EXHIBIT 10.2
FIRST AMENDED SETTLEMENT, EXCHANGE OF COLLATERAL
AND RELEASE AGREEMENT
This First Amended Settlement, Exchange of Collateral and Release
Agreement ("Agreement") is made by and between AMRESCO FINANCIAL I, L.P.
("Lender"), DAMERT COMPANY ("Borrower"), FREDERICK A. DAMERT ("Guarantor"), and
JANEX INTERNATIONAL, INC. ("Janex"). Lender, Borrower, Guarantor, and Janex are
referred to within this Agreement collectively as "the Parties."
RECITALS
A. As part of a continuing credit relationship, Borrower and Lender's
predecessor-in-interest, Wells Fargo Bank, National Association ("Bank"),
entered into several agreements pursuant to which Bank agreed to provide certain
financial accommodations to Borrower, including, without limitation: i) a
revolving line of credit in the maximum principal amount of $2,500,000.00 (the
"Line of Credit"). Borrower's obligations to Bank under the Line of Credit were
evidenced by, among other things, a promissory note executed by Borrower in
favor of Bank on or about May 15, 1998 ("Line of Credit Note"); ii) a term loan
in the original principal amount of $80,260.00 ("Term Loan"). Borrower's
obligations to Bank under the Term Loan were evidenced by, among other things, a
promissory note executed by Borrower in favor of Bank on or about April 30, 1996
("Term Note"); and iii) a loan in the original principal amount of $400,000.00
(the "Loan"). Borrower's obligations to Bank under the Loan were evidenced by,
among other things, a promissory note executed by Borrower in favor of Bank on
or about December 15, 1998 ("Note"). Hereinafter, the Line of Credit, the Term
Loan and the Loan shall be referred to collectively as the "Loans." Hereinafter,
the Line of Credit Note, the Term Note and the Note shall be referred to
collectively as the "Notes;
B. In connection with the Loans, Borrower executed several continuing
security agreements as Grantor in favor of Bank as Grantee, with the most recent
agreement executed on or about April 15, 1997 ("Security Agreement"). Pursuant
to the Security Agreement, Bank was granted a security interest in substantially
all of Borrower's personal property collateral, more particularly described in
the Security Agreement ("Collateral"). Bank's interests in the Collateral were
perfected pursuant to several UCC-1 financing statements ("Financing
Statements"), executed by Borrower in favor of Bank, as follows: i) a UCC-1
dated June 18, 1992, recorded in the Official Records of the California
Secretary of State on June 25, 1992 as Instrument No. 92139732, and continued by
a UCC-2 Financing Statement dated December 30, 1996, which was recorded on
January 6, 1997 as Instrument No. 97007C0253; ii) a UCC-1 dated October 16,
1995, recorded in the Official Records of the California Secretary of State on
December 18, 1995 as Instrument No. 9535460343; and iii) a UCC-1 dated October
16, 1995, recorded in the Official Records of the California Secretary of State
on January 10, 1996 as Instrument No. 9601160155;
C. The obligations of Borrower to Bank were guaranteed in an unlimited
face amount pursuant to commercial continuing guarantees executed by Guarantor
in favor of Bank, with the most recent continuing guaranty ("F. DaMert
Guaranty") executed by Guarantor on or about August 15, 1998, in the maximum
face amount of $3,040,000.00. Guarantor has also extended credit to Borrower in
the form of one or more loans. In connection with Bank's extensions of credit to
Borrower, Guarantor has executed subordination agreements in favor of Bank,
pursuant to which Guarantor agreed to subordinate the indebtedness of Borrower
to Guarantor, to the indebtedness of Borrower to Bank. Guarantor executed the
most recent subordination agreement on or about September 16, 1997
("Subordination Agreement");
D. On or about May 15, 1999, pursuant to a Letter Amendment agreement
between Bank and Borrower, and acknowledged by Guarantor, the maturity dates of
the Line of Credit Note and the Note were extended to June 30, 1999. On or about
July 13, 1999, pursuant to a Modification Agreement between Bank and Borrower,
and acknowledged by Guarantor, the maturity dates of the Line of Credit Note and
the Note were extended to July 31, 1999. The maturity dates of the Line of
Credit Note and the Note were extended because of Borrower's continuing
negotiations at that time with Futech Interactive Products, Inc. ("Futech") for
the sale of Borrower to Futech, which sale was expected to be completed by July
31, 1999;
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E. On or about July 21, 1999, all of the rights and interests of Bank
under all of the Loan Documents were assigned to Lender. Borrower failed to pay
the amounts due under the Line of Credit and the Loan on the extended maturity
date of July 31, 1999. Pursuant to a Loan Modification Agreement dated as of
July 31, 1999, and amendments thereto, the maturity dates of the Line of Credit
and the Loan were extended to September 30, 2000. Borrower paid the Term Loan in
full in or about May 2000. However, Borrower is in default under the Loan
Modification Agreement in that, among other things, the interest only payments
under the remaining two Loans have not been paid as of June 15, 2000, and for
all other payments thereafter. Hereinafter, the Notes, the Security Agreement,
the Financing Statements, the F. DaMert Guaranty, the Subordination Agreement,
the Letter Amendment, the Modification Agreement, the Loan Modification
Agreement, the amendments to the Loan Modification Agreement, and all other
documents evidencing or related to the Loans shall at times be referred to
collectively as the "Loan Documents;
F. On or about November 8, 2000, the Parties entered into that certain
Settlement, Exchange of Collateral and Release Agreement ("Prior Agreement"),
pursuant to which certain transactions between the Parties were to occur on
December 1, 2000, as described more fully in the Prior Agreement. Pursuant to
the Prior Agreement, Janex made a deposit of $20,000 with Lender, as provided in
Paragraph 2.1 of the Prior Agreement. The transactions in the Prior Agreement
were not consummated between the Parties on December 1, 2000. The Parties still
desire to consummate the transactions contemplated in the Prior Agreement, and
are entering into this Agreement to effectuate that desire, upon the amended
terms and conditions hereinafter set forth;
F. Janex continues to be in negotiations with Borrower to acquire
Borrower, either through a merger or a stock purchase agreement. Janex
anticipates completing the acquisition of Borrower by the Closing Date of this
Agreement, as defined below; and
G. Janex, Borrower and Guarantor have continued to request that Lender
accept a combination of money, and equity in Janex or its subsidiary, in
exchange for a release of Lender's interest in any assets of Borrower, and a
release of the obligations of Guarantor under the F. DaMert Guaranty. Lender is
willing to accept such consideration in exchange for such releases upon the
terms and conditions hereinafter set forth.
TERMS
NOW, THEREFORE, in consideration of the terms, covenants, promises,
representations and conditions herein, and for other good and valuable
consideration, the receipt, sufficiency and adequacy of which are hereby
acknowledged by each of the Parties hereto, the Parties hereto, and each of
them, hereby represent and agree, as follows:
1.0 INCORPORATION OF RECITALS.The foregoing Recitals form a material
part of this Agreement and are hereby incorporated by reference as if set forth
in full.
2.0 CONSIDERATION. As further consideration for the provisions of this
Agreement, the Parties agree as follows:
2.1 GOOD FAITH DEPOSIT BY JANEX: The deposit of $20,000.00 previously
made by Janex will be applied to the total consideration to be paid by Janex as
set forth below only on condition that Janex shall complete the performance of
its obligations as set forth below by the Closing Date, as defined below. If
Janex does not complete the performance of its remaining obligations as set
forth below by the Closing Date, then the $20,000.00 shall remain forfeited and
non-refundable pursuant to the Prior Agreement;
2.2 MERGER/STOCK ACQUISITION DOCUMENTS: Janex and Borrower will deliver
to Lender by no later than February 15, 2001, a copy of all of the documents
executed between Janex and Borrower related to the merger or stock acquisition
to be consummated between Janex and Borrower;
2.3 EXCHANGE OF CONSIDERATION: By no later than February 15, 2001
("Closing Date"), the following additional consideration will be exchanged among
the Parties, unless another date is designated:
2.3.1 Janex shall pay the additional sum of $200,000.00 to
Lender in immediately available funds, which, with the prior deposit of
$20,000.00, shall
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equal the total sum of $220,000.00 as of the Closing Date. Lender acknowledges
that Janex has already sent said $200,000.00 to Lender by wire transfer, and
said funds are held by Lender in a suspense account. If Janex does not complete
the performance of its remaining obligations as set forth herein by the Closing
Date, then $40,000.00 of the $200,000.00 deposited shall be forfeited and
non-refundable, in addition to the $20,000.00 already forfeited pursuant to the
Prior Agreement. Therefore, Lender shall refund only $160,000.00 of the
$200,000.00 deposited;
2.3.2 Janex shall deliver to Lender a promissory note in the
principal face amount of $1,300,000.00, security agreement and UCC-1 Financing
Statement, all in forms acceptable to Lender, which shall grant to Lender a
security interest in certain Janex inventory located in Hong Kong awaiting
shipment to the United States, and any receivables related thereto. Janex shall
also provide reasonable documentation to allow Lender to verify the inventory,
and that title resides in Janex. The security interest granted to Janex shall be
of first-priority, and shall be released by Lender upon the receipt of the
additional $400,000.00 payment to be made by Janex as set forth in Paragraph 2.6
below;
2.3.3 By no later than February 23, 2001, Janex shall deliver
to Lender a security agreement and UCC-1 Financing Statement, in forms
acceptable to lender, which shall grant to Lender a second-priority security
interest in all of the remaining personal property of Janex or its subsidiary
(except for the inventory set forth in Paragraph 2.3.2, which shall be subject
to a separate security agreement). By the Closing Date, Janex shall also cause
to be delivered to Lender the personal guaranty of Vincent Goett, in a form
acceptable to Lender, in the principal face amount of, and with a limit of,
$1.300 Million. Janex shall deliver to Lender, by no later than the Closing
Date, a current personal financial statement for Vincent Goett, in a form
acceptable to Lender. The security interest in this Paragraph, and the
obligations of the guaranty of Vincent Goett, shall be released by Lender upon
receipt of the additional $720,000.00 in payments to be made pursuant to
Paragraph 2.7 below, or in other words, upon the receipt of the total amount of
$1.520 Million in payments to be paid pursuant to Paragraphs 2.3.1, and 2.4,
2.5, 2.6 and 2.7 below. Additionally, if Janex acquires assets from Futech, or
obtains other assets, prior to the release of said guaranty, Lender agrees to
negotiate in good faith with Janex and Goett for the release of said guaranty
upon Janex granting to Lender a second-priority security interest in such
additional assets of Janex, in form and with assets satisfactory to Lender in
its sole discretion, based upon a commercially reasonably determination;
2.3.4 By no later than February 23, 2001, Janex shall cause to
be issued to Lender, an initial 1,500,000 (one million, five hundred thousand)
shares (subject to adjustment for stock splits, stock dividends,
recapitalizations and similar transactions after the date of this Agreement) of
Janex common stock (the "Initial Shares"), which shall be issued subject only to
restrictions under applicable Federal and State securities laws. Lender may sell
the shares at any time after issuance at its discretion. At the time of issuance
of the Initial Shares, Janex shall cause its counsel, Brown, Rudnick, Freed &
Gesmer, to issue an opinion to Lender in customary form that the Initial Shares
are validly issued, fully paid and non-assessable;
2.3.5 Upon performance of all of the conditions and
obligations required to be performed by Janex and Borrower by the Closing Date,
the principal obligation under the F. DaMert Guaranty shall be reduced to
$180,000.00.
2.4 ADDITIONAL PAYMENT BY JANEX: By no later than March 2, 2001, Janex,
Borrower or Guarantor shall pay to Lender, in immediately available funds, the
approximate sum of $160,000.00. Upon receipt of the approximate $160,000.00
payment hereunder, combined with the performance of all of the conditions and
obligations required to be performed by Janex and Borrower by the Closing Date,
the principal obligation under the F. DaMert Guaranty shall be reduced dollar
for dollar by the exact amount paid hereunder. For example, if the amount paid
is $160,000.00, then the F. DaMert Guaranty obligation shall be reduced from
$180,000.00 to $20,000.00.
2.5 REMAINDER OF $180,000.00 PAYMENT BY APRIL 15, 2001: By no later
than April 15, 2001, Janex shall pay to Lender, in immediately available funds,
the remaining sum required to make a total of $180,000.00 paid after the Closing
Date and before April 15, 2001. For example, if the amount paid under Paragraph
2.4 is $160,000.00, then Janex shall pay an additional amount of $20,000.00 by
no later than April 15, 2001 in order to make a total additional payment of
$180,000.00. Upon receipt of the total funds
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as set forth in this Paragraph and Paragraph 2.3.1 (i.e., $400,000.00), the
obligations under the Loan Documents shall be deemed paid in full, and Lender
shall execute a release of its security interest in any assets of Borrower, and
deliver same to Janex for recordation with the California Secretary of State
(and elsewhere where UCC-1's may be filed). Lender shall also deliver to
Borrower and Guarantor the originals of the Line of Credit Note, the Note, and
the F. DaMert Guaranty, all marked "cancelled." In addition, the mutual general
releases between Lender, Borrower and Guarantor, as set forth in Section 3.0
below, will become operative, and of full force and effect
2.6 ADDITIONAL $400,000.00 PAYMENT BY MAY 15, 2001: By no later than
May 15, 2001, Janex shall pay to Lender an additional sum of $400,000.00 in
immediately available funds. Upon receipt of such payment, Lender shall execute
a release of its security interest in the Hong Kong inventory set forth in
paragraph 2.3.2, and deliver it to Janex for recordation with the appropriate
Secretary of State;
2.7 ADDITIONAL $720,000.00 PAYMENTS BY QUARTER: Beginning August 15,
2001, Janex shall pay to Lender five quarterly payments of $116,666.67 each, and
one final quarterly payment of $136,666.67, in immediately available funds, for
a total additional amount of $720,000.00. Therefore, the total additional amount
of cash to be paid by Janex to Lender, after the initial $200,000.00 to be paid
at the Closing Date, is $1.30 Million, consisting of the payments to be made
under Paragraphs 2.4, 2.5, 2.6 and 2.7 of this Agreement. Upon receipt of all of
the quarterly payments to be made under this Paragraph, Lender shall execute a
release of its security interest in the remainder of any assets of Janex or its
subsidiary, and deliver it to Janex for recordation with the California
Secretary of State. Upon receipt of all of the quarterly payments to be made
hereunder, Lender shall also release the obligations of Vincent Goett under the
guaranty provided pursuant to paragraph 2.3.3.
2.8 ADDITIONAL 1.5 MILLION JANEX SHARES: By no later than June 15,
2001, Janex shall cause to be issued to Lender, an additional 1,500,000 (one
million, five hundred thousand) shares (subject to adjustment for stock splits,
stock dividends, recapitalizations and similar transactions after the date of
this Agreement) of Janex common stock (the "Additional Shares" and with the
Initial Shares, the "Janex Shares"), in addition to the original 1,500,000
shares to be issued pursuant to Paragraph 2.3.4, for a total of 3,000,000
shares. Such shares shall be issued subject only to the same restrictions set
forth in Paragraph 2.3.4. Janex represents and warrants that neither it, nor its
officers, directors, shareholders, or any other person acting on its behalf,
will take any action to intentionally diminish the value of the shares to be
issued to Lender under this Agreement. At the time of issuance of the Additional
Shares, Janex shall cause its counsel, Brown, Rudnick, Freed & Gesmer, to issue
an opinion to Lender in customary form that the Additional Shares are validly
issued, fully paid and non-assessable.
3.0 GENERAL RELEASE. For the valuable consideration to be exchanged by
the Closing Date, as set forth in this Agreement, Lender, on the one hand, and
the Borrower and Guarantor, on the other hand, hereby release and forever
discharge each other, and their respective officers, subsidiaries, parent,
affiliated entities, directors, employees, assigns, successors, agents, and
attorneys, from any and all claims, demands, damages, debts, liabilities,
obligations, contracts, agreements, accounts, causes of action, costs, and suits
of whatever nature, character, or description, whether known or unknown, and
whether anticipated or unanticipated, which any Party has, claims to have, or
may hereafter claim to have arising from the Loan Documents, including the F.
DaMert Guaranty, or any obligation related thereto, at law or in equity.
4.0 INTENTION OF THE PARTIES. It is the intention of Lender, Borrower
and Guarantor in executing this Agreement that it shall be effective upon the
exchange of all consideration as of the Closing Date, as a full and final accord
and satisfactory release of each and every matter specifically or generally
referred to with respect to the Loan Documents, or the relationship of the
Lender and each of the Borrower and Guarantor related to the Loan Documents. The
Lender, Borrower and Guarantor hereby acknowledge that they are familiar with
California Civil Code Section 1542, which Section provides as follows:
A general release does not extend to claims which a creditor does not
know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor.
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The Lender, Borrower and Guarantor hereby waive and relinquish any
rights and benefits that they may have under California Civil Code Section 1542.
They further acknowledge that they are aware that they may hereafter discover
facts in addition to or different from those which they now know or believe to
be true with respect to the subject matter of the Loan Documents, but it is
their intention hereby to fully and finally and to forever settle and release
any and all matters, disputes and differences, known or unknown, suspected or
unsuspected, which now exist, may exist, or hereto have existed between them
and/or their officers, directors, employees, assigns, successors, agents, and
attorneys with respect to the Loan Documents, or the relationship of the Lender,
Borrower and Guarantor related to the Loan Documents. The release herein shall
be and remain in effect as a full and complete release, notwithstanding the
discovery or existence of any such additional or different facts. The Lender,
Borrower and Guarantor hereby warrant and represent that the effects and import
of California Civil Code Section 1542 have been fully explained to them by their
attorney(s), or that they have been otherwise made aware of same.
5.0 NO JOINT VENTURE OR PARTNERSHIP. The Parties hereby acknowledge and
agree that this Agreement is being entered into solely for the purposes of
settling the disputes related to the defaults of the Borrower and Guarantor
under the Loan Documents, and that no joint venture, partnership or any other
relationship other than creditor-debtor is being formed by virtue of this
Agreement.
6.0 DISINTEREST OF LENDER IN PURCHASE AGREEMENT. The Parties hereby
acknowledge and agree that Lender has had no involvement in the negotiation of
the purchase and sale of the assets of Borrower to Janex, and that Lender shall
have no involvement in either the terms of such agreement, or be a party to any
such agreement. Lender is expressly not undertaking any obligations with respect
to such agreements, and Borrower, Guarantor, and Janex agree to indemnify and
hold Lender harmless from any claims of any third party related to such
agreement. The obligations of Borrower and Guarantor with respect to this
Paragraph shall expressly survive the Closing Date, and shall not be subject to
the mutual general release set forth in Paragraphs 3.0 and 4.0.
7.0 WARRANTIES. The Parties hereby warrant and represent that they are
the only persons who have any interest in the matters they are releasing and
that none of such claims, releases, or any part thereof, has been assigned,
granted, pledged, encumbered or transferred in any way to any third person or
entity.
8.0 PARTIES BOUND. The releases and this Agreement shall be binding
upon the Parties and their heirs, legal representatives, successors, and assigns
and shall inure to the benefit of the Parties, their officers, directors,
employees, assigns, successors, agents, and attorneys.
9.0 RECOVERY OF ATTORNEYS' FEES AND COSTS. If any legal action or any
arbitration or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Agreement,
the prevailing Party shall be entitled to recover reasonable attorneys' fees,
accountants' fees, and other costs incurred in such action arbitration or
proceeding, in addition to any other relief to which it or he/she/they may be
entitled.
10.0 EFFECT OF HEADINGS. The headings of the sections and subsections
of this Agreement are included for convenience only, and are not to be construed
as affecting the construction or interpretation of the individual provisions of
this Agreement.
11.0 ENTIRE AGREEMENT; MODIFICATION; AND WAIVERS. This Agreement
constitutes the entire Agreement between the Parties pertaining to the subject
matter described herein, and supersedes all prior and contemporaneous
agreements, representations, and understandings of the Parties. No supplement,
modification, or amendment to this Agreement shall be binding unless executed in
writing by both Parties. No waiver of any of the provisions of this Agreement
shall be considered a waiver of any other provision, whether or not similar, nor
shall any such waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the waiving party.
12.0 CONSTRUCTION AND PERFORMANCE. This Agreement shall not be
construed against the party preparing it, but shall be construed as if both
Parties prepared this Agreement. This Agreement is entered into and is to be
performed and enforced in Los Angeles County, California.
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13.0 AGREEMENT TO PERFORM NECESSARY ACTS. The Parties shall execute and
deliver all documents and perform any and all further acts that may be
reasonably necessary to effectuate the provisions of this Agreement.
14.0 TIME IS OF THE ESSENCE. Time is of the essence for the performance
of each and every covenant and satisfaction of each and every condition
contained in this Agreement.
15.0 COUNTERPARTS, GENDER AND TENSE. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original document,
and all of which together shall constitute a single instrument. In this
Agreement, where the context may require, the singular shall include the plural,
and the neuter, masculine and feminine genders shall be deemed to include both
natural persons and any corporation, partnership, association, joint venture,
trust, firm, governmental agency, body politic or any other entity.
16.0 INVALIDITY OF PROVISIONS. If any provision of this Agreement as
applied to any party or to any circumstance shall be adjudged by a court to be
void or unenforceable, the same shall in no way affect: (a) any other provision
of this Agreement; (b) the application of such provision in any other
circumstances; and/or (c) the validity or enforceability of this Agreement as a
whole.
17.0 DATE OF THIS AGREEMENT. This Agreement shall be in full force and
effect upon execution by all Parties. The date of the last signature placed
hereon, excluding signatures of any attorneys representing the Parties, shall
herein be known as the "Date of This Agreement".
18.0 ADVICE OF COUNSEL. Each of the Parties hereto acknowledges the
receipt of advice of legal counsel, or the opportunity to obtain such advice,
regarding this Agreement prior to executing it.
19.0 RULE 144 COMPLIANCE. Until such time as Lender no longer holds any
Janex Shares, Janex covenants and agrees that it shall use commercially
reasonable efforts to satisfy the current public information requirements of
Rule 144(c) promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), so that Lender can dispose of Janex Shares in compliance with
Rule 144 promulgated under the Securities Act.
20.0 DEMAND REGISTRATIONS.
(a) Until February 15, 2006, Janex grants Lender the right to request
Janex to register under the Securities Act all or any portion of Lender's Janex
Shares on Form S-1 or any similar long-form registration ("Long-Form
Registrations"), and Lender may request registration under the Securities Act of
all or any portion of Lender's Janex Shares on Form S-2 or S-3 or any similar
short-form registration ("Short-Form Registrations"), if available. All
registrations requested pursuant to this Section 20 are referred to herein as
"Demand Registrations". Each request for a Demand Registration shall specify the
approximate number of Janex Shares requested to be registered and the
anticipated per share price range for such offering. Janex shall use
commercially reasonable efforts to comply with any requests for Demand
Registrations hereunder.
(b) LONG-FORM REGISTRATIONS. Lender shall be entitled to request two
Long-Form Registrations in which Janex shall pay all registration expenses;
provided that at least 1,000,000 shares of Janex common stock is requested to be
registered in any Long-Form Registration. A registration shall not count as one
of the permitted Long-Form Registrations until it has become effective. In any
event, Janex shall pay all registration expenses in connection with any
registration initiated as a Long-Form Registration, whether or not it has become
effective.
(c) SHORT-FORM REGISTRATIONS. In addition to the Long-Form
Registrations, Lender shall be entitled to request an unlimited number of
Short-Form Registrations in which Janex shall pay all registration expenses.
Demand Registrations shall be Short-Form Registrations whenever Janex is
permitted to use any applicable short form. Janex shall use its reasonable best
efforts to make Short-Form Registrations available for the sale of Janex Shares.
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(d) PRIORITY ON DEMAND REGISTRATION. If a Demand Registration is an
underwritten offering and the managing underwriters advise Janex in writing that
in their opinion the number of Janex Shares and, if permitted hereunder, other
securities requested to be included in such offering exceeds the number of Janex
Shares and other securities, if any, which can be sold without materially
jeopardizing the successful marketing of the securities proposed to be sold,
Janex shall include in such registration (i) first, the Janex Shares and (ii)
second, the other securities requested to be included in such registration.
(e) SELECTION OF UNDERWRITERS. Lender shall have the right to select
the investment banker(s) and manager(s) to administer the offering.
(f) OTHER REGISTRATION RIGHTS. Janex represents and warrants that it is
not a party to, or otherwise subject to, any other agreement granting
registration rights to any other person with respect to any securities of Janex.
Except as provided in this Agreement, Janex shall not grant to any person(s) the
right to request Janex to register any equity securities of Janex, or any
securities convertible or exchangeable into or exercisable for such securities,
without the prior written consent of Lender; provided that Janex may grant
rights to other persons to participate in Piggyback Registrations so long as
such rights are subordinate to the rights of Lender with respect to such
Piggyback Registrations.
(g) ASSIGNMENT. Lender may assign its rights under Section 20.0, 21.0
and 22.0 under this Agreement to any person who purchases at least 500,000
shares of Janex common stock from Lender.
21.0 PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. Whenever Janex proposes to register any of its
equity securities under the Securities Act (other than (i) pursuant to a Demand
Registration, and (ii) a registration relating solely to employee benefit plans,
a registration on Form S-4 or a registration relating solely to a Rule 145
transaction) and the registration form to be used may be used for the
registration of Janex Shares (a "Piggyback Registration"), Janex shall give
prompt written notice (in any event within three business days after its receipt
of notice of any exercise of demand registration rights other than under this
Agreement) to Lender of its intention to effect such a registration and, subject
to the terms of Sections 21.0(c) and 21.0(d) hereof, shall include in such
registration all Janex Shares with respect to which Janex has received written
requests for inclusion therein within 15 days after the delivery of Janex's
notice.
(b) PIGGYBACK EXPENSES. The registration expenses of the holders of
Janex Shares shall be paid by Janex in all Piggyback Registrations.
(c) PRIORITY ON PRIMARY REGISTRATION. If a Piggyback Registration is an
underwritten primary registration on behalf of Janex, and the managing
underwriters advise Janex in writing that in their reasonable opinion the number
of securities requested to be included in such registration would materially
jeopardize the successful marketing of the securities proposed to be sold, Janex
shall include in such registration, (i) first, the securities Janex proposes to
sell, (ii) second, the Janex Shares and (iii) third, other securities requested
to be included in such registration.
(d) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration is
an underwritten secondary registration on behalf of holders of Janex's
securities, and the managing underwriters advise Janex in writing that in their
reasonable opinion the number of securities requested to be included in such
registration would materially jeopardize the successful marketing of the
securities proposed to be sold, Janex shall include in such registration (i)
first, the securities requested to be included therein by the holders requesting
such registration, (ii) second, the Janex Shares requested to be included in
such registration, and (iii) third, other securities requested to be included in
such registration.
(e) SELECTION OF UNDERWRITERS. If any Piggyback Registration is an
underwritten offering, the selection of investment banker(s) and manager(s) for
the offering must be approved by Lender. Such approval shall not be unreasonably
withheld or delayed.
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(f) OTHER REGISTRATIONS. If Janex has previously filed a registration
statement with respect to Janex Shares, and if such previous registration has
not been withdrawn or abandoned, Janex shall not file or cause to be effected
any other registration, including any Demand Registration, of any of its equity
securities or securities convertible or exchangeable into or exercisable for its
equity securities under the Securities Act (except on Form S-8 or any successor
form), whether on its own behalf or at the request of any holder or holders of
such securities, until a period of at least 180 days has elapsed from the
effective date of such previous registration.
22.0 INDEMNIFICATION FOR SECURITIES MATTERS. (a) Janex agrees to
indemnify, to the extent permitted by law, Lender, its officers and directors
and each person who controls Lender (within the meaning of the Securities Act)
against all out-of-pocket losses, claims, damages, liabilities and expenses
("Loss") caused by any untrue or alleged untrue statement of material fact
contained in any registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are caused by or
contained in any information furnished in writing to Janex by such holder
expressly for use therein or by such holder's failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto
after Janex has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, Janex shall indemnify such
underwriters, their officers and directors and each person who controls such
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of Lender.
(a) In connection with any registration statement in which Lender is
participating, Lender shall furnish to Janex in writing such information and
affidavits as Janex reasonably requests for use in connection with any such
registration statement or prospectus and, to the extent permitted by law, shall
indemnify Janex, its directors and officers and each person who controls Janex
(within the meaning of the Securities Act) against any Losses resulting from any
untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by such
holder; provided that the obligation to indemnify shall be individual, not joint
and several, for each holder and shall be limited to the net amount of proceeds
received by Lender pursuant to such registration statement.
(b) Any person entitled to indemnification hereunder shall (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided that the failure to give prompt notice
shall not impair any person's right to indemnification hereunder to the extent
such failure has not prejudiced the indemnifying party) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(c) The indemnification provided for under this Agreement shall remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities. Janex also
agrees to make such provisions, as are reasonably requested by any indemnified
party, for contribution to such party in the event Janex's indemnification is
unavailable for any reason
[ATTESTATION AND SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the Parties hereto have duly executed this
Agreement on the date set forth opposite their names below.
LENDER:
AMRESCO FINANCIAL I, L.P., a Delaware limited partnership
By: AMRESCO Principal Managers II, Inc., a Delaware corporation, its general
partner
By: /s/ Allyn S. Patrick
-----------------------
Name: Allyn S. Patrick
-----------------------
Its: Vice President Dated: 2-27-01
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BORROWER:
DAMERT COMPANY
By: /s/ Frederick A. Damert
-----------------------
Name: Frederick A. Damert
-----------------------
Its: President Dated: 2-15-01
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GUARANTOR:
/s/ Frederick A. Damert Dated: 2-15-01
- ------------------------------ ------------------
FREDERICK A. DAMERT
JANEX:
JANEX INTERNATIONAL, INC.
By: /s/ Dan Lesnick
-----------------------
Name: Daniel Lesnick
-----------------------
Its: President Dated: 2-16-01
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