terrorism involving the United States or there is a declaration of a
national emergency or war by the United States or (ii) if there shall have been
any other calamity or crisis or any change in political, financial or economic
conditions if the effect of any such event in (i) or (ii) in the judgment of the
Representative makes it impracticable or inadvisable to proceed with the
offering, sale and delivery of the Firm Shares or the Additional Shares, as the
case may be, on the terms and in the manner contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 12
shall be in writing.
(d) If this Agreement shall be terminated pursuant to any
of the provisions hereof (otherwise than pursuant to (i) notification by the
Representative as provided in Section 12(a) hereof or (ii) Section 10(b)), or if
the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by the Representative, reimburse the
Underwriters for all out-of-pocket expenses (including the fees and expenses of
their counsel), incurred by the Underwriters in connection herewith as provided
in Section 6.
13. Notices. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing, and:
(a) if sent to any Underwriter, shall be mailed,
delivered, or faxed and confirmed in writing, to such Underwriter c/o Bear,
Xxxxxxx & Co. Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Equity Capital Markets, with a copy to Manatt, Xxxxxx & Xxxxxxxx, LLP, 00000 X.
Xxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxx,
Esq.
(b) if sent to the Company, shall be mailed, delivered, or
faxed and confirmed in writing to the Company and its counsel at the addresses
set forth in the Registration Statement, Attention: Xxxx X. Xxxxxxx, Chief
Financial Officer, with a copy to Feder, Kaszovitz, Isaacson, Weber, Xxxxx, Bass
& Rhine, LLP, Attn: Xxxx Xxxxxxxxx;
(c) if sent to the Selling Stockholders, shall be mailed,
delivered, or faxed and confirmed in writing to the Custodian c/o the Company.
32
provided, however, that any notice to an Underwriter pursuant to Section 8 shall
be delivered or sent by mail or facsimile transmission to such Underwriter at
its address set forth in its acceptance facsimile to the Representative, which
address will be supplied to any other party hereto by the Representative upon
request. Any such statements, requests, notices or agreements shall take effect
at the time of receipt thereof.
14. Parties. This Agreement shall insure solely to the benefit
of, and shall be binding upon, the Underwriters, and the Company and the Selling
Stockholders the controlling persons, directors, officers, employees and agents
referred to in Sections 8 and 9 hereof, and their respective successors and
assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provision herein contained. This Agreement and all conditions
and provisions hereof are intended to be for the sole and exclusive benefit of
the parties hereto and their respective successors, and said controlling
persons, and officers and directors and their heirs and legal representatives,
and it is not for the benefit of any other person, firm or corporation. The term
"successors and assigns" shall not include a purchaser, in its capacity as such,
of Shares from any of the Underwriters.
15. Governing Law. This Agreement shall be governed by and
construed in accordance with the substantive laws and not the conflict laws of
the State of New York. Each of the parties hereto irrevocably consents to the
exclusive jurisdiction of the federal district court for the Southern District
of New York in connection with any matter based upon or arising out of this
Agreement or the matters contemplated herein, agrees that process may be served
upon them in any manner authorized by the laws of the State of New York for such
persons and waives and covenants not to assert or plead any objection that they
might otherwise have to such jurisdiction and such process.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be delivered by facsimile and shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
17. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
18. Time is of the Essence. Time shall be of the essence of this
Agreement. As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
[signature page follows]
33
If the foregoing correctly sets forth the understanding among the
Representative, the Company and the Selling Stockholders, please so indicate in
the space provided below for that purpose, whereupon this letter shall
constitute a binding agreement among the parties. It is understood that
acceptance of this letter by the Representative on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company for
examination, upon request, but without warranty on the part of the
Representative as to the authority of the signers thereof.
Very truly yours,
JAKKS PACIFIC, INC.
By:
---------------------------------------------
Selling Stockholders
Listed in Schedule II
By:
---------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: as Attorney-in-Fact for the Selling
Stockholders
Accepted as of the date first above written
BEAR, XXXXXXX & CO. INC.
By:
------------------------------------------
Name:
Title:
On behalf of themselves and the other
Underwriters named in Schedule I hereto.
34
SCHEDULE I
NUMBER OF FIRM SHARES
NAME OF UNDERWRITER TO BE PURCHASED
------------------- ---------------------
Bear, Xxxxxxx & Co. Inc............................
U.S. Bancorp Xxxxx Xxxxxxx, Inc. ..................
Advest, Inc. ......................................
Total:...................................
===============
I-1
SCHEDULE II
NUMBER OF FIRM MAXIMUM NUMBER OF
SHARES TO BE SOLD ADDITIONAL SHARES TO BE
NAME TO THE UNDERWRITERS SOLD TO THE UNDERWRITERS
---- ------------------- ------------------------
JAKKS Pacific, Inc.
Xxxx Xxxxxxxx 300,000 0
Xxxxxxx X. Xxxxxx 150,000 0
Xxxxxx X. Xxxxx 10,000 0
Xxxxxxx X. Xxxxxx 10,000 0
Xxxxxx X. Xxxxx 30,000 0
II-1
ANNEX I
Form of Opinion of
Feder, Kaszovitz, Isaacson, Weber, Xxxxx, Bass & Rhine LLP
(i) Each of the Company and the Subsidiaries has been duly
organized or formed and is validly existing as a corporation, partnership or
limited liability company in good standing under the laws of its jurisdiction of
incorporation or formation with full power and corporate and all other necessary
authority to own its properties and conduct its business as described in the
Prospectus.
(ii) Each of the Company and the Subsidiaries is duly qualified
and in good standing as a foreign corporation in each jurisdiction in which the
character or location of its properties (owned, leased or licensed) or the
nature or conduct of its business makes such qualification necessary, except for
those failures to be so qualified or in good standing which will not in the
aggregate have a Material Adverse Effect.
(iii) The Company has full right, power and authority to execute
and deliver the Underwriting Agreement and to issue and sell the Shares being
sold by it and to perform its obligations under the Underwriting Agreement, and
all corporate action required to be taken for the due and proper authorization,
execution and delivery of the Underwriting Agreement and the issuance and sale
of the Shares and the consummation of the transactions contemplated by the
Underwriting Agreement and as described in the Prospectus have been duly and
validly taken.
(iv) The Underwriting Agreement has been duly and validly
authorized, executed and delivered by the Company.
(v) The Company has an authorized capitalization as set forth in
the Registration Statement and the Prospectus. All of the issued shares of
capital stock of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and are not now in violation of or subject to
any preemptive or, to the best of such counsel's knowledge, similar rights that
entitle or will entitle any person to acquire any Shares from the Company upon
issuance thereof by the Company; and the Common Stock, the Firm Shares and the
Additional Shares conform to the descriptions thereof contained in the
Registration Statement and the Prospectus. All of the issued shares of capital
stock of each subsidiary of the Company have been duly and validly authorized
and issued and are fully paid and non-assessable and (except for directors'
qualifying shares) are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims.
(vi) The Shares to be delivered on the Closing Date have been
duly and validly authorized and, when delivered by the Company against payment
therefor in accordance with the Underwriting Agreement, will be duly and validly
issued, fully paid and non-assessable and will not have been issued in violation
of or subject to preemptive
or similar rights that entitle or will entitle any person to acquire any Shares
from the Company upon issuance thereof by the Company.
(vii) All of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and issued and
are fully paid and non-assessable and (except for directors' qualifying shares)
are owned directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims.
(viii) The Common Stock currently outstanding is listed on the
NASDAQ National Market, and the Shares to be sold under the Underwriting
Agreement to the Underwriters are duly authorized for listing on the NASDAQ
National Market.
(ix) The Company has not granted any registration rights with
respect to any of its securities that will be triggered by the consummation of
the Offering or the transactions contemplated by the Underwriting Agreement
other than such rights that have been duly waived.
(x) No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or any public,
governmental, or regulatory agency or body having jurisdiction over the Company
or any of the Subsidiaries or any of their respective properties or assets is
required for the issuance, sale and delivery of the Shares, the execution,
delivery and performance of the Underwriting Agreement or the consummation of
the transactions contemplated thereby, except for (1) such as may be required
under state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters (as to which such counsel need
express no opinion), (2) such as have been made or obtained under the Securities
Act and (3) such as are required by the National Association of Securities
Dealers, Inc.
(xi) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any of the
Subsidiaries is a party or of which any property of the Company or any of the
Subsidiaries is the subject which, if determined adversely to the Company or any
of the Subsidiaries, would individually or in the aggregate have a Material
Adverse Effect; and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(xii) Neither the Company nor any of the Subsidiaries is in
violation of its respective charter or by-laws and neither the Company nor any
of the Subsidiaries is in default in the performance of any obligation,
agreement, covenant or condition contained in any indenture, loan agreement,
mortgage, lease or other agreement or instrument that is material to the Company
and the Subsidiaries, taken as a whole, to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries or
their respective properties may be bound.
(xiii) Each of the Company and the Subsidiaries has such
authorizations of, and has made all filings with and notices to, all
governmental or regulatory authorities
and self-regulatory organizations and all courts and other tribunals, including,
without limitation, under any applicable environmental laws, as are necessary to
own, lease, license and operate its respective properties and to conduct its
business, except where the failure to have any such authorization or to make any
such filing or notice would not, singly or in the aggregate, have a Material
Adverse Effect; each such authorization is valid and in full force and effect
and each of the Company and the Subsidiaries is in compliance with all the terms
and conditions thereof and with the rules and regulations of the authorities and
governing bodies having jurisdiction with respect thereto; and no event has
occurred (including, without limitation, the receipt of any notice from any
authority or governing body) which allows or, after notice or lapse of time or
both, would allow, revocation, suspension or termination of any such
authorization or results or, after notice or lapse of time or both, would result
in any other impairment of the rights of the holder of any such authorization;
and such authorizations contain no restrictions that are burdensome to the
Company or any of the Subsidiaries; except where such failure to be valid and in
full force and effect or to be in compliance, the occurrence of any such event
or the presence of any such restriction would not, singly or in the aggregate,
have a Material Adverse Effect.
(xiv) The Registration Statement and the Prospectus and any
amendments thereof or supplements thereto (other than the financial statements
and schedules and other financial data included or incorporated by reference
therein, as to which no opinion need be rendered) comply as to form in all
material respects with the requirements of the Securities Act and the Rules and
Regulations. There are no known amendments to the Registration Statement and
there are no documents required by the Rules and Regulations to be filed in
connection with, incorporated by reference, or described in the Registration
Statement that have not been so filed, incorporated by reference or described.
(xv) The statements under the captions "Prospectus Summary",
"Risk Factors", "Business", "Certain Relationships and Related Transactions",
"Description of Securities", and "Underwriting" in the Prospectus, Item 15 of
Part II of the Registration Statement and the statements under the captions
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", "Legal Proceedings" and "Management" in the Form 10-K, insofar as
such statements constitute a summary of the legal matters, documents or
proceedings referred to therein, fairly present the information called for with
respect to such legal matters, documents and proceedings.
(xvi) No contract or agreement is required to be filed as an
exhibit to the Registration Statement or to a document incorporated by reference
into the Registration Statement that is not so filed, and no contract or
agreement is required to be described in the Registration Statement or a
document incorporated by reference into the Registration Statement that is not
described as required.
(xvii) The documents filed under the Exchange Act and
incorporated by reference in the Registration Statement and the Prospectus or
any amendment thereof or supplement thereto (other than the financial statements
and schedules and other financial data included or incorporated by reference
therein, as to which no opinion need be
rendered) when they became effective or were filed with the Commission, complied
as to form in all material respects with the Exchange Act and the rules and
regulations of the Commission thereunder; and such counsel has no reason to
believe that any of such documents, when such documents were so filed,
contained, an untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such documents were so filed, not
misleading.
(xviii) The Registration Statement is effective under the
Securities Act, and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement or any post-effective
amendment thereof has been issued and no proceedings therefore have been
initiated or threatened by the Commission and all filings required by Rule
424(b) and Rule 430A of the Rules and Regulations have been made in the manner
and within the time period required.
(xix) The issuance and sale of the Shares by the Company, the
execution, delivery, and performance of the Underwriting Agreement, compliance
by the Company with all provisions of the Underwriting Agreement and the
consummation of the transactions contemplated thereby do not and will not (A)
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default (or an event which with notice or lapse of time, or both,
would constitute a default) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company or
any of the Subsidiaries pursuant to, any indenture, mortgage, deed of trust,
loan agreement or any other agreement, instrument, franchise, license or permit
known to such counsel to which the Company or any of the Subsidiaries is a party
or by which any of the Company or any of the Subsidiaries or their respective
properties or assets is subject or may be bound or (B) violate or conflict with
any provision of the certificate of incorporation, by-laws, certificate of
formation, partnership agreement, limited liability agreement or other
organizational documents of the Company or any of the Subsidiaries, or, to the
best knowledge of such counsel, any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency or body
having jurisdiction over the Company or any of the Subsidiaries or any of their
respective properties or assets.
(xx) The Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as described
in the Prospectus, will not be, an "investment company" as such term is defined
in the Investment Company Act of 1940, as amended.
In addition, such opinion shall also contain a statement that
such counsel has participated in conferences with officers and representatives
of the Company, representatives of the independent public accountants for the
Company and the Underwriters at which the contents of the Registration Statement
and the Prospectus and related matters were discussed, and no facts have come to
the attention of such counsel that would lead such counsel to believe that
either the Registration Statement, at the time it became effective (including
the information deemed to be part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A(b) or Rule 434, if
applicable), or any amendment thereof made prior to the Closing Date, as of the
date of such amendment, contained or incorporated by reference any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading or
that the Prospectus (including the documents incorporated by reference therein),
as of its date (or any amendment thereof or supplement thereto made prior to the
Closing Date as of the date of such amendment or supplement) and as of the
Closing Date, contained or contains an untrue statement of a material fact or
omitted or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (it being understood that such counsel need
express no belief or opinion with respect to the financial statements and
schedules and other financial data included or incorporated by reference
therein).
ANNEX II
Form of Opinions of Selling Stockholders' Counsel
(i) Each of the Selling Stockholders has full legal right, power
and authority, and any approval required by law (other than any approval imposed
by the applicable state securities and Blue Sky laws), to enter into the
Underwriting Agreement, the Custody Agreement and the Power of Attorney executed
by each of them and to sell, assign, transfer and deliver the Shares and the
Additional Shares to be sold by such Selling Stockholder in the manner provided
in the Underwriting Agreement.
(ii) Each of the Selling Stockholders has good and valid title to
the certificates for the Shares and the Additional Shares to be sold by such
Selling Stockholder, and upon delivery thereof pursuant hereto and payment
therefor, good and clear title will pass to the Underwriters, severally, free
and clear of all restrictions on transfer, liens, encumbrances, security
interests and claims whatsoever.
(iii) The Underwriting Agreement has been duly and validly
authorized, executed and delivered by each of the Selling Stockholders.
(iv) The Custody Agreement and Power of Attorney appointing
_________________ as the Custodian and _______________ as the Selling
Stockholders' Attorney-In-Fact, with regard to the transactions contemplated
hereby and by the Registration Statement, have been duly authorized, executed
and delivered by or on behalf of each Selling Stockholder and are the valid and
binding agreements of each Selling Stockholder, enforceable in accordance with
their terms, and pursuant to such power of attorney, each Selling Stockholder
has authorized such Attorney-In-Fact to execute and deliver on each such Selling
Stockholder's behalf the Underwriting Agreement and any other document necessary
or desirable in connection with the transactions contemplated thereby and to
deliver the Shares and the Additional Shares to be sold by such Selling
Stockholder pursuant to the Underwriting Agreement.
(v) The execution, delivery and performance of the Underwriting
Agreement by each of the Selling Stockholders, compliance by each of the Selling
Stockholders with all the provisions hereof and the consummation of the
transactions contemplated hereby will not require any consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body (except such as may be required under the
Securities Act, state securities laws or Blue Sky laws) and will not conflict
with or constitute a breach of any of the terms or provisions of, or a default
under, any agreement, indenture or other instrument to which any Selling
Stockholder is a party or by which any Selling Stockholder or property of such
Selling Stockholder is bound, will not violate the charter, bylaws, certificate
of formation, partnership agreement, limited liability agreement or other
organizational documents of such Selling Stockholder and will not violate or
conflict with any law, statute, administrative regulation or ruling, or
judgment, order or decree
of any court or government instrumentality or agency applicable to any Selling
Stockholder or property of any Selling Stockholder.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to Underwriters'
Counsel) of other counsel reasonably acceptable to Underwriters' Counsel,
familiar with the applicable laws; and (B) as to matters of fact, to the extent
they deem proper, on certificates of the Selling Stockholders provided that
copies of any such statements or certificates shall be delivered, in advance, to
Underwriters' Counsel. The opinion of such counsel shall state that the opinion
of any such other counsel is in form satisfactory to such counsel and, in their
opinion, you and they are justified in relying thereon.
ANNEX III
_______________ __, 2002
BEAR, XXXXXXX & CO. INC.
as Representatives of the
several Underwriters
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Equity Capital Markets
JAKKS Pacific, Inc. Lock-Up Agreement
Ladies and Gentlemen:
The undersigned refers to the proposed Underwriting Agreement (the
"Underwriting Agreement") between JAKKS Pacific, Inc., a Delaware corporation
(the "Company"), and you as the representative of the Underwriters named therein
(the "Underwriters") relating to an underwritten public offering (the
"Offering") of common stock, $0.001 par value (the "Common Stock"), of the
Company.
In order to induce you and the other Underwriters to enter into the
Underwriting Agreement, the undersigned hereby agrees that, without the prior
written consent of Bear, Xxxxxxx & Co. Inc., the undersigned will not, directly
or indirectly, during the period from the date hereof until ninety (90) days
from the date of the final prospectus for the Offering (the "Lock-Up Period"),
(i) offer, sell, agree to offer or sell, solicit offers to purchase, grant any
call option or purchase any put option with respect to, pledge, loan or
otherwise dispose of any Relevant Security, (ii) establish or increase a "put
equivalent position" or liquidate or decrease a "call equivalent position" with
respect to any Relevant Security (in each case within the meaning of Section 16
of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder), or otherwise enter into any swap,
derivative or other transaction or arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of any Relevant
Security, whether or not such transaction is to be settled by delivery of
Relevant Securities, other securities, cash or other consideration or (iii)
announce publicly an intention to do any of the same.
As used in this letter agreement, "Relevant Security" means the Common
Stock, any other equity security of the Company or any of its subsidiaries, any
options or warrants to purchase any shares of Common Stock, and any security
convertible into, or exercisable or exchangeable for, any Common Stock or other
such equity security, in each case whether now owned or hereafter acquired.
The undersigned hereby further agrees that, during the Lock-up Period,
the undersigned (x) will not file or participate in the filing with the
Securities and Exchange Commission of any registration statement, or circulate
or participate in the circulation of any preliminary or final prospectus or
other disclosure document with respect to any proposed offering or sale of a
Relevant Security and (y) will not exercise any rights the undersigned may have
to require registration with the Securities and Exchange Commission of any
proposed offering or sale of a Relevant Security.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this letter agreement and that this
letter agreement constitutes the legal, valid and binding obligation of the
undersigned, enforceable in accordance with its terms. Upon request, the
undersigned will execute any additional documents necessary in connection with
enforcement hereof. Any obligations of the undersigned shall be binding upon the
successors and assigns of the undersigned from the date first above written.
This letter agreement shall be governed by and construed in accordance
with the laws of the State of New York. Delivery of a signed copy of this letter
by telecopier or facsimile transmission shall be effective as delivery of the
original hereof.
Very truly yours,
By:
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Print Name:
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