Exhibit 1
WARRANT AMENDMENT AGREEMENT
This Warrant Amendment Agreement (this "Agreement") is made as of January
30, 2003 by and among Hasbro, Inc., a Rhode Island corporation (the "Company"),
Lucasfilm Ltd., a California corporation ("Lucasfilm"), and Xxxxx Licensing
Ltd., a California corporation ("Xxxxx Licensing," and together with Lucasfilm,
"Xxxxx").
WHEREAS, the Company has previously issued the following warrants to Xxxxx
(each a "Warrant" and collectively, the "Warrants"): (i) Warrant to Purchase
Shares of Common Stock dated October 14, 1997 issued to Lucasfilm ("1997
Lucasfilm Warrant"); (ii) Warrant to Purchase Shares of Common Stock dated
October 14, 1997 issued to Xxxxx Licensing ("1997 Xxxxx Licensing Warrant");
(iii) Warrant to Purchase Shares of Common Stock dated October 30, 1998 issued
to Lucasfilm ("1998 Lucasfilm Warrant"); and (iv) Warrant to Purchase Shares of
Common Stock dated October 30, 1998 issued to Xxxxx Licensing ("1998 Xxxxx
Licensing Warrant"); and
WHEREAS, the Company and Xxxxx have determined that it is to their mutual
advantage to extend the Exercise Period (as such term is defined in each
respective Warrant) of each Warrant and to enter into certain other agreements
with respect to the Warrants.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants herein contained and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereby agree as follows.
1. Definitions. The following terms, when used herein, shall have the
meanings defined below. Capitalized terms not defined herein shall have the
meanings as defined in the Warrants.
"Call Notice" means the written notice given pursuant to Section 4 of this
Agreement by the Company to Xxxxx of the Company's exercise of its option to
purchase all, but not less than all, of the then outstanding unexercised
Warrants from Xxxxx.
"Call Period" means the period commencing on the date of this Agreement
and running until and including October 13, 2016.
"Call Price" means, at the Company's sole option, either (i) $200,000,000
in cash or (ii) the number of shares of Common Stock with an aggregate Market
Value as of the date that is two (2) business days prior to the Purchase Date
equal to $220,000,000, in each case as such price may be adjusted pursuant to
Section 4(e) hereof. In the event that the Company elects to pay the Call Price
in shares of Common Stock, the number of shares of Common Stock to be paid as
the Call Price will not be adjusted for changes in the Market Value occurring
after the date that is two (2) business days prior to the Purchase Date.
"Common Stock" means the Company's Common Stock, par value $0.50 per
share, any stock into which such stock shall have been changed or any stock
resulting from any
reclassification of such stock, and any other capital stock of the Company of
any class or series now or hereafter authorized having the right to share in
distributions either of earnings or assets of the Company without limit as to
the amount or percentage.
"Market Value" means, with respect to a share of Common Stock at any date:
a. If shares of Common Stock are then listed or admitted to trading
on any national securities exchange or quoted on Nasdaq, the average of the
daily closing prices for the twenty trading days before such date. The closing
price for each day shall be the last sale price on such date or, if no such sale
takes place on such date, the average of the closing bid and asked prices on
such date, in each case as officially reported on the principal national
securities exchange or national market system on which such shares are then
listed, admitted to trading or traded;
b. If no shares of Common Stock are then listed or admitted to
trading on any national securities exchange or quoted on Nasdaq, the average of
the reported closing bid and asked prices thereof on the trading day before such
date in the over-the-counter market as shown by the OTCBB or BBX or, if such
shares are not then quoted in such systems, as published by the National
Quotation Bureau, Incorporated or any similar successor organization, and in
either case as reported by any member firm of the New York Stock Exchange
selected by the Company and reasonably acceptable to Xxxxx; or
c. If no shares of Common Stock are then listed or admitted to
trading on any national securities exchange or traded on any national market
system, and if no closing bid and asked prices thereof are then so quoted or
published in the over-the-counter market, the market value of a share of Common
Stock shall be as determined by an investment bank selected by the Company with
the approval of Xxxxx (which approval shall not be unreasonably withheld or
delayed), the costs of such investment bank to be paid by the Company.
"Option Shares" means any shares of Common Stock that may be issued by the
Company upon the Sale Date, with respect to the Put Option, or the Purchase
Date, with respect to the Call Option, and, in the limited situation set forth
in Section 3(f), such additional shares of Common Stock as may be issued after
the Sale Date upon the Company's obtaining additional authorized shares. Option
Shares also includes any securities that may be issued or distributed or
issuable in respect of Option Shares by way of conversion, dividend, stock split
or similar transaction.
"Put Notice" means the written notice given pursuant to Section 3 of this
Agreement by Xxxxx to the Company of Xxxxx'x exercise of its option to sell all,
but not less than all, of the Warrants to the Company.
"Put Period" means the period commencing on the date of this Agreement and
running until and including the fifth anniversary of the date hereof.
"Put Price" means, at the Company's sole option, either (i) $100,000,000
in cash or (ii) the number of shares of Common Stock with an aggregate Market
Value as of the date that is two (2) business days prior to the Sale Date equal
to $110,000,000. In the event that the Company elects to pay the Put Price in
shares of Common Stock, the number of shares of
-2-
Common Stock to be paid as the Put Price will not be adjusted for changes in the
Market Value occurring after the date that is two (2) business days prior to the
Sale Date.
"Registrable Securities" means the Option Shares and any securities that
may be issued or distributed or issuable in respect of Option Shares by way of
conversion, dividend, stock split or similar transaction; provided, however,
that any such Registrable Securities shall cease to be Registrable Securities to
the extent (i) a Registration Statement with respect to the sale of such
Registrable Securities has been declared effective under the Securities Act and
such Registrable Securities have been disposed of in accordance with the plan of
distribution set forth in such Registration Statement, (ii) such Registrable
Securities have been distributed pursuant to Rule 144 (or any similar provisions
then in force) under the Securities Act, (iii) such Registrable Securities could
immediately be sold pursuant to Rule 144(k) promulgated by the Commission (or
any successor rule thereto) or (iv) such Registrable Securities shall have been
otherwise transferred and new certificates for them not bearing a legend
restricting transfer under the Securities Act shall have been delivered by the
Company and such securities may be publicly resold without registration under
the Securities Act.
2. Exercise Periods.
a. 1997 Xxxxx Licensing Warrant. The definition of "Exercise Period"
in the 1997 Xxxxx Licensing Warrant is hereby amended and restated to read in
its entirety:
"'Exercise Period' means the period commencing on the earlier of (i) the
U.S. Release Date of Episode I and (ii) the occurrence of a Change in Control
and terminating at 5:00 p.m. Pacific Time on October 14, 2018."
b. 1997 Lucasfilm Warrant. The definition of "Exercise Period" in
the 1997 Lucasfilm Warrant is hereby amended and restated to read in its
entirety:
"'Exercise Period' means the period commencing on the earlier of (i) the
U.S. Release Date of Episode I and (ii) the occurrence of a Change in Control
and terminating at 5:00 p.m. Pacific Time on October 14, 2019."
c. 1998 Xxxxx Licensing Warrant. The definition of "Exercise Period"
in the 1998 Xxxxx Licensing Warrant is hereby amended and restated to read in
its entirety:
"'Exercise Period' means the period commencing on the earlier of (i) the
U.S. Release Date of Episode I and (ii) the occurrence of a Change in Control
and terminating at 5:00 p.m. Pacific Time on October 30, 2019."
d. 1998 Lucasfilm Warrant. The definition of "Exercise Period" in
the 1998 Lucasfilm Warrant is hereby amended and restated to read in its
entirety:
"'Exercise Period' means the period commencing on the earlier of (i) the
U.S. Release Date of Episode I and (ii) the occurrence of a Change in Control
and terminating at 5:00 p.m. Pacific Time on October 30, 2020."
-3-
3. Put Option.
a. At any time during the Put Period, Xxxxx shall have the right and
option, by delivering to the Company a Put Notice, to require the Company to
purchase all, but not less than all, of the Warrants (the "Put Option") for the
Put Price.
b. Within three (3) business days following its receipt of the Put
Notice, the Company shall designate to Xxxxx in writing (the "Put Election
Notice") (i) a proposed date of closing of the Put Option, which date shall be
at least five (5) but not more than thirty (30) days after the receipt by the
Company of the Put Notice, as such date may be extended until such time as each
of the covenants set forth in Section 9(b) have been fully complied with (the
"Sale Date"), and (ii) whether the payment of the Put Price shall consist of
cash or shares of Common Stock.
c. On the Sale Date, Xxxxx shall transfer and deliver to the Company
all its right, title and interest in and to the Warrants, free and clear of all
liens, charges, restrictions, options, rights and other encumbrances, against
payment of the Put Price, and the Company shall (i) in the event the Company
elects in the Put Election Notice that the Put Price shall consist of cash, pay
the Put Price in immediately available funds by wire transfer to such bank
account(s) located in the United States as are designated by Xxxxx not less than
two (2) business days prior to the Sale Date or (ii) in the event the Company
elects in the Put Election Notice that the Put Price shall consist of shares of
Common Stock, the Company shall deliver to Xxxxx certificates for shares of
Common Stock (rounded to the nearest whole number of shares) equal in aggregate
Market Value to the Put Price. Upon delivery of the Put Notice, all rights under
the Warrants shall immediately terminate and cease to be in effect, including
the right to exercise or transfer the Warrants, unless the Company fails to
timely comply with its obligations hereunder following receipt of the Put
Notice. For all tax and financial reporting purposes, the Company and Xxxxx
shall treat the Sale Date as the date of the sale or redemption of the Warrants;
provided, however, that if payment of any portion of the Put Price is deferred
past the Sale Date in accordance with the provisions of Section 3(f) of this
Agreement, the Sale Date shall be considered the date of sale or redemption of
the same proportion of the Warrants as is equal to the proportion of the total
Put Price paid on such Sale Date, with the remainder of the Warrants being
treated as sold or redeemed on the date that the remaining amount of the Put
Price is paid by the Company. The Put Price shall be allocated between Lucasfilm
and Xxxxx Licensing Ltd. in proportion to the number of shares of Common Stock
underlying the respective Warrants held by each such party.
d. The Put Notice shall be irrevocable.
e. The Put Option shall terminate and be of no further force and
effect upon any of (i) the exercise by Xxxxx of all or any part of any of the
Warrants, (ii) the transfer or other disposition by Xxxxx of all or any portion
of the Warrants, unless such transfer is made in compliance with the terms of
the Warrants and the terms of this Agreement and Xxxxx transfers all of the
Warrants, along with all of its rights and obligations under this Agreement, to
a single entity, or to one or more entities all of which are controlled by a
single entity, or (iii) upon any assignment by Xxxxx of its rights under this
Section 3 that is not permitted by Section 15 hereof.
-4-
f. In the event that Xxxxx exercises the Put Option, the Company
elects to pay the Put Price in shares of Common Stock, the Put Price comprises
more than 100,000,000 shares of Common Stock, and the number of authorized
shares of Common Stock available is inadequate to issue the full number of
shares of Common Stock called for in the computation of the Put Price, then the
Company will issue the maximum number of shares of Common Stock which are then
authorized and available. Following issuance of the maximum number of shares
which are available on the Sale Date, the Company will use its best efforts to
obtain additional authorized shares as promptly as practicable to allow for the
issuance of the remaining shares of Common Stock necessary to pay the full Put
Price. The number of shares of Common Stock to be issued to fulfill any such
shortfall, when additional authorized shares are obtained, will equal the
difference between (i) the total aggregate number of shares that the Company
would otherwise have been obligated to issue to Xxxxx on the Sale Date,
notwithstanding this Section 3(f), and (ii) the number of shares already paid by
the Company, and will not be adjusted for any changes in the Market Value
following the date that is two (2) business days prior to the Sale Date.
Alternatively, the Company may settle any excess amount of the Put Price left
unpaid as a result of an inadequate number of authorized and available shares of
Common Stock by paying the remaining Put Price in cash, such remainder again
being computed by reference to the Market Value of the shares of Common Stock
provided based on the date that is two (2) business days prior to the Sale Date.
4. Call Option.
a. At any time during the Call Period, the Company shall have the
right and option, by giving a Call Notice to Xxxxx, to purchase all, but not
less than all, of the then outstanding and unexercised Warrants (the "Call
Option") for the Call Price.
b. The Company shall designate, in the Call Notice, (i) a proposed
date of closing of the Call Option, which date shall be at least five (5) but
not more than thirty (30) days after the date of the Call Notice, as such date
may be extended until such time as each of the covenants set forth in Section
9(b) have been fully complied with (the "Purchase Date"), and (ii) whether the
payment of the Call Price shall consist of cash or shares of Common Stock.
c. On the Purchase Date, Xxxxx shall transfer and deliver to the
Company all its right, title and interest in and to the Warrants, free and clear
of all liens, charges, restrictions, options, rights and other encumbrances,
against payment of the Call Price, and the Company shall (i) in the event the
Company elects in the Call Notice that the Call Price shall consist of cash, pay
the Call Price in immediately available funds by wire transfer to such bank
account(s) located in the United States as are designated by Xxxxx not less than
two (2) business days prior to the Purchase Date or (ii) in the event the
Company elects in the Call Notice that the Call Price shall consist of shares of
Common Stock, the Company shall deliver to Xxxxx certificates for shares of
Common Stock (rounded to the nearest whole number of shares) equal in aggregate
Market Value to the Call Price. Upon receipt of the Call Notice, all rights
under the Warrants shall immediately terminate and cease to be in effect,
including the right to exercise or transfer the Warrants, and Xxxxx shall have
no further rights under the Warrants, including the right of exercise or
transfer thereunder, unless the Company fails to timely comply with its
obligations hereunder following the date of the Call Notice. For all tax and
financial reporting purposes, the Company and Xxxxx shall treat the Purchase
Date as the date of the sale or redemption of the
-5-
Warrants. The Call Price shall be allocated between Lucasfilm and Xxxxx
Licensing Ltd. in proportion to the number of shares of Common Stock underlying
the respective Warrants held by each such party.
d. The Call Notice shall be irrevocable.
e. In the event that any or all of the Warrants are exercised in
part, the Call Price for the remaining unexercised portion of the Warrants shall
be reduced in accordance with the method set forth in the following sentences.
For every share of Common Stock purchased upon an exercise of the 1997 Lucasfilm
Warrant or the 1997 Xxxxx Licensing Warrant (together the "1997 Warrants"), the
Call Price shall be reduced by $14.4737 if the Call Price is being paid in cash,
and $15.92107 if the Call Price is being paid in shares of Common Stock. For
every share of Common Stock purchased upon an exercise of the 1998 Lucasfilm
Warrant or the 1998 Xxxxx Licensing Warrant (together the "1998 Warrants"), the
Call Price shall be reduced by $9.8137 if the Call Price is being paid in cash,
and $10.79507 if the Call Price is being paid in shares of Common Stock. The per
share values set forth above in this Section 4(e) will be adjusted for any stock
splits, stock dividends, recapitalizations, reclassifications or other similar
adjustments affecting the number of Warrant Shares after the date of this
Agreement, it being understood that notwithstanding any such adjustments the
ratio between the adjustments for exercise of the 1997 Warrants versus the 1998
Warrants shall remain the same as is reflected in the values set forth above.
f. Prior to the transfer by Xxxxx of all or any portion of the
Warrants pursuant to the terms thereof, Xxxxx shall be required to obtain from
such transferee an agreement to be bound by the terms and conditions of this
Agreement pursuant to an agreement reasonably acceptable to the Company.
5. Restrictions on Transfers.
a. Compliance with Securities Act. Xxxxx, by execution of this
Agreement, hereby makes the representations set forth in Exhibit A with respect
to the Option Shares that the Company may elect to issue to Xxxxx in connection
with the Put Option or Call Option, and represents that such Option Shares are
being acquired for investment, solely for Xxxxx'x own account and not as a
nominee for any other Person, and that Xxxxx will not offer, sell or otherwise
dispose of any such Option Shares except under circumstances which will not
result in a violation of the Securities Act or this Agreement. Xxxxx agrees
that, in the event the Company elects to issue Option Shares, that it will
confirm in writing, by executing the form attached as Exhibit A hereto, that
such Option Shares are being acquired for investment, solely for Xxxxx'x own
account and not as a nominee for any other Person, and not with a view toward
distribution.
b. Certificate Legends. All Option Shares issued upon exercise of
the Put Option or the Call Option (unless registered under the Securities Act)
shall be stamped or imprinted with legends in substantially the following form
(in addition to any legends required by applicable state securities laws):
-6-
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS. NO SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION OF SUCH
SECURITIES MAY BE EFFECTED WITHOUT (A) (i) AN EFFECTIVE REGISTRATION
STATEMENT RELATING THERETO, (ii) AN OPINION OF COUNSEL FOR XXXXX,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT
REQUIRED OR (iii) RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION AND (B) OTHERWISE COMPLYING WITH THE PROVISIONS OF
SECTION 5 OF THE AGREEMENT UNDER WHICH THIS SECURITY WAS ISSUED.
c. Disposition of Option Shares. Prior to the registration of such
shares and disposition in connection with such registration, with respect to any
offer, sale or other disposition of any Option Shares issued upon exercise of
the Put Option or Call Option, Xxxxx agrees to give written notice to the
Company prior thereto, describing briefly the manner thereof, together with a
written opinion of Xxxxx'x counsel, if reasonably requested by the Company, to
the effect that such offer, sale or other disposition may be effected without
registration under the Securities Act or qualification under any applicable
state securities laws of such Option Shares and indicating whether or not under
the Securities Act certificates for such Option Shares to be sold or otherwise
disposed of, require any restrictive legend as to applicable restrictions on
transferability in order to insure compliance with the Securities Act and any
other applicable securities laws, such opinion to be in form and substance
reasonably satisfactory to the Company. Promptly upon receiving such written
notice and reasonably satisfactory opinion, if so requested, the Company, as
promptly as practicable, shall notify Xxxxx that it may sell or otherwise
dispose of such Option Shares all in accordance with the terms of the notice
delivered to the Company. If a determination has been made pursuant to this
subsection (c) that the opinion of counsel for Xxxxx is not reasonably
satisfactory to the Company, the Company shall so notify Xxxxx promptly after
such determination has been made and shall specify the legal analysis supporting
any such conclusion. Notwithstanding the foregoing, such Option Shares may be
offered, sold or otherwise disposed of in accordance with Rule 144, provided
that the Company shall have been furnished with such information as the Company
may reasonably request to provide reasonable assurance that the provisions of
Rule 144 have been satisfied. Each certificate representing the Option Shares
thus transferred in accordance with this subsection (d) (except a transfer
pursuant to Rule 144) shall bear a legend as to the applicable restrictions on
transferability in order to insure compliance with the Securities Act, unless in
the aforesaid reasonably satisfactory opinion of counsel for the Shareholder
such legend is not necessary in order to insure compliance with the Securities
Act. The Company may issue stop transfer instructions to its transfer agent in
connection with such restrictions.
d. Termination of Restrictions. The restrictions imposed under this
Section 5 upon the transferability of Option Shares shall cease when (i) the
Option Shares are disposed of pursuant to the Registration Statement, (ii) the
Company is presented with an opinion of counsel reasonably satisfactory to the
Company that such restrictions are no longer required in order to insure
compliance with the Securities Act or with a Commission "no-action" letter
stating that future transfers of such securities by the transferor or the
contemplated transferee would be
-7-
exempt from registration under the Securities Act, or (iii) such securities may
be transferred in accordance with Rule 144(k). When such restrictions terminate,
the Company shall, or shall instruct its transfer agent to, promptly, and
without expense to Xxxxx issue new securities in the name of Xxxxx not bearing
the legends required under subsection (b) of this Section 5.
6. Registration Rights.
a. Registration on Form S-3.
i. Filing of Registration Statement. The Company shall use its
best efforts to secure effectiveness of, as soon as practicable, and shall
file with the Commission no later than 30 days after the date of this
Agreement, a registration statement in form and substance reasonably
satisfactory to Xxxxx on Form S-3 (the "Registration Statement") for an
offering to be made on a delayed or continuous basis pursuant to Rule 415
under the Securities Act to register the offering and sale by Xxxxx, from
time to time, of the Registrable Securities; provided however, that in the
event the Company fails to file reports in a timely manner or otherwise
fails (due to an action or inaction of the Company) to be eligible to file
a registration statement on Form S-3, the Company shall file such
registration statement on Form S-1.
ii. Registrable Expenses. The Company shall pay all
Registration Expenses (as defined below) in connection with any
registration, qualification or compliance hereunder, and Xxxxx shall pay
all Selling Expenses (as defined below) and other expenses that are not
Registration Expenses relating to the Registrable Securities resold by
Xxxxx. "Registration Expenses" shall mean all expenses, except for Selling
Expenses, incurred by the Company in complying with the registration
provisions herein described, including, without limitation, all
registration, qualification and filing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and expenses and
the expense of any special audits incident to or required by any such
registration. "Selling Expenses" shall mean all selling commissions,
underwriting fees and stock transfer taxes applicable to the Registrable
Securities and all fees and disbursements of counsel for Xxxxx.
iii. Additional Company Obligations. In the case of any
registration effected by the Company pursuant to these registration
provisions, the Company will use its best efforts to: (A) keep such
registration effective until such date as all of the Registrable
Securities have been sold or could immediately be sold pursuant to Rule
144(k) promulgated by the Commission; (B) prepare and file with the
Commission such amendments and supplements to the Registration Statement
and the prospectus used in connection with the Registration Statement as
may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of the Registrable Securities; (C) furnish such
number of prospectuses and other documents incident thereto, including any
amendment of or supplement to the prospectus, as Xxxxx from time to time
may reasonably request; (D) promptly following the delivery of a Put
Election Notice or Call Notice in which the Company elects to settle in
Common Stock, cause all such Registrable Securities registered as
described herein to be listed on each securities exchange and quoted on
each quotation system on which similar securities issued by the
-8-
Company are then listed or quoted; (E) promptly following the delivery of
a Put Election Notice or Call Notice in which the Company elects to settle
in Common Stock, provide a transfer agent and registrar for all
Registrable Securities registered pursuant to the Registration Statement
and a CUSIP number for all such Registrable Securities; (F) comply with
all applicable rules and regulations of the Commission, and make available
to its securityholders, to the extent required, as soon as reasonably
practicable, an earnings statement covering the period of at least twelve
months, but not more than eighteen months, beginning with the first month
after the effective date of the Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities
Act; and (G) file the documents required of the Company and otherwise
maintain requisite blue sky clearance in (x) all jurisdictions in which
any of the Option Shares are originally sold and (y) all other states
specified in writing by Xxxxx as may reasonably be required to sell
Xxxxx'x Option Shares, provided, however, that the Company shall not be
required to qualify to do business, subject itself to taxation, or consent
to service of process in any state in which it is not now so qualified or
subject to taxation or has not so consented.
iv. Conditions and Limitations
A. Cooperation by Holder. It shall be a condition
precedent to the obligation of the Company to take any action pursuant to
this Section 6 in respect of the Registrable Securities that Xxxxx shall
furnish to the Company such information regarding such Registrable
Securities and the intended method of disposition thereof and such other
information as the Company shall reasonably request and as shall be
required in connection with the action taken by the Company.
B. Notification Prior to Sale. If Xxxxx shall propose
to sell any Registrable Securities pursuant to the Registration
Statement, it shall notify the Company of its intent to do so at least
two (2) full business days prior to such sale, and the provision of such
notice to the Company shall be deemed to establish an agreement by Xxxxx
to comply with the registration provisions contained herein. Such notice
shall be deemed to constitute a written representation that any
information previously supplied by Xxxxx is accurate as of the date of
such notice. Other than during the ninety (90) day period immediately
following the issuance of validly-issued, fully-paid and nonassessable
Option Shares to Xxxxx pursuant to an exercise of the Put Option or the
Call Option, at any time within such two (2) business day period, or at
any time that Xxxxx is reselling securities under the Registration
Statement, the Company may notify Xxxxx that Xxxxx xxx not resell any
Registrable Securities pursuant to the Registration Statement; provided,
however, that in order to exercise this right, the Company must deliver
a certificate in writing to Xxxxx to the effect that a delay or
suspension in such sale is necessary because, in the good faith judgment
of the Company, a sale pursuant to the Registration Statement would
require the public disclosure of information that would not otherwise be
required to be disclosed (which disclosure would be likely, in the good
faith judgment of the Company, to be materially harmful to the Company)
or could in other respects constitute a violation of the federal
securities laws; provided, that the Company shall not under any
circumstances be entitled to refuse to permit Xxxxx to resell any
Registrable Securities more than twice in any twelve-month period, and
any individual
-9-
period during which the Company refuses to permit Xxxxx to resell any
Registrable Securities shall not exceed forty-five (45) days (the
"Suspension Period"). The Company shall, prior to the end of any such
Suspension Period, use its best efforts to amend the Registration
Statement to the extent required to comply with Section 6(a)(iv) and to
take all other actions necessary to allow such sale under the federal
securities laws, and shall notify Xxxxx promptly after it has satisfied
such obligation.
The Company will promptly notify Xxxxx at any time when a
prospectus relating to any Registrable Securities is required to be
delivered under the Securities Act of the happening of any event or
existence of any fact as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances in which they are made, and, as promptly as is
practicable, other than during a Suspension Period, prepare and furnish to
Xxxxx a reasonable number of copies of any required supplement to or
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include 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 not misleading in light of the circumstances in which they are
made.
By acquisition of Registrable Securities, Xxxxx shall be deemed
to have agreed that upon receipt of any notice from the Company of the
happening of any event of the kind described in the preceding sentence or
of a Suspension Period, Xxxxx will promptly discontinue Xxxxx'x
disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until Xxxxx'x receipt of
the copies of any required supplemented or amended prospectus contemplated
by this Section. If so directed by the Company, Xxxxx will deliver to the
Company (at the Company's expense) all copies, other than permanent file
copies, in Xxxxx'x possession of the prospectus covering such Registrable
Securities at the time of receipt of such notice. Subject to the
foregoing, when Xxxxx is entitled to sell and gives notice of its intent
to sell pursuant to the Registration Statement, the Company shall furnish
to Xxxxx a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered to
the purchasers of such shares, such prospectus shall not 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 not
misleading in light of the circumstances in which they are made.
b. Indemnification and Contribution.
i. Indemnification by the Company. The Company agrees to
indemnify and hold harmless Xxxxx from and against any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) to
which Xxxxx xxx become subject (under the Securities Act or otherwise)
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any claim
by a third party asserting any untrue statement of a material fact
contained in the Registration Statement or omission of a material fact
therefrom necessary to make the
-10-
statements therein not misleading, on the effective date thereof, or arise
out of any failure by the Company to fulfill any undertaking included in
the Registration Statement, and the Company will, as incurred, reimburse
Xxxxx for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that the Company shall not be
liable in any such case to the extent that such loss, claim, damages or
liability arises out of, or is based upon (i) an untrue statement, alleged
untrue statement, omission, or alleged omission made in such Registration
Statement in reliance upon and in conformity with written information
furnished to the Company by or on behalf of Xxxxx specifically for use in
preparation of the Registration Statement or (ii) any untrue statement,
alleged untrue statement, omission, or alleged omission in any prospectus
that is corrected in any subsequent prospectus that was delivered to Xxxxx
prior to the pertinent sale or sales by Xxxxx.
ii. Indemnification by Xxxxx. Xxxxx agrees to indemnify and
hold harmless the Company from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which the
Company may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings
in respect thereof) arise out of, or are based upon any claim by a third
party asserting an untrue statement or omission made in such Registration
Statement in reliance upon and in conformity with written information
furnished to the Company by or on behalf of Xxxxx specifically for use in
preparation of the Registration Statement, provided, however, that Xxxxx
shall not be liable in any such case for (i) any untrue statement included
in any prospectus which statement has been corrected, in writing, by Xxxxx
and delivered to the Company at least three business days before the sale
from which such loss occurred or (ii) any untrue statement, alleged untrue
statement, omission, or alleged omission in any prospectus that is
corrected in any subsequent prospectus that was delivered by Xxxxx to the
purchaser prior to the pertinent sale or sales by Xxxxx, and Xxxxx will,
as incurred, reimburse the Company for any legal or other expenses
reasonably incurred in investigating, defending or preparing to defend any
such action, proceeding or claim.
iii. Indemnification Procedures. Promptly after receipt by any
indemnified person of a notice of a claim or the beginning of any action
in respect of which indemnity is to be sought against an indemnifying
person pursuant to this Section 6(b), such indemnified person shall notify
the indemnifying person in writing of such claim or of the commencement of
such action, and, subject to the provisions hereinafter stated, in case
any such action shall be brought against an indemnified person and the
indemnifying person shall have been notified thereof, the indemnifying
person shall be entitled to participate therein, and, to the extent that
it shall wish, to assume the defense thereof, with counsel reasonably
satisfactory to the indemnified person. After notice from the indemnifying
person to such indemnified person of the indemnifying person's election to
assume the defense thereof, the indemnifying person shall not be liable to
such indemnified person for any legal expenses subsequently incurred by
such indemnified person in connection with the defense thereof; provided,
however, that if there exists or shall exist a conflict of interest that
would make it inappropriate in the reasonable opinion of counsel for the
indemnified person for the same counsel to represent both the indemnified
person and such indemnifying person or any affiliate or associate thereof,
the
-11-
indemnified person shall be entitled to retain its own counsel at the
expense of such indemnifying person; provided, however, that in the case
of the immediately preceding proviso the indemnifying person shall not be
responsible for the legal expenses of more than one counsel for all
indemnified persons. No indemnified party will consent to entry of any
judgment or settle such claim or litigation without the prior written
consent of the indemnifying party, which consent shall not be unreasonably
withheld.
iv. Contribution in Lieu of Indemnity. If the indemnification
provided for in this Section 6(b) is unavailable to or insufficient to
hold harmless an indemnified party under Section 6(b)(i) or 6(b)(ii) above
in respect of any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefit and relative fault of the
respective parties as well as any other relevant equitable considerations.
The relative fault 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 on the one hand or Xxxxx on the other
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company
and Xxxxx agree that it would not be just and equitable if contribution
pursuant to this Section 6(b)(iv) were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 6(b)(iv). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above in this Section 6(b)(iv) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding
the provisions of this Section 6(b)(iv), Xxxxx shall not be required to
contribute any amount in excess of the net amount received by Xxxxx from
the sale of the Registrable Securities to which such loss relates. 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.
v. Controlling Persons Indemnified. The obligations of the
Company and Xxxxx under this Section 6(b) shall be in addition to any
liability which the Company and Xxxxx xxx otherwise have and the benefits
hereunder shall extend, upon the same terms and conditions, to each
person, if any, who controls or may be deemed to control the Company or
Xxxxx within the meaning of the Securities Act including, without
limitation, the directors and officers of the Company and Xxxxx, as the
case may be.
c. Transfer Of Registration Rights. The right to sell Registrable
Securities pursuant to the Registration Statement described herein will
automatically be assigned to each transferee of the Option Shares to the extent
such transfer is permitted under the terms of this Agreement. In the event that
it is necessary, in order to permit such transferee to sell Registrable
Securities pursuant to the Registration Statement, to amend the Registration
Statement to name
-12-
such transferee, the Company shall use its best efforts, following written
notice by such transferee to the Company, to make such amendment as soon as
reasonably practicable.
d. Termination of Section 6. This Section 6 shall terminate upon the
Sale Date or the Purchase Date, to the extent that the Call Option or Put Option
has been settled in cash rather than shares of Common Stock.
7. Representations, Warranties and Covenants of the Company.
a. Representations and Warranties. The Company represents and
warrants that as of the date hereof:
i. Legal Status; Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Rhode
Island and is qualified or licensed to do business in all other countries,
states and provinces in which the laws thereof require the Company to
qualify and/or be licensed, except where failure to qualify or be licensed
would not have a material adverse effect on the business or assets of the
Company taken as a whole;
ii. Authority. The Company has the right and power, and is duly
authorized and empowered, to enter into, execute, deliver and perform its
obligations under this Agreement;
iii. Binding Effect. This Agreement has been duly authorized,
executed and delivered and constitutes a valid and binding obligation of
the Company enforceable in accordance with its terms, except to the extent
that enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and (ii) general principles of equity;
iv. No Conflict. The execution, delivery and/or performance by the
Company of this Agreement shall not, by the lapse of time, the giving of
notice or otherwise, constitute a violation of any applicable law or a
breach of any provision contained in the Company's Articles of
Incorporation or Bylaws, each as amended, or contained in any agreement,
instrument or document to which the Company is a party or by which it is
bound, provided, however, that the Company would currently be required to
obtain a consent under its Second Amended and Restated Revolving Credit
Agreement, dated March 19, 2002 in order to settle the Call Option in
cash; and
v. Consents. Except as contemplated by Sections 6 and 9(b), no
consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body is required for the
performance of any of the Company's obligations hereunder.
-13-
8. Representations and Warranties of Xxxxx. Lucasfilm and Xxxxx Licensing
jointly and severally represent and warrant that as of the date hereof:
a. Legal Status; Qualification. Lucasfilm is a corporation duly
organized, validly existing and in good standing under the laws of California
and is qualified or licensed to do business in all other countries, states and
provinces in which the laws thereof require Lucasfilm to qualify and/or be
licensed, except where failure to qualify or be licensed would not have a
material adverse effect on the business or assets of Lucasfilm taken as a whole.
Xxxxx Licensing is a corporation duly organized, validly existing and in good
standing under the laws of California and is qualified or licensed to do
business in all other countries, states and provinces in which the laws thereof
require Xxxxx Licensing to qualify and/or be licensed, except where failure to
qualify or be licensed would not have a material adverse effect on the business
or assets of Xxxxx Licensing taken as a whole;
b. Authority. Each of Lucasfilm and Xxxxx Licensing has the right
and power, and is duly authorized and empowered, to enter into, execute, deliver
and perform its obligations under this Agreement;
c. Binding Effect. This Agreement has been duly authorized, executed
and delivered and constitutes a valid and binding obligation of each of
Lucasfilm and Xxxxx Licensing, enforceable in accordance with its terms, except
to the extent that enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and (ii) general principles of equity;
d. No Conflict. The execution, delivery and/or performance by each
of Lucasfilm and Xxxxx Licensing of this Agreement shall not, by the lapse of
time, the giving of notice or otherwise, constitute a violation of any
applicable law or a breach of any provision contained in their respective
charters, Bylaws or other organizational documents or contained in any
agreement, instrument or document to which either of them is a party or by which
either of them is bound; and
e. Consents. Except as contemplated by Section 6, no consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for performance of
any of the Xxxxx'x obligations hereunder.
9. Covenants of the Parties.
a. Authorized Shares. The Company will use its best efforts to have,
at all times, authorized, and reserved for the purpose of issuance or transfer
upon exercise of the rights evidenced by this Agreement, a sufficient number of
shares of Common Stock to provide for the exercise of the rights represented by
this Agreement (for purposes of determining compliance with this covenant, the
shares of Common Stock issuable upon exercise of all other options and warrants
to acquire Common Stock and upon conversion of all instruments convertible into
Common Stock shall be deemed issued and outstanding);
b. Proper Issuance. The Company, at its expense, will use its best
efforts to take all such action as may be necessary to assure that the Common
Stock issuable upon the exercise of the Put Option or Call Option may be so
issued without violation of any applicable
-14-
law or regulation, or of any requirements of any domestic securities exchange or
automated quotation system upon which any capital stock of the Company may be
listed or quoted, as the case may be, provided that Xxxxx, at its sole expense,
will take all such action as may be necessary under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, in connection with its
acquisition of securities of the Company and shall cooperate with the Company in
connection with actions by the Company hereunder. Such action by the Company may
include, but not be limited to, using its best efforts to cause such shares to
be duly registered or approved, listed or quoted on relevant domestic securities
exchanges or automated quotation systems; and
c. Fully Paid Shares. The Company will take all actions necessary or
appropriate to validly and legally issue fully-paid and nonassessable shares of
Common Stock following the exercise of the Put Option or Call Option. All such
shares will be free from all taxes, liens and charges with respect to the
issuance thereof, other than any stock transfer taxes in respect to any transfer
occurring contemporaneously with such issuance.
10. Xxxxx Not a Shareholder. Prior to the exercise of the Put Option or
the Call Option as hereinbefore provided and payment of the applicable purchase
price in shares of Common Stock, Xxxxx shall not be entitled to any of the
rights of a shareholder of the Company with respect to the Option Shares
including, without limitation, the right as a shareholder to vote on or consent
to any proposed action of the Company.
11. Remedies. The parties stipulate that the remedies at law in the event
of any default or threatened default by the other parties hereto in the
performance of or compliance with any of the terms of this Agreement are not and
will not be adequate to the fullest extent permitted by law, and that such terms
may be specifically enforced by a decree for the specific performance of any
agreement contained herein or by an injunction against a violation of any of the
terms hereof or otherwise.
12. Enforcement Costs. If Xxxxx or the Company seeks to enforce its rights
hereunder by legal proceedings or otherwise, then the non-prevailing party shall
pay all reasonable costs and expenses incurred by the prevailing party,
including, without limitation, all reasonable attorneys' fees (including the
allocable costs of in-house counsel).
13. Nonwaiver; Cumulative Remedies. No course of dealing or any delay or
failure to exercise any right hereunder on the part of any party hereto shall
operate as a waiver of such right or otherwise prejudice the rights, powers or
remedies of such party. No single or partial waiver by any party hereto of any
provision of this Agreement or of any breach or default hereunder or of any
right or remedy shall operate as a waiver of any other provision, breach,
default, right or remedy or of the same provision, breach, default, right or
remedy on a future occasion. The rights and remedies provided in this Agreement
are cumulative and are in addition to all rights and remedies which the parties
hereto may have in law or in equity or by statute or otherwise.
14. Notices. Any notice, demand or delivery to be made pursuant to this
Agreement will be sufficiently given or made if sent by certified or registered
mail, postage prepaid, nationally recognized overnight delivery service or
facsimile transmission, addressed to (a)
-15-
Xxxxx at its last known addresses appearing on the books of the Company
maintained for such purpose or (b) the Company at its Principal Executive
Office. Xxxxx and the Company may each designate a different address by notice
to the other pursuant to this Section 14. A notice shall be deemed effective
three days after mailing, if sent by certified or registered mail, the next
business day, if sent by overnight mail, or upon receipt of evidence of
transmission, if sent by facsimile transmission.
15. Assignment; Successors and Assigns. Xxxxx shall not assign any of its
rights or obligations under this Agreement without the prior written consent of
the Company, which consent may be withheld in the Company's sole discretion;
provided, that the amendments of the Exercise Periods of each of the Warrants
contained in Section 2 hereof shall be deemed a part of the Warrant to which
such amendment relates and shall be deemed to be transferred along with the
underlying Warrant, to the extent permitted in the Warrant; and provided,
further, that Xxxxx xxx assign, without the consent of the Company, its rights
under Section 3 hereof to:
(x) one or more entities owned or controlled by Xxxxx (but only for so
long as all such entities remain so owned or controlled by Xxxxx and such
entities agree (i) to be bound by the terms and conditions of this Agreement
pursuant to an agreement reasonably acceptable to the Company ("Assumption
Agreement") and (ii) to assign this Agreement back to Xxxxx if any one or more
of them ceases to be owned or controlled by Xxxxx);
(y) one or more entities in connection with (i) the merger, consolidation
or reorganization of Xxxxx, (ii) the sale, assignment, transfer or other
disposition of all or substantially all of Xxxxx'x assets or business in one or
more related transactions or (iii) the sale, assignment, transfer or other
disposition of all or substantially all of Xxxxx'x capital stock, provided that
any transferees described in this clause (y) execute an Assumption Agreement and
provided that all such transferees are owned or controlled by the same entity,
which controlling entity shall also execute an Assumption Agreement; or
(z) one or more Persons directly or indirectly controlling Xxxxx, provided
that all such Persons are owned or controlled by the same entity, and that all
such Persons, including the controlling entity, execute an Assumption Agreement;
provided, that in the case of each of clause (x), (y) and (z), the assignment is
in connection with a transfer of all of the Warrants to such entity(ies).
This Agreement shall be binding upon Xxxxx, the Company and any Persons
succeeding the Company or Xxxxx by merger, consolidation or acquisition of all
or substantially all of the their respective assets, and all of the obligations
of Xxxxx and the Company hereunder shall survive the termination of this
Agreement and all of the covenants and agreements of Xxxxx, on the one hand, and
the Company, on the other hand, shall inure to the benefit of the Company and
Xxxxx and their respective successors and assigns.
16. Modification; Severability.
a. If, in any action before any court or agency legally empowered to
enforce any term, any term of this Agreement is found to be unenforceable, then
such term shall be deemed modified to the extent necessary to make it
enforceable by such court or agency.
-16-
b. If any term of this Agreement is not curable as set forth in
subsection (a) above, the unenforceability of such term shall not affect the
other provisions of this Agreement but this Agreement shall be construed as if
such unenforceable term had never been contained herein.
17. Integration. This Agreement, together with the Warrants, a letter
agreement dated October 14, 1997 relating to the 1997 Lucasfilm Warrant, a
letter agreement dated October 14, 1997 relating to the 1997 Xxxxx Licensing
Warrant, and a letter agreement dated September 25, 1998 between the Company and
Lucasfilm, amends all prior and contemporaneous agreements and supersedes all
prior and contemporaneous negotiations between the parties with respect to the
transactions contemplated herein and constitutes the entire agreement of the
parties with respect to the transactions contemplated herein.
18. Survival of Representations and Warranties. The representations and
warranties of any party in this Agreement shall survive the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, notwithstanding any investigation by the such party or its agents.
19. Amendment. This Agreement may not be modified or amended except by
written agreement of the Company and Xxxxx.
20. Headings. The headings of the Sections of this Agreement are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Agreement.
21. Meanings. Whenever used in this Agreement, any noun or pronoun shall
be deemed to include both the singular and plural and to cover all genders; and
the words "herein," "hereof" and "hereunder" and words of similar import shall
refer to this instrument as a whole, including any amendments hereto.
22. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California applicable to contracts
entered into and to be performed wholly within California by California
residents.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-17-
IN WITNESS WHEREOF, the Company and Xxxxx have executed this Agreement,
effective on and as of the date first above written.
HASBRO, INC.
By: /s/ Xxxxx X.X. Xxxxxxxxxx
_______________________________
Name: Xxxxx X.X. Xxxxxxxxxx
Title: Senior Vice President
and Chief Financial
Officer
XXXXX LICENSING LTD.
By: /s/ Xxxxxx Xxxxxxx
_______________________________
Name: Xxxxxx Xxxxxxx
Title: President
LUCASFILM LTD.
By: /s/ Xxxxxx Xxxxxx
_______________________________
Name: Xxxxxx Xxxxxx
Title: President
-18-
EXHIBIT A
INVESTMENT REPRESENTATION CERTIFICATE
Purchaser:
Company: Hasbro, Inc.
Security: Common Stock
Amount:
Date:
(a) In connection with the purchase of the above-listed securities (the
"Securities"), the undersigned (the "Purchaser") represents to the Company as
follows:
(b) The Purchaser is aware of the Company's business affairs and financial
condition, and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. The Purchaser is
purchasing the Securities for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933, as amended (the "Securities
Act");
(c) The Purchaser understands that the Securities have not been registered
under the Securities Act in reliance upon a specific exemption therefor, which
exemption depends upon, among other things, the bona fide nature of the
Purchaser's investment intent as expressed herein;
(d) The Purchaser further understands that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from registration is otherwise available. In addition, the
Purchaser understands that the certificate evidencing the Securities will be
imprinted with the legend referred to in the Agreement under which the
Securities are being purchased; and
(e) The Purchaser is aware of the provisions of Rule 144, promulgated
under the Securities Act, which, in substance, permit limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, if applicable, including, among other
things: (i) the availability of certain public information about the Company;
(ii) the resale occurring not less than one year after the party has purchased
and paid for the securities to be sold; (iii) the sale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly with
a market maker (as said term is defined under the Securities Exchange Act of
1934) and the amount of securities being sold during any three-month period not
exceeding the specified limitations stated therein.
-19-
The Purchaser represents that it is an "accredited investor" as that term is
defined in Rule 501 of Regulation D under the Securities Act or any successor
regulation thereunder.
Date:______________ PURCHASER:____________________________
-20-
