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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST , 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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TOYMAX INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
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DELAWARE 11-3391335
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
125 EAST BETHPAGE ROAD 11803
PLAINVIEW, NEW YORK (Zip Code)
(Address of Principal Executive Offices)
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TOYMAX INTERNATIONAL, INC.
AMENDED AND RESTATED 1997 STOCK OPTION PLAN
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SANFORD FRANK, ESQ.
GENERAL COUNSEL
TOYMAX INTERNATIONAL, INC.
125 EAST BETHPAGE ROAD
PLAINVIEW, NEW YORK 11803
(Name and Address of Agent for Service)
(516) 391-9898
(Telephone Number, Including Area Code, of Agent for Service)
WITH COPIES TO:
JOEL HANDEL, ESQ.
BAER MARKS & UPHAM LLP
805 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 702-5700
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CALCULATION OF REGISTRATION FEE
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PROPOSED
MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) SHARE(2) PRICE(2) REGISTRATION FEE
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Common stock, par value $0.01 per share 1,500,000 shares $8.9375 $13,406,250 $3,726.94
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(1) The Toymax International, Inc. Amended and Restated 1997 Stock Option Plan
authorizes the issuance of a maximum of 1,500,000 shares of common stock
which are reserved for issuance pursuant to the grant of stock options under
such plan.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h)(1) under the Securities Act of 1933, as amended, on
the basis of $8.9375 per share, the average of the closing bid and ask
prices of the common stock on the Nasdaq National Market on August 26, 1999.
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PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION.
Pursuant to Rule 428(b)(1) under the Securities Act of 1933, as amended, the
documents containing the information specified in Part I of this Registration
Statement on Form S-8 will be sent or given to participants in the Toymax
International, Inc. ("we" or the "Company") Amended and Restated 1997 Stock
Option Plan (the "Plan").
This document and the documents incorporated by reference in this
Registration Statement pursuant to Item 3 of Form S-8 (Part II hereof), taken
together, constitute a prospectus that meets the requirements of Section 10(a)
of the Securities Act of 1933, as amended.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
Upon the written or oral request by a participant in the Plan listed in Item
1 of this Part I, the Company will provide any of the documents incorporated by
reference in Item 3 of Part II of this Registration Statement (which documents
are incorporated by reference into this Section 10(a) prospectus), any documents
required to be delivered to participants pursuant to Rule 428(b) and other
additional information about such plans. All of such documents and information
will be available without charge. Any and all such requests should be directed
to the Company at 125 E. Bethpage Road, Plainview, New York 11803, telephone
number (516) 391-9898, attention Sanford Frank, Esq., General Counsel.
EXPLANATORY NOTE
This Registration Statement has been prepared in accordance with the
requirements of Form S-8 and Form S-3 pursuant to the Securities Act of 1933, as
amended. The Form S-8 portion of this Registration Statement will be used for
offers of shares of common stock, par value $0.01 per share (the "Common
Stock"), of the Company, pursuant to the employee benefit plan listed in Item 1
of Part I to this Registration Statement. In accordance with the Note to Part I
of Form S-8, the information specified by Part I for Form S-8 has been omitted
from this Registration Statement. The Reoffer Prospectus filed as a part of this
Registration Statement has been prepared in accordance with the requirements of
Part I of Form S-3 and will be used for reofferings or resales of shares of
Common Stock of the Company which are deemed to be control securities, which
have been acquired or will be acquired by control persons, pursuant to the
employee benefit plan.
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REOFFER PROSPECTUS
TOYMAX INTERNATIONAL, INC.
1,500,000 SHARES OF COMMON STOCK UNDER THE
TOYMAX INTERNATIONAL, INC. AMENDED AND RESTATED 1997 STOCK OPTION PLAN
The shares of common stock, par value $0.01 per share (the "Common Stock"),
of Toymax International, Inc. (the "Company" or "we") covered by this Reoffer
Prospectus may be offered and sold to the public by stockholders of the Company
(the "Selling Stockholders"), some of whom may be deemed to be "affiliates" (as
that term is defined in Rule 405 of the General Rules and Regulations under the
Securities Act of 1933, as amended (the "Securities Act")) of the Company. The
Selling Stockholders may sell a maximum of 1,500,000 shares of Common Stock (the
"Shares"). The Selling Stockholders acquired or will acquire the Shares through
their exercise of stock options granted to them under the Company's Amended and
Restated 1997 Stock Option Plan (the "Plan").
All or a portion of the Shares may be offered for sale, from time to time,
on the Nasdaq National Market or otherwise, at prices and terms then obtainable,
subject to certain limitations. However, any Shares covered by this Reoffer
Prospectus which qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 instead of pursuant to this Reoffer Prospectus. See
"Plan of Distribution."
The Company will not receive any of the proceeds from the sales of the
Shares by the Selling Stockholders, but will receive funds from the sale of the
Shares of Common Stock to the Selling Stockholders upon the exercise of stock
options for such Shares, which funds will be used by the Company for working
capital. All expenses of registration incurred in connection with this offering
are being borne by the Company, but all brokerage commissions, discounts and
other expenses incurred by individual Selling Stockholders will be borne by such
Selling Stockholders.
The Common Stock is listed on the Nasdaq National Market under the symbol
"TMAX". The high and closing price of our Common Stock on the Nasdaq National
Market on August 26, 1999 was U.S. $8.9375.
SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR INFORMATION THAT SHOULD BE
CAREFULLY CONSIDERED BY PROSPECTIVE INVESTORS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED
IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Reoffer Prospectus is August 27, 1999
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TABLE OF CONTENTS
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PAGE
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AVAILABLE INFORMATION...................................................................................... 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................................................ 5
PROSPECTUS SUMMARY......................................................................................... 6
RISK FACTORS............................................................................................... 8
FORWARD-LOOKING STATEMENTS................................................................................. 8
USE OF PROCEEDS............................................................................................ 16
SELLING STOCKHOLDERS....................................................................................... 16
PLAN OF DISTRIBUTION....................................................................................... 17
INDEMNIFICATION OF DIRECTORS AND OFFICERS.................................................................. 18
LEGAL MATTERS.............................................................................................. 19
EXPERTS.................................................................................................... 19
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AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith is required to file periodic reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). The
reports, proxy statements and other information filed by the Company can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, Room 1024, N.W., Washington, D.C. 20549, and at
the Commission's Regional Offices at 7 World Trade Center, Suite 1300, New York,
New York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials can also be obtained by mail
from the public reference facilities of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. You may obtain information on
the operation of the Public Reference Room by calling the Commission at 1-(800)
SEC-0330. The Commission also maintains a site on the World Wide Web that
contains reports, proxy and information statements and other information
regarding registrants that file electronically. The address of such site is
http://www.sec.gov. See "Incorporation of Certain Documents by Reference."
The Company has filed with the Commission a Registration Statement on Form
S-8 under the Securities Act with respect to the shares of Common Stock offered
by this Reoffer Prospectus. This Reoffer Prospectus does not contain all the
information set forth in or annexed as exhibits to the Registration Statement.
For further information with respect to the Company and the Shares of Common
Stock offered by this Reoffer Prospectus, reference is made to the Registration
Statement and to the financial statements, schedules and exhibits filed as part
thereof or incorporated by reference herein. Copies of the Registration
Statement, together with such financial statements, schedules and exhibits, may
be obtained from the public reference facilities of the Commission at the
addresses listed above, upon payment of the charges prescribed therefor by the
Commission. Statements contained in this Reoffer Prospectus as to the contents
of any contract or other document referred to are not necessarily complete and,
in each instance, reference is made to the copy of such contract or other
documents, each such statement being qualified in its entirety by such
reference. Copies of such contracts or other documents, to the extent that they
are exhibits to this Registration Statement, may be obtained from the public
reference facilities of the Commission, upon the payment of the charges
prescribed therefor by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
pursuant to the Exchange Act are hereby incorporated by reference, except as
superseded or modified herein:
1. The Company's Annual Report on Form 10-K/A for the fiscal year ended
March 31, 1999.
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2. The Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1999.
3. The Company's Current Report on Form 8-K/A filed with the Commission
on August 10, 1999.
4. The Company's definitive Proxy Statement dated July 1, 1999 relating
to its annual and special meeting of stockholders held on August 5,
1999.
In addition, all documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date of this Reoffer
Prospectus and prior to the termination of the offering of the Shares of Common
Stock shall be deemed to be incorporated in and made a part of this Reoffer
Prospectus by reference from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this Reoffer
Prospectus to the extent that a statement contained herein or in any
subsequently filed document that is also incorporated by reference herein
modifies or replaces such statement. Any statements so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Reoffer Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner of Shares of Common Stock, to whom this Reoffer
Prospectus is delivered, on written or oral request of any such person, a copy
of any or all of the foregoing documents incorporated herein by reference (other
than exhibits to such documents). Written or oral requests for such copies
should be directed to the Company, at 125 E. Bethpage Road, Plainview, New York
11803, telephone number (516) 391-9898, attention Sanford Frank, Esq., General
Counsel.
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PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS REOFFER
PROSPECTUS. THIS SUMMARY IS NOT COMPLETE AND MAY NOT CONTAIN ALL OF THE
INFORMATION THAT YOU SHOULD CONSIDER BEFORE PURCHASING OUR COMMON STOCK. CERTAIN
STATEMENTS MADE IN THIS REOFFER PROSPECTUS CONSTITUTE "FORWARD-LOOKING
STATEMENTS" UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SEE
"FORWARD-LOOKING STATEMENTS."
Unless the context otherwise requires, all references to "dollars" refers to
U.S. dollars.
THE COMPANY
OUR BUSINESS
Toymax International, Inc. (the "COMPANY") is a consumer leisure products
company that creates, designs and markets innovative and technologically
advanced toys as well as other leisure products, which are sold in the U.S. and
throughout the world. Toymax products promote fun and creative play, and are
available under several brands: Toymax-Registered Trademark- toys, such as
R.A.D.-TM- Robot, Mighty Mo's-TM- vehicles, the award-winning Laser
Challenge-TM- brand and a new line of educational hand-held and tabletop
electronics under the Jumpstart-TM- brand licensed from Knowledge Adventure
Inc., and the Math Blaster-TM- brand licensed from Davidson & Associates, Inc.;
Go Fly a Kite-Registered Trademark- kites, windsocks and banners; Candy
Planet-TM- candy products and Monogram International gift, novelty and souvenir
products. Management believes that the major strengths of the Company include
its ability to develop and design new toys, such as Arcadia-TM- Electronic Skeet
Shoot; to identify and satisfy niche opportunities with brands such as Mighty
Mo's; to extend existing core brands such as Laser Challenge; and to identify
acquisitions, such as Monogram International, Inc. ("Monogram") and Go Fly A
Kite, Inc. ("GFK"), that further its plan to diversify into other leisure
product categories.
In February 1999 the Company formed a new division, Candy Planet, which
together with the licensing of the World Wrestling Federation ("WWF") brand,
enabled the Company to enter the expanding candy industry, which grew to $9.7
billion in 1997 (retail sales estimates of non-chocolate candy and gum according
to the National Confectioners Association). In December 1998 the Company
acquired the business of Go Fly A Kite, Inc., a leading developer and marketer
of kites, windsocks, banners, mini flags and WindWheels-TM-. In May 1999 the
Company completed the acquisition of Monogram International, Inc., a leading
designer, manufacturer and marketer of gift and children's leisure product
lines, including items based on well-established and evergreen licenses.
Monogram has been associated with the Walt Disney Company for over 25 years and
has more recently established a relationship with Warner Bros. Consumer
Products. In order to integrate the current and any future acquisitions as well
as to build the business in basic staple products, the Company has established a
new administrative group, Toymax Enterprises, which will be comprised of the
recently acquired GFK, the Candy Planet unit, the Company's non-promotional toy
line, and Monogram.
The Company operates in two reporting segments: Toymax Brands (primarily
consisting of sales activities conducted through Toymax, Inc. ("TOYMAX NY") and
Toymax (H.K.) Limited ("TOYMAX HK")) and Toymax Enterprises (consisting of Go
Fly A Kite, Monogram International, Inc. and Candy Planet).
Sales conducted by Toymax NY consist of sales of the Company's promotional
product lines to primarily U.S. customers pursuant to customer purchase orders.
Customers purchasing products on this basis include Toys "R" Us, Kay-Bee Toys,
F.A.O. Schwarz, Wal-Mart Stores, Inc., Kmart Corporation and Target Stores, Inc.
Sales conducted by Toymax HK ("TOYMAX HK SALES") consist of sales on a free on
board ("FOB") Hong Kong basis which are generally based on letters of credit,
and include sales of lower priced basic products to U.S. and international
retailers including Toys "R" Us International, Index (U.K.), Wal-Mart (Canada)
and sales of the Company's promotional product lines to approximately 48
international distributors. Candy Planet and Monogram International, Inc. sales
are made pursuant to
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customer purchase orders. Sales conducted by GFK are on a COD, prepaid or credit
card basis. The Company's products are sold in over 45 countries around the
world.
OUR HISTORY
Toymax was founded in 1990 by four experienced toy industry executives:
David Chu, the Company's Chairman, Steven Lebensfeld, its President, Harvey
Goldberg, its Executive Vice President, and Kenneth Price, its Senior Vice
President--Sales and Marketing. Since the early 1980s these executives have
worked together in managing or founding toy companies or in customer-supplier
relationships. Each individual brings particular strengths to the management
team, Mr. Chu in manufacturing, Mr. Lebensfeld in product development, and Mr.
Goldberg and Mr. Price in sales and marketing. In addition, these executives
have built a team of knowledgeable, highly skilled management and employees
whose collective toy industry experience enhances the Company's ability to
effectively execute its business plan.
Our principal executive offices are located at 125 E. Bethpage Road,
Plainview, New York 11803 and our telephone number is (516) 391-9898
THE OFFERING
The Selling Stockholders may offer and sell up to 1,500,000 Shares of our
Common Stock under this Reoffer Prospectus. We will not receive any of the
proceeds from the sale of these Shares, however, we will receive funds from the
sale of the Shares of Common Stock to the Selling Stockholders, which funds will
be used by the Company for working capital. See "Use of Proceeds" and "Selling
Stockholders."
RISK FACTORS
Investing in our Common Stock involves significant risks. You should
consider the information under the caption "Risk Factors" beginning on page 9 of
this Reoffer Prospectus in deciding whether to purchase the Shares of Common
Stock offered under this Reoffer Prospectus.
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RISK FACTORS
Purchasing the Shares of Common Stock offered by this Reoffer Prospectus
involves a high degree of risk. Before purchasing our Common Stock, you should
carefully consider the following risk factors and the other information
contained elsewhere in this Reoffer Prospectus.
NO ASSURANCE OF PROFITABILITY.
Gross profit for fiscal 1999 decreased by $2.0 million, or 4.5%, to $42.4
million, or 39.5% of net sales, from $44.4 million, or 44.7% of net sales, for
fiscal 1998. The decrease in gross profit as a percentage of net sales was
primarily attributable to changes in the Company's product mix and higher sales
promotion costs, including those stemming from lower than expected retail demand
for the Company's CyberSplash-TM- product. Although management has taken steps
to lessen its exposure to similar industry and retailer developments, there can
be no assurance that the Company will operate profitably in the future. Future
operating results will depend on a number of factors, including demand for the
Company's current products, the Company's ability to introduce new products,
market acceptance of new products and the general state of the economy in the
U.S. and other major markets.
CHANGING CONSUMER PREFERENCES; SUBSTANTIAL RELIANCE ON NEW PRODUCT
INTRODUCTIONS.
The toy market is characterized by changing consumer preferences and
frequent new product introductions which reduce the period of time in which many
toys are successfully marketed. There can be no assurance that any of the
Company's current products or product lines will be popular with consumers for
any period of time. Furthermore, sales of the Company's existing products are
expected to decline over time and may decline at rates faster than expected. The
Company's success is dependent upon the Company's ability to enhance existing
product lines and develop new products and product lines. Historically, a
significant portion of the gross sales each year were derived from new products.
The failure of the Company's existing and new products and product lines to
achieve and sustain market acceptance and to produce acceptable margins could
have a material adverse effect on the Company's financial condition and results
of operations.
RISKS ASSOCIATED WITH INVENTORY MANAGEMENT.
Most of the Company's largest retail customers utilize an electronic
inventory management system to track sales of products and rely on reorders
being rapidly filled by the Company and distributors rather than maintaining
large product inventories. These types of systems put pressure on suppliers like
the Company to promptly fill customer orders and shift some of the inventory
risk from the retailer to suppliers. The Company generally places orders with
manufacturers based in part on advance, non-binding, estimates of orders from
its major retail clients. Such estimates may deviate substantially from actual
orders. In the event that subsequent orders fall short of original estimates,
the Company may be left with excess inventory. Significant excess inventory
could result in price discounts and increased inventory carrying costs for the
Company. Similarly, if the Company fails to have an adequate supply of products
manufactured on a timely basis, the Company may, as a result, lose sales
opportunities. Despite the Company's efforts to adjust its production schedule
based on market activities, including participating in electronic data
interchange ("EDI") programs with its largest retail customers, there can be no
assurance that the Company will maintain appropriate inventory levels. Such
occurrences may have a material adverse effect on the Company's financial
condition and results of operations.
DEPENDENCE ON LIMITED NUMBER OF CUSTOMERS.
For fiscal 1999, Toys "R" Us and Wal-Mart each accounted for more than 10%
of the Company's invoiced sales. The Company expects to continue to rely on a
relatively small number of customers for a significant percentage of sales for
the foreseeable future. Because of the large portion of the Company's sales to
the Company's five largest customers and the significant market share for toy
sales to consumers
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represented by these same customers, the loss of any one of them as a customer,
or a significant reduction in sales, would have a material adverse effect on the
Company's financial condition and results of operations.
SEASONALITY AND QUARTERLY FLUCTUATIONS.
The Company's sales are seasonal in that a substantial portion of net sales
is made to retailers in anticipation of the Christmas holiday season. During
fiscal 1999 approximately 81% of the Company's net sales were made during the
Company's second and third fiscal quarters (July through December) in connection
with retail sales for the Christmas holiday season. Adverse business or economic
conditions during these periods may adversely affect results of operations for
the full year. Such seasonality causes the Company's quarterly operating results
and working capital requirements to fluctuate. As a result of the seasonality of
the Company's net sales, the Company could incur a loss in the first quarter of
each fiscal year for the foreseeable future. The Company's financial results for
a particular quarter may not be indicative of results for an entire year, and
the Company's revenues and/or expenses will vary from quarter to quarter. In
addition, in the event that the Company's results of operations for any period
are below the expectation of market analysts and investors, the market price of
the Common Stock could be adversely affected.
DEPENDENCE ON LIMITED NUMBER OF PRODUCT LINES.
The Company derives a substantial portion of its revenue from a limited
number of product lines. A decrease in the popularity of a particular product
line or key products within a given product line during any year could have a
material adverse effect on the Company's business, financial condition and
results of operations. There can be no assurance that any of the key product
lines will retain their historical levels of popularity or increase in
popularity. Decreased sales from any one of the key product lines without a
corresponding increase in sales from other existing or newly introduced products
would have a material adverse effect on the Company's financial condition and
results of operations.
SALES ALLOWANCES.
The Company has, in certain instances, provided sales allowances to
retailers for promotions and for purposes of assisting the retailer in reducing
the levels of inventory carried by the retailer. The Company expects that it
will continue to be required to make such accommodations in the future. Any
significant increase in the amounts of these sales allowances could have a
material adverse effect on the Company's financial condition and results of
operations.
RELIANCE ON SINGLE AFFILIATED MANUFACTURER; POTENTIAL CONFLICT OF INTEREST.
During fiscal 1999, one manufacturer, Jauntiway Investments Limited
("Jauntiway") accounted for approximately 81% of the Company's purchases of
products. Jauntiway and the Company's purchasing agent, Tai Nam, are owned by
David Chu, the Chairman and a principal stockholder of Toymax. In consideration
of an agency fee equal to seven percent (7%) of the gross invoiced value of
products purchased by the Company, Tai Nam handles all purchase orders for the
Company, and assists the Company in product development and testing and
Jauntiway manufactures a majority portion of these products in addition to
subcontracting certain manufacturing requirements to unaffiliated third parties.
The loss of Jauntiway, or a substantial interruption of the Company's
manufacturing arrangements with Jauntiway, could cause a delay in production of
the Company's products for delivery to its customers and could have a material
adverse effect on the Company. While the Company believes that alternate
manufacturers exist, there can be no assurance that alternate arrangements could
be provided in a timely manner on terms or with the level of support currently
provided by the combination of Tai Nam and Jauntiway to the Company.
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RELIANCE ON MANUFACTURERS BASED IN CHINA; TRADE RELATIONS.
To date, most of the Company's products have been manufactured by Hong
Kong-based manufacturers at facilities located in the Peoples' Republic of China
(the "PRC"). According to reports published by the Toy Manufacturers Association
("TMA"), an industry trade group, the PRC is the world's largest producer of
toys and is the source of a majority of toys imported into the U.S. There is
uncertainty surrounding the political and economic consolidation of Hong Kong
(now known as the Special Administrative Region of China), with the PRC and the
extent to which such consolidation could disrupt business in Hong Kong or
elsewhere in the PRC. In the event of any such disruption or other political,
legal or economic change in Hong Kong or elsewhere in the PRC affecting the
Company's business, the Company could be required to seek alternative
manufacturing sources. The Company currently does not have in place plans or
arrangements for securing alternative manufacturing sources in the event that
its present relationship with Tai Nam and Jauntiway prove impracticable to
maintain, and there can be no assurance that there would be sufficient
alternative facilities to meet the increased demand for production that would
likely result from a disruption of manufacturing operations in the PRC.
Furthermore, such a shift to alternative facilities would likely result in
increased manufacturing costs and could subject the Company's products to
increased duties, tariffs or other restrictions.
RISKS INHERENT IN INTERNATIONAL OPERATIONS; CURRENCY RISKS.
A significant percentage of the Company's business, including substantially
all of its product manufacturing, is conducted outside of the United States. As
a result, the Company's operations are subject to various risks such as the
possibility of the loss of revenue, property or equipment due to expropriation,
nationalization, war, insurrection, terrorism or civil disturbance, the
instability of foreign economies, currency fluctuations and devaluations,
adverse tax policies and governmental activities that may limit or disrupt
markets, restrict payments or the movement of funds or result in the deprivation
of contract rights. Additionally, the ability of the Company to compete may be
adversely affected by foreign governmental regulations that encourage or mandate
the hiring of local contractors, or by regulations that require foreign
contractors to employ citizens of, or purchase supplies from vendors in, a
particular jurisdiction. The Company is subject to taxation in a number of
jurisdictions, and the final determination of its tax liabilities involves the
interpretation of the statutes and requirements of various domestic and foreign
taxing authorities. There can be no assurance that any of these risks will not
have an adverse effect on the Company's financial condition and results of
operations.
While the Company's product purchases are transacted in U.S. dollars, most
transactions among the suppliers and subcontractors of Jauntiway Investments
Limited, an OEM toy manufacturer that has been the Company's most important
manufacturer since inception, are effected in Hong Kong dollars. Accordingly,
fluctuations in Hong Kong monetary rates may have an impact on the Company's
cost of goods. However, since 1983, the value of the Hong Kong dollar has been
tied to the value of the United States dollar, eliminating fluctuations between
the two currencies. Despite the announcements by the Hong Kong Government that
it is determined to maintain such fixed exchange rate, there can be no assurance
that the Hong Kong dollar will continue to be tied to the United States dollar
in the near future or longer term. Furthermore, appreciation of Chinese currency
values relative to the Hong Kong dollar could increase the cost to the Company
of the products manufactured in China, and thereby have a negative impact on the
Company.
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RELIANCE ON KEY PERSONNEL; PART-TIME SERVICES OF CHAIRMAN.
The Company's future success will be dependent on the continued efforts of
its senior management team which consists of David Chu, Steven Lebensfeld, and
Harvey Goldberg. These individuals collectively beneficially own 54% of the
Company's outstanding shares of common stock. Mr. Chu is also an officer and
director of other companies, and he is not expected to devote to the Company's
affairs more than such portion of his business time and attention as he or the
Company's Board of Directors may deem necessary. The Company has entered into
employment and non-competition agreements with Mr. Lebensfeld and Mr. Goldberg
as well as other key executives. The loss of the services of any of these
individuals could have a material adverse effect on the Company. The Company's
success is also dependent on the Company's ability to attract and/or retain key
managerial, sales, marketing, product development and other personnel. There can
be no assurance that the Company will be successful in attracting and/or
retaining such personnel.
RISKS ASSOCIATED WITH ACQUISITIONS, INVESTMENTS AND STRATEGIC ALLIANCES.
As part of its growth strategy, the Company intends to pursue acquisitions
of business or product lines and investments in, and strategic alliances with,
entities that complement or expand the Company's current operations or
production and marketing capabilities. Any acquisitions (including the
acquisitions of Go Fly and Kite, Inc. and Monogram International, Inc.),
investments, strategic alliances or related efforts will be accompanied by the
risks commonly encountered in such transactions or efforts. Such risks include,
among others, the identification of appropriate candidates, the assimilation of
operations and personnel of the respective entities, the potential disruption of
the Company's ongoing business, the inability of management to capitalize on the
opportunities presented by acquisitions, investments, strategic alliances or
related efforts, the failure to successfully incorporate licensed or acquired
technology and rights into the Company's services, the inability to maintain
uniform standards, controls, procedures and policies and the impairment of
relationships with employees and customers as a result of changes in management
or otherwise. Further, to the extent that any such transaction involves
operations located outside the United States, the transaction would involve
numerous risks associated with international operations, including regulatory
obstacles. There can be no assurance that the Company would be successful in
overcoming these risks or any other difficulties encountered with respect to
such acquisitions, investments, strategic alliances or related efforts.
RISKS ASSOCIATED WITH MANAGEMENT OF GROWTH.
There can be no assurance that the Company's recent growth will continue or
that the Company will be able to maintain its present level of net sales or
profitability. Furthermore, future growth, if achieved, might place a strain on
the Company's management and financial control systems, and there can be no
assurance that management of the Company would be able to manage such growth
effectively. Failure to manage any future growth experienced by the Company
could have a material adverse effect on the Company's financial condition and
results of operations.
CHANGES IN THE RETAIL AND TOY INDUSTRIES.
The retail industry has periodically experienced consolidation and other
ownership changes. Major retailers in the United States and in foreign markets
may in the future consolidate, undergo restructurings or realign their
affiliations which could decrease the number of stores that sell the Company's
products or increase the ownership concentration within the retail industry.
While such changes in the retail industry to date have not had a material
adverse effect on the Company's business or financial condition, there can be no
assurance as to the future effect of any such changes. The toy industry is also
experiencing a shift toward greater consolidation of retail distribution
channels, such as large specialty toys stores and discount retailers, including
Toys "R" Us, Wal-Mart, Kmart and Target, which have increased their overall
share of the retail market. This consolidation has resulted in an increased
reliance among retailers on the large toy
9
<PAGE>
companies because of their financial stability and ability to support products
through advertising and promotion and to distribute products on a national
basis. Such consolidation may have a negative impact on the ability of smaller
toy companies such as the Company to compete.
COMPETITION.
The toy industry is highly competitive. Many of the Company's competitors
have longer operating histories, broader product lines and greater financial
resources and advertising budgets than the Company. In addition, the toy
industry has low barriers to entry. Competition is based primarily on the
ability to design and develop new toys, procure licenses for popular products,
characters and trademarks, and successfully market products. Many of the
Company's competitors offer similar products or alternatives to the Company's
products. The Company's products compete with other products for retail shelf
space. There can be no assurance that shelf space in retail stores will continue
to be available to support the Company's existing products or any expansion of
the Company's products and product lines. There can be no assurance that the
Company will be able to continue to compete effectively in this marketplace.
PROPRIETARY RIGHTS.
The Company relies on patent, trademark, copyright and trade secret
protection, nondisclosure agreements and licensing arrangements to establish,
protect and enforce proprietary rights in its products. Despite the efforts of
the Company and its licensors to safeguard and maintain their proprietary
rights, there can be no assurance that the Company or its licensors will be
successful in so doing. In addition, the laws of certain foreign countries do
not protect intellectual property rights to the same extent or in the same
manner as the laws of the United States. Although the Company and its licensors
continue to implement protective measures and intend to defend their proprietary
rights vigorously, there can be no assurance that these efforts will be
successful. Furthermore, the Company cannot guarantee that it possesses all of
the rights purportedly granted under its licensing agreements and cannot
guarantee that such licensing agreements are and will be enforceable.
The Company does not believe that any of its products infringe on the
proprietary rights of third parties. However, existing or future intellectual
property claims against the Company, if proven, could have a material adverse
effect on the Company's business, financial condition and results of operations.
Although such claims could ultimately prove to be without merit, the necessary
management attention to, and legal costs associated with, litigation or other
resolution of such claims could have a material adverse effect on the Company's
business, financial condition and results of operations.
GOVERNMENT REGULATION; PRODUCT SAFETY.
The Company's operations in the United States are subject to various laws,
rules and regulations, including the Federal Hazardous Substances Act, the
Consumer Product Safety Act, the Flammable Fabrics Act and the regulations
promulgated under each such Act. Such laws empower the CPSC to protect children
from hazardous toys and other articles. The CPSC has the authority to exclude
from the market products that are found to be hazardous and to require a
manufacturer to repurchase such products under certain circumstances. Similar
laws and regulations exist in most countries in which the Company's products are
sold. While the Company oversees a quality control program designed to ensure
that its products comply in all material respects with such regulations, no
assurance can be made that defects will not be found in the Company's products,
resulting in product liability claims, loss of revenue, diversion of resources,
damage to the Company's reputation or increased warranty costs, any of which
could have a material adverse effect on the Company's business, financial
condition and results of operations.
Products that have been or may be developed or sold by the Company may
expose the Company to potential liability from personal injury or property
damage claims by consumers. The Company currently
10
<PAGE>
maintains product liability insurance coverage in the amount of $25 million per
occurrence, with a $50 million aggregate product liability policy. There can be
no assurance that the Company will be able to maintain such coverage or obtain
additional coverage on acceptable terms, or that such insurance will provide
adequate coverage against all potential claims. Moreover, even if the Company
maintains adequate insurance, any claim could divert management time and
materially and adversely affect the reputation and prospects of the Company.
NO DIVIDENDS.
Although the Company paid dividends to its stockholders in 1993, 1994 and
1995, the Company intends to retain its earnings, if any, to finance the
operation and expansion of its business and, therefore, it does not expect to
pay any cash dividends in the foreseeable future.
CERTAIN ANTI-TAKEOVER CONSIDERATIONS.
Certain provisions of the Company's Amended and Restated Certificate of
Incorporation and Amended and Restated Bylaws may discourage, defer or prevent a
change of control of the Company. These provisions (1) classify the Company's
Board of Directors into three classes, each of which serves for a different
three-year period, (2) provide that only the Board of Directors, the Chairman or
at least 10% of the stockholders of Company entitled to vote may call special
meetings of the stockholders, (3) establish certain advanced notice procedures
for nomination of candidates for election as directors and for stockholder
proposals to be considered at stockholders' meetings and (4) authorize preferred
stock, the terms of which may be determined by the Board of Directors and which
may be issued without stockholder approval. Each of these provisions, as well as
certain provisions of the Delaware Business Combination Act to which the Company
is subject, could have the effect of delaying or preventing an acquisition or
change in control of the Company.
YEAR 2000 COMPLIANCE
The Company has established a task force, which has evaluated and is in the
process of updating its internal Management Information Systems to ensure that
it will have the capability to manage and manipulate data in the year 2000 and
beyond. As the Company takes measures to be in compliance, new programs are
currently being tested. The Company's information technology ("IT") systems are
substantially year 2000 compliant. Costs incurred by the Company to date to
implement its plan have not been material and are not expected to have a
material effect on the Company's financial condition or results of operations.
The Company is continuing its assessment of the compliance of its non-IT
systems, which include telephone and alarm systems, fax machines and other
miscellaneous systems. It is believed that the majority of these systems will
not be affected by the Year 2000 issue and the Company anticipates that all
significant systems not as yet compliant will be by December 31, 1999.
The Company has addressed year 2000 compliance with its major customers and
vendors and nothing has come to its attention that would lead the Company to
believe that those key business partners who are not as yet compliant will not
be prior to the year 2000. However, any significant disruption in the flow of
new products or of the Company's ability to communicate electronically with its
customers and suppliers could negatively impact the Company's business,
financial condition and results of operations. To that end, the Company is
attempting to discuss and develop contingency plans with these and other
participants in the Company's industry, including suppliers, financial
institutions and trading partners, which would be implemented, if in fact they
do experience functional or data abnormalities as the result of non-compliance.
The Company believes that its reasonably likely worst case scenario would be to
revert to manual order processing for orders currently processed through EDI
systems and the Company's internal order processing systems. However, we could
be materially and adversely impacted by widespread economic or financial market
disruption, or by the Year 2000 computer system failures of others that may
generally occur as a result of the Year 2000 issues.
11
<PAGE>
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Reoffer Prospectus, including, without
limitation, statements containing the words "believes," "anticipates," "may,"
"intends," "expects" and words of similar import, constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance
or achievements (or industry results, performance or achievements) expressed or
implied by such forward-looking statements to be substantially different from
those predicted. Such factors might include, among others, the following:
- differences between bookings received from customers and actual orders
received;
- the Company's dependence on timely development, introduction and customer
acceptance of new products;
- the loss of existing licenses or the inability to renew or extend licenses
under favorable terms;
- possible weakness of the Company's markets;
- dependence on a limited number of major customers;
- the effect of currency fluctuations;
- other risks and uncertainties as may be disclosed from time to time in the
Company's public announcements;
- the general state of the economy in the United States and other major
markets; and
- customer inventory levels.
Certain of these factors are discussed in more detail elsewhere in this
Reoffer Prospectus, including, without limitation, under the caption "Risk
Factors".
We do not undertake any obligation to publicly update or revise any
forward-looking statements contained in this Reoffer Prospectus or incorporated
by reference, whether as a result of new information, future events or
otherwise. Because of these risks and uncertainties, the forward-looking events
and circumstances discussed in this Reoffer Prospectus might not transpire.
USE OF PROCEEDS
All of the Shares of Common Stock are being offered by the Selling
Stockholders. The Company will not receive any proceeds from sales of the Shares
by the Selling Stockholders, but will receive funds from the sale of the Shares
to the Selling Stockholders upon the exercise of stock options for such Shares.
The Company will use these funds for working capital.
SELLING STOCKHOLDERS
The Shares offered under this Reoffer Prospectus are being registered for
reoffers and resales by Selling Stockholders of the Company who have and may in
the future acquire such Shares under the Plans and the Stein Option. The Selling
Stockholders named in the following table may resell all, a portion, or none of
such Shares. There is no assurance that any of the Selling Stockholders will
sell any or all of the Shares offered by them hereunder.
Participants under the Plans who are deemed to be "affiliates" of the
Company who acquire Shares of Common Stock under the Plans may be added to the
Selling Stockholders listed below from time to time by use of a prospectus
supplement filed pursuant to Rule 424(b) under the Securities Act.
In addition, certain unnamed non-affiliates of the Company holding
restricted securities may use this Reoffer Prospectus for reoffers and resales
of the Shares registered pursuant to this Registration
12
<PAGE>
Statement of which this Reoffer Prospectus is a part, if such non-affiliates
hold less than the lesser of 1,000 Shares or 1% of the shares issuable under a
Plan.
The following table sets forth certain information concerning the Selling
Stockholders as of the date of this Reoffer Prospectus, and as adjusted to
reflect the sale by the Selling Stockholders of the Shares offered hereby,
assuming all of the Shares offered hereby are sold:
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
OF COMMON STOCK
BENEFICIALLY OWNED(4)
NUMBER OF SHARES UPON --------------------------
NUMBER OF SHARES EXERCISE OF OPTIONS BEFORE AFTER
NAME OWNED(1) TO BE OFFERED(2)(3) OFFERING(1) OFFERING
- ------------------------------------------------- ---------------- ---------------------- ------------- -----------
<S> <C> <C> <C> <C>
David Ki Kwan Chu(5)............................. 4,349,116 193,902 41.1% 40.9%
Steven A. Lebensfeld(6).......................... 1,331,281 193,902 12.6% 12.2%
Harvey Goldberg(7)............................... 89,447 193,902 *
Kenneth Price(8)................................. 244,116 120,579 2.3% 2.2%
William A. Johnson, Jr.(9)....................... 9,286 63,171 * *
Carmine Russo (10)............................... 32,866 120,579 * *
Andrew B. Stein(11).............................. 7,635 63,171 * *
Amy L. Weltman(12)............................... 7,635 63,171 * *
Mark Merryweather(13)............................ -- 10,000 * *
Barry Shapiro(14)................................ 1,000 50,000 * *
Sanford B. Frank(15)............................. 7,635 63,171 * *
Jonathan Muir(16)................................ -- 15,000 * *
Oren Asher(17)................................... 11,738 33,476 * *
Joel M. Handel(18)............................... 11,738 33,476 * *
</TABLE>
- ------------------------
* Represents less than 1%.
(1) Represents shares beneficially owned by the named individual, including
shares that such person has the right to acquire within 60 days of the date
of this Reoffer Prospectus. Unless otherwise noted, all persons referred to
above have sole voting and sole investment power.
(2) Includes all outstanding options to purchase Shares of Common Stock granted
to the named individuals under the Plan whether or not vested or
exercisable within 60 days of the date of this Reoffer Prospectus. Also
includes all Shares issued to such named individuals upon the exercise of
options granted under the Plan. All of such Shares are being registered
hereunder. Does not include any shares that may be acquirable under future
grants of options under the Plan.
(3) Does not constitute a commitment to sell any or all of the stated number of
Shares of Common Stock. The number of Shares offered shall be determined
from time to time by each Selling Stockholder at his sole discretion.
(4) Based on 10,570,000 shares of Common Stock outstanding as of the date of
this Reoffer Prospectus.
(5) Mr. Chu is Chairman of the Board of the Company.
(6) Mr. Lebensfeld is President and Director of the Company.
(7) Mr. Goldberg is Executive Vice-President and Director of the Company.
(8) Mr. Price is Senior Vice President- Sales and Marketing of the Company.
(9) Mr. Johnson is Senior Vice President, Chief Financial Officer and Treasurer
of the Company.
(10) Ms. Russo is Chief Operating Officer of the Company.
(11) Mr. Stein is Vice President-International Sales of the Company.
13
<PAGE>
(12) Ms. Weltman is Vice President-Marketing of the Company.
(13) Mr. Shapiro is Vice President and President of Toymax Enterprises, a
division of the Company.
(14) Mr. Merryweather is Vice President-Business Development of the Company.
(15) Mr. Frank is General Counsel and Secretary of the Company.
(16) Mr. Muir is the Controller of the Company.
(17) Mr. Asher is a Director of the Company.
(18) Mr. Handel is a Director of the Company.
PLAN OF DISTRIBUTION
The sale of the Shares by the Selling Stockholders may be effected in
transactions on the Nasdaq National Market, in negotiated transactions, or a
combination of such methods of sale. The Shares may be sold at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. In addition, the Shares of Common Stock covered
by this Reoffer Prospectus may also be sold pursuant to Rule 144 under the
Securities Act, rather than pursuant to this Reoffer Prospectus. The number of
Shares to be sold by the Selling Stockholders (or any person with whom such
Selling Stockholders is acting in concert for the purpose of selling securities
of the Company), whether pursuant to this Reoffer Prospectus or otherwise, may
not exceed, during any three month period, the amount specified by Rule 144(e)
under the Securities Act because the Company does not satisfy the requirements
for use of Form S-3 under the Securities Act,.
The Selling Stockholders may effect such transactions by selling the Shares
directly to purchasers or through underwriters or broker-dealers who may act as
agents or principals. Such underwriters or broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders or the purchasers of the Shares for whom such underwriters
or broker-dealers may act as agent or to whom they may sell as principal, or
both (which compensation as to a particular underwriter or broker-dealer may be
in excess of customary compensation).
We will not receive any of the proceeds from the sales of Shares, but we
will receive funds from the sale of the Shares to the Selling Stockholders upon
the exercise of stock options for such Shares. While all expenses of
registration incurred in connection with this offering are being borne by the
Company, all brokerage commissions and other expenses incurred by individual
Selling Stockholders will be borne by such Selling Stockholders.
Under the rules and regulations under the Exchange Act, subject to certain
exceptions, any person engaged in a distribution of securities may not
simultaneously engage in market making activities with respect to such
securities for a period of one business day (if such securities have an average
daily trading volume over a two month period of $100,000 and the public float
value of the issuer's equity securities is $25 million or more) or five business
days (in all other cases) prior to the day of the pricing of the securities that
are the subject of the distribution. Trading in "actively traded securities" by
persons other than the issuer (or selling stockholder) and affiliates is exempt
from such restrictions. "Actively traded securities" are securities with an
average daily trading volume of $1,000,000 issued by companies with a public
float of at least $150 million. In addition, and without limiting the foregoing,
the Selling Stockholders and any other person participating in such distribution
will be subject to other applicable provisions of the Exchange Act, including
without limitation, Rules 100 through 105 of Regulation M promulgated under the
Exchange Act, which provisions may limit the timing of purchases and sales of
any of the Shares of Common Stock by the Selling Stockholders and any other such
person.
There can be no assurance that any of the Selling Stockholders will sell any
or all of the Shares of Common Stock offered by them hereunder.
14
<PAGE>
An investor may only purchase the Shares of Common Stock being offered
hereby if such shares are qualified for sale or are exempt from registration
under the applicable securities laws of the state in which such prospective
purchaser resides. We have not registered or qualified the Shares of Common
Stock under any state securities laws and, unless the sale of such Shares to a
particular investor is exempt from registration or qualification under
applicable state securities laws, the sale of such Shares to an investor may not
be effected until such Shares have been registered or qualified with applicable
state securities authorities.
INDEMNIFICATION OF DIRECTORS AND OFFICER
The General Corporation Law of the State of Delaware permits a corporation,
through its certificate of incorporation, to eliminate the personal liability of
its directors to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, with certain exceptions. The exceptions
include breach of fiduciary duty of loyalty, acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, improper
declarations of dividends and transactions from which the directors derived an
improper personal benefit. Our certificate of incorporation, as amended,
exonerates our directors from monetary liability to the fullest extent permitted
by this statutory provision but does not restrict the availability of
non-monetary and other equitable relief.
Our certificate of incorporation, as amended, and by-laws provide that we
shall indemnify our directors and officers to the fullest extent permitted by
Delaware law.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
LEGAL MATTERS
The validity of the Shares of Common Stock offered hereby will be passed
upon for the Company by Baer Marks & Upham LLP, New York, New York.
EXPERTS
The financial statements and schedule incorporated by reference in this
Prospectus have been audited by BDO Seidman, LLP, independent certified public
accountants, to the extent and from the periods set forth in their reports
incorporated herein by reference, and are incorporated herein in reliance upon
such report given upon the authority of said firm as experts in auditing and
accounting.
15
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents heretofore filed by the Company with the Commission
pursuant to the Exchange Act are hereby incorporated by reference, except as
superseded or modified herein:
1. The Company's Annual Report on Form 10-K/A for the fiscal year ended
March 31, 1999.
2. The Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1999.
3. The Company's Current Report on Form 8-K/A filed with the Commission on
June 11, 1999.
4. The Company's definitive Proxy Statement dated July 1, 1999 relating to
its annual and special meeting of stockholders held on August 5, 1999.
In addition, all documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date of this Registration
Statement and prior to the filing of a post-effective amendment which indicates
that all securities offered have been sold or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of the filing of
such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
The Company is authorized to issue 50,000,000 shares of Common Stock, par
value $.01 per share, of which, as of the date of this Registration Statement,
10,570,000 shares are outstanding and as of April 1, 19?? held of record by 2011
record holders. Holders of shares of Common Stock are entitled to one vote for
each share hold of record on all matters to be voted on by stockholders. There
are no preemptive, subscription, conversion or redemption rights pertaining to
the shares of Common Stock. Holders of shares of Common Stock are entitled to
receive dividends when, as and if declared by the Board of Directors from funds
legally available therefore and to share ratably in the assets of the Company
available upon liquidation, dissolution or winding up. The holders of shares of
Common Stock do not have cumulative voting rights for the election of directors
and, accordingly, the holders of more than 50% of the shares of Common Stock are
able to elect all directors.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Baer Marks & Upham LLP, New York, New York will review certain legal matters
in connection with this offering on behalf of the Company.
Joel Handel, a partner of Baer Marks & Upham LLP, is a Director of the
Company. The Company granted Mr. Handel options to purchase an aggregate of
33,476 Common Shares at exercise prices ranging from $5.25 to $8.60.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The General Corporation Law of the State of Delaware permits a corporation,
through its certificate of incorporation, to eliminate the personal liability of
its directors to the corporation or its stockholders for
II-1
<PAGE>
monetary damages for breach of fiduciary duty as a director, with certain
exceptions. The exceptions include breach of fiduciary duty of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, improper declarations of dividends and transactions from which
the directors derived an improper personal benefit. The Company's certificate of
incorporation, as amended, exonerates its directors from monetary liability to
the fullest extent permitted by this statutory provision but does not restrict
the availability of non-monetary and other equitable relief.
The Company's certificate of incorporation, as amended, and by-laws provide
that the Company shall indemnify its directors and officers to the fullest
extent permitted by Delaware law.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
4.1 Toymax International, Inc. 1997 Amended and Restated Stock Option Plan.
5.1 Opinion of Baer Marks & Upham LLP.
23.1 Consent of BDO Seidman LLP.
23.2 Consent of Baer Marks & Upham LLP (contained in Exhibit 5.1).
24.1 Power of Attorney (included on signature page of this Registration Statement).
</TABLE>
ITEM 9. UNDERTAKINGS.
The undersigned Company hereby undertakes:
(a) (1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective Registration Statement.
(iii) Include any additional or changed material information on the plan
of distribution.
(2) That, for the purpose of determining liability under the Securities Act,
to treat each post-effective amendment as a new registration statement of the
securities offered herein, and that the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
(3) To file a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(e) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Plainview, State of New York, on the 26th day of
August, 1999.
TOYMAX INTERNATIONAL, INC.
BY: /S/ STEVEN LEBENSFELD
-----------------------------------------
Steven Lebensfeld
President and Director
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Steven Lebensfeld and William Johnson, Jr., and
each of them, as his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
/s/ STEVEN LEBENSFELD President and Director
- ------------------------------ (Principal Executive August 26, 1999
Steven Lebensfeld Officer)
Officer (Principal
/s/ WILLIAM JOHNSON, JR. Financial Officer and
- ------------------------------ Principal Accounting August 26, 1999
William Johnson, Jr. Officer)
/s/ HARVEY GOLDBERG Director and Executive Vice
- ------------------------------ President August 26, 1999
Harvey Goldberg
/s/ DAVID CHU Chairman of the Board of
- ------------------------------ Directors August 26, 1999
David Chu
/s/ OREN ASHER Director
- ------------------------------ August 26, 1999
Oren Asher
/s/ JOEL HANDEL Director
- ------------------------------ August 26, 1999
Joel Handel
II-4
<PAGE>
FORM S-8 REGISTRATION STATEMENT
ITEM 8
EXHIBITS
TOYMAX INTERNATIONAL, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
4.1 Toymax International, Inc. 1997 Stock Option Plan
5.1 Opinion of Baer Marks & Upham LLP.
23.1 Consent of BDO Seidman LLP.
23.2 Consent of Baer Marks & Upham LLP (contained in Exhibit 5.1).
24.1 Power of Attorney (included on signature page of this Registration Statement).
</TABLE>
<PAGE>
EXHIBIT 4.1
TOYMAX INTERNATIONAL, INC.
AMDENDED AND RESTATED 1997 STOCK OPTION PLAN
1. PURPOSE
The purpose of this plan (the "Plan") is to secure for TOYMAX INTERNATIONAL,
INC. (the "Company") and its stockholders the benefits arising from capital
stock ownership by employees, officers and directors of the Company and its
subsidiary corporations who are expected to contribute to the Company's future
growth and success. The Plan is also designed to attract and retain other
persons who will provide services to the Company. Those provisions of the Plan
which make express reference to Section 422 of the Internal Revenue Code of
1986, as amended or replaced from time to time (the "Code"), shall apply only to
Incentive Stock Options (as that term is defined in the Plan). The initial Plan
was adopted by the Board of Directors (the "Board") of the Company on October
17, 1997, and was approved by the stockholders of the Company on October 17,
1997. This Amended and Restated Plan was approved by the Board on May 7, 1999,
and was approved by the stockholders of the Company on August 5, 1999.
2. TYPE OF OPTIONS AND ADMINISTRATION
(a) TYPES OF OPTIONS. Options granted pursuant to the Plan shall be
authorized by action of the Board (or the committee appointed by the
Board in accordance with Section 2(b) below) and may be either incentive
stock options ("Incentive Stock Options") intended to meet the
requirements of Section 422 of the Code or non-statutory options which
are not intended to meet the requirements of Section 422 of the Code
("Non-Qualified Options").
(b) ADMINISTRATION. The Plan will be administered by the Board or by a
committee consisting of two or more directors each of whom shall be a
"non-employee director," within the meaning of Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or any successor rule ("Rule 16b-3"), and an "outside director,"
within the meaning of Treasury Regulation Section 1.162-27(e)(3)
promulgated under Section 162(m) of the Code, (the "Committee") appointed
by the Board, in each case whose construction and interpretation of the
terms and provisions of the Plan shall be final and conclusive. If the
Board determines to create a Committee to administer the Plan, the
delegation of powers to the Committee shall be consistent with applicable
laws or regulations (including, without limitation, applicable state law
and Rule 16b-3). The Board or Committee may in its sole discretion grant
options to purchase shares of the Company's Common Stock, $0.01 par value
per share ("Common Stock"), and issue shares upon exercise of such
options as provided in the Plan. The Board or Committee shall have
authority, subject to the express provisions of the Plan, to construe the
respective option agreements and the Plan; to prescribe, amend and
rescind rules and regulations relating to the Plan; to determine the
terms and provisions of the respective option agreements, which need not
be identical; and to make all other determinations in the judgment of the
Board or Committee necessary or desirable for the administration of the
Plan. The Board or Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any option
agreement in the manner and to the extent it shall deem expedient to
carry the Plan into effect and it shall be the sole and final judge of
such expediency. No director or person acting pursuant to authority
delegated by the Board shall be liable for any action or determination
under the Plan made in good faith.
3. ELIGIBILITY
Options may be granted to persons who are, at the time of grant, employees,
officers or directors of the Company or any subsidiaries of the Company as
defined in Sections 424(e) and 424(f) of the Code, PROVIDED, that Incentive
Stock Options may only be granted to individuals who are employees (within the
meaning of Section 3401(c) of the Code) of the Company or any subsidiaries of
the Company. Options
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may also be granted to other persons, provided that such options shall be
Non-Qualified Options. A person who has been granted an option may, if he or she
is otherwise eligible, be granted additional options if the Board or Committee
shall so determine.
4. STOCK SUBJECT TO PLAN
The stock subject to options granted under the Plan shall be shares of
authorized but unissued or reacquired Common Stock. Subject to adjustment as
provided in Section 15 below, the maximum number of shares of Common Stock of
the Company which may be issued and sold under the Plan is 1,500,000. If an
option granted under the Plan shall expire, terminate or is cancelled for any
reason without having been exercised in full, the unpurchased shares subject to
such option shall again be available for subsequent option grants under the
Plan.
5. FORMS OF OPTION AGREEMENTS
As a condition to the grant of an option under the Plan, each recipient of
an option shall execute an option agreement in such form not inconsistent with
the Plan and as may be approved by the Board or the Committee. The terms of such
option agreements may differ among recipients.
6. PURCHASE PRICE
(a) GENERAL. The purchase price per share of Common Stock issuable upon the
exercise of an option shall be determined by the Board or the Committee
at the time of grant of such option, PROVIDED, HOWEVER, that in the case
of an Incentive Stock Option, the exercise price shall not be less than
100% of the Fair Market Value (as hereinafter defined) of such Common
Stock at the time of grant of such option, or less than 110% of such Fair
Market Value in the case of options described in Section 11(b) of the
Plan. "Fair Market Value" of a share of Common Stock of the Company as of
a specified date for purposes of the Plan shall mean the closing price of
a share of the Common Stock on the principal securities exchange
(including but not limited to the Nasdaq Small Market or the Nasdaq
National Market) on which such shares are traded on the day immediately
preceding the date as of which Fair Market Value is being determined, or
on the next preceding date on which such shares are traded if no shares
were traded on such immediately preceding day, or if the shares are not
traded on a securities exchange, Fair Market Value shall be deemed to be
the average of the high bid and low asked prices of the shares in the
over-the-counter market on the day immediately preceding the date as of
which Fair Market Value is being determined or on the next preceding date
on which such high bid and low asked prices were recorded. If the shares
are not publicly traded, Fair Market Value of a share of Common Stock
shall be determined in good faith by the Board. In no case shall Fair
Market Value be determined with regard to restrictions other than
restrictions which, by their terms, will never lapse.
(b) PAYMENT OF PURCHASE PRICE. Options granted under the Plan may provide
for the payment of the exercise price by delivery of cash or a check to
the order of the Company in an amount equal to the exercise price of such
options, or by any other means which the Board determines are consistent
with the purpose of the Plan and with applicable laws and regulations
(including, without limitation, the provisions of Rule 16b-3).
7. EXERCISE OPTION PERIOD
Subject to earlier termination as provided in the Plan, each option and all
rights thereunder shall expire on such date as determined by the Board or the
Committee and set forth in the applicable option agreement, PROVIDED, that such
date shall not be later than ten (10) years after the date on which the option
is granted.
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8. EXERCISE OF OPTIONS
Each option granted under the Plan shall be exercisable either in full or in
installments at such time or times and during such period as shall be set forth
in the option agreement evidencing such option, subject to the provisions of the
Plan. Subject to the requirements in the immediately preceding sentence, if an
option is not at the time of grant immediately exercisable, the Board may (i) in
the agreement evidencing such option, provide for the acceleration of the
exercise date or dates of the subject option upon the occurrence of specified
events, and/or (ii) at any time prior to the complete termination of an option,
accelerate the exercise date or dates of such option.
9. NONTRANSFERABILITY OF OPTIONS
No option granted under this Plan shall be assignable or otherwise
transferable by the optionee, except by will or by the laws of descent and
distribution. An option may be exercised during the lifetime of the optionee
only by the optionee.
10. EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP
Except as provided in Section 11(d) of the Plan with respect to Incentive
Stock Options and except as otherwise determined by the Board or Committee at
the date of grant of an option, and subject to the provisions of the Plan, an
optionee may exercise an option at any time within three (3) months following
the termination of the optionee's employment or other relationship with the
Company and its subsidiary corporations or within one (1) year if such
termination was due to the death or disability (within the meaning of Section
22(e)(3) of the Code or any successor provisions thereto) of the optionee (to
the extent such option is otherwise exercisable at the time of such termination)
but in no event later than the expiration date of the option. If the termination
of the optionee's employment is for cause or is otherwise attributable to a
breach by the optionee of an employment or confidentiality or non-disclosure
agreement, the option shall expire immediately upon such termination. The Board
shall have the power to determine, in its sole discretion, what constitutes a
termination for cause or a breach of an employment or confidentiality or
non-disclosure agreement, whether an optionee has been terminated for cause or
has breached such an agreement, and the date upon which such termination for
cause or breach occurs. Any such determinations shall be final and conclusive
and binding upon the optionee and all other persons interested or claiming
interests under the Plan.
11. INCENTIVE STOCK OPTIONS
Options granted under the Plan which are intended to be Incentive Stock
Options shall be subject to the following additional terms and conditions:
(a) EXPRESS DESIGNATION. All Incentive Stock Options granted under the Plan
shall, at the time of grant, be specifically designated as such in the
option agreement covering such Incentive Stock Options.
(b) 10% SHAREHOLDER. If any employee to whom an Incentive Stock Option is to
be granted under the Plan is, at the time of the grant of such option,
the owner of stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company (after taking into account
the attribution of stock ownership rules of Section 424(d) of the Code),
then the following special provisions shall be applicable to the
Incentive Stock Option granted to such individual:
(i) the purchase price per share of the Common Stock subject to such
Incentive Stock Option shall not be less than 110% of the Fair Market
Value of one share of Common Stock at the time of grant; and
(ii) the option exercise period shall not exceed five (5) years from the
date of grant.
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(c) DOLLAR LIMITATION. For so long as the Code shall so provide, options
granted to any employee under the Plan (and any other incentive stock
option plans of the Company) which are intended to constitute Incentive
Stock Options shall not constitute Incentive Stock Options to the extent
that such options, in the aggregate, become exercisable for the first
time in any one calendar year for shares of Common Stock with an
aggregate Fair Market Value, as of the respective date or dates of grant,
of more than $100,000.
(d) TERMINATION OF EMPLOYMENT, DEATH OR DISABILITY. No Incentive Stock
Option may be exercised unless, at the time of such exercise, the
optionee is, and has been continuously since the date of grant of his or
her option, employed by the Company, except that:
(i) an Incentive Stock Option may be exercised within the period of three
(3) months after the date the optionee ceases to be an employee of
the Company (or within such lesser period as may be specified in the
applicable option agreement), to the extent it is otherwise
exercisable at the time of such cessation,
(ii) if the optionee dies while in the employ of the Company, or within
three (3) months after the optionee ceases to be such an employee,
the Incentive Stock Option may be exercised by the person to whom it
is transferred by will or the laws of descent and distribution within
the period of one (1) year after the date of death (or within such
lesser period as may be specified in the applicable option
agreement), to the extent it is otherwise exercisable at the time of
the optionee's death, and
(iii) if the optionee becomes disabled (within the meaning of Section
22(e)(3) of the Code or any successor provisions thereto) while in
the employ of the Company, the Incentive Stock Option may be
exercised within the period of one (1) year after the date the
optionee ceases to be such an employee because of such disability (or
within such lesser period as may be specified in the applicable
option agreement), to the extent it is otherwise exercisable at the
time of such cessation.
For all purposes of the Plan and any option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Income Tax Regulations (or any successor regulations). Notwithstanding the
foregoing provisions, no Incentive Stock Option may be exercised after its
expiration date.
12. ADDITIONAL PROVISIONS
(a) ADDITIONAL OPTION PROVISIONS. The Board or the Committee may, in its
sole discretion, include additional provisions in option agreements
covering options granted under the Plan, including without limitation,
restrictions on transfer, repurchase rights, rights of first refusal,
commitments to pay cash bonuses or to make, arrange for or guaranty loans
or to transfer other property to optionees upon exercise of options, or
such other provisions as shall be determined by the Board or the
Committee, PROVIDED, that such additional provisions shall not be
inconsistent with the requirements of applicable law and such additional
provisions shall not cause any Incentive Stock Option granted under the
Plan to fail to qualify as an Incentive Stock Option within the meaning
of Section 422 of the Code.
(b) ACCELERATION, EXTENSION, ETC. The Board or the Committee may, in its
sole discretion (i) accelerate the date or dates on which all or any
particular option or options granted under the Plan may be exercised, or
(ii) extend the dates during which all, or any particular, option or
options granted under the Plan may be exercised, PROVIDED, HOWEVER, that
no such acceleration or extension shall be permitted if it would (i)
cause any Incentive Stock Option granted under the Plan to fail to
qualify as an Incentive Stock Option within the meaning of Section 422 of
the Code, or (ii) cause
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the Plan or any option granted under the Plan to fail to comply with Rule
16b-3 (if applicable to the Plan or such option).
13. GENERAL RESTRICTIONS
(a) INVESTMENT REPRESENTATIONS. The Company may require any person to whom
an option is granted, as a condition of exercising such option or award,
to give written assurances in substance and form satisfactory to the
Company to the effect that such person is acquiring the Common Stock
subject to the option or award for his or her own account for investment
and not with any present intention of selling or otherwise distributing
the same, and to such other effects as the Company deems necessary or
appropriate in order to comply with applicable federal and state
securities laws, or with covenants or representations made by the Company
in connection with any public offering of its Common Stock, including any
"lock-up" or other restriction on transferability.
(b) COMPLIANCE WITH SECURITIES LAW. Each option shall be subject to the
requirement that if, at any time, counsel to the Company shall determine
that the listing, registration or qualification of the shares subject to
such option or award upon any securities exchange or automated quotation
system or under any state or federal law, or the consent or approval of
any governmental or regulatory body, or that the disclosure of non-public
information or the satisfaction of any other condition, is necessary as a
condition of, or in connection with the issuance or purchase of shares
thereunder, except to the extent expressly permitted by the Board, such
option or award may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval or satisfaction
of such condition shall have been effected or obtained on conditions
acceptable to the Board or the Committee. Nothing herein shall be deemed
to require the Company to apply for or to obtain such listing,
registration, qualification, consent or approval, or to satisfy such
condition.
14. RIGHTS AS A STOCKHOLDER
The holder of an option shall have no rights as a stockholder with respect
to any shares covered by the option (including, without limitation, any right to
vote or to receive dividends or non-cash distributions with respect to such
shares) until the effective date of exercise of such option and then only to the
extent of the shares of Common Stock so purchased. No adjustment shall be made
for dividends or other rights for which the record date is prior to the date of
exercise.
15. ADJUSTMENT PROVISIONS FOR RECAPITALIZATIONS,
REORGANIZATIONS AND RELATED TRANSACTIONS
(a) RECAPITALIZATIONS AND RELATED TRANSACTIONS. If, through or as a result
of any recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction (other than the initial
public offering of the Common Stock) (i) the outstanding shares of Common
Stock are increased, decreased or exchanged for a different number or
kind of shares or other securities of the Company, or (ii) additional
shares or new or different shares or other non-cash assets are
distributed with respect to such shares of Common Stock or other
securities, an appropriate and proportionate adjustment shall be made in
(x) the maximum number and kind of shares reserved for issuance under or
otherwise referred to in the Plan, (y) the number and kind of shares or
other securities subject to any then-outstanding options under the Plan,
and (z) the price for each share subject to any then-outstanding options
under the Plan, without changing the aggregate purchase price as to which
such options remain exercisable. Notwithstanding the foregoing, no
adjustment shall be made pursuant to this Section 15 if such adjustment
(A) would cause any Incentive Stock Option granted under the Plan to fail
to qualify as an Incentive Stock Option within the meaning of Section 422
of the Code, (B) would cause the Plan or any option granted under the
Plan to fail to comply with Rule 16b-3 (if applicable to the Plan or such
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option), or (C) would be considered as the adoption of a new plan
requiring stockholder approval.
(b) REORGANIZATION, MERGER AND RELATED TRANSACTIONS. All outstanding options
under the Plan shall become fully exercisable for a period of sixty (60)
days following the occurrence of any Trigger Event (as defined below),
whether or not such options are then exercisable under the provisions of
the applicable agreements relating thereto. For purposes of the Plan, a
"Trigger Event" is any one of the following events:
(i) the date the Company acquires knowledge that any person or group
deemed a person under Section 13(d)-3 of the Exchange Act (other than
the Company, any subsidiary of the Company, any employee benefit plan
of the Company or of any subsidiary of the Company or any entity
holding shares of Common Stock or other securities of the Company for
or pursuant to the terms of any such plan or any individual or entity
or group or affiliate thereof which acquired its beneficial ownership
interest prior to the date the Plan was adopted by the Board), in a
transaction or series of transactions, has become the beneficial
owner, directly or indirectly (with beneficial ownership determined
as provided in Rule 13d-3, or any successor rule, under the Exchange
Act), of securities of the Company entitling the person or group to
30% or more of all votes (without consideration of the rights of any
class of stock to elect directors by a separate class vote) to which
all stockholders of the Company would be entitled in the election of
the Board were an election held on such date;
(ii) the date, during any period of two (2) consecutive years, when
individuals who at the beginning of such period constitute the Board
cease for any reason to constitute at least a majority thereof,
unless the election, or the nomination for election by the
stockholders of the Company, of each new director was approved by a
vote of at least a majority of the directors then still in office who
were directors at the beginning of such period; and
(iii) the date of approval by the stockholders of the Company of an
agreement (a "reorganization agreement") providing for:
(A) The merger or consolidation of the Company with another
corporation (x) where the stockholders of the Company,
immediately prior to the merger or consolidation, do not
beneficially own, immediately after the merger or consolidation,
shares of the corporation issuing cash or securities in the
merger or consolidation entitling such stockholders to 80% or
more of all votes (without consideration of the rights of any
class of stock to elect directors by a separate class vote) to
which all stockholders of such corporation would be entitled in
the election of directors, or (y) where the members of the Board,
immediately prior to the merger or consolidation, do not,
immediately after the merger or consolidation, constitute a
majority of the Board of Directors of the corporation issuing
cash or securities in the merger or consolidation, or
(B) The sale or other disposition of all or substantially all the
assets of the Company.
Notwithstanding the foregoing, no event described in Section 15(b)(i), (ii)
or (iii) above shall constitute a Trigger Event if the occurrence of such event
is the result of the initial public offering of the Common Stock.
(c) BOARD AUTHORITY TO MAKE ADJUSTMENTS. Any adjustments under this Section
15 will be made by the Board or the Committee, whose determination as to
what adjustments, if any, will be made and the extent thereof will be
final, binding and conclusive. No fractional shares will be issued under
the Plan on account of any such adjustments.
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16. NO SPECIAL EMPLOYMENT RIGHTS
Nothing contained in the Plan or in any option shall confer upon any
optionee any right with respect to the continuation of his or her employment or
other relationship with the Company or interfere in any way with the right of
the Company at any time to terminate such employment or relationship or to
increase or decrease the compensation of the optionee.
17. AMENDMENT, MODIFICATION OR TERMINATION OF THE PLAN
(a) The Board may at any time modify, amend or terminate the Plan, PROVIDED
that to the extent required by applicable law, any such modification,
amendment or termination shall be subject to the approval of the
stockholders of the Company.
(b) The modification, amendment or termination of the Plan shall not,
without the consent of an optionee, affect his or her rights under an
option previously granted to him or her. With the consent of the optionee
affected, the Board or the Committee may amend or modify outstanding
option agreements in a manner not inconsistent with the Plan.
Notwithstanding the foregoing, the Board shall have the right, without
the consent of the optionee affected, to amend or modify (i) the terms
and provisions of the Plan and of any outstanding Incentive Stock Options
granted under the Plan to the extent necessary to qualify any or all such
options for such favorable federal income tax treatment (including
deferral of taxation upon exercise) as may be afforded incentive stock
options under Section 422 of the Code, (ii) the terms and provisions of
the Plan and of any outstanding options to the extent necessary to ensure
the qualification of the Plan and such options under Rule 16b-3 (if
applicable to the Plan and such options), and (iii) the terms and
provisions of the Plan and any outstanding option to the extent that the
Board determines necessary to preserve the deduction of compensation paid
to certain optionees who are "covered employees," within the meaning of
Treasury Regulation Section 1.162-27(c)(2), as a result of the grant or
exercise of options under the Plan.
18. WITHHOLDING
(a) The Company shall have the right to deduct and withhold from payments of
any kind otherwise due to the optionee any federal, state or local taxes
of any kind required by law to be so deducted and withheld with respect
to any shares issued upon exercise of options under the Plan. Subject to
the prior approval of the Company, which may be withheld by the Company
in its sole discretion, the optionee may elect to satisfy such
obligations, in whole or in part by (i) causing the Company to withhold
shares of Common Stock otherwise issuable pursuant to the exercise of an
option, (ii) delivering to the Company shares of Common Stock already
owned by the optionee, or (iii) delivering to the Company cash or a check
to the order of the Company in an amount equal to the amount required to
be so deducted and withheld. The shares delivered in accordance with
method (ii) above or withheld in accordance with method (i) above shall
have a Fair Market Value equal to such withholding obligation as of the
date that the amount of tax to be withheld is to be determined. An
optionee who has made an election pursuant to method (i) or (ii) of this
Section 18(a) may only satisfy his or her withholding obligation with
shares of Common Stock which are not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirements.
(b) The acceptance of shares of Common Stock upon exercise of an Incentive
Stock Option shall constitute an agreement by the optionee (i) to notify
the Company if any or all of such shares are disposed of by the optionee
within two (2) years from the date the option was granted or within one
(1) year from the date the shares were issued to the optionee pursuant to
the exercise of the option, and (ii) if required by law, to remit to the
Company, at the time of and in the case of any such disposition, an
amount sufficient to satisfy the Company's federal, state and local
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withholding tax obligations with respect to such disposition, whether or
not, as to both (i) and (ii), the optionee is in the employ of the
Company at the time of such disposition.
19. CANCELLATION AND NEW GRANT OF OPTIONS, ETC.
The Board or the Committee shall have the authority to effect, at any time
and from time to time, with the consent of the affected optionees the (i)
cancellation of any or all outstanding options under the Plan and the grant in
substitution therefor of new options under the Plan (or any successor stock
option plan of the Company) covering the same or different numbers of shares of
Common Stock and having an option exercise price per share which may be lower or
higher than the exercise price per share of the cancelled options, or (ii)
amendment of the terms of any and all outstanding options under the Plan to
provide an option exercise price per share which is higher or lower than the
then-current exercise price per share of such outstanding options.
20. EFFECTIVE DATE AND DURATION OF THE PLAN
(a) EFFECTIVE DATE. The Plan shall become effective when adopted by the
Board, but no Incentive Stock Option granted under the Plan shall become
exercisable unless and until the Plan shall have been approved by the
Company's stockholders. If such stockholder approval is not obtained
within twelve (12) months after the date of the Board's adoption of the
Plan, no options previously granted under the Plan shall be deemed to be
Incentive Stock Options and no Incentive Stock Options shall be granted
thereafter. Amendments to the Plan not requiring stockholder approval
shall become effective when adopted by the Board and amendments requiring
stockholder approval (as provided in Section 17) shall become effective
when adopted by the Board, but no Option granted on or after the date of
such amendment shall become exercisable unless and until such amendment
shall have been approved by the Company's stockholders. If such
stockholder approval is not obtained within twelve (12) months of the
Board's adoption of such amendment, no options granted on or after the
date of such amendment shall be deemed Incentive Stock Options and no
Incentive Stock Options shall be granted thereafter. Subject to above
limitations, options may be granted under the Plan at any time after the
effective date and before the date fixed for termination of the Plan.
(b) TERMINATION. Unless sooner terminated by the Board, the Plan shall
terminate upon the close of business on the day next preceding the tenth
anniversary of the date of its adoption by the Board. After termination
of the Plan, no further options may be granted under the Plan; PROVIDED,
HOWEVER, that such termination will not affect any options granted prior
to termination of the Plan.
21. GOVERNING LAW
The provisions of this Plan shall be governed and construed in accordance
with the laws of the State of New York without regard to the principles of
conflicts of laws.
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EXHIBIT 5.1
August 30, 1999
Toymax International, Inc.
125 E. Bethpage Road
Plainview, New York
RE: Registration Statement on Form S-8
Gentlemen:
We have acted as counsel to Toymax International, Inc., a Delaware
corporation (the "Company"), in connection with a Registration Statement on Form
S-8 (the "Registration Statement") being filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to the Toymax
International, Inc. Amended and Restated 1997 Stock Option Plan (the "Plan")
offering an aggregate of 1,500,000 shares of Common Stock (the "Shares"), $.01
par value per share, that may be acquired at the election of the Plan's
participants under and pursuant to the Plan.
In connection with the foregoing, we have examined originals or copies,
satisfactory to us, of all such corporate records and of all such agreements,
certificates and other documents as we have deemed relevant and necessary as a
basis for the opinion hereinafter expressed. In such examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity with the original documents of
all documents submitted to us as copies. As to any facts material to such
opinion, we have, to the extent that relevant facts were not independently
established by us, relied on certificates of public officials and certificates
of officers or other representatives of the Company.
Based upon and subject to the foregoing, we are of the opinion that, when
the Registration Statement has become effective and any newly issued Shares have
been acquired at the election of a participant in accordance with the Plans and
paid for as provided therein, said newly issued Shares will be validly issued,
fully paid and non-assessable.
We are members of the bar of the State of New York and are not licensed or
admitted to practice law in any other jurisdiction. Accordingly, we express no
opinion with respect to the laws of any jurisdiction other than the State of New
York, Delaware General Corporate Law and the federal laws of the United States.
We assume no obligation to advise you of any changes to this opinion which
may come to our attention after the date hereof. This opinion may not be relied
upon or furnished to any other person except the addressee hereof without the
express written consent of this firm.
We hereby consent to the use of our opinion as herein set forth as an
exhibit to the Registration Statement and to the use of our name under the
caption "Legal Matters" in the Prospectus forming part of the Registration
Statement. In giving such consent, we do not thereby concede that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended or the rules and regulations thereunder or that we are
"experts" within the meaning of such act, rules and regulations.
Very truly yours,
/s/ BAER MARKS & UPHAM LLP
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EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Toymax International, Inc.
Plainview, New York
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated June 14,
1999, relating to the consolidated financial statements and schedule of Toymax
International, Inc. appearing in the Company's Annual Report on Form 10-K for
the year ended March 31, 1999.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO Seidman, LLP
New York, New York
August 30, 1999
