EXHIBIT 4.3
EXECUTION COPY
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REGISTRATION RIGHTS AGREEMENT
BETWEEN
JAKKS PACIFIC, INC.
AND
BEAR, STEARNS & CO. INC.,
DATED AS OF JUNE 9, 2003
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This REGISTRATION RIGHTS AGREEMENT, dated as of June 9, 2003, is
between JAKKS PACIFIC, INC., a Delaware corporation (together with any successor
entity, herein referred to as the "Issuer"), and BEAR, STEARNS & CO. INC. (the
"Initial Purchaser").
Pursuant to the Purchase Agreement, dated June 4, 2003, between the
Issuer and the Initial Purchaser (the "Purchase Agreement"), the Initial
Purchaser has agreed to purchase from the Issuer $98,000,000 aggregate principal
amount at maturity of Convertible Senior Notes due 2023 (the "Notes"). The Notes
will be convertible into fully paid, nonassessable common stock, par value
$0.001 per share, of the Issuer (the "Common Stock") on the terms, and subject
to the conditions, set forth in the Indenture (as defined herein). To induce the
Initial Purchaser to purchase the Notes, and in satisfaction of a condition to
the Initial Purchaser's obligations under the Purchase Agreement, the Issuer has
agreed to provide the registration rights set forth in this Agreement.
The Company agrees with the Initial Purchaser (i) for its benefit as
Initial Purchaser and (ii) for the benefit of the beneficial owners (including
the Initial Purchaser) from time to time of the Notes and the beneficial owners
from time to time of the Common Stock issued upon conversion of the Notes (each
of the foregoing a "Holder"), as follows:
1. Definitions.
As used in this Agreement, the following capitalized terms shall have
the following meanings:
"Additional Amounts": As defined in Section 3(a) hereof.
"Additional Amounts Payment Date": Each interest payment date with
respect to the Notes and each June 15 and December 15 in the case of the Common
Stock.
"Advice": As defined in Section 4(c)(ii) hereof.
"Affiliate": With respect to any specified Person, means an
"Affiliate," as defined in Rule 144 under the Securities Act, of such Person.
"Agreement": This Registration Rights Agreement, as it may be amended
from time to time in accordance with the terms hereof.
"Blue Sky Application": As defined in Section 6(a)(i) hereof.
"Broker-Dealer": Any broker or dealer registered under the Exchange
Act.
"Business Day": Each day of the year other than a Saturday or Sunday or
other day on which banking institutions in the City of New York are required or
authorized by law or regulation to close.
"Closing Date": The date of this Agreement.
"Commission": The United States Securities and Exchange Commission.
"Common Stock": The shares of common stock, par value $0.001 per share,
of the Issuer and any other shares of capital stock that may constitute "Common
Stock" for purposes of the Indenture.
"Control": With respect to a Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ability to exercise voting power,
by contract or otherwise.
"Effectiveness Period": As defined in Section 2(a)(iii) hereof.
"Effectiveness Target Date": As defined in Section 2(a)(ii) hereof.
"Exchange Act": The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Holder": A Person who owns, beneficially or otherwise, Registrable
Securities.
"Indemnified Party": As defined in Section 6(a) hereof.
"Indenture": The Indenture, dated as of June 9, 2003, between the
Issuer and Wells Fargo Bank, N.A., as trustee (the "Trustee"), pursuant to which
the Notes are to be issued, as such Indenture is amended, modified or
supplemented from time to time in accordance with the terms thereof.
"Initial Purchaser": As defined in the preamble hereto.
"Issuer": As defined in the preamble hereto.
"Majority of Holders": Holders holding over 50% of the aggregate
principal amount of Notes outstanding; provided that, for purposes of this
definition, a Holder of shares of Common Stock that constitute Registrable
Securities and that were issued upon conversion of the Notes shall be deemed to
hold an aggregate principal amount of Notes (in addition to the principal amount
of Notes held by such Holder) equal to the product of (x) the number of such
shares of Common Stock held by such Holder and (y) the prevailing conversion
price at the time of such conversion, such prevailing conversion price as
determined in accordance with the Indenture.
"Nasd": National Association of Securities Dealers, Inc.
"Notes": As defined in the preamble hereto, up to $98,000,000 aggregate
principal amount at maturity.
"Person": An individual, partnership, corporation, unincorporated
organization, trust, joint venture or a government or agency or political
subdivision thereof.
"Prospectus": The prospectus included in a Shelf Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 415 promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement and by all other
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amendments thereto, including post-effective amendments, and all materials
incorporated by reference or deemed to be incorporated by reference into such
Prospectus.
"Questionnaire Deadline": As defined in Section 2(b) hereof.
"Record Holder": With respect to any Additional Amounts Payment Date,
each Person who is a Holder on the record date with respect to the interest
payment date on which such Additional Amounts Payment Date shall occur. In the
case of a Holder of shares of Common Stock issued upon conversion of the Notes,
"Record Holder" shall mean each Person who is a Holder of shares of Common Stock
that constitute Registrable Securities on the May 15 or November 15 immediately
preceding the Additional Amounts Payment Date.
"Registrable Securities": Each Note and each share of Common Stock
issued upon conversion of Notes, and any securities into or for which such
Common Stock has been converted, and any security issued with respect thereto
upon any stock dividend, split or similar event, until, in the case of any such
security, (A) the earliest of (i) its effective registration under the
Securities Act and resale in accordance with the Registration Statement covering
it, (ii) expiration of the holding period that would be applicable thereto under
Rule 144(k) under the Securities Act were it not held by an Affiliate of the
Issuer, (iii) its sale to the public pursuant to Rule 144 under the Securities
Act and (iv) the date that is two years after the later of the original issuance
of the Notes and the last date that the Issuer or any of its Affiliates was the
owner of any such Notes (or any predecessor thereto), and (B) as a result of the
event or circumstance described in any of the foregoing clauses (i) through
(iv), the legends with respect to transfer restrictions required under the
Indenture are removed or removable in accordance with the terms of the Indenture
or such legend, as the case may be.
"Registration Default": As defined in Section 3(a)(iii) hereof.
"Registration Statement": Means any registration statement of the
Issuer that covers any of the Registrable Securities pursuant to the provisions
of this Agreement including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all materials incorporated by reference or explicitly deemed to be incorporated
by reference in such registration statement.
"Sale Notice": As defined in Section 4(e) hereof.
"Securities Act": The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the Commission thereunder.
"Shelf Filing Deadline": As defined in Section 2(a)(i) hereof.
"Shelf Registration Statement": As defined in Section 2(a)(i) hereof.
"Suspension Period": As defined in Section 4(b)(i) hereof.
"TIA": The Trust Indenture Act of 1939, as in effect on the date the
Indenture is qualified under that Act.
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"Underwriting Majority": On any date, Holders holding at least 66 2/3%
of the aggregate principal amount of the Registrable Securities outstanding on
such date; provided, that for the purpose of this definition, a holder of shares
of Common Stock that constitute Registrable Securities and issued upon
conversion of Notes shall be deemed to hold an aggregate principal amount of
Registrable Securities (in addition to the principal amount of Notes held by
such holder) equal to (x) the number of such shares of Common Stock that are
Registrable Securities held by such holder multiplied by (y) the then applicable
Conversion Price (as defined in the Indenture).
"Underwritten Registration" or "Underwritten Offering": A registration
in which securities of the Issuer are sold to an underwriter for reoffering to
the public.
2. Shelf Registration.
(a) The Issuer shall:
(i) as soon as practicable but not later than 90
days after the date hereof (the "Shelf Filing Deadline"), cause to be
filed with the Commission a registration statement pursuant to Rule 415
under the Securities Act (the "Shelf Registration Statement"), which
Shelf Registration Statement shall provide for resales from time to
time of all Registrable Securities held by the Holders thereof as of
the Closing Date or for any other Holder who acquired the Notes
subsequent to the Closing Date and who has notified the Issuer of its
desire to be included as a Selling Stockholder in such Registration
Statement;
(ii) use its best efforts to cause the Shelf
Registration Statement to be declared effective by the Commission as
promptly as is practicable but in any event no later than 210 days
after the date hereof (the "Effectiveness Target Date"); and
(iii) subject to Section 4(b)(i) hereof, use its
best efforts to keep the Shelf Registration Statement continuously
effective, supplemented and amended as required by the provisions of
Section 4(b) hereof to the extent necessary to ensure that (A) it is
available for resales by the Holders of Registrable Securities entitled
to the benefit of this Agreement and (B) conforms with the requirements
of this Agreement and the Securities Act and the rules and regulations
of the Commission promulgated thereunder as announced from time to time
for a period (the "Effectiveness Period") ending on the earliest of:
(1) two years after the later of the last date
of original issuance of any of the Notes and the date on which
we or any of our Affiliates owned any of the Notes;
(2) the date on which Holders of Registrable
Securities are able to sell all of the Registrable Securities
immediately without restriction pursuant to Rule 144(k) under
the Securities Act;
(3) the date when all of the Registrable
Securities of those Holders that have provided the information
required pursuant to the terms of Section 2(b)
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hereof are registered under the Shelf Registration Statement
and disposed of in accordance with the terms of the Shelf
Registration Statement; and
(4) the date when all of the Registrable
Securities of those Holders that have provided the information
required pursuant to the terms of Section 2(b) hereof have
ceased to be outstanding (whether as a result of redemption,
repurchase and cancellation, conversion or otherwise).
(b) No Holder of Registrable Securities may include any
of its Registrable Securities in the Shelf Registration Statement
pursuant to this Agreement unless such Holder furnishes to the Issuer
in writing, prior to or on the 30th Business Day after receipt of a
request therefor (the "Questionnaire Deadline"), such information as
the Issuer may reasonably request for use in connection with the Shelf
Registration Statement or Prospectus or preliminary Prospectus included
therein and in any application to be filed with or under state
securities laws. In connection with all such requests for information
from Holders of Registrable Securities, the Issuer shall notify such
Holders of the requirements set forth in the preceding sentence. Each
Holder as to which the Shelf Registration Statement is being effected
agrees to furnish promptly to the Issuer all information required to be
disclosed in order to make information previously furnished to the
Issuer by such Holder not materially misleading.
3. Additional Amounts.
(a) If:
(i) the Shelf Registration Statement has not
been filed with the Commission prior to or on the Shelf Filing
Deadline,
(ii) the Shelf Registration Statement has not
been declared effective by the Commission prior to or on the
Effectiveness Target Date,
(iii) subject to the provisions of Section 4(b)(i)
hereof, the Shelf Registration Statement is filed and declared
effective but, during the Effectiveness Period and after the
Effectiveness Target Date, shall thereafter cease to be effective or
fail to be usable for its intended purpose for a period of time
(including any Suspension Period) that shall exceed 30 days in the
aggregate in any 3-month period or 60 days in the aggregate in any
365-day period (each such event referred to in foregoing clauses (i)
through (iii), a "Registration Default"),
then the Issuer hereby agrees to pay additional amounts ("Additional
Amounts") to each Holder from and including the day following the
Registration Default to but excluding the day on which the Registration
Default has been cured in an amount equal to:
(A) with respect to such Holder's
Notes, for the first 90-day period during which a Registration
Default shall have occurred and be continuing but excluding
the day on which all Registration Defaults have been cured, an
amount equal to 0.25% per annum on the applicable principal
amount of such Holder's then outstanding and not converted
Notes, increasing to an amount per
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annum on the applicable principal amount of such Holder's then
outstanding and not converted Notes equal to 0.50% on the 91st
day, provided that in no event shall the aggregate Additional
Amounts pursuant to this clause accrue at a rate per annum
exceeding 0.50% of the sum of the applicable principal amount
of the then outstanding Notes;
(B) with respect to such Holder's
Common Stock issued upon conversion of Notes for the first
90-day period during which a Registration Default shall have
occurred and be continuing but excluding the day on which all
Registration Defaults have been cured, an amount equal to
0.25% per annum on the applicable principal amount of such
Holder's converted Notes, increasing to an amount per annum on
the applicable principal amount of such Holder's converted
Notes equal to 0.50% on the 91st day, provided that in no
event shall the aggregate Additional Amounts pursuant to this
clause accrue at a rate per annum exceeding 0.50% of the sum
of the applicable principal amount of the then converted
Notes;
provided that for purposes of this section the term
"applicable principal amount" means, as of any date of
determination, with respect to each $1,000 principal amount at
maturity of Notes, the sum of the initial issue price of such
Notes plus accrued original issue discount with respect to
such Notes through the date of determination.
(b) All accrued Additional Amounts shall be paid in
arrears to Record Holders by the Issuer on each Additional Amounts
Payment Date by wire transfer of immediately available funds or by
federal funds check; provided that any Additional Amounts accrued with
respect to any Registrable Securities or portion thereof called for
redemption on a redemption date or converted into Common Stock on a
conversion date prior to the Additional Amounts Payment Date shall, in
any such event, be paid instead to the Holder who submitted such Note
or portion thereof for redemption or conversion on the applicable
redemption date or conversion date, as the case may be, on such date
(or promptly following the conversion date, in the case of
conversions). Following the cure of all Registration Defaults relating
to any particular Note or share of Common Stock, the accrual of
Additional Amounts with respect to such Note or share of Common Stock
will cease.
The Trustee shall be entitled, on behalf of Holders of Notes, to seek
any available remedy for the enforcement of this Agreement, including for the
payment of any Additional Amounts. All obligations of the Issuer set forth in
this Section 3 that are outstanding with respect to any Registrable Security at
the time such security ceases to be a Registrable Security shall survive until
such time as all such obligations with respect to such Registrable Security
shall have been satisfied in full. The parties hereto agree that the Additional
Amounts provided for in this section constitutes a reasonable estimate of the
damages that may be incurred by Holders of Registrable Securities by reason of
the failure of the Shelf Registration Statement to be filed or declared
effective or available for effecting resales of Registrable Securities in
accordance with the provisions hereof.
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4. Registration Procedures.
(a) In connection with the Shelf Registration Statement,
the Issuer shall prepare and file with the Commission a Shelf
Registration Statement on Form S-1 or Form S-3 or on any other
appropriate form under the Securities Act permitting registration of
the Registrable Securities for resale by the Holders thereof in
accordance with the reasonable methods of distribution elected by them,
and use its best efforts to cause such Shelf Registration Statement to
become effective and remain effective as provided herein. At the time
the Shelf Registration Statement is declared effective, each Holder
that has satisfied the requirements of Section 2(b) hereof shall be
named as a selling securityholder in the Shelf Registration Statement
and the related Prospectus in such a manner as to permit such Holder to
deliver such Prospectus to purchasers of Registrable Securities in
accordance with applicable law.
(b) In connection with the Shelf Registration Statement
and any Prospectus required by this Agreement to permit the sale or
resale of Registrable Securities, the Issuer shall:
(i) Subject to any notice by the Issuer in
accordance with this Section 4(b) of the existence of any fact or event
of the kind described in Section 4(b)(iii)(D), use its reasonable best
efforts to keep the Shelf Registration Statement continuously effective
during the Effectiveness Period; upon the occurrence of any event that
would cause the Shelf Registration Statement or the Prospectus
contained therein (A) to contain a material misstatement or omission or
(B) not be effective and usable for resale of Registrable Securities
during the Effectiveness Period, the Issuer shall file promptly an
appropriate amendment to the Shelf Registration Statement, a prospectus
supplement or a report filed with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act, in the case of clause
(A), correcting any such misstatement or omission, and, in the case of
either clause (A) or (B), use its reasonable best efforts to cause such
amendment to be declared effective and the Shelf Registration Statement
and the related Prospectus to become usable for their intended purposes
as soon as practicable thereafter. Notwithstanding the foregoing, the
Issuer may, by written notice to the Holders, suspend the Holders' use
of the Prospectus for a period not to exceed an aggregate of 30 days in
any three-month period (each such period, a "Suspension Period") if:
(x) an event occurs and is continuing as a
result of which the Shelf Registration Statement would, in the
Issuer's reasonable judgment, contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; and
(y) the Issuer reasonably determines in good faith
that the disclosure of such event at such time would have a
material adverse effect on the business of the Issuer (and its
subsidiaries, if any, taken as a whole);
provided, that the Suspension Periods shall not exceed an aggregate of
60 days in any 365-day period. The Effectiveness Period shall be
extended by the number of days beginning on the date the Issuer gives
the Holders notice of the Suspension Period to and
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including the date on which the Holders receive copies of the
supplemented or amended Prospectus or the date on which the Holders are
advised in writing by the Issuer that the Prospectus may be used. Each
Holder, by its acceptance of a Registrable Security, agrees to hold in
confidence any communication by the Issuer relating to an event
described in Section 4(b)(i)(x) and (y) or Section 4(b)(iii)(D).
(ii) Prepare and file with the Commission such
amendments and post-effective amendments to the Shelf Registration
Statement as may be necessary to keep the Shelf Registration Statement
effective during the Effectiveness Period; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Securities Act,
and to comply fully with the applicable provisions of Rules 424 and
430A under the Securities Act in a timely manner, if required by the
Securities Act or as reasonably requested by the Initial Purchaser or
by the Trustee on behalf of the Holders of the Registrable Securities
covered by such Shelf Registration Statement; and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by the Shelf Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in the Shelf Registration
Statement or supplement to the Prospectus.
(iii) As promptly as practicable give notice to
the Initial Purchaser, the Holders, counsel for the Holders and for the
Initial Purchaser (or, if applicable, separate counsel for the
Holders), and any underwriters and, if requested by such Persons,
confirm such advice in writing:
(A) when the Shelf Registration
Statement, Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to
the Shelf Registration Statement or any post-effective
amendment thereto, when the same has become effective,
(B) of any request by the Commission or
any other federal or state governmental authority for
amendments to the Shelf Registration Statement or amendments
or supplements to the Prospectus or for additional information
relating thereto,
(C) of the issuance by the Commission
or any other federal or state authority of any stop order
suspending the effectiveness of the Shelf Registration
Statement under the Securities Act or of the suspension by any
state securities commission of the qualification of the
Registrable Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of
the preceding purposes, or
(D) of the existence of any fact or the
happening of any event, during the Effectiveness Period, that
makes any statement of a material fact made in the Shelf
Registration Statement, the Prospectus, any amendment or
supplement thereto, or any document incorporated by reference
therein untrue, or that requires the making of any additions
to or changes in the Shelf Registration
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Statement or the Prospectus in order to make the statements
therein not misleading.
If at any time the Commission shall issue any stop order
suspending the effectiveness of the Shelf Registration Statement, or
any state securities commission or other regulatory authority shall
issue an order suspending the qualification or exemption from
qualification of the Registrable Securities under state securities or
Blue Sky laws, or the Shelf Registration Statement ceases to be
effective for any reason at any time during the Effectiveness Period,
the Issuer shall use its reasonable best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time, and
in any event shall within thirty (30) days of such cessation of
effectiveness amend the Shelf Registration Statement in a manner
reasonably expected to obtain the withdrawal of the order suspending
the effectiveness thereof, or file an additional Shelf Registration
Statement covering all of the securities that as of the date of such
filing are Registrable Securities. If a subsequent Shelf Registration
Statement is filed, the Issuer shall use its best efforts to cause such
Shelf Registration Statement to become effective as promptly as is
practicable after such filing and to keep such Shelf Registration
Statement continuously effective until the end of the Effectiveness
Period.
(iv) Furnish to the Initial Purchaser, counsel
for the Initial Purchaser, one counsel for the selling Holders and each
of the underwriter(s), if any, before filing with the Commission, a
copy of the Shelf Registration Statement and copies of any Prospectus
included therein or any amendments or supplements to either of the
Shelf Registration Statement or Prospectus (other than documents
incorporated by reference after the initial filing of the Shelf
Registration Statement), which documents will be subject to the review
of such persons, counsel and underwriter(s), if any, for a period of
two Business Days, and the Issuer will not file the Shelf Registration
Statement or Prospectus or any amendment or supplement to the Shelf
Registration Statement or Prospectus (other than documents incorporated
by reference) to which such counsel or the underwriter(s), if any,
shall reasonably object within two Business Days after the receipt
thereof. Such counsel or underwriter, if any, shall be deemed to have
reasonably objected to such filing if the Shelf Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be
filed, contains a material misstatement or omission.
(v) Subject to the execution of a
confidentiality agreement reasonably acceptable to the Issuer, make
available at reasonable times for inspection by one or more
representatives of the selling Holders, designated in writing by a
Majority of Holders whose Registrable Securities are included in the
Shelf Registration Statement, any underwriter, if any, participating in
any distribution pursuant to the Shelf Registration Statement, and any
attorney or accountant retained by the Majority of Holders or any of
the underwriter(s), all financial and other records, pertinent
corporate documents and properties of the Issuer as shall be reasonably
necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the Issuer's officers, directors, managers
and employees to supply all information reasonably requested by any
such representative or representatives of the selling Holders,
underwriter, attorney or accountant in connection with the Shelf
Registration Statement; provided, however, that
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any information designated by the Issuer as confidential at the time of
delivery of such information shall be kept confidential by the
recipient thereof.
(vi) If requested by the Initial Purchaser or its
counsel, any selling Holders or the underwriter(s), if any, incorporate
in the Shelf Registration Statement or Prospectus, pursuant to a
supplement or post-effective amendment if necessary, such information
as such Initial Purchaser, counsel, selling Holders or underwriter(s),
if any, may reasonably request to have included therein, including,
without limitation: (1) information relating to the "Plan of
Distribution" of the Registrable Securities, (2) information with
respect to the principal amount of Notes or number of shares of Common
Stock being sold, (3) the purchase price being paid therefor and (4)
any other terms of the offering of the Registrable Securities to be
sold in such offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as reasonably
practicable after the Issuer is notified of the matters to be
incorporated in such Prospectus supplement or post-effective amendment.
(vii) As promptly as practicable furnish to each
selling Holder by electronic or paper copy, the Initial Purchaser and
its counsel, and each of the underwriter(s), if any, without charge, at
least one copy of the Shelf Registration Statement, as first filed with
the Commission, and of each amendment thereto (and any documents
incorporated by reference therein or exhibits thereto (or exhibits
incorporated in such exhibits by reference) as such Person may request
in writing).
(viii) Deliver to each selling Holder, the Initial
Purchaser and its counsel, and each of the underwriter(s), if any,
without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
Persons reasonably may request; subject to any notice by the Issuer in
accordance with this Section 4(b) of the existence of any fact or event
of the kind described in Section 4(b)(iii)(D), the Issuer hereby
consents to the use of the Prospectus and any amendment or supplement
thereto by each of the selling Holders and each of the underwriter(s),
if any, in connection with the offering and the sale of the Registrable
Securities covered by the Prospectus or any amendment or supplement
thereto.
(ix) If an underwriting agreement is entered into
and the registration is an Underwritten Registration, the Issuer shall:
(A) upon request, furnish to each
selling Holder and each underwriter, if any, in such substance
and scope as they may reasonably request and as are
customarily made by issuers to underwriters in primary
underwritten offerings, upon the date of closing of any sale
of Registrable Securities in an Underwritten Registration:
(1) a customary certificate, dated
the date of such closing, signed by (y) the
Chairman of the Board, the Chief Executive
Officer, the President or a Vice President
and (z) the Chief Financial Officer of the
Issuer confirming, as of the date thereof,
such matters as such parties may reasonably
request;
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(2) opinions, each dated the date
of such closing, of counsel to the Issuer
covering such matters as are customarily
covered in legal opinions to underwriters in
connection with primary underwritten
offerings of securities; and
(3) customary comfort letters,
dated the date of such closing, from the
Issuer's independent accountants (and from
any other accountants whose report is
contained or incorporated by reference in
the Shelf Registration Statement), in the
customary form and covering matters of the
type customarily covered in comfort letters
to underwriters in connection with primary
underwritten offerings of securities;
(B) set forth in full in the
underwriting agreement, if any, indemnification provisions and
procedures which provide rights no less protective than those
set forth in Section 6 hereof with respect to all parties to
be indemnified; and
(C) deliver such other documents and
certificates as may be reasonably requested by such parties to
evidence compliance with clause (A) above and with any
customary conditions contained in the underwriting agreement
or other agreement entered into by the selling Holders
pursuant to this clause (ix).
(x) Before any public offering of Registrable
Securities, cooperate with the selling Holders, the underwriter(s), if
any, and their respective counsel in connection with the registration
and qualification of the Registrable Securities under the securities or
Blue Sky laws of such jurisdictions as the selling Holders or
underwriter(s), if any, may reasonably request and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Shelf
Registration Statement; provided, however, that the Issuer shall not be
required (A) to register or qualify as a foreign corporation or a
dealer of securities where it is not now so qualified or to take any
action that would subject it to the service of process in any
jurisdiction where it is not now so subject or (B) to subject itself to
taxation in any such jurisdiction if it is not now so subject.
(xi) Cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold
and not bearing any restrictive legends (unless required by applicable
securities laws); and enable such Registrable Securities to be in such
denominations and registered in such names as the Holders or the
underwriter(s), if any, may reasonably request at least two Business
Days before any sale of Registrable Securities.
(xii) Use its reasonable best efforts to cause the
Registrable Securities covered by the Shelf Registration Statement to
be registered with or approved by such other U.S. governmental agencies
or authorities as may be necessary to enable the seller
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or sellers thereof or the underwriter(s), if any, to consummate the
disposition of such Registrable Securities, subject to the proviso in
clause (x) above.
(xiii) Subject to Section 4(b)(i) hereof, if any
fact or event contemplated by Section 4(b)(iii)(D) hereof shall exist
or have occurred, use its reasonable best efforts to prepare a
supplement or post-effective amendment to the Shelf Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of Registrable Securities, the Prospectus
will not contain 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.
(xiv) Provide CUSIP numbers for all Registrable
Securities not later than the effective date of the Shelf Registration
Statement and provide the Trustee under the Indenture with certificates
for the Notes that are in a form eligible for deposit with The
Depository Trust Company.
(xv) Cooperate and assist in any filings required
to be made with the NASD and in the performance of any due diligence
investigation by any underwriter that is required to be retained in
accordance with the rules and regulations of the NASD.
(xvi) Otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the Commission and
all reporting requirements under the rules and regulations of the
Exchange Act and make generally available to its security holders
earning statements (which need not be audited) satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder no later than 45 days after the end of any 12 month period
(or 90 days after the end of any 12-month period if such period is a
fiscal year) commencing on the first day of the first fiscal quarter of
the Issuer commencing after the effective date of a Shelf Registration
Statement, which statements shall cover said 12-month periods.
(xvii) Cause the Indenture to be qualified under
the TIA not later than the effective date of the Shelf Registration
Statement required by this Agreement, and, in connection therewith,
cooperate with the Trustee and the holders of Notes to effect such
changes to the Indenture as may be required for such Indenture to be so
qualified in accordance with the terms of the TIA; and execute and use
its reasonable best efforts to cause the Trustee thereunder to execute
all documents that may be required to effect such changes and all other
forms and documents required to be filed with the Commission to enable
such Indenture to be so qualified in a timely manner.
(xviii) Cause all Registrable Securities covered by
the Shelf Registration Statement to be listed or quoted, as the case
may be, on each securities exchange or automated quotation system on
which securities issued by the Issuer of the same series are then
listed or quoted.
(xix) Provide promptly to each Holder upon written
request each document filed with the Commission pursuant to the
requirements of Section 13 and
13
Section 15 of the Exchange Act after the effective date of the Shelf
Registration Statement, unless such documents are available from EDGAR.
(xx) If requested by the underwriters in an
underwritten offering, make appropriate officers of the Issuer
reasonably available to the underwriters for meetings with prospective
purchasers of the Registrable Securities and prepare and present to
potential investors customary "road show" material in a manner
consistent with other new issuances of other securities similar to the
Registrable Securities.
(xxi) Enter into such customary agreements and
take all such other necessary actions in connection therewith
(including those requested by the holders of a majority of the
Registrable Securities being sold) in order to expedite or facilitate
disposition of such Registrable Securities.
(xxii) Upon the filing of the Shelf Registration
Statement and the effectiveness of the Shelf Registration Statement,
announce the same by issuing a news release to Reuters Economic
Services and Bloomberg Business News.
(c) Each Holder agrees by acquisition of a Registrable
Security that, upon receipt of any notice from the Issuer of the
existence of any fact of the kind described in Section 4(b)(iii)(D)
hereof, such Holder will, and will use its reasonable best efforts to
cause any underwriter(s) in an Underwritten Offering to, forthwith
discontinue disposition of Registrable Securities pursuant to the Shelf
Registration Statement until:
(i) such Holder has received copies of the
supplemented or amended Prospectus contemplated by Section 4(b)(xiii)
hereof; or
(ii) such Holder is advised in writing (the
"Advice") by the Issuer that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus.
If so directed by the Issuer, each Holder will deliver to the Issuer
(at the Issuer's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such
Registrable Securities that was current at the time of receipt of such
notice of suspension.
(d) The Issuer is required to send a questionnaire in the
form attached hereto as Annex A to each Holder of Registrable
Securities at least 30 Business Days before the Shelf Registration
Statement is declared effective. Each Holder who intends to be named as
a selling Holder in the Shelf Registration Statement shall furnish to
the Issuer in writing, within 30 Business Days after receipt of a
request therefor as set forth in a questionnaire in the form attached
hereto as Annex A, such information regarding such Holder and the
proposed distribution by such Holder of its Registrable Securities as
the Issuer may reasonably request for use in connection with the Shelf
Registration Statement or Prospectus or preliminary Prospectus included
therein. Holders that do not complete the questionnaire and deliver it
to the Issuer shall not be named as selling securityholders in the
Prospectus or preliminary Prospectus included in the Shelf Registration
Statement and therefore shall not be permitted to sell any Registrable
Securities pursuant to the
14
Shelf Registration Statement, so long as the Issuer has diligently
requested such information from such Holder. Each Holder who intends to
be named as a selling Holder in the Shelf Registration Statement shall
promptly furnish to the Issuer in writing all information required to
be disclosed in order to make information previously furnished to the
Issuer by such Holder not materially misleading and such other
information as the Issuer may from time to time reasonably request in
writing.
(e) Upon the effectiveness of the Shelf Registration
Statement, each Holder shall notify the Issuer at least three Business
Days prior to any intended distribution of Registrable Securities
pursuant to the Shelf Registration Statement (a "Sale Notice"), which
notice shall be effective for five Business Days. Each Holder of this
Security, by accepting the same, agrees to hold any communication by
the Issuer in response to a Sale Notice in confidence.
(f) Notwithstanding anything in this Agreement to the
contrary, each party to this Agreement (and any employee,
representative or other agent of such party) may disclose to any and
all persons, without limitation of any kind, the U.S. federal income
tax treatment and tax structure of the transactions contemplated by
this offering memorandum and all materials of any kind (including
opinions or other tax analyses) that are provided to it relating to
such tax treatment and tax structure. However, any such information
relating to the U.S. federal income tax treatment or tax structure is
required to be kept confidential to the extent necessary to comply with
any applicable federal or state securities laws.
5. Registration Expenses.
(a) All expenses incident to the Issuer's performance of
or compliance with this Agreement shall be borne by the Issuer
regardless of whether a Shelf Registration Statement becomes effective,
including, without limitation:
(i) all registration and filing fees and
expenses (including without limitation fees and expenses with respect
to filings required to be made with the NASD);
(ii) all fees and expenses of compliance with
federal securities and state Blue Sky or securities laws (including
without limitation reasonable fees and disbursements of counsel for the
Holders in connection with blue sky qualifications of the Registrable
Securities);
(iii) all expenses of printing (including printing
of Prospectuses and certificates for the Common Stock to be issued upon
conversion of the Notes), messenger and delivery services, and
telephone;
(iv) all reasonable fees and disbursements of
counsel to the Issuer and, subject to Section 5(b) below, the Holders
of Registrable Securities;
(v) fees and disbursements of the Trustee and
its counsel and of the registrar and transfer agent for the Common
Stock;
15
(vi) all application and filing fees in
connection with listing (or authorizing for quotation) the Common Stock
on a national securities exchange or automated quotation system
pursuant to the requirements hereof; and
(vii) all fees and disbursements of independent
certified public accountants of the Issuer (including the expenses of
any special audit and comfort letters required by or incident to such
performance).
The Issuer shall bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and
employees performing legal, accounting or other duties), the expenses
of any annual audit and the fees and expenses of any Person, including
special experts, retained by the Issuer.
(b) In connection with the Shelf Registration Statement
required by this Agreement, the Issuer shall reimburse the Initial
Purchaser and the Holders of Registrable Securities being registered
pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, which
shall be Manatt, Phelps & Phillips, LLP or such other counsel chosen by
a Majority of Holders for whose benefit the Shelf Registration
Statement is being prepared and is reasonably acceptable to the Issuer.
The Issuer shall not be required to pay any underwriter discount,
commission or similar fees related to the sale of the Securities.
6. Indemnification and Contribution.
(a) The Issuer shall indemnify and hold harmless each
Holder, their directors, officers, employees, representatives, agents
and each person, if any, who controls such Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act
(each, an "Indemnified Party"), from and against any loss, claim,
damage, expense or liability, joint or several, or any action in
respect thereof (including, but not limited to, any loss, claim,
damage, expense, liability or action relating to resales of the
Registrable Securities), to which such Indemnified Party may become
subject, under the Securities Act or otherwise, insofar as any such
loss, claim, damage, expense, liability or action arises out of, or is
based upon:
(i) any untrue statement or alleged untrue
statement of a material fact contained in (A) the Shelf Registration
Statement or Prospectus or any amendment or supplement thereto or any
preliminary prospectus or (B) any blue sky application or other
document or any amendment or supplement thereto prepared or executed by
the Issuer (or based upon written information furnished by or on behalf
of the Issuer expressly for use in such blue sky application or other
document or amendment on supplement) filed in any jurisdiction
specifically for the purpose of qualifying any or all of the
Registrable Securities under the securities law of any state or other
jurisdiction (such application or document being hereinafter called a
"Blue Sky Application"); or
(ii) the omission or alleged omission to state in
the Shelf Registration Statement or amendment thereto any material fact
required to be stated therein or necessary to make the statements
therein not misleading, or the omission or alleged
16
omission to state in the Prospectus or any amendment or supplement
thereto or any preliminary prospectus any material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
and shall reimburse each Indemnified Party promptly upon demand for any
legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Issuer shall not be
liable to an Indemnified Party in any such case to the extent that any
such loss, claim, damage, expense, liability or action arises out of,
or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in the Shelf Registration Statement
or Prospectus or amendment or supplement thereto or Blue Sky
Application in reliance upon and in conformity with written information
furnished to the Issuer by or on behalf of such Indemnified Party
specifically for use therein; provided, further, that as to any
preliminary Prospectus, this indemnity agreement shall not inure to the
benefit of any Indemnified Party or any officer, employee,
representative, agent, director or controlling person of that
Indemnified Party on account of any loss, claim, damage, expense,
liability or action arising from the sale of the Registrable Securities
sold pursuant to the Shelf Registration Statement to any person by such
Indemnified Party if (i) that Indemnified Party failed to send or give
a copy of the Prospectus, as the same may be amended or supplemented,
to that person within the time required by the Securities Act and (ii)
the untrue statement or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact in such
preliminary Prospectus was corrected in the Prospectus or a supplement
or amendment thereto, as the case may be, unless in each case, such
failure resulted from noncompliance by the Issuer with Section 4. The
foregoing indemnity agreement is in addition to any liability that the
Issuer may otherwise have to any Indemnified Party.
(b) Each Holder, severally and not jointly, shall
indemnify and hold harmless the Issuer, its directors, officers,
employees, representatives, agents and each person, if any, who
controls the Issuer within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, from and against any loss,
claim, damage, expense or liability, joint or several, or any action in
respect thereof, to which the Issuer or any such officer, employee,
representative, agent or controlling person may become subject, insofar
as any such loss, claim, damage, expense, liability or action arises
out of, or is based upon:
(i) any untrue statement or alleged untrue
statement of any material fact contained in the Shelf Registration
Statement or Prospectus or any amendment or supplement thereto or any
Blue Sky Application; or
(ii) the omission or the alleged omission to
state in the Shelf Registration Statement any material fact required to
be stated therein or necessary to make the statements therein not
misleading, or the omission or alleged omission to state in the
Prospectus any material fact required to be stated therein or necessary
to make the
17
statements therein, in light of the circumstances under which they were
made, not misleading,
but in each case only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to
the Issuer by or on behalf of such Holder (or its related Indemnified
Party) specifically for use therein, and shall reimburse the Issuer and
any such director, officer, employee, representative, agent or
controlling person promptly upon demand for any legal or other expenses
reasonably incurred by the Issuer or any such officer, employee or
controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or
action as such expenses are incurred. The foregoing indemnity agreement
is in addition to any liability that any Holder may otherwise have to
the Issuer and any such director, officer, employee or controlling
person. In no event shall the liability of any selling Holder of
Registrable Securities hereunder be greater in amount than the dollar
amount of the proceeds received by such Holder upon the sale of the
Registrable Securities pursuant to the Shelf Registration Statement
giving rise to such indemnification obligation.
(c) Promptly after receipt by an indemnified party under
this Section 6 of notice of any claim or the commencement of any
action, the indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under this Section 6, notify
the indemnifying party in writing of the claim or the commencement of
that action; provided, however, that the failure to notify the
indemnifying party shall not relieve it from any liability that it may
have under this Section 6 except to the extent it has been materially
prejudiced by such failure and, provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability
that it may have to an indemnified party otherwise than under this
Section 6. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof,
the indemnifying party shall be entitled to participate therein and, to
the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel
satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not
be liable to the indemnified party under this Section 6 for any legal
or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that the indemnified party shall have
the right to employ counsel to represent jointly the indemnified party
and its respective directors, employees, officers and controlling
persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the indemnified party
against the indemnifying party under this Section 6 if (1) employment
of such counsel has been authorized in writing by the indemnifying
party, or (2) such indemnifying party shall not have employed counsel
to have charge of the defense of such proceeding within 30 days of the
receipt of notice thereof, or (3) such indemnified party shall have
reasonably concluded that the representation of such indemnified party
and those directors, employees, officers and controlling persons by the
same counsel representing the indemnifying party would be inappropriate
under applicable standards of professional conduct due to actual or
potential differing interests between them or where there may be one or
more defenses
18
available to them that are different from, additional to or in conflict
with those available to the indemnifying party, and in any such event
((1), (2) or (3)) the fees and expenses of such separate counsel shall
be paid by the indemnifying party as incurred. It is understood that
the indemnifying party shall not be liable for the fees and expenses of
more than one separate firm (in addition to local counsel in each
jurisdiction) for all indemnified parties in connection with any
proceeding or related proceedings. No indemnifying party shall:
(i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld)
effect any settlement of any pending or threatened action in respect of
which indemnification or contribution may be sought hereunder (whether
or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes
an unconditional release of such indemnified party from all liability
arising out of such claim, action, suit or proceeding and does not
include a statement as to or an admission of fault, culpability or
failure to act by or on behalf of any indemnified party, or
(ii) be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if
there be a final judgment for the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss of liability by reason of
such settlement or judgment in accordance with this Section 6.
(d) If the indemnification provided for in this Section 6
is unavailable or insufficient to hold harmless an indemnified party
under subsections (a) or (b) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages, expenses or liabilities (or
actions in respect thereof) referred to in subsection (a) or (b) above
(i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand
and the indemnified party on the other from the registration of the
Registrable Securities pursuant to the Shelf Registration, or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the
relative fault of the indemnifying party or parties on the one hand and
the indemnified party on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities
(or actions in respect thereof) as well as any other relevant equitable
considerations. The relative fault of the parties 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 Issuer
on the one hand or such Holder or such other indemnified party, as the
case may be, on the other, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the
first sentence of this subsection (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any action or claim which
is the
19
subject of this subsection (d). The Issuer and the Holders agree that
it would not be just and equitable if contribution pursuant to this
Section 6(d) were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable
considerations referred to herein. Notwithstanding any other provision
of this Section 6(d), the Holders of the Registrable Securities shall
not be required to contribute any amount in excess of the amount by
which the gross proceeds received by such Holders from the sale of the
Registrable Securities pursuant to the Shelf Registration Statement
exceeds the amount of damages which such Holders have otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of
this paragraph (d), each person, if any, who controls such indemnified
party within the meaning of the Securities Act or the Exchange Act
shall have the same rights to contribution as such indemnified party
and each person, if any, who controls the Issuer within the meaning of
the Securities Act or the Exchange Act shall have the same rights to
contribution as the Issuer. The Holders' respective obligations to
contribute pursuant to this Section 6 are several in proportion to the
respective amount of Registrable Securities they have sold pursuant to
a Registration Statement and not joint. The remedies provided for in
this Section 6 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at
law or in equity.
(e) If at any time an indemnified party shall have
requested an indemnifying party to reimburse such indemnified party for
fees and expenses of counsel as contemplated herein, then such
indemnifying party agrees that it shall be liable for any settlement of
any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying
party shall not have reimbursed such indemnified party in accordance
with such request prior to the date of such settlement, and (iii) such
indemnified party shall have given such indemnifying party at least 30
days' prior notice of its intention to settle.
(f) The indemnity and contribution provisions contained
in this Section 6 shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of the Initial Purchaser, any Holder
or any person controlling the Initial Purchaser or any Holder, or by or
on behalf of the Issuer, its officers or directors or any person
controlling the Issuer, and (iii) any sale of Registrable Securities
pursuant to the Shelf Registration Statement.
7. Information Requirements.
The Issuer covenants that, if at any time before the end of the
Effectiveness Period it is not subject to the reporting requirements of the
Exchange Act, it will cooperate with any Holder of Registrable Securities and
take such further action as any Holder of Registrable Securities may reasonably
request in writing (including, without limitation, making such representations
as any such Holder may reasonably request), all to the extent required from time
to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the
20
limitations of the exemptions provided by Rule 144, Rule 144A, Regulation S and
Regulation D under the Securities Act and customarily taken in connection with
sales pursuant to such exemptions.
In addition, in the event the Issuer is not subject to Section 13 or
15(d) of the Exchange Act, the Issuer hereby agrees with each Holder, for so
long as any Registrable Securities remain outstanding, to make available to any
Holder or beneficial owner of Registrable Securities in connection with any sale
thereof and any prospective purchaser of such Registrable Securities from such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Securities Act in order to permit resales of such Registrable Securities
pursuant to Rule 144A.
The Issuer shall file the reports required to be filed by it under the
Exchange Act and shall comply with all other requirements set forth in the
instructions to Form S-1 or Form S-3, as the case may be, in order to allow the
Issuer to be eligible to file registration statements on Form S-1 or Form S-3.
8. Underwritten Registrations.
(a) The Underwriting Majority may sell its Registrable
Securities in an Underwritten Offering pursuant to the Shelf
Registration Statement only with the Issuer's consent, which consent
may not be unreasonably withheld, delayed or conditioned.
(b) Participation of Holders. No Holder may participate
in any Underwritten Registration hereunder unless such Holder:
(i) agrees to sell such Holder's Registrable
Securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such
arrangements; and
(ii) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other documents reasonably required
under the terms of such underwriting arrangements.
(c) Selection of Underwriters. In any such Underwritten
Offering, the investment banker or investment bankers and manager or
managers that will administer the offering will be selected by a
Majority of Holders whose Registrable Securities are included in such
Underwriting Offering; provided, that such investment bankers and
managers must be reasonably satisfactory to the Issuer.
21
9. Miscellaneous.
(a) Remedies. The Issuer acknowledges and agrees that any
failure by the Issuer to comply with its obligations under Section 2
hereof may result in material irreparable injury to the Initial
Purchaser or the Holders for which there is no adequate remedy at law,
that it will not be possible to measure damages for such injuries
precisely and that, in the event of any such failure, the Initial
Purchaser or any Holder may obtain such relief as may be required to
specifically enforce the Issuer's obligations under Section 2 hereof.
The Issuer further agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Issuer is not a party
to, as of the date hereof, and will not enter into, on or after the
date of this Agreement, any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. In
addition, the Issuer shall not grant to any of its security holders
(other than the holders of Registrable Securities in such capacity) the
right to include any of its securities in the Shelf Registration
Statement provided for in this Agreement other than the Registrable
Securities. The Issuer has not previously entered into any agreement
(which has not expired or been terminated) granting any registration
rights with respect to its securities to any Person, which rights
conflict with the provisions hereof.
(c) Adjustments Affecting Registrable Securities. The
Issuer shall not, directly or indirectly, take any action with respect
to the Registrable Securities as a class that would adversely affect
the ability of the Holders of Registrable Securities to include such
Registrable Securities in a registration undertaken pursuant to this
Agreement.
(d) Amendments and Waivers. This Agreement may not be
amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given, unless the
Issuer has obtained the written consent of a Majority of Holders;
provided, however, that no amendment, modification, supplement, waiver
or consent to or departure from the provisions of Section 6 that
materially and adversely affects a Holder hereof shall be effective as
against any such Holder of Registrable Securities unless consented to
in writing by such Holder; provided, further, that with respect to any
matter that directly or indirectly adversely affects the rights of the
Initial Purchaser hereunder, the Issuer shall obtain the written
consent of the Initial Purchaser against which such amendment,
modification, supplement, waiver or consent is to be effective.
(e) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, first-class mail (registered or certified, return
receipt requested), telex, telecopier, or air courier guaranteeing
overnight delivery:
(i) if to a Holder, at the address set forth on
the records of the registrar under the Indenture or the transfer agent
of the Common Stock, as the case may be; and
22
(ii) if to the Issuer:
Jakks Pacific, Inc.
22619 Pacific Coast Highway
Malibu, California 90265
Fax No.: (310) 317-8527
Attention: Joel Bennett
With a copy to:
Feder, Kaszovitz, Isaacson, Weber, Skala, Bass &
Rhine, LLP
750 Lexington Avenue
New York, New York 10022
Fax No.: (212) 888-7776
Attention: Saul Kaszovitz
(iii) if to the Initial Purchaser:
Bear, Stearns & Co. Inc.
383 Madison Avenue
New York, New York 10179
Fax No.: (212) 272-3092
Attention: Convertible Capital Markets
With a copy to:
Manatt, Phelps & Phillips, LLP
11355 West Olympic Boulevard
Los Angeles, California 90064
Fax No.: (310) 914-5772
Attention: Gordon Bava
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if
mailed; when answered back, if telexed; when receipt acknowledged, if
telecopied; and on the next Business Day, if timely delivered to an air
courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at
the address specified in the Indenture.
A document or notice shall be deemed to have been furnished to the
Holders of the Registrable Securities if it is provided to the
registered holders of the Registrable Securities at the address set
forth in clause (i) above.
23
(f) Successors and Assigns. Any person who purchases any
Registrable Securities from the Initial Purchaser or any Holder shall
be deemed, for purposes of this Agreement, to be an assignee of the
Initial Purchaser or such Holder, as the case may be. This Agreement
shall inure to the benefit of and be binding upon the successors,
assigns and transferees of each of the parties, including without
limitation and without the need for an express assignment, subsequent
Holders of Registrable Securities; provided, however, that (i) nothing
contained herein shall be deemed to permit any assignment, transfer or
other disposition of Registrable Securities in violation of the terms
of the Purchase Agreement or the Indenture and (ii) this Agreement
shall not inure to the benefit of or be binding upon a successor or
assign of a Holder unless and to the extent such successor or assign
acquired Registrable Securities from such Holder. If any transferee of
any Holder shall acquire Registrable Securities, in any manner, whether
by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and
holding such Registrable Securities such person shall be conclusively
deemed to have agreed to be bound by and to perform all of the terms
and provisions of this Agreement and such Person shall be entitled to
receive the benefits hereof. The Initial Purchaser (in its capacity as
Initial Purchaser) shall have no liability or obligation to the Issuer
with respect to any failure by a Holder to comply with, or breach by
any Holder of, any of the obligations of such Holder under this
Agreement.
(g) Purchases and Sales of Notes. The Issuer shall not,
and shall use its reasonable best efforts to cause its affiliates (as
defined in Rule 405 under the Securities Act) within its Control not
to, resell or otherwise transfer any Notes acquired by the Company or
such affiliates, except pursuant to an effective registration statement
under the Securities Act or an exemption therefrom.
(h) Third Party Beneficiary. The Holders shall be third
party beneficiaries to the agreements made hereunder between the Issuer
and the Initial Purchaser, and the Initial Purchaser shall have the
right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights or the rights
of Holders hereunder.
(i) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the
same agreement.
(j) Securities Held by the Issuer or Their Affiliates.
Whenever the consent or approval of Holders of a specified percentage
of Registrable Securities is required hereunder, Registrable Securities
held by the Issuer or its affiliates (as such term is defined in Rule
405 under the Securities Act) shall not be counted in determining
whether such consent or approval was given by the Holders of such
required percentage.
(k) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
24
(l) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(m) Consent to Jurisdiction. Each party irrevocably
agrees that any legal suit, action or proceeding arising out of or
based upon this Agreement or the transactions contemplated hereby
("Related Proceedings") may be instituted in the federal courts of the
United States of America located in the City of New York or the courts
of the State of New York in each case located in the Borough of
Manhattan in the City of New York (collectively, the "Specified
Courts"), and irrevocably submits to the exclusive jurisdiction (except
for proceedings instituted in regard to the enforcement of a judgment
of any such court (a "Related Judgment"), as to which such Jurisdiction
is non-exclusive) of such courts in any such suit, action or
proceeding. The parties further agree that service of any process,
summons, notice or document by mail to such party's address set forth
above shall be effective service of process for any lawsuit, action or
other proceeding brought in any such court. The parties hereby
irrevocably and unconditionally waive any objection to the laying of
venue of any lawsuit, action or other proceeding in the Specified
Courts, and hereby further irrevocably and unconditionally waive and
agree not to plead or claim in any such court that any such lawsuit,
action or other proceeding brought in any such court has been brought
in an inconvenient forum.
(n) Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby, and the parties hereto shall use its best efforts to find and
employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by
law.
(o) Entire Agreement. This Agreement, together with the
Purchase Agreement and the Indenture, is intended by the parties as a
final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those
set forth or referred to herein with respect to the registration rights
granted by the Issuer with respect to the Registrable Securities. This
Agreement supersedes all prior agreements and understandings between
the parties with respect to such subject matter.
[Signature page to follow]
25
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Very truly yours,
JAKKS PACIFIC, INC.
By: _____________________________________
Name: Joel M. Bennett
Title: Chief Financial Officer
The foregoing Registration Rights Agreement is hereby confirmed and
accepted as of the date first above written.
BEAR, STEARNS & CO. INC.,
By ______________________________________
Name:
Title:
26
ANNEX A
JAKKS PACIFIC, INC.
NOTICE OF REGISTRATION STATEMENT AND
SELLING SECURITYHOLDER ELECTION AND QUESTIONNAIRE
NOTICE
Jakks Pacific, Inc. (the "Company") has filed, or intends shortly to
file, with the Securities and Exchange Commission (the "Commission") a
registration statement on Form S-3 or such other Form as may be available (the
"Shelf Registration Statement") for the registration and resale under Rule 415
of the Securities Act of 1933, as amended (the "Securities Act"), of the
Company's Convertible Senior Notes due 2023 (CUSIP No. 47012EAA4) (the "Notes"),
and common stock, par value $0.001 per share, issuable upon conversion thereof
(the "Shares" and together with the Notes, the "Transfer Restricted Securities")
in accordance with the terms of the Registration Rights Agreement, dated as of
June 9, 2003 (the "Registration Rights Agreement") between the Company and Bear,
Stearns & Co. Inc. A copy of the Registration Rights Agreement is available from
the Company. All capitalized terms not otherwise defined herein have the meaning
ascribed thereto in the Registration Rights Agreement.
To sell or otherwise dispose of any Transfer Restricted Securities
pursuant to the Shelf Registration Statement, a beneficial owner of Transfer
Restricted Securities generally will be required to be named as a Selling
Securityholder in the related Prospectus, deliver a Prospectus to purchasers of
Transfer Restricted Securities, be subject to certain civil liability provisions
of the Securities Act and be bound by those provisions of the Registration
Rights Agreement applicable to such beneficial owner (including certain
indemnification rights and obligations, as described below). To be included in
the Shelf Registration Statement, this Election and Questionnaire must be
completed, executed and delivered to the Company at the address set forth herein
for receipt prior to or on the 30th business day from the receipt hereof (the
"Election and Questionnaire Deadline"). BENEFICIAL OWNERS THAT DO NOT COMPLETE
AND RETURN THIS ELECTION AND QUESTIONNAIRE PRIOR TO THE ELECTION AND
QUESTIONNAIRE DEADLINE AND DELIVER IT TO THE COMPANY AS PROVIDED BELOW WILL NOT
BE NAMED AS SELLING SECURITYHOLDERS IN THE SHELF REGISTRATION STATEMENT, AND
THEREFORE, WILL NOT BE PERMITTED TO SELL ANY TRANSFER RESTRICTED SECURITIES
PURSUANT TO THE SHELF REGISTRATION STATEMENT.
Certain legal consequences arise from being named as a Selling
Securityholder in the Shelf Registration Statement and the related Prospectus.
Accordingly, holders and beneficial owners of Transfer Restricted Securities are
advised to consult their own securities law counsel regarding the consequences
of being named or not being named as a Selling Securityholder in the Shelf
Registration Statement and the related Prospectus.
A-1
ELECTION
The undersigned holder (the "Selling Securityholder") of Transfer
Restricted Securities hereby elects to include in the Shelf Registration
Statement the Transfer Restricted Securities beneficially owned by it and listed
below in Item 3 (unless otherwise specified under Item 3). The undersigned, by
signing and returning this Election and Questionnaire, understands that it will
be bound with respect to such Transfer Restricted Securities by the terms and
conditions of this Election and Questionnaire and the Registration Rights
Agreement.
Pursuant to the Registration Rights Agreement, the Selling
Securityholder has agreed to indemnify and hold harmless the Company, the
Company's directors, the Company's officers, employees, representatives and
agents and each person, if any, who controls the Company within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act, from
and against certain losses arising in connection with statements concerning the
Selling Securityholder made in the Shelf Registration Statement or the related
Prospectus in reliance upon the information provided in this Election and
Questionnaire.
The Selling Securityholder hereby provides the following information to
the Company and represents and warrants that such information is accurate and
complete:
QUESTIONNAIRE
1. (a) Full Legal Name of Selling Securityholder:
________________________________________________________________________________
(b) Full legal name of registered holder (if not the same
as (a) above) through which Transfer Restricted Securities listed in
(3) below are held:
________________________________________________________________________________
(c) Full legal name of DTC participant (if applicable and
if not the same as (b) above) through which Transfer Restricted
Securities listed in (3) are held:
________________________________________________________________________________
2. Address for notices to Selling Securityholders:
________________________________________________________________________________
________________________________________________________________________________
Telephone: ___________________________Fax:_____________________
Contact Person:_________________________________________________________________
A-2
3. Beneficial ownership of Transfer Restricted Securities:
(a) Type of Transfer Restricted Securities beneficially
owned, and principal amount of Notes or Number of shares of Common
Stock, as the case may be, beneficially owned:
(b) CUSIP No(s). of such Transfer Restricted Securities
beneficially owned:
4. Beneficial ownership of the Company's securities owned by the
Selling Securityholder:
EXCEPT AS SET FORTH BELOW IN THIS ITEM (4), THE UNDERSIGNED IS NOT THE
BENEFICIAL OR REGISTERED OWNER OF ANY SECURITIES OF THE COMPANY OTHER THAN THE
TRANSFER RESTRICTED SECURITIES LISTED ABOVE IN ITEM (3) ("Other Securities").
(a) Type and amount of Other Securities beneficially
owned by the Selling Securityholder:
________________________________________________________________________________
(b) CUSIP No(s). of such Other Securities beneficially
owned:
________________________________________________________________________________
5. Relationship with the Company
Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equity holders (5% or more) has
held any position or office or has had any other material relationship with the
Company (or their predecessors or affiliates) during the past three years.
State any exceptions here:
________________________________________________________________________________
6. Plan of Distribution:
Except as set forth below, the undersigned (including its donees or
pledgees) intends to distribute the Transfer Restricted Securities listed above
in Item (3) pursuant to the Shelf Registration Statement only as follows (if at
all). Such Transfer Restricted Securities may be sold from time to time directly
by the undersigned or, alternatively, through underwriters, broker-dealers or
agents. If the Transfer Restricted Securities are sold through underwriters or
broker-dealers, the Selling Securityholder will be responsible for underwriting
discounts or commissions or agent's commissions. Such Transfer Restricted
Securities may be sold in one or more transactions at fixed prices, at
prevailing market prices at the time of sale, at varying prices determined at
the time of sale, or at negotiated prices. Such sales may be effected in
transactions (which may involve crosses or block transactions):
A-3
(i) on any national securities exchange or
quotation service on which the Transfer Restricted Securities may be
listed or quoted at the time of sale;
(ii) in the over-the-counter market;
(iii) in transactions otherwise than on such
exchanges or services or in the over-the-counter market; or
(iv) through the writing of options.
In connection with sales of the Transfer Restricted Securities or
otherwise, the undersigned may enter into hedging transactions with
broker-dealers, which may in turn engage in short sales of the Transfer
Restricted Securities and deliver Transfer Restricted Securities to close out
such short positions, or loan or pledge Transfer Restricted Securities to
broker-dealers that in turn may sell such securities. State any exceptions here:
________________________________________________________________________________
________________________________________________________________________________
Note: In no event will such method(s) of distribution take the form of an
underwritten offering of the Transfer Restricted Securities without the prior
agreement of the Company.
By signing below, the Selling Securityholder acknowledges that it
understands its obligation to comply, and agrees it will comply, with the
provisions of the prospectus delivery and other provisions of the Securities Act
and Exchange Act and the respective rules and regulations promulgated
thereunder, particularly Regulation M thereunder (or any successor rules or
regulations), in connection with any offering of Transfer Restricted Securities
pursuant to the Shelf Registration Statement.
If the Selling Securityholder transfers all or any portion of the
Transfer Restricted Securities listed in Item 3 above after the date on which
such information is provided to the Company, the Selling Securityholder agrees
to notify the transferee(s) at the time of the transfer of its rights and
obligations under this Election and Questionnaire and the Registration Rights
Agreement.
By signing below, the Selling Securityholder consents to the disclosure
of the information contained herein in its answers to Items (1) through (6)
above and the inclusion of such information in the Shelf Registration Statement
and the related Prospectus. The Selling Securityholder understands that such
information will be relied upon by the Company in connection with the
preparation or amendment of the Shelf Registration Statement and the related
Prospectus.
In accordance with the Selling Securityholder's obligation under the
Registration Rights Agreement to provide such information as may be required by
law for inclusion in the Shelf Registration Statement, the Selling
Securityholder agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein that may occur subsequent to the date
hereof at any time while the Shelf Registration Statement remains effective. All
notices
A-4
hereunder and pursuant to the Registration Rights Agreement shall be made in
writing at the address set forth below.
Once this Election and Questionnaire is executed by the Selling
Securityholders and received by the Company, the terms of this Election and
Questionnaire and the representations and warranties contained herein shall be
binding on, shall inure to the benefit of and shall be enforceable by the
respective successors, heirs, personal representatives and assigns of the
Company and the Selling Securityholder with respect to the Transfer Restricted
Securities beneficially owned by such Selling Securityholder and listed in Item
3 above. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has
caused this Election and Questionnaire to be executed and delivered either in
person or by its authorized agent.
Dated:
Beneficial Owner
By: ______________________________________
Name:
Title:
Please return the completed and executed Election and Questionnaire for
receipt PRIOR TO OR ON THE 30TH BUSINESS DAY FROM RECEIPT HEREOF to Jakks
Pacific, Inc. at:
Jakks Pacific, Inc.
22619 Pacific Coast Highway
Malibu, California 90265
Attention: Joel Bennett
A-5
EXHIBIT 1 TO ANNEX A
NOTICE TO TRANSFER PURSUANT
TO REGISTRATION STATEMENT
Jakks Pacific, Inc.
22619 Pacific Coast Highway
Malibu, California 90265
Attention: Joel Bennett
Re: Jakks Pacific, Inc.'s Convertible Senior Notes due 2023 (the
"Notes")
Dear Sirs:
Please be advised that __________ has transferred $_________ aggregate
principal amount of the above-referenced Notes or ____________________________
shares of the Company's Common Stock issued on conversion or repurchase of
Notes, pursuant to the Registration Statement on Form S-3 (File No. 333-
__________) filed by the Company.
We hereby certify that the prospectus delivery requirements, if any, of
the Securities Act of 1933, as amended, have been satisfied with respect to the
transfer described above and that the above named beneficial owner of the Notes
or Common Stock is named as a selling securityholder in the Prospectus dated
_____________________, or in amendments or supplements thereto, and that the
aggregate principal amount of the Notes or number of shares of Common Stock
transferred are all or a portion of the Notes or Common Stock listed in such
Prospectus, as amended or supplemented, opposite such owner's name.
Very truly yours,
[name]
By: _____________________________________
(Authorized signature)
Dated: ________________
A-6