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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
TYCO TOYS, INC.
(NAME OF ISSUER)
Common Stock
(TITLE OF CLASS OF SECURITIES)
90212810
(CUSIP NUMBER)
With a copy to:
Jonathan Kagan Timothy G. Massad, Esq.
Corporate Advisors, L.P. Cravath, Swaine & Moore
One Rockefeller Plaza 825 Eighth Avenue
New York, New York 10020 New York, N.Y. 10019
212-632-6253 212-474-1154
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS)
April 15, 1994
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
Schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [x]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP NO. 90212810 13D PAGE 2 OF 216 PAGES
----------------------- ------- --------
1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Corporate Partners, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED -0-
BY EACH REPORTING
PERSON WITH
8 SHARED VOTING POWER
-0-
9 SOLE DISPOSITIVE POWER
-0-
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,252,290 shares of Common Stock, assuming conversion of all shares of convertible preferred stock
beneficially owned by Corporate Partners, L.P.
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.87%, assuming conversion of all shares of convertible preferred stock beneficially owned by
Corporate Partners, L.P.
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
</TABLE>
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CUSIP NO. 90212810 13D PAGE 3 OF 216 PAGES
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1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Corporate Offshore Partners, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bermuda
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED -0-
BY EACH REPORTING
PERSON WITH 8 SHARED VOTING POWER
-0-
9 SOLE DISPOSITIVE POWER
-0-
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
303,240 shares of Common Stock assuming conversion of all shares of convertible preferred stock
beneficially owned by Corporate Offshore Partners, L.P. (See Item 5).
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.86%, assuming coversion of all shares of convertible preferred stock beneficially owned by Corporate Offshore
Partners, L.P.
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
</TABLE>
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CUSIP NO. 90212810 13D PAGE 4 OF 216 PAGES
----------------------- ------- -------
1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
State Board of Administration of Florida
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Florida
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED -0-
BY EACH REPORTING
PERSON WITH 8 SHARED VOTING POWER
-0-
9 SOLE DISPOSITIVE POWER
-0-
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
444,465 shares of Common Stock assuming conversion of all shares of convertible preferred stock
owned by the State Board of Administration of Florida.
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.26% assuming conversion of all shares of convertible preferred stock owned by the State Board of Administration
of Florida (See Item 5).
14 TYPE OF REPORTING PERSON*
OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
</TABLE>
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CUSIP NO. 90212810 13D PAGE 5 OF 216 PAGES
----------------------- ------- -------
1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Corporate Advisors, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED -0-
BY EACH REPORTING
PERSON WITH 8 SHARED VOTING POWER
4,999,995
9 SOLE DISPOSITIVE POWER
-0-
10 SHARED DISPOSITIVE POWER
4,999,995
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,999,995 shares of Common Stock assuming conversion of all shares of convertible preferred stock
beneficially owned by Corporate Partners, L.P., Corporate Offshore Partners, L.P. and the State
Board of Administration of Florida.
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
12.53% assuming conversion of all shares of convertible preferred stock beneficially owned by Corporate Partners, L.P.,
Corporate Offshore Partners, L.P. and the State Board of Administration of Florida.
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
</TABLE>
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CUSIP NO. 90212810 13D PAGE 6 OF 216 PAGES
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1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
LFCP Corp.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED -0-
BY EACH REPORTING
PERSON WITH 8 SHARED VOTING POWER
4,999,995
9 SOLE DISPOSITIVE POWER
-0-
10 SHARED DISPOSITIVE POWER
4,999,995
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,999,995 shares of Common Stock assuming conversion of all shares of convertible preferred stock
beneficially owned by Corporate Partners, L.P., Corporate Offshore Partners, L.P. and the State
Board of Administration of Florida.
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
12.53% assuming conversion of all shares of convertible preferred stock beneficially owned by
Corporate Partners, L.P., Corporate Offshore Partners, L.P. and the State Board of Administration
of Florida.
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
</TABLE>
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Item 1. Security and issuer.
The security to which this joint statement relates is the
common stock, par value $.01 per share (the "Common Stock"), of Tyco Toys, Inc.,
a Delaware corporation (the "Company"), whose principal executive offices
are located at 6000 Midlantic Drive, Mt. Laurel, NJ 08054. Although no person
identified in Item 2 (except as otherwise indicated in this Schedule 13D) has
acquired any shares of Common Stock, such persons are deemed to be the
beneficial owners of the shares of Common Stock reported in Item 5 by virtue
of their acquisition of beneficial ownership of shares of the Company's Series
B Voting Convertible Exchangeable Preferred Stock, par value $.10 (the
"Preferred Stock"), which is convertible into shares of the Common Stock.
Item 2. Identity and Background.
This Statement is filed on behalf of (i) Corporate Partners,
L.P., a Delaware limited partnership ("Corporate Partners"), (ii)
Corporate Offshore Partners, L.P., a Bermuda limited partnership ("Corporate
Offshore "Partners"; Corporate Partners and Corporate Offshore Partners
being referred to collectively as the "Partnerships"), (iii) the State Board of
Administration of Florida, a body corporate organized under the Constitution of
the State of Florida (the "State Board"; the Partnerships and the State Board
being referred to collectively as the "Purchasers"), (iv) Corporate Advisors,
L.P. ("Corporate Advisors"), a Delaware limited partnership which serves as
general partner of the Partnerships and as the investment manager over account
assets held in a certain custody account for the State Board (which account
assets include the shares of Preferred Stock owned by the State Board) and (v)
LFCP Corp., a Delaware corporation which serves as the general partner of
Corporate Advisors all the shares of capital stock of which are owned by Lazard
Freres & Co., a New York limited partnership ("Lazard"). The Purchasers,
Corporate Advisors and LFCP Corp. are collectively referred to as the
"Reporting Persons". The agreement with respect to the joint filing of this
Schedule 13D is attached hereto as Exhibit 1.
This Statement is filed on behalf of the State Board because
the State Board is a record owner of shares of Preferred Stock (see Item 5).
However, under the Stock Purchase Agreement dated as of April 15, 1994 between
the Purchasers, Corporate Advisors and the Company which is attached hereto
as Exhibit 2 and incorporated herein by reference (the "Purchase Agreement")
and an Investment Management Agreement dated as of June 17, 1988 between
Corporate Advisors and the State Board, the State Board
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8
has appointed Corporate Advisors as the exclusive investment manager over
certain account assets which include the shares of Preferred Stock purchased
by the State Board pursuant to the Purchase Agreement and has granted Corporate
Advisors an irrevocable proxy dated April 15, 1994, which is attached hereto
as Exhibit 3 and incorporated herein by reference, to vote all shares of
Preferred Stock purchased by the State Board pursuant to the Purchase
Agreement (the "Irrevocable Proxy") (see Item 4). Accordingly, the filing of
this Statement on Schedule 13D on behalf of the State Board should not be
deemed a representation that the State Board has an obligation to file in
respect of the shares of Preferred Stock owned of record by the State Board or
any other securities of the Company which the State Board purchases in the
ordinary course of its investment activities.
The Partnerships were formed for the purpose of providing a
vehicle for institutional and other sophisticated investors to participate in
the acquisition of substantial equity interests in companies with significant
potential for long-term growth in value.
The State Board is an agency of the State of Florida created
pursuant to a provision of the Constitution of the State of Florida to
perform certain duties specified in such Constitution and by statute,
including the responsibility of investing certain funds of the Florida
retirement system.
LFCP Corp. was formed for the purpose of serving as the
general partner of Corporate Advisors, which in turn was formed for the purpose
of serving as the general partner of the Partnerships and as investment manager
on behalf of the State Board pursuant to the Investment Management Agreement
with respect to account assets held in a certain custody account for the State
Board.
Lazard is a private investment banking partnership of
international stature, with extensive experience in principal investments,
money management, mergers and acquisitions and corporate finance.
The address of the principal offices of Corporate Partners,
LFCP Corp., Corporate Advisors and Lazard is One Rockefeller Plaza, New York,
New York 10020. The address of the principal offices of Corporate Offshore
Partners is 30 Cedar Avenue, Hamilton 5-24, Bermuda. The address of the
principal offices of the State Board is Park 20 West, 1230 Blountstown
Highway, Tallahassee, Florida 32304.
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9
The name, residence or business address, citizenship, present
principal occupation or employment, and the name and address of any corporation
or other organization in which such employment is conducted of (i) each of the
executive officers and directors of LFCP Corp., (ii) each person ultimately
in control of LFCP Corp. and (iii) each person controlling the State Board are
set forth in Appendix A attached hereto and incorporated herein by reference.
During the last five years, neither any Reporting Person nor,
to the Reporting Persons' knowledge, any person identified in Appendix A has
(i) been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to such
laws.
Item 3. Source and Amount of Funds or Other Consideration.
On April 15, 1994, the Purchasers purchased an aggregate of
47,619 shares of Preferred Stock (the "Initial Shares") pursuant to the
Purchase Agreement. Of such total, Corporate Partners purchased 40,498 Initial
Shares, Corporate Offshore Partners purchased 2,888 Initial Shares and the
State Board purchased 4,233 Initial Shares.
The Initial Shares were purchased by the Purchasers at a
purchase price of $1,050.00 per share, for an aggregate purchase price of
$49,999,950.00 (the "Purchase Price"). The funds used by the Purchasers to pay
for their respective portions of the Purchase Price were obtained by each
Partnership from capital contributions made by their respective partners
pursuant to preexisting capital commitments and by the State Board from
contributions from the State of Florida for the Florida retirement system.
The Certificate of Designation (the "Certificate of
Designation") for the Preferred Stock, which is attached hereto as Exhibit 4
and incorporated herein by reference, provides that dividends on the Preferred
Stock, which are to be paid at the rate of 6% per annum of the liquidation
preference, may be paid in additional shares of Preferred Stock through the
dividend period ending April 15, 1996. Any shares so issued are referred to
herein as "Additional Shares". The Initial Shares, together
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10
with Additional Shares so issued, are collectively referred to as the "Shares".
Each Share of Preferred Stock is convertible into shares of
Common Stock at a conversion price of $10.00 per share, subject to antidilution
adjustments, or 105 shares of Common Stock currently.
Item 4. Purpose of Transaction.
The Purchasers have acquired the Shares for investment
purposes. The Purchase Agreement contains certain restrictions on the
Purchasers' ability to dispose of the Shares and any shares of Common Stock
and Notes (as hereinafter defined) which may be issued upon the conversion of
or in exchange for the Preferred Stock, and imposes other restrictions on the
Purchasers' ability to engage in certain conduct in respect of the Company.
Notwithstanding the foregoing, in respect of the State Board, all such
restrictions relate only to securities of the Company acquired or held by the
State Board to the extent the Partnerships or any of their affiliates have sole
or shared voting or dispositive power. In this regard, the State Board has
granted to Corporate Advisors the Irrevocable Proxy with respect to the
Initial Shares purchased by the State Board under the Purchase Agreement,
Additional Shares issued as dividends thereon, and shares of Common Stock and
Notes which may be issued to the State Board upon conversion of or in exchange
for the Shares. None of the Reporting Persons has any intention to acquire
control over the Company; however, if any of the Reporting Persons believes
that further investment in the Company is attractive, whether because of the
market price of the Company's securities or otherwise, it may acquire
additional shares of Common Stock or other securities of the Company to the
extent and in a manner consistent with the Purchase Agreement. Similarly,
subject to the terms of the Purchase Agreement and depending upon market and
other factors, the Reporting Persons may determine to dispose of the Shares.
Under the terms of the Purchase Agreement, and subject to
certain limited exceptions set forth therein, the Purchasers have agreed that
until the date when the Purchasers and certain of their affiliates do not own
any Shares or any shares of Common Stock or Notes issued upon conversion of or
in exchange for Shares, the Partnerships and Corporate Advisors, acting
on behalf of the State Board, shall not, except by virtue of their
representation on the Company's Board of Directors pursuant to the
Purchase Agreement and the Certificate of Designation: (i) make, or in any way
participate, directly or indirectly, in
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any "solicitation" of "proxies" to vote (as such terms are used in the
proxy rules of the SEC), initiate, propose or otherwise solicit stockholders of
the Company for the approval of one or more stockholder proposals, or induce or
attempt to induce any other person to initiate any stockholder proposal, or
advise or influence, or seek to advise or influence, any person with respect to
the voting of any voting securities of the Company; (ii) deposit any voting
securities in the Company in a voting trust or, except for the Irrevocable
Proxy, subject any voting securities of the Company to any agreement or
arrangement with respect to the voting of any such voting securities or other
agreement having similar effect; or (iii) form a partnership, syndicate or
other group for the purpose of acquiring, holding, voting or disposing of
voting securities with any person that is not a Purchaser or Corporate
Advisors.
Voting Rights.
Each Share of Preferred Stock entitles the holder thereof to
vote on all matters voted on by holders of Common Stock, voting together as a
single class with other shares entitled to vote, at all meetings of the
stockholders of the Company. With respect to any such vote, each Share of
Preferred Stock entitles the holder thereof to cast the number of votes equal
to the number of votes which could be cast in such vote by a holder of the
number of shares of Common Stock into which such Share of Preferred Stock is
convertible on the record date for such vote. Notwithstanding the foregoing,
until such time as the waiting period (including any extensions) applicable to
the acquisition of the Preferred Stock by the Purchasers under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 shall have expired or
terminated, the holders of shares of Preferred Stock shall not have the right
to vote for the election of directors of the Company.
Election of Directors.
The Purchase Agreement provides that the Purchasers shall be
entitled to designate two persons to be elected to the Company's Board of
Directors and the Company shall use its best efforts to have such persons
elected as directors of the Company. Notwithstanding the foregoing, the number
of directors which may be so designated shall be reduced (i) to one upon a
transfer of Shares as a result of which the Purchasers and their affiliates
beneficially own Shares or shares of Common Stock that, in the aggregate,
represent less than 5% of the total voting power of the voting securities of
the Company and (ii) to zero upon a transfer of Shares as a result of which the
Purchasers and their affiliates beneficially own Shares or shares of Common
Stock
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that, in the aggregate, represent less than 1% of the total voting power of the
voting securities of the Company. The Purchasers have designated Mr. Jonathan
Kagan and Mr. David Golub for election as directors of the Company.
If at any time (i) the Company breaches in any material
respect any of its obligations under the Purchase Agreement or the Registration
Rights Agreement referred to below (which breach, in certain cases, shall have
continued for a certain specified period), (ii) any quarterly dividend payable
on the Preferred Stock is not paid when due, or (iii) the Company fails to
satisfy its obligation to redeem shares of Preferred Stock then required to be
redeemed, then, (x) the dividend rate payable on the Preferred Stock shall be
increased to 7% per year of the liquidation preference, (y) the number of
directors constituting the Board of Directors shall be increased by two and the
holders of shares of Preferred Stock shall have the right, voting as a separate
class, to elect the directors of the Company to fill such newly created
directorships and (z) certain dividends on, and purchases and redemptions of,
shares of capital stock ranking junior to or on parity with the Preferred Stock
and certain other transactions shall be prohibited. Such remedies shall
continue until such time as (A) all such breaches are no longer continuing, (B)
all dividends accumulated on the Preferred Stock shall have been paid in full
and (C) any redemption obligation with respect to the Preferred Stock which
has become due has been satisfied or all necessary funds have been set aside
for such redemption, as the else may be.
Redemption.
The Preferred Stock is subject to optional and mandatory
redemption as follows:
Except for redemption by exchange for Notes as hereinafter
described, the Company may not redeem the Preferred Stock prior to April 15,
1997.
The Company, at its option, may at any time on and after April
15, 1997, and prior to April 15, 1998, redeem the Preferred Stock in whole or
in part, at a cash price per Share equal to 105.25% of the liquidation
preference, if the daily closing price per share of the Common Stock for any
20 consecutive trading day period commencing on or after April 15, 1997,
and ending prior to April 15, 1998, is greater than or equal to 175% of the
then current Conversion Price (as defined below).
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The Company, at its option, may at any time on and after April
15, 1998, and prior to April 15, 1999, redeem the Preferred Stock in whole or
in part, at a cash price per Share equal to 104.50% of the liquidation
preference, if the daily closing price per share of the Common Stock for any 20
consecutive trading day period commencing on or after April 15, 1998, and
ending prior to April 15, 1999, is greater than or equal to 150% of the
then current Conversion Price.
The Company, at its option, may at any time on and after April
15, 1999, redeem the Preferred Stock in whole or in part at a cash price per
share equal to a percentage of the liquidation preference (which shall be
103.75% for the twelve month period commencing April 15, 1999 and which shall
decline ratably to 100.75% for the twelve month period commencing April 15,
2003.
On April 15, 2004, the Company shall redeem all outstanding
Shares of Preferred Stock at a price equal to the liquidation preference per
share, which price may be paid in cash or in shares of Common Stock. If the
redemption price is paid in shares of Common Stock, each share of Common Stock
shall be valued at the product of (1) .95 and (2) the average of the daily
closing prices per share of the Common Stock for the 20 consecutive trading
days immediately preceding the redemption date.
Upon any such redemption, the Company shall pay in cash all
accrued and unpaid dividends on the Preferred Stock.
Change of Control.
In the event that any Change of Control (as defined in the
Certificate of Designation) occurs while any shares of Preferred Stock are
outstanding, each holder of Preferred Stock shall have the right to give notice
that it is exercising a change of control election with respect to all or any
number of such holder's Shares of Preferred Stock. Upon any such election, the
Company shall either, at its option, (x) redeem each such holder's Shares at
the applicable redemption price or (y) adjust the Conversion Price. The
Company may choose the option of adjusting the Conversion Price only if
redeeming the Shares (or the obligation to redeem the Shares) would constitute
a breach of the Company's obligations under the covenant pertaining to
restricted payments in the Indenture dated as of August 15, 1992 between the
Company, certain of its subsidiaries and Bankers Trust, as trustee, as
supplemented as of June 8, 1993, or if the failure to be able to exercise such
option would cause the Shares not to be deemed Qualified Capital Stock as
defined in such
<PAGE> 14
14
indenture. If such holders' Shares are to be redeemed, the redemption
price per share shall equal (A) a percentage of the liquidation preference per
share equal to 106.0% for the twelve month period commencing April 15, 1994 and
declining ratably to 100.6% for the twelve month period commencing April 15,
2003), plus (B) an amount equal to all accrued and unpaid dividends to the date
of purchase of such holder's Shares by the Company.
If the Conversion Price is to be adjusted, it shall be
decreased (but not increased) so as to equal the product of .70 and the lowest
average market price of the Common Stock over any consecutive ten trading day
period during a specified period before and after the Change of Control.
Redemption by Exchange for Notes.
The Shares of Preferred Stock are redeemable at the option of
the Company, in whole but not in part, on any date, by exchanging such shares
for 6% Senior Subordinated Convertible Notes Due 2004 (the "Notes") of the
Company. Holders of the outstanding shares of Preferred Stock will be entitled
to receive a principal amount of the Notes equal to the liquidation preference
of each share of Preferred Stock held by them at the time of exchange.
Conversion.
Each Share of Preferred Stock is convertible at any time at
the option of the holder thereof into that number of fully paid and
nonassessable shares of Common Stock (calculated as to each conversion to the
nearest 1/100 of a share) obtained by dividing $1,050.00 by the Conversion
Price in effect at such time. The "Conversion Price" shall mean and be $10.00,
subject to adjustment in the event of certain stock dividends, subdivisions and
combinations of Common Stock, certain distributions made on the outstanding
Common Stock, certain issuances of Common Stock (or securities convertible into
Common Stock) for a fair market value per share less than the market price and
certain repurchases of Common Stock at a premium to market. If the Company is
a party to a Transaction (as defined in the Certificate of Designation),
including a merger or consolidation, sale of substantially all its assets or
reclassification, in which the Company is not the Surviving Person (as defined
in the Certificate of Designation), then, subject to certain limitations set
forth in the Certificate of Designation, at the option of the holder (i) the
Change of Control provisions shall apply to such holder's shares or (ii) if
the consideration to be received by stockholders of the Company does not
consist entirely of cash,
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15
each Share shall be convertible into (x) shares of a series of preferred stock
of the Surviving Person having terms similar to the Preferred Stock or (y)
the kind and amount of shares of stock and other securities and property
receivable (including cash) upon the consummation of such Transaction by a
holder of that number of shares of Common Stock into which one Share was
convertible immediately prior to such Transaction.
Exchange of Preferred Stock for Common Stock.
Each Share of Preferred Stock shall, at the option of the
holder, be exchangeable at certain time between April 15, 1999 and April 29,
2003 into that number of shares of Common Stock (calculated as to each exchange
to the nearest 1/100 of a share) obtained by dividing $1,050.00 by the Exchange
Price (as defined below) applicable to such exchange. The "Exchange Price" per
share of Common Stock with respect to any exchange is the average of the daily
closing prices per share for the 20 consecutive trading days ending on the
trading day immediately preceding the date of such exchange; provided, however,
that the Exchange Price shall not be less than $5.00 per share (the "Minimum
Exchange Price"); and provided further, however, the Minimum Exchange Price
shall be adjusted in the same manner as the Conversion Price upon the
occurrence of any of the events which would cause the adjustment of the
Conversion Price.
Upon any such exchange, the Company may, at its option, in
lieu of issuing shares of Common Stock to such holder, redeem all but not less
than all of the shares of Preferred Stock to be exchanged at a cash redemption
price per share of Preferred Stock equal to the liquidation preference.
Registration Rights.
Under the Registration Rights Agreement dated April 15, 1994
between the Purchasers and the Company (the "Registration Rights Agreement"),
the Purchasers have the right to demand the registration of shares of Preferred
Stock or Common Stock or Notes issued upon conversion or exchange thereof under
the Securities Act up to three times, two of which may be made at the Company's
expense. The Purchasers also have unlimited "piggy-back" registration rights.
The foregoing description of certain provisions of the
Purchase Agreement, the Irrevocable Proxy, the Certificate of Designation and
the Registration Rights Agreement is not intended to be complete and is
qualified in its entirety by reference to the detailed provisions of such
agreements and the Certificate of
<PAGE> 16
16
Designation, copies of which are filed as Exhibits 2 through 5, respectively,
and are incorporated herein by reference. Each capitalized term used in the
foregoing description has the meaning as defined in the Purchase Agreement or
the Certificate of Designation, unless otherwise indicated in the foregoing
description.
Other than as described above, neither any Reporting Person
nor, to the best knowledge of each Reporting Person, any person identified in
Appendix A, has any present plans or proposals which relate to or would result
in: (a) the acquisition by any person of additional securities of the Company,
or the disposition of securities of the Company; (b) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving the
Company or any of its subsidiaries; (c) a sale or transfer of a material amount
of assets of the Company or of any of its subsidiaries; (d) any change in the
present board of directors or management of the Company, including any plans or
proposals to change the number or term of directors or to fill any existing
vacancies on the board; (e) any material change in the present capitalization
or dividend policy of the Company; (f) any other material change in the
Company's business or corporate structure; (g) changes in the Company's
charter, by-laws or instruments corresponding thereto or other actions which
may impede the acquisition of control of the Company by any person; (h) causing
a class of securities of the Company to be delisted from a national securities
exchange or to cease to be authorized to be quoted in an inter-dealer quotation
system of a registered national securities association; (i) a class of equity
securities of the Company becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Exchange Act; or (j) any action similar to
any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) through (c). As set forth above, on April 15, 1994, (i)
Corporate Partners purchased from the Company 40,498 shares of Preferred Stock,
(ii) Corporate Offshore Partners purchased from the Company 2,888 shares of
Preferred Stock, and (iii) the State Board purchased from the Company 4,233
shares of Preferred Stock. Thus, as to each Purchaser, giving effect to the
conversion of all Shares owned by such Purchaser (but not to the conversion of
Shares beneficially owned by any other Purchaser) and using the current
Conversion Price of $10.00 per share of Common Stock, (i) Corporate Partners
beneficially owns 4,252,290 shares of Common Stock representing 10.87% of the
outstanding
<PAGE> 17
17
shares of Common Stock, (ii) Corporate Offshore Partners beneficially owns
303,240 shares of Common Stock representing 0.86% of the outstanding shares
of Common Stock, and (iii) the State Board beneficially owns 444,465
shares of Common Stock representing 1.26% of the outstanding shares
of Common Stock. By virtue of Corporate Advisors' relationship with
the Partnerships and the State Board and LFCP Corp.'s relationship with
Corporate Advisors, Corporate Advisors and LFCP Corp. each may be deemed
to beneficially own 4,999,995 shares of Common Stock representing approximately
12.53% of the outstanding shares of Common Stock (assuming the conversion of all
Shares owned by the Purchasers). Neither the Partnerships nor the State
Board has any power to vote or dispose or to direct the disposition of the
Shares indicated above as owned by it. Corporate Advisors as general partner of
the Partnerships and as investment manager over the Shares owned by the State
Board, which are held in a custody account, and LFCP Corp., as general partner
of Corporate Advisors, may be deemed to have shared power to vote or to direct
the vote, and to dispose or to direct the disposition, of the Shares. The
percentages calculated in this Item 5 are based upon 34,876,940 shares of
Common Stock outstanding as of April 15, 1994 as represented by the Company in
the Purchase Agreement.
Except as set forth above, no Reporting Person nor, to the
best knowledge of each Reporting Person, any person identified in Appendix A,
beneficially owns any Shares of Preferred Stock or Common Stock or has effected
any transaction in shares of Common Stock during the preceding 60 days.
(d) To the best knowledge of the Reporting Persons, no person
other than the Reporting Persons has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from, the sale of the
Shares or shares of Common Stock or Notes which may be issued upon conversion
or exchange of such Shares.
(e) Not applicable.
<PAGE> 18
18
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
The Company has entered into the Registration Rights
Agreement, which is attached hereto as Exhibit 5 and incorporated herein by
reference, with the Purchasers, giving the Purchasers rights to require the
Company to register for sale to the public the Shares and the Common Stock or
Notes which may be issued upon the conversion or exchange of the Shares.
Except as described elsewhere in this Statement and as set
forth in the Purchase Agreement, the Irrevocable Proxy, the Certificate of
Designation and the Registration Rights Agreement, copies of which are attached
as Exhibits 2 through 5 respectively, and incorporated herein by reference, to
the best knowledge of the Reporting Persons, there exists no contract,
arrangement, understanding or relationship (legal or otherwise) among the
persons named in Item 2 and between such persons and any other person with
respect to any securities of the Company, including but not limited to transfer
or voting of any of the Shares, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, divisions of profits
or loss, or giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
Exhibit 1 - Agreement with Respect to Joint Filing on
Schedule 13D.
Exhibit 2 - Stock Purchase Agreement, dated as of April
15, among the Purchasers, Corporate Advisors
and the Company.
Exhibit 3 - Irrevocable Proxy, dated as of April 15,
1994, from the State Board to Corporate
Advisors.
Exhibit 4 - Certificate of Designation for the Preferred
Stock.
Exhibit 5 - Registration Rights Agreement, dated as of
April 15, 1994, among the Purchasers and the
Company.
<PAGE> 19
19
Exhibit 6 - Power of Attorney from the
State Board to Corporate Advisors.
<PAGE> 20
20
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct. Dated: April 15, 1994.
CORPORATE PARTNERS, L.P.
by: Corporate Advisors, L.P.
General Partner
by: LFCP Corp.
General Partner
by:/s/ Jonathan Kagan
---------------------
Name: Jonathan Kagan
Title: President
CORPORATE OFFSHORE PARTNERS, L.P.
by: Corporate Advisors, L.P.
Attorney-In-Fact
by: LFCP Corp.
General Partner
by: /s/ Jonathan Kagan
---------------------
Name: Jonathan Kagan
Title: President
STATE BOARD OF ADMINISTRATION OF
FLORIDA
by: Corporate Advisors, L.P.
Attorney-In-Fact
by: LFCP Corp.
General Partner
by:/s/ Jonathan Kagan
---------------------
Name: Jonathan Kagan
Title: President
<PAGE> 21
21
CORPORATE ADVISORS, L.P.
by: LFCP Corp.
General Partner
by:/s/ Jonathan Kagan
--------------------
Name: Jonathan Kagan
Title: President
LFCP CORP.
by:/s/ Jonathan Kagan
--------------------
Name: Jonathan Kagan
Title: President
<PAGE> 22
22
Appendix A
1. Set forth below are the name and position of each of the
directors and executive officers of LFCP Corp. and each person controlling
Lazard Freres & Co. The principal occupations of Messrs. Pollack and Kagan,
respectively, are Senior Managing Director and Managing Director of Corporate
Advisors, L.P. as well as, in both cases, general partner of Lazard Freres &
Co. Except as otherwise indicated, the principal occupation of each person
controlling Lazard Freres & Co. is general partner of Lazard Freres & Co., the
business address of each such person is One Rockefeller Plaza, New York, New
York 10020 and each person is a citizen of the United States. Lazard Groupment
d'Interest Economique, a partnership organized under French law whose principal
business is investments (including its investment in Lazard Freres & Co.), and
Lazard Partners Limited Partnership, a Delaware limited partnership whose
principal business is serving as a holding company, also serve as general
partners of Lazard Freres & Co.
Directors and Executive Officers of LFCP Corp.
<TABLE>
<CAPTION>
Name Position
- ---- --------
<S> <C>
Lester Pollack Director, Chairman of the
Board, Treasurer
Jonathan Kagan Director, President, Secretary
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
2
Persons Controlling Lazard Freres & Co.
-----------------------------------------
Business Address and Principal Citizenship (if other
Occupation (if other than as than as indicated
Name indicated above) above)
--------------------- ------------------------------- -------
<S> <C> <C>
Michel A. David-Weill France
Marcus A.P. Agius Managing Director United Kingdom
Lazard Brothers & Co., Ltd.
21 Moorfields
London EC2P-2HT
England
Robert F. Agostinelli
William R. Araskog
F. Harlan Batrus
David C. Batten
Patrick J. Callahan Lazard Freres & Co.
200 West Madison
Suite 2200
Chicago, IL 60606
Nancy C. Cooper
Michael J. Del Giudice
John V. Doyle
Charles R. Dreifus
Norman Eig
Peter R. Ezersky
Kim S. Fennebresque
Dod A. Fraser
Albert H. Garner
James S. Gold
Jeffrey A. Golman Lazard Freres & Co.
200 West Madison
Suite 2200
Chicago, IL 60606
Steven J. Golub
William P. Gottschalk Lazard Freres & Co.
200 West Madison
Suite 2200
Chicago, IL 60606
Herbert W. Gullquist
Thomas R. Haack
Eduardo Haim
J. Ira Harris Lazard Freres & Co.
200 West Madison
Suite 2200
Chicago, IL 60606
Melvin L. Heineman
Kenneth M. Jacobs
Jonathan H. Kagan
</TABLE>
<PAGE> 24
3
<TABLE>
<CAPTION>
Persons Controlling Lazard Freres & Co.
---------------------------------------
Business Address and Principal Citizenship (if
Occupation (if other than as other than as
Name indicated above) indicated above)
- --------------------- ------------------------------- ----------------
<S> <C> <C>
James L. Kemper
Marilyn E. LaMarche
Sandra A. Lamb
M. Steven Langman
William R. Loomis, Jr.
J. Robert Lovejoy
Lustig, Mathew J.
Philippe Magistretti 6th Floor 135 Switzerland
Fleet Street
London EC4A 2ED
Damon Mezzacappa
Christina A. Mohr
Robert P. Morgenthau
Steven J. Niemczyk
Jonathan O'Herron
Steven W. Oliver Lazard Freres K.K
AIU Building 13th Floor
1-3, Marunouchi 1-Chome
Chiyoda-ku
Tokyo 100
Japan
James A. Paduano
Vincent S. Perez, Jr. Philippines
Louis Perlmutter
Richard Poirier, Jr.
Robert E. Poll, Jr.
Lester Pollack
Michael J. Price
Steven L. Rattner
John R. Reese
John R. Reinsberg
Luis E. Rinaldini United Kingdom
Bruno Roger Lazard Freres et Cie France
121, Boulevard Haussmann
75382 Paris
Felix G. Rohatyn
Gerald Rosenfeld
Jeremy W. Sillem
Peter L. Smith
Arthur P. Solomon
Michael B. Solomon
Edouard Stern France
David J. Supino
John S. Tamagni
David L. Tashjian
</TABLE>
<PAGE> 25
4
<TABLE>
Persons Controlling Lazard Freres & Co.
---------------------------------------
Business Address and Principal Citizenship (if
Occupation (if other than as other than as
Name indicated above) indicated above)
- ----------------------------- ------------------------------- -----------------
<S> <C> <C>
Ali E. Wambold Chief Executive Officer
Lazard Freres & Co., Ltd.
21 Moorfields
London EC20-2HT
England
Kendrick R. Wilson III
Philip P. Young
Alexander E. Zagoreos
</TABLE>
<PAGE> 26
2. Set forth below is the name, position and principal
occupation of each person controlling the State Board of Administration of
Florida. The business address of such person is Park 20 West, 1230 Bloutstown
Highway, Tallahassee, Florida 32304, and such person is a citizen of the United
States.
Name Position
- ---- --------
Ash Williams Jr. Executive Director
<PAGE> 27
EXHIBIT
INDEX
EXHIBIT DESCRIPTION
------- -----------
Exhibit 1 - Agreement with Respect to Joint Filing on
Schedule 13D.
Exhibit 2 - Stock Purchase Agreement, dated as of April
15, among the Purchasers, Corporate Advisors
and the Company.
Exhibit 3 - Irrevocable Proxy, dated as of April 15,
1994, from the State Board to Corporate
Advisors.
Exhibit 4 - Certificate of Designation for the Preferred
Stock.
Exhibit 5 - Registration Rights Agreement, dated as of
April 15, 1994, among the Purchasers and the
Company.
Exhibit 6 - Power of Attorney from the
State Board to Corporate Advisors.
<PAGE> 1
EXHIBIT 1 - Agreement with Respect to
Joint Filing on Schedule 13D
<PAGE> 2
AGREEMENT WITH RESPECT TO THE JOINT FILING OF 13D
The undersigned hereby agree, in accordance with the provisions of
Rule 13d-(f)(1) promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), to the joint filing of a statement on Schedule
13D pursuant to the Exchange Act pertaining to our ownership of securities of
Tyco Toys, Inc., a Delaware corporation. We further agree in accordance with
subparagraph (ii) of said Rule, that each person on whose behalf such statement
is filed is responsible for its timely filing and for the timely filing of any
amendment thereto and for the completeness and accuracy of the information
concerning each such person contained therein.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of April 15, 1994.
CORPORATE PARTNERS, L.P.
by: Corporate Advisors, L.P.
General Partner
by: LFCP Corp.
General Partner
by: /s/ Jonathan Kagan
-----------------------
Name: Jonathan Kagan
Title: President
CORPORATE OFFSHORE PARTNERS, L.P.
by: Corporate Advisors, L.P.
General Partner
by: LFCP Corp.
General Partner
by: /s/ Jonathan Kagan
-----------------------
Name: Jonathan Kagan
Title: President
<PAGE> 3
STATE BOARD OF ADMINISTRATION OF
FLORIDA
by: Corporate Advisors, L.P.
Attorney-In-Fact
by: LFCP Corp.
General Partner
by: /s/ Jonathan Kagan
------------------------
Name: Jonathan Kagan
Title: President
CORPORATE ADVISORS, L.P.
by: LFCP Corp.
General Partner
by: /s/ Jonathan Kagan
-----------------------
Name: Jonathan Kagan
Title: President
LFCP CORP.
by: /s/ Jonathan Kagan
-----------------------
Name: Jonathan Kagan
Title: President
<PAGE> 1
EXHIBIT 2 - Stock Purchase Agreement, dated as of
April 15, among the Purchasers,
Corporate Advisors and the Company
<PAGE> 2
CONFORMED COPY
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 15th day of April, 1994,
among TYCO TOYS, INC., a Delaware corporation (the "Company"),
CORPORATE PARTNERS, L.P., a Delaware limited partnership
("Corporate Partners"), CORPORATE OFFSHORE PARTNERS, L.P., a
Bermuda limited partnership ("Offshore Partners", and
collectively with Corporate Partners, the "Partnerships"), THE
STATE BOARD OF ADMINISTRATION OF FLORIDA, a body corporate
organized under the constitution of the State of Florida (the
"State Board", and collectively with the Partnerships, the
"Purchasers", which term includes any successor to the
Purchasers) and CORPORATE ADVISORS, L.P. ("Corporate Advisors").
WHEREAS, the Company desires to raise additional capital by issuing
and selling shares of a new series of its present class of Preferred Stock (as
hereinafter defined); and
WHEREAS, the Purchasers desire to purchase such shares of the
Company's Preferred Stock.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, each
intending to be legally bound, do hereby agree as follows:
1. Authorization of Issuance of Shares. The Company has authorized
the issuance and sale of up to 47,619 shares (which number may be increased by
the Board of Directors without a vote of stockholders if and to the extent that
Additional Shares are issued) of its present class of Preferred Stock, such
shares to be constituted as a new series of Preferred Stock, and being
designated as the "Series B Voting Convertible Exchangeable Preferred Stock"
(herein referred to as the "Convertible Exchangeable Preferred Stock"). The
relative powers, preferences and rights and qualifications, limitations and
restrictions of the Convertible Exchangeable Preferred Stock shall be set forth
in the Certificate of Designation.
<PAGE> 3
2
2. Sale and Purchase of Shares. Subject to the terms and conditions
herein set forth, and contemporaneously with the execution of this Agreement,
and in reliance on the representations, warranties and agreements of the
Company (in the case of the Purchasers) or the Purchasers (in the case of the
Company), (i) the Company is issuing and selling to Corporate Partners and
Corporate Partners is purchasing from the Company 40,498 shares of Convertible
Exchangeable Preferred Stock, (ii) the Company is issuing and selling to
Corporate Offshore Partners and Corporate Offshore Partners is purchasing from
the Company 2,888 shares of Convertible Exchangeable Preferred Stock and (iii)
the Company is selling to the State Board and the State Board is purchasing
from the Company 4,233 shares of Convertible Exchangeable Preferred Stock, in
each case at a price of $1,050 per share. The shares of Convertible
Exchangeable Preferred Stock being purchased pursuant hereto are referred to
herein as the "Initial Shares". In accordance with the Certificate of
Designation, the Company may, at its option, pay dividends on the Convertible
Exchangeable Preferred Stock in additional shares of Convertible Exchangeable
Preferred Stock through the dividend period ending April 15, 1996. Any shares
so issued are referred to herein as "Additional Shares". The Initial Shares,
together with any Additional Shares that the Company elects to issue, are
collectively referred to as the "Shares".
3. The Closing. At or prior to the Closing, the parties shall have
delivered or shall deliver all documents, instruments and writings required to
be delivered by them at or prior to the Closing pursuant to this Agreement
(including but not limited to those documents set forth in Section 8 hereof).
At the Closing, the Company is delivering to each of the Purchasers a separate
single certificate in definitive form representing the Shares being purchased
by such Purchaser, registered in each such Purchaser's name (or in the name of
its respective nominee), against payment of the purchase price therefor of
$42,522,900 (in the case of Corporate Partners), $3,032,400 (in the case of
Offshore Partners) and $4,444,650 (in the case of the State Board), by wire
transfer of immediately available funds to the account of the Company at
Midlantic Bank in Mount Laurel, New Jersey.
Prior to the Closing the Restated Certificate of the Company shall be
amended and supplemented by the Certificate of Designation, filed with the
Secretary of
<PAGE> 4
3
State of the State of Delaware in accordance with the General Corporation Law
of such state.
4. Representations and Warranties of the Company. The Company
hereby represents and warrants to the Purchasers and Corporate Advisors as
follows:
(a) Organization, Standing and Power of the Company and its
Subsidiaries; Holdings of the Company. The Company is a corporation duly
incorporated and validly existing in good standing under the laws of the State
of Delaware; and each of the subsidiaries of the Company named in Schedule 4(a)
attached hereto (such subsidiaries being herein called the "Material
Subsidiaries") and each of the Company's other subsidiaries (each such Material
Subsidiary and each such other subsidiary being herein collectively called the
"Subsidiaries") is a corporation duly incorporated and validly existing in good
standing under the laws of its jurisdiction of incorporation. Each of the
Company and each of the Material Subsidiaries has the power and authority to
own its properties and to conduct its business as now being conducted and is
duly qualified to do business as a foreign corporation in good standing in
those jurisdictions, other than the state of its incorporation or organization,
in which the nature of the businesses conducted or property owned by it makes
such qualification necessary and where the failure so to qualify would have a
Material Adverse Effect.
Except as set forth in Schedule 4(a), the Company owns, directly or
indirectly, all of the issued and outstanding shares of capital stock of each
of the Subsidiaries free and clear of any liens, encumbrances, equities and
claims.
Except as set forth in Schedule 4(a), there are no options, warrants
or other rights outstanding for the purchase of, nor any securities convertible
into, capital stock of any class of any Subsidiary, whether issued, unissued or
held in the treasury. All Subsidiaries that are not Material Subsidiaries,
taken in the aggregate, would not constitute a "significant subsidiary", as
such term is defined in Rule 1-02 of Regulation S-X under the Securities Act of
1933, as amended (the "Securities Act").
Except for the investments in the Persons set forth on Schedule 4(a)
(the "Minority Investments"), the Company and its Subsidiaries do not own any
interest in any
<PAGE> 5
4
Person other than the Subsidiaries. The class of security, number of shares,
percentage of such class and percentage of the Total Voting Power of such
Person owned by the Company and its Subsidiaries with respect to each Minority
Investment is listed on Schedule 4(a) hereto.
(b) Authority; No Conflict. The Company has the requisite corporate
power and authority to enter into this Agreement and the Registration Rights
Agreement and to carry out its obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement and the Registration
Rights Agreement by the Company (including the issuance of the Shares, the
issuance of shares of Common Stock upon the conversion or exchange of the
Shares and the issuance of the Notes in exchange for the Shares) have been duly
and validly authorized by all requisite corporate proceedings on the part of
the Company and do not require the approval or consent of any stockholders of
the Company. Each of this Agreement and the Registration Rights Agreement has
been duly executed and delivered by the Company and is a valid and binding
agreement of the Company, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy and insolvency laws
and by other laws affecting the rights of creditors generally or by the
availability of equitable remedies and except as rights of indemnity or
contribution may be limited by federal or state securities or other laws or the
public policy underlying such laws. The execution and delivery of this
Agreement and the Registration Rights Agreement, and the consummation of the
transactions contemplated hereby and thereby (including the issuance of the
Shares, the issuance of shares of Common Stock upon the conversion or exchange
of the Shares and the issuance of the Notes in exchange for the Shares and the
compliance by the Company with the terms of such securities), do not and will
not result in or constitute: (i) a default under, or breach or violation of,
the Restated Certificate or the By-laws, (ii) a default under, or breach or
violation of, any material mortgage, deed of trust, indenture, note, bond,
license, lease or other material agreement, instrument or obligation to which
the Company or any Subsidiary is a party or by which any of their properties or
assets are bound, (iii) an event which (with the giving of notice or the lapse
of time or both) would permit any Person to terminate, accelerate the
performance required by, or accelerate the maturity of any indebtedness or
obligation of the Company or any Subsidiary under, any material agreement or
commitment to which the Company or any Subsidiary is a party or by which the
Company
<PAGE> 6
5
or any Subsidiary is bound or by which any of their properties or assets are
bound, (iv) the creation or imposition of any material lien, charge or
encumbrance on any property of the Company or any Subsidiary or on the Shares,
under any agreement or commitment to which the Company or any Subsidiary is a
party or by which the Company or any Subsidiary is bound or by which any of
their properties or assets are bound, (v) a material violation of any statute,
rule, regulation, order, judgment or decree of any court, public body or
authority or any other restriction of any kind or character by which the
Company or any Subsidiary or any of their properties or assets may be bound or
(vi) an event which would require any consent under any material agreement to
which the Company or any Subsidiary is a party or by which the Company or any
Subsidiary is bound or by which any of their properties or assets are bound,
except as set forth on Schedule 4(b) with respect to the payment of cash
dividends on, or redemption of, the Shares.
(c) Capitalization. The authorized capital structure of the Company
consists of (i) 50,000,000 shares of Common Stock, of which as of the Closing
Date, 34,876,940 shares (excluding shares held in treasury) are outstanding,
and (ii) 1,000,000 shares of Preferred Stock, par value $.10 per share, of
which as of the Closing Date, no shares are outstanding. All of the
outstanding shares of Common Stock and Preferred Stock have been duly and
validly issued, and are fully paid and nonassessable and have not been issued
in violation of or subject to any preemptive rights provided for by law or by
the Restated Certificate or the By-laws. Except as set forth in Schedule 4(c),
there are no outstanding preemptive, conversion or other rights, options,
warrants or agreements granted or issued by or binding upon the Company for the
purchase or acquisition of any shares of its capital stock or any other
securities convertible into, exchangeable for or evidencing the right to
subscribe for any shares of capital stock. Since December 31, 1993, the
Company has not changed the amount of its authorized capital stock or purchased
any shares of its capital stock, or subdivided or otherwise changed any shares
of any class of its capital stock, whether by way of reclassification,
recapitalization, stock split or otherwise, or issued or reissued, or agreed to
issue or reissue, any of its capital stock, except as expressly provided in
this Agreement, except as set forth on Schedule 4(c) or except for issuances of
Common Stock pursuant to employee plans, and the Company has not since such
date declared or paid any dividend in
<PAGE> 7
6
cash or stock or made any other distribution of assets to its shareholders.
(d) Status of Shares. The Shares have been duly authorized by all
necessary corporate action on the part of the Company (no consent or approval
of stockholders being required by law, the Restated Certificate, the By-laws or
the rules of any stock exchange on which the Common Stock is traded). The
Initial Shares have been, and upon their issuance any Additional Shares will
be, validly issued and outstanding, fully paid and nonassessable and free and
clear of any liens, and the issuance of such Shares is not and will not be
subject to preemptive or similar rights of any other stockholder of the
Company. The shares of Common Stock issuable upon conversion or exchange of
the Shares or the Notes have been duly authorized by all necessary corporate
action on the part of the Company (no consent or approval of stockholders being
required by law, the Restated Certificate, the By-laws or the rules of any
stock exchange on which the Common Stock is traded), and such shares of Common
Stock have been validly reserved for issuance, and upon issuance upon such
conversion or exchange will be validly issued and outstanding, fully paid and
nonassessable, and free and clear of any liens and preemptive or similar
rights. The Notes issuable upon exchange of the Shares have been duly
authorized by all necessary corporate action on the part of the Company, and
when issued and exchanged for Shares in accordance with the Certificate of
Designation, will constitute valid and binding obligations of the Company,
enforceable in accordance with their terms, except to the extent that the
enforceability of remedies may be limited by applicable bankruptcy, insolvency,
reorganization moratorium or other similar laws from time to time in effect
affecting the enforcement of creditors' rights generally. The maximum number
of Additional Shares issuable in respect of the payment of dividends as of the
date hereof is 7,090 and such shares have been validly reserved for issuance.
(e) Financial Statements. The Company has furnished to the
Purchasers copies of the Financial Statements. The Financial Statements,
including in each case the related notes, fairly present the financial position
of the Company and its Subsidiaries as of the respective dates of said balance
sheets and the results of the operations of the Company and its Subsidiaries
for the respective periods covered by said statements of income and retained
earnings and changes in financial position, and
<PAGE> 8
7
have been prepared in accordance with generally accepted accounting principles
consistently applied by the Company throughout the periods involved, except for
accounting changes described in the related notes.
(f) Inventory; Receivables. (i) The inventory of the Company and
the Subsidiaries is in good and marketable condition, and is salable in the
ordinary course of business, except for obsolete or unusable inventory the
value of which does not exceed $2,000,000 in the aggregate at cost, and the
reserves in respect thereof are adequate and were calculated in a manner
consistent with past practice and in accordance with generally accepted
accounting principles consistently applied and are disclosed in the Financial
Statements.
(ii) Substantially all accounts receivable of the Company and the
Subsidiaries have arisen from bona fide transactions in the ordinary course of
business consistent with past practice. All accounts receivable of the Company
and the Subsidiaries reflected in the December 31, 1993 Balance Sheet are good
and collectible at the aggregate recorded amounts thereof, net of any
applicable reserve for returns, or allowances for doubtful accounts reflected
thereon, which reserves are adequate and were calculated in a manner consistent
with past practice and in accordance with generally accepted accounting
principles consistently applied and are disclosed in the Financial Statements.
(g) Liabilities. Except (i) as disclosed on Schedule 4(g) hereto,
(ii) as disclosed in the Financial Statements, (iii) for liabilities or
obligations that were incurred after December 31, 1993, in the ordinary course
of business and consistent with past practices (none of which is a liability
for breach of warranty, tort, infringement claim or lawsuit in excess of
$100,000 individually or $500,000 in the aggregate for all such liabilities)
and (iv) liabilities the maximum amount of which do not exceed $100,000
individually or $1,000,000 in the aggregate, the Company and its Subsidiaries
do not have any liabilities or obligations (whether absolute, accrued,
contingent or otherwise and whether due or to become due and whether or not the
amount thereof is readily ascertainable) that were not either fully reflected
or disclosed in the December 31, 1993, Balance Sheet and, in the reasonable
judgment of the Company, the reserves referred to in the Financial Statements
are appropriate and reasonable.
<PAGE> 9
8
(h) Actions Pending. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened, against the
Company or any of its Subsidiaries or any of their respective properties or
assets by or before any court, arbitrator or governmental body, department,
commission, board, bureau, agency or instrumentality, that questions the
validity or enforceability of this Agreement, the Registration Rights
Agreement, the Certificate of Designation or the Shares or any action taken or
to be taken pursuant hereto or thereto. Except as disclosed in Schedule 4(h),
there is no litigation or governmental proceeding or investigation pending or,
to the knowledge of the Company, threatened against the Company or any of the
Subsidiaries which, if adversely determined, would be reasonably likely to
result in a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is in default in any material respect with respect to any material
judgment, order, writ, injunction, decree or award.
(i) Compliance with Law. Except as disclosed in Schedule 4(i), the
business of the Company and each Subsidiary has been and is presently being
conducted in compliance with applicable U.S. and foreign federal, state, and
local governmental laws, rules, regulations and ordinances, in all material
respects. Except as disclosed in Schedule 4(i), the Company and each
Subsidiary has all franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for the
conduct of its business as now being conducted by it that are material to the
business of the Company and its Subsidiaries, taken as a whole, and each of the
Company and its Subsidiaries is in compliance with all material terms thereof.
(j) No Consents. Except (i) as set forth in Schedule 4(j) and (ii)
for any filings, notices, applications and other information as may be required
to be made or supplied pursuant to the HSR Act, no consent, authorization or
approval of or filing with any person or any U.S. or foreign federal, state or
local governmental department, commission, board, agency or instrumentality is
required to be obtained or made by the Company for the valid execution and
performance by the Company of this Agreement or the Registration Rights
Agreement or the valid authorization, issuance and sale of the Shares or the
valid authorization, issuance and delivery of the shares of Common Stock
issuable upon conversion or exchange of the Shares or the Notes issuable in
exchange for the Shares.
<PAGE> 10
9
(k) SEC Filings. The Company has furnished to the Purchasers its
(i) Annual Report on Form 10-K for the fiscal year ended December 31, 1993,
(ii) Proxy Statement for the Company's Annual Meeting of Shareholders to be
held on May 26, 1994, and (iii) all other reports or registration statements
(other than on Form S-8) filed by the Company or any of the Subsidiaries with
the Securities and Exchange Commission (the "SEC") since January 1, 1991, each
as filed with the SEC (collectively, the "SEC Reports"). As of their
respective dates, such reports and statements complied in all material respects
with the applicable requirements of the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder, and did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(l) Environmental Matters. (i) Except as set forth in Schedule
4(l), (x) each of the Company and the Subsidiaries is in compliance with all
Environmental Laws and all permits required thereunder for the operation of the
Company and the Subsidiaries except as would not reasonably be expected to
result in any Material Adverse Effect; (y) to the knowledge of the Company,
neither the Company nor any Subsidiary has received any communication (written
or oral) from a governmental authority with respect to such compliance or the
failure thereof; and (z) the Company and the Subsidiaries are in compliance in
all material respects with the New Jersey Environmental/Cleanup Responsibility
Act, as amended by the Industrial Site Recovery Act, and any orders or decrees
issued thereunder.
(ii) Except as set forth in Schedule 4(l) and except as would not
result in any Material Adverse Effect, (x) there is no civil, criminal or
administrative action, claim, demand, investigation or notice relating to a
violation of an Environmental Law (an "Environmental Claim") pending or, to the
knowledge of the Company, threatened and (y) there are no past or present
actions, activities, circumstances, conditions, events or incidents, including,
without limitation, the release or threatened release, emission, discharge or
disposal of any chemical, pollutant, contaminant, waste, toxic substance,
asbestos or asbestos containing material, petroleum or petroleum product, that
could reasonably be expected to form the basis of any Environmental Claim, in
either case (1) against the Company
<PAGE> 11
10
or any Subsidiary, (2) to the knowledge of the Company, against any Person
whose liability for any Environmental Claim the Company or any Subsidiary has
or may have retained or assumed either contractually or by operation of law, or
(3) involving any real or personal property which the Company or any Subsidiary
owns, leases, operates or manages, or formerly owned, leased, operated or
managed.
"Environmental Laws" shall mean any applicable foreign, federal,
state, provincial or local law, rule, regulation, directive, decree, order or
agreement concerning releases of chemicals, substances, materials, wastes,
contaminants or pollutants into any part of the natural environment, or
protection of natural resources, the environment and public and employee health
and safety including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, as amended by the Superfund
Amendment, and Reauthorization Act, 42 U.S.C. Section 9601 et seq. the
Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Clean Water Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (33 U.S.C.
Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. Section
7401 et seq., the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
Section 136 et seq.), and the Occupational Health and Safety Act 29 U.S.C.
Section 651 et seq., as such laws have been and may be amended or supplemented
through the Closing Date, and the regulations promulgated pursuant thereto.
(m) Disclosure of Facts. No representation, warranty or statement
made by the Company in (i) this Agreement (including, without limitation, the
representations and warranties made by the Company herein and in the schedules
and exhibits hereto which are incorporated by reference herein and which
constitute and integral part of this Agreement) or (ii) any other written
materials furnished on or prior to the Closing Date, by the Company to the
Purchasers or any of their representatives, attorneys and accountants pursuant
to this Agreement, contains any untrue statement of a material fact, or omits
to state a material fact required to be stated herein or therein or necessary
to make the statements contained herein or therein, in light of the
circumstances under which they were or will be made, not misleading. Except as
heretofore disclosed to the Purchasers in writing, there is no fact which has
had or, so far as the Company can reasonably foresee, will have a Material
Adverse Effect, or will
<PAGE> 12
11
materially and adversely affect the ability of the Company to perform its
obligations under this Agreement, the Certificate of Designation or any Note,
except those relating to general economic conditions or the toy industry in
general.
(n) No Violations; Restrictive Agreements. Except as disclosed in
Schedule 4(n), neither the Company nor any Subsidiary is in violation of or
default under any term of its certificate of incorporation or By-laws. Except
as set forth in Schedule 4(n), neither the Company nor any Subsidiary (i) is a
party to any contract or agreement that limits in any material respect the
amount of, or otherwise imposes material restrictions on the incurring of
indebtedness or the paying of dividends by the Company, (ii) is a party to any
contract or agreement, or subject to any charter or other corporate
restriction, that has a Material Adverse Effect or (iii) has any net worth
maintenance, "keep-well", capital contribution or other similar financial
obligations or commitments with respect to any Subsidiaries or any other Person
in which it holds an interest.
(o) Offering of Securities. Neither the Company nor any agent
acting on its behalf has offered or will offer the Shares or any part thereof
or any similar securities for issue or sale to, or has solicited or will
solicit any offer to acquire any of the same from, anyone other than the
Purchasers so as to require the registration of the Shares in connection with
the issuance thereof pursuant to this Agreement under the provisions of Section
5 of the Securities Act.
(p) Use of Proceeds. The proceeds from the sale of the Initial
Shares will be used by the Company and its Subsidiaries to repay indebtedness
under the Bank Credit Agreement.
(q) Taxes. Except as set forth in Schedule 4(q), the Company and
its Subsidiaries have timely filed or caused to be filed all Tax Returns that
are required to be filed by or with respect to them, their operations and
assets, and all such Tax Returns were complete and correct in all material
respects. The Company and its Subsidiaries have paid or caused to be paid all
Taxes as shown on said returns and on all assessments received by them to the
extent that such Taxes have become due, except Taxes disclosed on Schedule 4(q)
that are being contested in good faith by
<PAGE> 13
12
appropriate proceedings and with respect to which adequate reserves have been
set aside. The federal income Tax Returns of the Company and its Subsidiaries
have been examined and reported on by the Internal Revenue Service (or closed
by applicable statutes) and all Tax liabilities including additional
assessments have been satisfied for all fiscal years prior to and including the
fiscal year ended August 31, 1986. The Company and its Subsidiaries have paid
or caused to be paid, or have established reserves which, in the reasonable
judgment of the Company, are adequate, in all material respects, for all Tax
liabilities applicable to the Company and its Subsidiaries for all fiscal years
which have not been examined and reported on by the taxing authorities (or
closed by applicable statutes). The term "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation, all
net income, gross income, gross receipts, premium, sales, use, ad valorem,
transfer, franchise, profits, license, withholding, payroll, employment,
excise, estimated severance, stamp, occupation, property or other taxes, fees,
custom duties, assessments or charges of any kind whatsoever, together with any
interest and any penalties (including penalties for failure to file in
accordance with applicable information reporting requirements), and additions
to tax by any authority (domestic or foreign). The term "Tax Return" shall
mean any report, return, form, declaration or other document or information
required to be supplied to any authority in connection with the reporting or
collection of Taxes.
(r) Registration under the Exchange Act. The Company has not
registered the Convertible Exchangeable Preferred Stock as a class pursuant to
Section 12 of the Exchange Act. When issued, the Convertible Exchangeable
Preferred Stock will not be registered as such a class and as of the date of
such issuance such registration will not be required.
(s) ERISA. Neither the Company nor any Subsidiary (nor any entity
under common control with the Company or any Subsidiary as described in Section
414(b) or (c) of the Code) presently maintains, participates in or contributes
to any employee pension benefit plan (as defined in Section 3(2) of ERISA) that
is subject to Title IV of ERISA, or has any actual (or any possible contingent)
liability under Title IV of ERISA for any such employee pension benefit plan
which it previously maintained, participated in or contributed to.
<PAGE> 14
13
(t) Absence of Specified Changes. Except as disclosed in Schedule
4(t), since December 31, 1993, there has not been with respect to the Company
or its Subsidiaries, taken as a whole, any:
(1) material adverse change in its business, financial condition or
results of operations;
(2) liability, contract, agreement, license, commitment or other
transaction entered into or assumed by or on behalf of the Company or any
of the Subsidiaries except in the ordinary course of business;
(3) material change in accounting principles, methods or practices;
(4) any purchase, sale, transfer, assignment, conveyance or pledge of
the assets or properties of the Company or any of the Subsidiaries, except
in the ordinary course of business consistent with past practice;
(5) any waiver or modification by the Company or any Subsidiary of
any right or rights of substantial value, or any payment, direct or
indirect, in satisfaction of any liability, in each case, having a
Material Adverse Effect;
(6) any loan, advance or capital expenditure by the Company or any of
the Subsidiaries, except for loans, advances and capital expenditures made
in the ordinary course of business;
(7) declaration, setting aside, or payment of a dividend or other
distribution in respect of its capital stock, or any direct or indirect
redemption, purchase or other acquisition of any shares of its capital
stock;
(8) amendment to its certificate of incorporation or By-laws;
(9) issuance of capital stock or change in the authorized
capitalization of the Company (except as contemplated by this Agreement),
or any event which would have required an adjustment to the Conversion
Price (as defined in the Certificate of Designation) or the number of
shares of Common Stock issuable upon
<PAGE> 15
14
conversion of a Share if the Shares had been issued and the Certificate of
Designation had been in effect as of December 31, 1993; or
(10) agreement or understanding to take any of the actions described
above in this paragraph 4(t).
(u) Intellectual Property. (i) Schedule 4(u) sets forth a true and
complete list and summary description of all patents, registered or common law
trademarks, trade names, service marks, licenses and copyrights and
applications for any of the foregoing (collectively, "Intellectual Property")
owned by or licensed to the Company or its Subsidiaries, which constitutes all
the Intellectual Property necessary for use in the United States and in such
other jurisdictions as is necessary for the conduct of the business of the
Company and its Subsidiaries as presently conducted, other than those for
products which the Company and its Subsidiaries are not currently marketing and
do not reasonably expect to market in the near future. Except as disclosed on
Schedule 4(u), the Company owns, or has the right to use for the term set forth
in Schedule 4(u), without payment to or interference from any other party, all
Intellectual Property listed on Schedule 4(u) and has not authorized any person
in any jurisdiction to use any such Intellectual Property. All Intellectual
Property listed on Schedule 4(u) which may be so registered or filed has been
duly registered and filed in or issued by the appropriate governmental agency
in the jurisdictions indicated, all necessary affidavits of continuing use have
been filed, and all necessary maintenance fees have been paid to continue all
such rights in effect. Except as set forth in Schedule 4(u), the Company has
no notice or knowledge of any objection or claim being asserted by any person
with respect to the ownership, validity, enforceability or use of any
Intellectual Property listed on Schedule 4(u) or challenging or questioning the
validity or effectiveness) of any such license, and has not received any such
notice within the last five years.
(ii) Schedule 4(u) also sets forth each agreement, whether oral or
in writing, pursuant to which the Company is obligated to pay any Person, in
consideration of a license of or other agreement with respect to Intellectual
Property or in consideration of any other rights with respect to the
development or marketing of any product or products, an amount which is in
excess, or can reasonably be expected to be in excess, for fiscal year 1994, of
either (i) $1 million
<PAGE> 16
15
per annum or (ii) 10% of the sales of such product or product for such period
(whether or not such amount is expressly calculated in such agreement as a
percentage of such sales). The Purchasers have been supplied with true and
correct copies of each such written agreement (and a description of any oral
agreement) as in effect on the date hereof.
(v) Projections. The Company has heretofore provided the Purchasers
with certain projected financial information, as identified on Schedule 4(v),
which, in the judgment of the Company's management, was prepared on a
reasonable basis in light of the circumstances existing at the time of its
preparation; provided, however, that no representation or warranty is made as
to the occurrence of any particular assumptions on which such projections were
based or as to any particular items or figures contained in such projections.
(w) Unlawful Payments and Contributions. Neither the Company nor
its Subsidiaries or any of their respective directors, officers or, to the
Company's knowledge, any of their other employees or agents has (a) used any
Company funds for any unlawful contribution, endorsement, gift, entertainment
or other unlawful expense relating to political activity; (b) made any direct
or indirect unlawful payment to any government official or employee from
Company funds; (c) violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977, as amended in connection with the Company's and
its Subsidiaries' business; or (d) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any Person (whether or not a
government official) with respect to matters pertaining to the Company.
(x) Contracts and Commitments. (i) Except as expressly
contemplated by this Agreement or as set forth on Schedule 4(x), neither the
Company nor any Subsidiary is a party to any written or oral:
(A) pension, profit sharing, stock option, employee stock purchase or
other plan or arrangement providing for deferred or other compensation to
employees or any other employee benefit plan or arrangement, or any
contract with any labor union, or any severance agreements;
<PAGE> 17
16
(B) contract for the employment of any officer, individual employee
or other Person on a full-time, part-time, consulting or other basis
providing annual compensation in excess of $250,000 or contract relating
to loans to officers, directors or affiliates;
(C) contract under which the Company or Subsidiary has advanced or
loaned any other Person amounts in the aggregate exceeding $100,000;
(D) agreement or indenture relating to the borrowing of money or the
mortgaging, pledging or otherwise placing a lien on any material asset or
material group of assets of the Company and its Subsidiaries;
(E) guarantee of any obligation of any other Person in excess of
$100,000 (other than by the Company of a wholly-owned Subsidiary's debts
or a guarantee by a Subsidiary of the Company's debts or another
Subsidiary's debts);
(F) lease or agreement under which the Company or any Subsidiary is
lessee of or holds or operates any property, real or personal, owned by
any other party, except for any lease of real or personal property under
which the aggregate annual rental payments do not exceed $50,000;
(G) lease or agreement under which the Company or any Subsidiary is
lessor of or permits any third party to hold or operate any property, real
or personal, owned or controlled by the Company or any Subsidiary;
(H) contract or group of related contracts with the same party or
group of affiliated parties the performance of which involves a
consideration in excess of $250,000, other than purchase orders and sale
orders made in the ordinary course of business;
(I) assignment, royalty, license, indemnification or agreement with
respect to any Intellectual Property or any other intangible property
(including, without limitation, know-how, trade secret or confidential
information), other than agreements with respect to trade secrets or
confidential information made in the ordinary course of business;
<PAGE> 18
17
(J) other than in the ordinary course of business, warranty agreement
with respect to its services rendered or its products sold or leased;
(K) agreement under which it has granted any Person any registration
rights (including piggyback rights);
(L) contract or agreement with any officer, director, employee or
affiliate, or any affiliate of any officer, director or employee;
(M) contract or agreement prohibiting it from freely engaging in any
business or competing anywhere in the world;
(N) supply or customer contract involving consideration in excess of
$200,000 annually; or
(O) any agreement pursuant to which the Company or any Subsidiary has
received or is entitled to receive payments from any Person in excess of
$1,000,000 in consideration of the purchase or sale of, or other
transaction concerning, any goods or services or any interests therein
where such purchase or sale or other transaction has not yet been
consummated or performed; or
(P) any other agreement which is material to its operations and
business prospects or involves a consideration in excess of $300,000
annually, other than those agreements which are not required to be
disclosed due to ordinary course of business exceptions above.
(ii) All of the contracts, agreements and instruments set forth on
Schedule 4(x) are valid, binding and enforceable in accordance with their
respective terms. Except as set forth on Schedule 4(x), to the best of the
Company's knowledge, the Company and each Subsidiary have performed all
material obligations required to be performed by them and are not in default
under or in breach of nor in receipt of any claim of default or breach in each
case in any material respect under any contract, agreement or instrument to
which the Company or any Subsidiary is subject; no event has occurred which
with the passage of time or the giving of notice or both would result in a
default, breach or event of noncompliance in each case in
<PAGE> 19
18
any material respect under any contract, agreement or instrument to which the
Company or any Subsidiary is subject; neither the Company nor any Subsidiary
has any present expectation or intention of not fully performing all such
obligations; neither the Company nor any Subsidiary has knowledge of any
material breach by the other parties.
(iii) The Purchasers have been supplied with a true and correct copy
of each of the written contracts and an accurate description of the oral
contracts listed on Schedule 4(x) (or, in the case of those referred to in
Section 4(x)(I), accurate abstracts thereof), together with all amendments,
waivers or other changes thereto.
(y) Assets. Except as set forth on Schedule 4(y), the Company and
each Subsidiary have good and marketable title to, or a valid leasehold
interest in, the material properties and assets shown on the December 31, 1993,
Balance Sheet or acquired thereafter, free and clear of all liens, security
interests, charges and encumbrances, except as disclosed on the December 31,
1993 Balance Sheet (including the notes thereto) and liens for current property
taxes not yet due and payable. Except as described on Schedule 4(y), the
Company's and each Subsidiary's material buildings, equipment and other
tangible assets are in good operating condition in all material respects and
are fit for use in the ordinary course of business. The Company and each
Subsidiary own, or have a valid leasehold interest in, all material assets
necessary for the conduct of their respective business as presently conducted
and as presently proposed to be conducted.
(z) Labor Matters. (i) Except as set forth on Schedule 4(z),
neither the Company nor any Subsidiary is party to any labor or collective
bargaining agreement and there are no labor or collective bargaining agreements
which pertain to employees of the Company or any Subsidiary.
(ii) No employees of the Company or any Subsidiary are represented
by any labor organization. Except as set forth in Schedule 4(z), no labor
organization or group of employees of the Company or any Subsidiary has made a
pending demand for recognition or certification, and there are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or, to the knowledge of the
Company, threatened to be brought or filed, with the National Labor Relations
Board or any other labor relations tribunal or authority. To the
<PAGE> 20
19
knowledge of the Company, there are no organizing activities involving the
Company or any Subsidiary pending with, or threatened by, any labor
organization.
(iii) There are no material strikes, work stoppages, slowdowns,
lockouts, arbitrations or grievances or other material labor disputes pending
or, to the knowledge of the Company, threatened against or involving the
Company or any Subsidiary. Except as would not reasonably be expected to
result in any Material Adverse Effect, there are no unfair labor practice
charges, grievances or complaints pending or, to the knowledge of the Company,
threatened by or on behalf of any employees or group of employees of the
Company or any Subsidiary.
(aa) Insurance. Each insurance policy maintained by the Company and
its Subsidiaries with respect to its properties, assets and businesses is in
full force and effect as of the Closing Date. Neither the Company nor any
Subsidiary is in default in any material respect with respect to its
obligations under any insurance policy maintained by it. The insurance
coverage of the Company and its Subsidiaries is customary for corporations of
similar size engaged in similar lines of business.
(bb) Related Party Transactions. Except as set forth on Schedule
4(bb) hereto, no Affiliate of the Company and/or any person who beneficially
owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) five
percent or more of the outstanding Common Stock of the Company has borrowed any
monies from or has outstanding any indebtedness or other similar obligations to
the Company or any Subsidiary which exceed $5,000 principal amount in any one
case or $50,000 principal amount in the aggregate. Except as set forth on
Schedule 4(bb) hereto, no Affiliate of the Company and/or any person who
beneficially owns (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) five percent or more of the outstanding Common Stock of the
Company (i) owns any direct or indirect interest of any kind in, or is a
director, officer, employee, partner or Associate (as such term is defined in
Rule 12b-2 under the Exchange Act) of, or consultant or lender to, or borrower
from, or has the right to participate in the management, operations or profits
of, any person or entity which is (a) a competitor, supplier, customer,
distributor, lessor, tenant, creditor or debtor of the Company or any
Subsidiary, (b) engaged in a business related to the business of the Company or
(c) participating in any
<PAGE> 21
20
transaction to which the Company or any Subsidiary is a party or (ii) is
otherwise a party to any contract, arrangement or understanding with the
Company or any Subsidiary. Each of the contracts, arrangements or
understandings set forth on Schedule 4(bb) hereto to which the Company or any
Subsidiary is a party provides for terms and conditions that are no less
favorable to the Company then could be obtained from a non-Affiliate
third-party in an arms-length transaction.
5. Representations and Warranties of the Purchasers. The Purchasers
hereby represent and warrant to the Company as follows:
(a) Organization and Standing of the Purchasers. Corporate Partners
and Offshore Partners are partnerships duly organized, validly existing and in
good standing under the laws of the State of Delaware and the country of
Bermuda, respectively. The State Board is a body corporate duly organized and
validly existing under the constitution of the State of Florida. Each of the
Purchasers has been in existence for more than three years.
(b) Authority and Authorization of the Purchasers. Each of the
Purchasers has the requisite power and authority to enter into this Agreement
and the Registration Rights Agreement and to carry out its obligations
hereunder and thereunder. The execution, delivery and performance of this
Agreement and the Registration Rights Agreement by each of the Purchasers has
been duly and validly authorized and no other proceedings on their part are
necessary to authorize this Agreement or the Registration Rights Agreements or
the transactions contemplated hereby or thereby. Each of this Agreement and
the Registration Rights Agreement is a valid and binding agreement of each of
the Purchasers, enforceable against each of the Purchasers in accordance with
its terms except as may be limited by bankruptcy and insolvency laws and by
other laws affecting the rights of creditors generally and except as may be
limited by the availability of equitable remedies and except as rights of
indemnity or contribution may be limited by federal or state securities or
other laws or the public policy underlying such laws. The execution and
delivery of this Agreement does not and the Registration Rights Agreement and
consummation of the transactions contemplated hereby and thereby, will not,
result in or constitute (i) a default, breach or violation of the partnership
or corporate governing documents, as the case
<PAGE> 22
21
may be, of any of the Purchasers, or (ii) subject to the receipt of the
consents or approvals required as set forth on Schedule 5(c), a violation of
any statute, rule, regulation, order, judgment or decree of any court, public
body or authority, which violation would have a material adverse effect on any
of the Purchasers.
(c) No Consents. No consent, authorization or approval of, or
filing with, any person or any U.S. or foreign federal, state or local
governmental department, commission, board, agency or instrumentality is
required to be made or obtained by any of the Purchasers in connection with
their execution and performance of this Agreement, the Registration Rights
Agreement or the purchase of the Shares, except as may be required under the
HSR Act, and except for such consents, authorizations, approvals or filings,
the absence of which would not prevent, impair, hinder or delay the
consummation of the transactions contemplated by this Agreement or the
Registration Rights Agreement.
(d) Experience of Purchasers; Acquisition for Investment. Each of
the Purchasers is an accredited investor as defined in Regulation D under the
Securities Act and is an "institutional buyer" as that term is used in Section
359(e)-1(a) of the New York General Business Law. Each Purchaser has been
given, at a reasonable time prior to the Closing, an opportunity to ask
questions and receive answers concerning the terms and conditions of the
investment in the Shares. None of the Purchasers is engaged in the business
of manufacturing or marketing toys. Each of the Purchasers represents that it
is acquiring the Shares solely for its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof, and that it has no present intention or plan to effect
any distribution of the Shares or the shares of Common Stock or the Notes
issuable upon conversion or exchange of the Shares; provided, however, that the
disposition of each Purchaser's property shall at all times be and remain
within such Purchaser's control and subject to the provisions of this Agreement
and the Registration Rights Agreement. The Shares, the shares of Common Stock
and the Notes may bear a legend to the following effect:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be sold or
transferred except in compliance with that Act. The securities
<PAGE> 23
22
represented by this certificate are subject to the provisions of a Stock
Purchase Agreement, dated April 15, 1994, among Tyco Toys, Inc., a
Delaware corporation, Corporate Partners, L.P., a Delaware limited
partnership, Corporate Offshore Partners, L.P., a Bermuda limited
partnership, The State Board of Administration of Florida, a body
corporate organized under the constitution of the State of Florida, and
Corporate Advisors, L.P., copies of which are on file at the principal
executive offices of Tyco Toys, Inc."
(e) Authority of Corporate Advisors to Act for State Board. The
State Board represents that Corporate Advisors has full power and authority,
pursuant to the provisions of an Investment Management Agreement, dated as of
June 17, 1988 (the "Management Agreement"), to act on behalf of the State Board
in connection with the transactions contemplated by this Agreement and the
Registration Rights Agreement, and that the Company can rely on any action
taken by Corporate Advisors in connection therewith as if such action were
taken by the State Board.
(f) Principal Place of Business. Corporate Partners represents that
its principal place of business is in New York. Offshore Partners represents
that its principal place of business is in Bermuda. The State Board represents
that its principal place of business is in Florida.
(g) ERISA. The Purchasers are not making their investments in the
Shares with the assets of any employee benefit plan that is subject to Section
406 of ERISA or Section 4975 of the Code.
6. Covenants of the Company. The Company hereby covenants to the
Purchasers and Corporate Advisors as follows:
(a) Financial Statements. The Company covenants to deliver to the
Purchasers in duplicate:
(i) as soon as available and in any event within 45 days after the
end of each quarterly period (other than the last quarterly period) in
each fiscal year, a consolidated statement of income and a consolidated
statement of cash flows of the Company and its Subsidiaries for the period
from the beginning of the current fiscal year to the end of such quarterly
<PAGE> 24
23
period, and a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarterly period, setting forth in each
case in comparative form figures for the corresponding period in the
preceding fiscal year, all in reasonable detail and certified by an
authorized financial officer of the Company, subject to changes resulting
from year-end adjustments; provided, however, that delivery pursuant to
clause (iii) below of a copy of the Quarterly Report on Form 10-Q of the
Company for such quarterly period filed with the SEC shall be deemed to
satisfy the requirements of this clause (i);
(ii) as soon as available and in any event within 90 days after the
end of each fiscal year, a consolidated statement of income and a
consolidated statement of cash flows of the Company and its Subsidiaries
for such year, and a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year, setting forth in each case in
comparative form corresponding consolidated figures from the preceding
annual audit, all in reasonable detail and together with an opinion
directed to the Company of independent accountants of recognized standing
selected by the Company; provided, however, that delivery pursuant to
clause (iii) below of a copy of the Annual Report on Form 10-K of the
Company for such fiscal year filed with the SEC shall be deemed to satisfy
the requirements of this clause (ii);
(iii) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as it shall
send to its public shareholders and copies of all registration statements
(without exhibits), other than on Form S- 8 or any similar successor form,
and all reports which it files with the SEC;
(iv) together with each delivery of financial statements required by
clauses (i) and (ii) above, an officer's certificate demonstrating (with
computations in reasonable detail) whether the Company was in compliance,
as of the end of the period covered by such financial statements, with the
provisions of Section 6(j) and (k) hereof (the "Financial Provisions");
and
(v) promptly after the chief executive officer, principal financial
officer or principal accounting
<PAGE> 25
24
officer of the Company obtains knowledge of any failure to comply with any
Financial Provision, an officer's certificate specifying the nature and
period of existence thereof and what action the Company proposes to take
with respect thereto.
The Purchasers are hereby authorized to deliver a copy of any financial
statement delivered to the Purchasers pursuant to this Section 6(a) to any
regulatory body having jurisdiction over the Purchasers if such delivery is
required by any law or regulation applicable to the Purchasers.
(b) Inspection of Property; Access to Information. The Company
covenants that it will permit each of the Purchasers (and the Purchasers
Affiliates), for so long as they own any Shares (or shares of Common Stock
issued upon conversion or in exchange thereof), and any holder of more than 15%
of the Shares then outstanding (or shares of Common Stock issued upon
conversion or in exchange of such number of Shares), and any Person acting in a
representative capacity on behalf of any of the foregoing Persons and who is
designated in writing by such Person, to (i) upon reasonable notice to the
Company and at such Person's expense, visit any of the properties and inspect
any of the corporate books and financial records of the Company and its
Subsidiaries during normal business hours, provided that such visitations do
not unreasonably disrupt the business of the Company or its Subsidiaries and
(ii) reasonably request and be furnished with such data, books and records as
will enable the Purchasers to confirm the Company's compliance with its
obligations set forth in Sections 6(d), 6(f), 6(j) and 6(k) hereof. The
Purchasers and such other holders shall, and shall cause any Person designated
by them pursuant to the first sentence of this Section 6(b) to, keep
confidential all information furnished to, or made available to, them pursuant
to this Section 6(b), nor shall any of them use, or permit any such Person to
use, any such information for any purpose other than to evaluate their
investment in the Shares (or shares of Common Stock into which Shares have been
converted); except that the Purchasers and such other holders shall have no
obligation to keep confidential information which is or becomes generally
available to the public other than as a result of a disclosure by the
Purchasers or any such other holders or their representatives.
<PAGE> 26
25
(c) Financial Records. The Company will, and will cause each of its
Subsidiaries to, maintain in all material respects its financial records
(including, but not limited to, its journals and ledgers) in accordance with
generally accepted accounting principles and in accordance with any prescribed
system of accounts applicable to the Company or any such Subsidiary, as the
case may be.
(d) Status of Shares. The Company covenants and agrees that in
connection with any report to stockholders or any governmental authority and
for all tax purposes, it will treat the Shares as equity, except as otherwise
required by any change in applicable law or regulation or generally accepted
accounting principles after the date hereof.
(e) Election of Directors. (i) The Partnerships and Corporate
Advisors, acting on behalf of the State Board, shall be entitled, with respect
to each election of directors, to designate two persons to be elected to the
Company's Board of Directors and the Company shall use its best efforts to have
such persons elected as directors of the Company the first meeting of the
Company's Board of Directors after the date hereof (it being understood that
one of such directors shall be in the class of directors whose terms expire in
1996 and one of such directors shall be in the class of directors whose terms
expire in 1997) and at each annual meeting (or special meeting, if applicable)
of stockholders held thereafter (or, at each such meeting at which directors of
the applicable class are to be elected). Such efforts by the Company shall
include, without limitation, including the nominees of the Partnerships and
Corporate Advisors in management's slate for election and nomination,
solicitation of proxies on their behalf and voting any Voting Securities held
by the Company or its Subsidiaries entitled to vote for such nominees. Prior
to making the designation of any person to serve as a director of the Company,
the Partnerships and Corporate Advisors shall consult with the Company. In the
event that any person so designated and elected to the Company's Board of
Directors shall cease to serve as a director for any reason, the vacancy
resulting therefrom shall be filled by such Board with a substitute nominee
designated by the Partnerships and Corporate Advisors. No person so designated
to serve as a director of the Company shall, if the Company objects thereto, be
a director, officer, or controlling person of any Person that is a direct
competitor of the Company in the toy industry, and there shall not have
occurred with respect to such person any of the legal
<PAGE> 27
26
proceedings set forth under Item 401(f)(2), (3), (4), (5) or (6) of Regulation
S-K under the Securities Act.
(ii) The rights granted to the Purchasers in this Section 6(e) (x) shall
be in addition to any rights the holders of the Shares may have pursuant to
Section 5 of the Certificate of Designation at any time when the Shares are
outstanding and (y) shall not be effective until the applicable waiting period
under the HSR Act (as herein defined), including any extensions thereof, shall
have expired or terminated.
(iii) Notwithstanding the foregoing, the number of persons the
Partnerships and Corporate Advisors, L.P., acting on behalf of the State Board,
shall be entitled to designate for election to the Company's Board of Directors
pursuant to Section 6(e) shall be reduced as follows in the event and upon the
transfer by the Purchasers of any Shares to any Person other than a Purchaser
Affiliate, if as a result of such transfer:
(i) the Purchasers and the Purchaser Affiliates do not beneficially
own Shares or shares of Common Stock that, in the aggregate, represent at
least 5% of the Total Voting Power of the Company, in which case the
Partnerships and Corporate Advisors, acting on behalf of the State Board,
shall be entitled to designate one director; or
(ii) the Purchasers and the Purchaser Affiliates do not beneficially
own Shares or shares of Common Stock that, in the aggregate, represent at
least 1% of the Total Voting Power of the Company, in which case the
Partnerships and Corporate Advisors, acting on behalf of the State Board,
shall not be entitled to designate any directors;
it being understood that any such determination shall be made only as of the
date and after giving effect to any such transfer.
(f) Transactions with Shareholders and Affiliates. The Company will
not, and will not permit any Subsidiary to, directly or indirectly, make loans,
advances or payments to, or sell, transfer or lease any assets or property to,
any Person who beneficially owns in the aggregate 5% or more of the Voting
Securities of the Company or any Affiliate or Associate (as such terms are
defined in
<PAGE> 28
27
the rules and regulations under the Exchange Act) of such owner (a "Prohibited
Transaction"), other than a Prohibited Transaction to which the Company or any
of its Subsidiaries is contractually bound on the Closing Date and which is
disclosed in Schedule 4(bb), unless the Board of Directors of the Company has
determined such transaction is in the ordinary course of business and that the
terms thereof are no less favorable to the Company or such Subsidiary than
would be obtainable from an unaffiliated party (and in connection therewith any
director interested in such transaction shall recuse himself from the
discussion and vote on such transaction); provided, however, that a change in
the terms of any existing Prohibited Transaction shall require a similar Board
determination.
(g) Exchange of Stock Certificates. Upon surrender of any
certificate representing Shares for exchange at the office of the Company, the
Company at its expense will cause to be issued in exchange therefor new
certificates in such denomination or denominations as may be requested for the
same aggregate number of Shares represented by the certificate so surrendered
and registered as such holder may request.
(h) Lost Certificates Evidencing Shares. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of any certificate evidencing any of the Shares, and
(in case of loss, theft or destruction) of indemnity reasonably satisfactory to
it, and upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of such certificate, if mutilated,
the Company will make and deliver in lieu of such certificate a new certificate
of like tenor and for the number of shares evidenced by such certificate which
remain outstanding. A Purchaser's agreement of indemnity shall constitute
indemnity satisfactory to the Company for the purposes of this Section 6(h).
(i) HSR Act. The Company shall make any and all filings which it is
required to make under the HSR Act for the sale of the Shares, such filing to
be made within ten business days of the Closing Date, and the Company agrees to
furnish the Purchasers with such necessary information and reasonable
assistance as the Purchasers may request in connection with their preparation
of necessary filings or submissions to the FTC or the Antitrust Division,
including, without limitation, any filings necessary under the
<PAGE> 29
28
provisions of the HSR Act. The Company shall, at its own expense, utilize its
best efforts to respond promptly to any Request for Additional Information, or
other formal or informal request for information, witnesses or documents which
may be made by any governmental body pertaining to the sale of the Shares, and
shall keep the Purchasers fully apprised of its actions with respect thereto.
(j) Restrictions on Indebtedness. Without the consent of the holders
of a majority of the Shares, the Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, incur, issue, assume or guarantee
or otherwise become, directly or indirectly, liable with respect to
(collectively, "incur") any additional Indebtedness, or permit any Subsidiary
to, directly or indirectly, issue any Disqualified Capital Stock, other than
(i) Indebtedness under the Bank Credit Agreement in an aggregate principal
amount outstanding at any one time not to exceed $325,000,000, (ii) the 10-1/8%
Notes and guarantees thereof in an aggregate principal amount not to exceed
$126,500,000, (iii) the First Chicago Notes in an aggregate principal amount
not to exceed $13,500,000 and additional notes issued in payment of interest
thereon at a rate not in excess of 8% per annum, (iv) Permitted Refinancings of
Indebtedness in clauses (ii) and (iii), (v) the Notes and (vi) other
Indebtedness in an aggregate principal amount outstanding at any one time not
to exceed $80,000,000, unless, after giving pro forma effect to the incurrence
of such Indebtedness or issuance of such Disqualified Capital Stock and the
application of the proceeds thereof, the Consolidated Fixed Charge Coverage
Ratio, determined as of the date of such incurrence or issuance, would be
greater than the applicable ratio set forth below: 1.75 to 1.0 for the period
beginning on the date of this Agreement through August 15, 1994; 2.00 to 1.0
for the period beginning on August 16, 1994 through August 15, 1995; 2.25 to
1.0 for the period beginning on August 16, 1995 through August 15, 1996; and
2.50 to 1.0 for the period beginning August 16, 1996 and thereafter.
A calculation of the Consolidated Fixed Charge Coverage Ratio as
required by the paragraph above shall be made, in each case, for the period of
four full consecutive fiscal quarters next preceding the date on which such
Indebtedness is proposed to be incurred or such Disqualified Capital Stock is
proposed to be issued. In addition, for purposes of the pro forma calculations
required to be made above, the amount of Indebtedness to be incurred (plus all
<PAGE> 30
29
other Indebtedness previously incurred during such four fiscal quarters) and
the amount of Disqualified Capital Stock to be issued (plus all other
Disqualified Capital Stock previously issued during such four fiscal quarters)
will be presumed to have been outstanding during the latest four full fiscal
quarters (beginning on the first day of the earliest of such four full fiscal
quarters) and, if such Indebtedness or Disqualified Capital Stock is being used
to finance an acquisition of another business or entity, the Consolidated Fixed
Charge Coverage Ratio will be adjusted to give effect to such acquisition on a
pro forma basis as if such acquisition had occurred on the first day of the
earliest of such four full fiscal quarters.
(k) Limitations on Restricted Payments. Without the consent of the
holders of a majority of the Shares, the Company shall not, and shall not
permit any Subsidiary (provided that these restrictions shall not apply to a
Subsidiary if and to the extent such application would result in a breach by
the Company of Section 4.10 of the Indenture if the same is then in effect) to,
directly or indirectly, (i) declare or pay any dividends on or make any
distributions in respect of the Capital Stock of the Company or of any
Subsidiary that is not a wholly owned Subsidiary of the Company (other than
dividends or distributions payable solely in shares of Qualified Capital Stock
and other than pro rata dividends and distributions paid to minority
stockholders of the Subsidiaries noted on Schedule 6(k) provided the percentage
interests of such minorities do not exceed the amounts specified on such
Schedule), or (ii) purchase, redeem or otherwise acquire or retire for value
(other than through the issuance solely of Qualified Capital Stock of the
Company) any (x) Capital Stock of the Company or any Subsidiary, or (y)
warrants, rights or options to acquire any such Capital Stock of the Company or
any Subsidiary (other than a redemption of rights for a nominal consideration
per right under the Company's existing preferred stock rights plan or an
acquisition of minority interests referred to on Schedule 6(k)), or (iii) make
any investment in any Person other than the Company or a wholly owned
Subsidiary or a Subsidiary referred to on Schedule 6(k) (any such transaction
not excluded from (i), (ii) and (iii) above being hereinafter collectively
referred to as a "Restricted Payment"); if at the time of such Restricted
Payment, or after giving effect thereto, (x) a Restriction Event (as defined in
Section 5 of the Certificate of Designation) shall have occurred and be
continuing, (y) the Company would not be able to incur $1.00
<PAGE> 31
30
of additional Indebtedness in accordance with Section 6(j), or (z) the
aggregate amount expended for all Restricted Payments subsequent to March 31,
1994, shall exceed the sum of (a) 50% of the aggregate cumulative Consolidated
Net Income (minus 100% of any cumulative net loss) for periods commencing with
the fiscal quarter ending March 31, 1994, and through the full fiscal quarter
ended immediately prior to the fiscal quarter in which the Restricted Payment
is to be paid; and (b) 100% of the aggregate Net Proceeds received by the
Company from any person other than a Subsidiary from (I) the issuance and sale
subsequent to the date of this Agreement of Qualified Capital Stock of the
Company (other than the sale of the Shares) and (II) the exchange, exercise,
conversion or surrender after the date of this Agreement of any securities of
the Company (issued after the date of this Agreement) for or into Qualified
Capital Stock (excluding (A) any Qualified Capital Stock paid as a dividend on
any Capital Stock or as interest on any Indebtedness and (B) the issuance of
Qualified Capital Stock upon the conversion of or in exchange for any Qualified
Capital Stock but including (C) the issuance of Common Stock upon the
conversion of or in exchange for any Shares); provided, however, that so long
as no Restricted Event shall have occurred and be continuing such provisions
shall not prevent (1) the payment of any dividend within 60 days after the date
of its declaration if the dividend would have been permitted on the date of its
declaration, and (2) the acquisition of any shares of Capital Stock of the
Company by any exchange for, or solely out of the proceeds of the substantially
concurrent sale (other than to a Subsidiary of the Company) of shares of
Qualified Capital Stock, although any such payments expended shall be counted
for purposes of computing amounts expended in (ii) above.
(l) Additional Shares. The Company covenants that for so long as it
may issue Additional Shares pursuant to Section 2 hereof, the full number of
Additional Shares which it could issue shall remain validly reserved for
issuance.
(m) Contractual Management Rights. So long as (i) the Purchasers
own securities representing 1% or more of the Total Voting Power, and (ii)
Corporate Partners is required to have contractual "management rights" under
ERISA and Department of Labor Regulation Sec. 2510.3-101(d) (or successor
provision) with respect to all or a portion of its investments in order that
its assets are not considered "plan assets" under ERISA, then at the written
request of
<PAGE> 32
31
Corporate Partners the Company shall use its best efforts to provide Corporate
Partners with rights that comply with such requirements, it being understood
that (x) the Company shall have the sole discretion to determine which rights
complying with such requirements it will so provide, and (y) all the rights of
Corporate Partners under this Agreement and the Certificate of Designation
shall be considered in determining if Corporate Partners has and is permitted
to exercise sufficient contractual management rights.
7. Covenants of the Purchasers. Each of the Purchasers covenants
with the Company as follows:
(a) Prohibited Actions. From the Closing Date and until the date
when the Purchasers and the Purchaser Affiliates do not own any Shares or any
shares of Common Stock or Notes issued on conversion of or in exchange for
Shares, the Partnerships and Corporate Advisors, acting on behalf of the State
Board, shall not, except by virtue of their representation on the Company's
Board of Directors pursuant to Section 6(e) hereof and the Certificate of
Designation: (i) make, or in any way participate, directly or indirectly, in
any "solicitation" of "proxies" to vote (as such terms are used in the proxy
rules of the SEC), initiate, propose or otherwise solicit stockholders of the
Company for the approval of one or more stockholder proposals, or induce or
attempt to induce any other person to initiate any stockholder proposal, or
advise or influence, or seek to advise or influence, any person with respect to
the voting of any Voting Securities of the Company; (ii) deposit any Voting
Securities in a voting trust or, except for the irrevocable proxy to be
delivered by the State Board to Corporate Advisors pursuant to Section 7(c),
subject any Voting Securities to any agreement or arrangement with respect to
the voting of any Voting Securities or other agreement having similar effect;
or (iii) form a partnership, syndicate or other group (as defined in Rule 13d-3
under the Exchange Act) for the purpose of acquiring, holding, voting or
disposing of Voting Securities with any person that is not a Purchaser or
Corporate Advisors. In addition to and not in limitation of any other remedies
at law or in equity available to the Purchasers for a breach of Section 4 of
the Certificate of Designation, the restrictions contained in this Section 7(a)
shall not apply to any Partnership or Corporate Advisors, acting on behalf of
the State Board, as to whom there has been a redemption default pursuant to
Section 4 of the Certificate of Designation which default is continuing after
<PAGE> 33
32
30 days notice thereof from such Partnership or Corporate Advisors to the
Company. The Company may not assign any of its rights under this Section 7(a)
and the obligations of the Partnerships and Corporate Advisors, acting on
behalf of the State Board, under this Section 7(a) shall not be binding upon
any subsequent holders of the Shares other than Purchaser Affiliates. For
purposes of this Section 7(a), "Purchaser Affiliate" shall be deemed not to
include Lazard Freres & Co. provided it is not acting on behalf of a Purchaser.
(b) HSR Act. The Purchasers shall make any and all filings which
they are required to make under the HSR Act with respect to the purchase of the
Shares, such filing to be made within ten business days of the Closing Date and
the Purchasers agree to furnish the Company with such necessary information and
reasonable assistance as it may request in connection with its preparation of
necessary filings or submissions to the FTC or the Antitrust Division,
including, without limitation, any filings necessary under the provisions of
the HSR Act. The Purchasers agree to utilize their best efforts to respond
promptly to any request for additional information, or other formal or informal
request for information, witnesses or documents which may be made by any
governmental body pertaining to the sale of the Shares, and shall keep the
Company fully apprised of their actions with respect thereto.
(c) Irrevocable Proxy. The State Board covenants that as soon as
practicable after the date of this Agreement, it will grant to Corporate
Advisors an irrevocable proxy with respect to the Shares purchased by the State
Board hereunder, shares of Common Stock issued to the State Board upon
conversion of the Shares and all other shares of equity capital of the Company
having voting rights obtained by the State Board pursuant to ownership of the
Shares.
(d) Exempt Voting Securities. Notwithstanding anything to the
contrary contained in this Agreement, (i) the restrictions and obligations
contained in Section 7 shall not apply to any Voting Securities acquired or
held by the State Board with respect to which none of Corporate Advisors, the
Partnerships, nor any of the Purchaser Affiliates has sole or shared voting or
dispositive power with respect thereto pursuant to the Management Agreement,
which Voting Securities shall also include Shares acquired by the State Board
pursuant to this Agreement (or shares of
<PAGE> 34
33
Common Stock into which such Shares have been converted) if such Shares (or the
shares of Common Stock into which such Shares have been converted) are released
from the custody account maintained by Corporate Advisors on behalf of the
State Board pursuant to the Management Agreement, and (ii) the State Board
shall not be bound by the obligations or prohibitions set forth in
subparagraphs (a) through (c) of this Section 7; provided, however, that the
foregoing shall not be deemed to be a limitation of any of the obligations
imposed by this Agreement upon Corporate Advisors, acting on behalf of the
State Board. If at any time the irrevocable proxy described in Section 7(c)
shall cease to be in full force and effect and the Shares (or shares of Common
Stock issued upon conversion or exchange of Shares) are released from the
custody account maintained by Corporate Advisors on behalf of the State Board
pursuant to the Management Agreement, the State Board shall not be entitled to
any rights or interests under this Agreement (other than rights or interests
accruing as of, or with respect to matters occurring prior to, such time),
unless it agrees to be bound by the provisions of this Section 7. The
foregoing shall not be construed to limit the rights of the State Board under
Section 10 hereof with respect to matters arising prior to such time.
(e) Notice Prior to Sale. Each of the Partnerships and Corporate
Advisors, acting on behalf of the State Board, shall give the Company three
days' prior notice of its intent to sell any Shares prior to entering into a
written agreement for such sale.
8. Other Documents to be Delivered at Closing.
(a) The Purchasers shall deliver to the Company a certificate
attesting that the representations and warranties of the Purchasers are true
and correct in all material respects as of the Closing Date, signed by a duly
authorized officer or agent of the Purchasers.
(b) The Purchasers shall deliver to the Company a certificate
attesting that the Purchasers have performed, satisfied and complied in all
material respects with all covenants, agreements, and conditions required by
this Agreement to be performed, satisfied or complied with on or prior to the
Closing Date, signed by a duly authorized officer or agent of the Purchasers.
<PAGE> 35
34
(c) The Company shall have received from the Purchasers, and the
Purchasers shall have received from the Company, fully executed counterparts of
the Registration Rights Agreement substantially in the form of Exhibit B
attached hereto.
(d) The Company shall deliver to the Purchasers a certificate
attesting that the representations and warranties of the Company are true and
correct in all material respects as of the Closing Date, signed by a duly
authorized officer of the Company.
(e) The Company shall deliver to the Purchasers a certificate
attesting that the Company has performed, satisfied and complied in all
material respects with all covenants, agreements, and conditions required by
this Agreement to be performed, satisfied or complied with on or prior to the
Closing Date, signed by a duly authorized officer of the Company to such
effect.
(f) There shall be delivered to each of the Purchasers a signed
opinion of R. Michael Kennedy, Jr., Esq., General Counsel of the Company, dated
as of the date of the Closing, in a form satisfactory to the Purchasers and
their legal counsel.
(g) The Company shall deliver to the Purchasers (i) a long form
certificate of good standing as to the Company certified by the Secretary of
State of the State of Delaware (the "Secretary of State"), dated within 30 days
of the Closing Date, and (ii) telephonic confirmation by the Secretary of State
of such good standing as to the Company. The Company shall deliver to the
Purchasers copies of the Restated Certificate and the Certificate of
Designation certified by the Secretary of State and the By-laws certified by
the Secretary of the Company.
(h) The Company shall deliver to the Purchasers a certificate, dated
the Closing Date and in form and substance satisfactory to the Purchasers, of
the President or the Chief Executive Officer of the Company as to (i) the
incumbency of those officers of the Company who shall be executing and
delivering this Agreement and the Registration Rights Agreement, which shall be
certified by the Secretary of the Company, and (ii) the adoption of appropriate
corporate resolutions authorizing the execution and delivery of each of this
Agreement and the Registration Rights
<PAGE> 36
35
Agreement and consummation of the transactions contemplated hereby and thereby.
9. Definitions.
"Additional Shares" shall have the meaning set forth in Section 2.
"Affiliate" shall have the meaning set forth in Reel 12b-2 under the
Exchange Act (as in effect on the date of this Agreement).
"Antitrust Division" shall mean the Antitrust Division of the U.S.
Department of Justice.
"Bank Credit Agreement" shall mean the Amended and Restated Credit
Agreement dated as of October 2, 1992, among the Company and certain of its
Subsidiaries, the Lenders party thereto, Nationsbank of North Carolina, N.A.,
as agent for such Lenders, and The Bank of Nova Scotia, as co-agent, as the
same was amended by amendment agreements dated as of March 18, 1993 and
February 10, 1994, and by the waivers and modifications listed on Schedule
9(a), and all renewals, extensions, amendments and modifications thereof and
any refunding or refinancing of the Indebtedness thereunder so long as the same
is in the form of Indebtedness under a credit facility with banks or other
financial institutions.
"By-laws" shall mean the By-laws of the Company, as amended to the
Closing Date.
"Capital Stock" shall mean with respect to any person any and all
shares, interests, participations or other equivalents (however designated) of
corporate stock, including each class of common stock and preferred stock of
such person.
"Certificate of Designation" shall mean the Certificate of
Designation setting forth the relative powers, preferences and rights and
qualifications, limitations and restrictions of the Convertible Exchangeable
Preferred Stock.
"Closing" shall mean the closing of the sale of the Initial Shares to
the Purchasers.
"Common Stock" shall mean the Common Stock of the Company, par value
$.01 per share.
<PAGE> 37
36
"Consolidated EBITDA" shall mean, for any period, the Consolidated
Net Income for such period plus (in each case to the extent such Consolidated
Net Income was reduced thereby) (i) all liabilities paid or accrued during such
period by the Company or any of its consolidated Subsidiaries for taxes based
on income or earnings after taking into account all items of credit, loss or
deductions available during such period, (ii) depreciation and amortization
expense of the Company or any of its consolidated Subsidiaries during such
period, (iii) Fixed Charges and (iv) to the extent not included in clauses
(i) through (iii) above, any other non-cash expense reducing Consolidated Net
Income, in each case determined on a consolidated basis in accordance with
generally accepted accounting principles.
"Consolidated Fixed Charge Coverage Ratio" shall mean, for any
period, the ratio of (i) Consolidated EBITDA for such period to (ii) Fixed
Charges for such period.
"Consolidated Net Income" for any period shall mean the Net Income
(or loss) of the Company and its Subsidiaries for such period, on a
consolidated basis, determined in accordance with generally accepted accounting
principles, provided, however, that (a) the Net Income of any Subsidiary (of
which less than 80% of the Capital Stock of such Subsidiary having ordinary
voting power for the election of directors or other governing body of such
Subsidiary is owned by the Company or any of its Subsidiaries) shall be
included only to the extent of the amount of dividends or distributions paid to
the Company or its Subsidiaries in such period; (b) the Net Income of any
Subsidiary that is subject to any restriction or limitation on the payment of
dividends or the payment of other distributions (including loans or advances)
to the Company or any other Subsidiary (or the ability of the Company or such
other Subsidiary to receive or retain such amount) shall be excluded to the
extent of such restriction or limitation; and (c) there shall be excluded (i)
the Net Income (or loss) of any person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition, (ii) any net
gain (but not loss) on the sale or other disposition of capital assets by the
Company or any of its Subsidiaries other than in the ordinary course of
business and (iii) any net gain (but not loss) from the issuance, sale or
disposition of any Capital Stock of the Company or any of its Subsidiaries.
<PAGE> 38
37
"December 31, 1993 Balance Sheet" shall mean the balance sheet of the
Company and its Subsidiaries as of such date, including the notes thereto,
included in the Financial Statement.
"Disqualified Capital Stock" shall mean any Capital Stock of the
Company or its Subsidiaries that, by its terms or by the terms of any security
into which it is convertible or exchangeable, is, or upon the happening of an
event would be, required to be repurchased, including at the option of the
holder, in whole or in part, or has, or upon the happening of any event would
have, a redemption or similar payment due, on or prior to April 15, 2004.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974.
"Financial Statements" shall mean the consolidated balance sheets of
the Company and its Subsidiaries for the years ended December 31, 1992 and
1993, and the consolidated statements of income and retained earnings and
changes in financial position for the three years ended December 31, 1993, and
the notes thereto, all as reported on by Deloitte & Touche, independent
accountants.
"First Chicago Notes" shall mean the 7% Convertible Subordinated
Notes issued by the Company, which rank junior in right of payment to the
10-1/8% Notes.
"Fixed Charges" shall mean, for any period, the aggregate amount of
(i) consolidated interest in respect of all Indebtedness of the Company and any
of its consolidated Subsidiaries (including, without limitation, all
commissions, discounts or related amortization and other fees and charges owed
by the Company and its consolidated Subsidiaries with respect to letters of
credit and bankers' acceptance financing and the net costs associated with
interest swap obligations of the Company and its consolidated Subsidiaries,
amortization of debt expense and original issue discount on any Indebtedness
and the interest portion of any deferred payment obligation, calculated in
accordance with the effective interest method), and (ii) dividend requirements
of the Company, any of its consolidated Subsidiaries and any person in which
the Company has at least a 50% equity ownership, paid, accrued or scheduled to
be paid during such period attributable to any preferred stock (excluding in
all such cases items that would be or are eliminated in consolidation). For
purposes
<PAGE> 39
38
of this definition, (a) with respect to capitalized lease obligations, all but
the principal component of rentals relating to such capitalized lease
obligations, and with respect to operating leases relating to assets other than
real estate, one-third of the aggregate amount of rent expense relating to such
operating lease paid, accrued, or scheduled to be paid or accrued by the
Company and its consolidated Subsidiaries shall be deemed to be Fixed Charges,
and (b) Fixed Charges attributable to any Indebtedness represented by the
guarantee by the Company or any of its consolidated Subsidiaries of an
obligation of a person other than the Company or any of its consolidated
Subsidiaries shall be deemed to be the Fixed Charges attributable to the items
guaranteed. For purposes of clause (ii) above, dividend requirements
attributable to any preferred stock shall be an amount equal to the aggregate
dollar amount of dividend requirements on such preferred stock dividend by the
difference between 1 and the applicable Federal, state, local and foreign
income tax rates of the Company and its consolidated Subsidiaries (expressed as
a decimal number between 1 and 0), on a consolidated basis.
"FTC" shall mean the Federal Trade Commission.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976.
"Indebtedness" shall mean, for any entity, (a) its liabilities for
borrowed money or the deferred purchase price of property or services, (b)
capitalized lease obligations of such entity, and (c) all liabilities of any
other entity for borrowed money or for the deferred purchase price of property
or services (other than trade accounts payable, and any such purchase price
payable for goods or services acquired, in either case in the ordinary course
of business) (i) which is or are secured by any mortgage, deed of trust,
pledge, lien, security interest or other charge or encumbrance upon or in
property owned by such entity, whether or not such entity has assumed or become
liable for the payment of such liability, or (ii) for which such entity has
assumed or otherwise become directly or contingently liable for the payment of
such liability.
"Indenture" shall mean the Indenture dated as of August 15, 1992,
among the Company certain subsidiaries of the Company and Bankers Trust, as in
effect on the date
<PAGE> 40
39
hereof, without giving effect to any amendment or modification subsequent to
the date hereof.
"Initial Shares" shall have the meaning set forth in Section 2.
"Material Adverse Effect" shall mean a material adverse effect on the
business condition (financial or otherwise), prospects or results of operation
of the Company and the Subsidiaries, taken as a whole.
"Net Income" of any Person shall mean the net income (or loss) of
such person, determined in accordance with generally accepted accounting
principles; excluding, however, from the determination of Net Income any gain
(but not loss) realized upon the sale or other disposition (including, without
limitation, dispositions pursuant to leaseback transactions) of any real
property or equipment of such person, which is not sold or otherwise disposed
of in the ordinary course of business, or of any Capital Stock of the Company
or a Subsidiary owned by such person.
"Net Proceeds" shall have the meaning set forth in the Indenture.
"Notes" shall mean the Company's Convertible Subordinated Notes in
the form attached hereto as Exhibit C.
"Permitted Refinancing" shall mean, with respect to any Indebtedness,
Indebtedness incurred in exchange for or the proceeds of which are used to
refinance or pay at or prior to maturity such Indebtedness so long as (i) the
principal amount of the Indebtedness so incurred does not exceed the principal
amount outstanding of the Indebtedness so exchanged, refinanced or paid plus
accrued and unpaid interest and prepayment premium, if any, (ii) the
Indebtedness so incurred (A) does not mature prior to the stated maturity of
the Indebtedness so exchanged, refinanced or paid and (B) has an average life
equal to or greater than the remaining average life of the Indebtedness so
exchanged, refinanced or paid, (iii) if the Indebtedness so exchanged,
refinanced or paid is subordinated to the Notes, the Indebtedness so incurred
is subordinated to at least the same extent, (iv) if the Indebtedness so
exchanged, refinanced or paid ranks pari passu with the Notes, the Indebtedness
so incurred ranks pari passu with or is subordinated to the Notes (assuming for
purposes of clauses (iii) and (iv) that the Notes were then outstanding).
<PAGE> 41
40
"Person" shall mean any individual, partnership, joint venture,
corporation, trust, organization, government or department or agency of a
government.
"Preferred Stock" shall mean the Company's present class of Preferred
Stock, par value $.10 per share designated in Article V of the Restated
Certificate of Incorporation.
"Purchaser Affiliate" shall mean any Affiliate of a Purchaser except
as set forth under Section 7(a), and shall include any successor to (but not
any assignee of) a Purchaser or Purchaser Affiliate, it being understood that
any limited partner of either Partnership shall not be an Affiliate of such
Partnership solely by virtue of its status as such a limited partner.
"Qualified Capital Stock" shall mean any Capital Stock of the Company
that is not Disqualified Capital Stock.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement with respect to the Shares substantially in the form of Exhibit B
attached hereto.
"Restated Certificate" shall mean the Restated Certificate of
Incorporation of the Company, as amended by the Closing Date.
"Shares" shall have the meaning set forth in Section 2.
"subsidiary" of any Person shall mean any other Person a majority of
the voting stock of which is owned by such first Person.
"10 1/8% Notes" shall mean the Company's 10 1/8% Senior Subordinated
Notes due August 15, 2002 issued under the Indenture.
"Total Voting Power" of any Person at any time shall mean the total
combined voting power in the general election of directors of all the
outstanding shares of all classes of capital stock of such Person which are
then entitled to vote generally in the election of directors.
"Voting Securities" shall mean Common Stock and any other securities
of the Company entitled to vote generally for the election of directors or any
securities
<PAGE> 42
41
(including without limitation, rights and options) convertible into or
exchangeable for or exercisable for any of the foregoing, including without
limitation, the Shares;
10. Indemnification.
(a) Company Indemnification. The Company agrees to indemnify and
hold harmless each Purchaser, Corporate Advisors, each person who controls any
Purchaser or Corporate Advisors within the meaning of Section 15 of the
Securities Act and/or Section 20 of the Exchange Act, each member of any
advisory or similar committee or Board of each of the Purchasers and Corporate
Advisors and each of the respective partners, officers, directors, employees,
agents, Affiliates and Associates of any Purchaser and Corporate Advisors in
their respective capacities as such (the "Purchaser Indemnitees"), to the
fullest extent lawful, from and against (i) any and all actions, suits, claims,
proceedings, costs, losses, damages, judgments, amounts paid in settlement in
accordance with Section 10(c) and reasonable expenses (including, without
limitation, reasonable attorneys' fees and disbursements)(hereinafter
collectively referred to as a "Loss" or "Losses") suffered or incurred by any
Purchaser Indemnitee to the extent relating to or arising out of any inaccuracy
in or breach, violation or nonobservance of the representations, warranties,
covenants or agreements made by the Company herein (other than the covenants in
Sections 6(j) and 6(k)) or in the Registration Rights Agreement and (ii) any
and all Losses relating to or arising out of any action or failure to act
undertaken by a Purchaser Indemnitee at the specific request of or with the
consent of the Company or its Chairman or otherwise relating to or arising out
of the transactions contemplated hereby or by the Registration Rights
Agreement, provided that any Loss referred to in this clause (ii) shall (x)
have been incurred or suffered by a Purchaser Indemnitee in connection with a
threatened or actual investigation, action, suit, claim or proceeding involving
the Purchaser Indemnitee as defendant, co-defendant, deponent, witness or in
any capacity whatsoever other than as a plaintiff initiating an action, suit,
claim or proceeding against any person or entity and (y) not have resulted from
the bad faith, wilful misconduct or gross negligence of such Purchaser
Indemnitee, as determined by a court of competent jurisdiction in a final,
non-appealable order. The parties hereto agree that to the extent a Purchaser
Indemnitee shall have suffered a Loss for which indemnification is available
pursuant to this Section
<PAGE> 43
42
10, it shall be entitled to indemnification for the full amount thereof whether
the investment by the Purchasers in the Shares or, in the case of conversion or
redemption, the Common Stock or Notes shall have yielded an actual economic
loss or profit.
(b) Purchaser Indemnification. The Purchasers agree to indemnify
and hold harmless the Company, the directors, officers, employees and agents of
the Company, and each person who controls the Company within the meaning of
Section 15 of the Securities Act and/or Section 20 of the Exchange Act from and
against any and all Losses suffered or incurred by the Company as a result of
any inaccuracy in or breach, violation or nonobservance of the representations,
warranties or covenants made by the Purchasers herein.
(c) Expenses, Reimbursement. Any Person (an "Indemnifying Person")
who is obligated to indemnify another Person (an "Indemnified Person") pursuant
hereto promptly shall reimburse any such Indemnified Person for all Losses
constituting reasonable out-of-pocket expenses (including reasonable attorneys'
fees and disbursements) as they are incurred in connection with investigating,
preparing to defend or defending any such action, suit, claim or proceeding
(including any inquiry or investigation) for which indemnity is available under
Sections 10(a) or 10(b), whether or not such Indemnified Person is a party
thereto. To the extent that any Indemnifying Person shall indemnify or
reimburse any Indemnified Person for Losses or expenses pursuant to Sections
10(a), 10(b) or this Section 10(c) and it is subsequently judicially determined
that such Indemnified Person is not entitled to such indemnity or reimbursement
of expenses hereunder, such Indemnified Person shall promptly refund to any
Indemnifying Person the amounts so received by it. In the event that any
Indemnified Person shall appeal a judgment contemplated by the preceding
sentence that is adverse to such Indemnified Person and thereafter it shall be
judicially determined that such Indemnified Person was entitled to indemnity
hereunder, such Indemnifying Person shall reimburse the Indemnified Person for
all Losses incurred by such Indemnified Person, including without limitation
amounts earlier refunded to such Indemnifying Person by such Indemnified Person
and the costs associated with pursuing and prosecuting the appeal.
(d) Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Sections 10(a) and 10(b) is
<PAGE> 44
43
due in accordance with its terms but is for any reason held by a court to be
unavailable from any Indemnifying Person on grounds of public policy or
otherwise, then such Indemnifying Person shall, to the fullest extent permitted
by law, contribute to the aggregate Losses of such Indemnified Person in such
proportion as is appropriate to reflect the relative fault of the Company on
the one hand and the Purchasers on the other in connection with the conduct
which resulted in the Loss. The parties agree that it would not be just or
equitable if contribution were determined by pro rata allocation or by any
other method of allocation which does not take account of relative fault and
other equitable considerations. The parties further agree that if and to the
extent that pro rata contribution were nevertheless considered by a court, all
Purchaser Indemnitees collectively on the one hand, and the Company and each
other Person indemnified pursuant to Section 10(b) collectively on the other
hand, shall each be deemed to be one person. No Purchaser Indemnitee shall in
any event have liability to the Company arising out of any inaccuracy in or
breach of the representations, warranties, covenants or agreements made by the
Company herein; other conduct by the Company or its employees or agents; or any
action or failure to act undertaken by a Purchaser Indemnitee at the request of
or with the consent of the Company.
(e) Indemnification Procedure. An Indemnified Person shall give
written notice to the Indemnifying Person of any claim with respect to which it
seeks indemnification within five days after the discovery by such parties of
any matters giving rise to a claim for indemnification pursuant to Sections
10(a) or 10(b), as the case may be; provided that the failure of any
Indemnified Person to give notice as provided herein shall not relieve any
Indemnifying Person of its obligations under this Section 10 except to the
extent that such Indemnifying Person is actually prejudiced by such failure to
give notice. In case any such action, proceeding or claim is brought against
any Indemnified Person, the Indemnifying Persons shall be entitled to
participate in and, unless in the reasonable good faith judgment of the
Indemnified Persons a conflict of interest between them and the Indemnifying
Persons may exist in respect of such action, proceeding or claim, to assume the
defense thereof, with counsel reasonably satisfactory to the Indemnified
Persons, and after notice from the Indemnifying Persons to the Indemnified
Persons of their election so to assume the defense thereof, the Indemnifying
Persons shall not be liable to such Indemnified Persons for any legal or other
<PAGE> 45
44
expenses subsequently incurred by the latter in connection with the defense
thereof other than reasonable costs of investigation. In any event, unless and
until the Indemnifying Persons elect in writing to assume and do so assume the
defense of any such claim, proceeding or action, the Indemnified Persons' costs
and expenses arising out of the defense, settlement or compromise of any such
action, claim or proceeding shall be losses subject to indemnification
hereunder. If the Indemnifying Persons elect to defend any such action or
claim, then the Indemnified Persons shall be entitled to participate in such
defense with counsel of their choice at their sole cost and expense. The
Indemnifying Persons shall not be liable for any settlement of any action,
claim or proceeding effected without its written consent, provided, however,
that the Indemnifying Persons shall not unreasonably withhold, delay or
condition their consent. Anything in this Section 10 to the contrary
notwithstanding, the Indemnifying Persons shall not, without the Indemnified
Persons' prior written consent (which consent shall not be unreasonably
withheld), settle or compromise any claim or consent to entry of any judgment
in respect thereof which imposes any future obligation on the Indemnified
Persons or which does not include, as an unconditional term thereof, the giving
by the claimant or the plaintiff to the Indemnified Persons, a release from all
liability in respect of such claim.
(f) Survival. The obligations of the Company and the Purchasers
under this Section 10 shall survive the transfer of any Shares or shares of
Common Stock or Notes or the Closing or termination of this Agreement and the
transactions contemplated hereby and shall inure to the benefit of any
transferees or assignees of the Purchasers or the Company to the extent
provided by Section 11(d) of this Agreement. The agreements contained in this
Section 10 shall be in addition to any other rights of any party hereto against
any other party with respect to the matters referred to in Sections 10(a),
10(b) and 10(c) or others.
11. Miscellaneous. (a) Home Office Payment. The Company agrees
that, as long as the Purchasers shall hold any Shares, any dividend and other
payments to be made on, or in connection with the redemption of, such Shares
will be made at the place and in the manner indicated on Schedule 11(a) hereto
or such other place or manner as the Purchasers may designate in writing,
without any requirement for the presentation or surrender of the certificates
for such Shares.
<PAGE> 46
45
(b) Expenses. Except for Allen & Company Incorporated, who have
provided certain brokerage and financial advisory services to the Company with
respect to the issuance and sale of the Shares, the Company on the one hand and
the Purchasers on the other each represents to the other that it has not used a
broker in connection with the transactions contemplated by this Agreement. The
Company agrees to pay, and hold the Purchasers harmless against liability for
the payment of, all out-of-pocket expenses arising in connection with the
preparation, negotiation and execution of this Agreement, the Registration
Rights Agreement and the Closing of the purchase and sale of the Shares,
including, without limitation, the fees and expenses of the Purchasers' special
counsel and all local counsel retained in connection with such agreements and
the Closing. The Company shall be responsible for any and all fees and
expenses owing to Allen & Company Incorporated.
(c) Survival of Representations and Warranties. The representations
and warranties set forth in this Agreement shall survive the execution and
delivery of this Agreement.
(d) Assignment and Binding Effect. (i) This Agreement shall be
binding upon and inure to the benefit of the successors and assigns of the
parties pursuant to this paragraph. The Company shall not assign all or any
part of this Agreement without the prior written consent of the Purchasers.
After the closing hereunder, any Purchaser may assign its rights under this
Agreement to any Person who acquires Shares (or securities issued upon the
conversion or exchange thereof) and who signs and delivers to the Company an
agreement assuming the rights and obligations hereunder and under the
Registration Rights Agreement of the assigning Purchaser; provided that a
Purchaser may not assign its rights under Sections 6(e) and 6(m) to any
assignee, and the Company shall not be obligated to any assignee with respect
to such Sections, other than a Purchaser Affiliate.
(ii) Notwithstanding any assignment pursuant hereto, it is
understood and agreed that (x) at any time when there are no Shares
outstanding, the covenants set forth in Sections 6(d), 6(g), 6(h), 6(j), 6(k)
and 6(1) shall cease to have any effect and (y) at any time when there are no
Shares outstanding and none of the Purchasers or the Purchaser Affiliates owns
any Voting Securities issued upon conversion or exchange of Shares, all the
<PAGE> 47
46
covenants set forth in Section 6 shall cease to have any effect.
(e) Independent Investment Banking Firm. So long as the Purchasers
or any Purchaser Affiliates hold any Shares, any independent investment banking
firm or appraisal firm used pursuant to Section 3 of the Certificate of
Designation shall be mutually acceptable to the Company, on the one hand, and
the Purchasers or such Purchaser Affiliates on the other hand.
(f) Headings. Subject headings are included for convenience only
and shall not affect the interpretation of any provisions of this Agreement.
(g) Notices. Any notice, demand, request, waiver, or other
communication under this Agreement shall be in writing and shall be deemed to
have been duly given (i) on the date of service if personally served or
transmitted via telecopy, (ii) on the next business day after delivery to an
overnight carrier or (iii) on the third day after mailing if mailed to the
party to whom notice is to be given, by first class mail, registered, return
receipt requested, postage prepaid and addressed as follows:
(i) To the Company: Tyco Toys, Inc.
6000 Midlantic Drive
Mt. Laurel, NJ 08054
Attention: Harry J. Pearce
With a copy to: R. Michael Kennedy, Esq.
Tyco Toys, Inc.
6000 Midlantic Drive
Mt. Laurel, NJ 08054
(ii)(a) To Corporate Partners: Corporate Partners, L.P.
One Rockefeller Center
New York, New York 10020
Attention: Mr. Jonathan Kagan
(ii)(b) To Offshore Partners: Corporate Offshore
Partners, L.P.
One Rockefeller Center
New York, New York 10020
Attention: Mr. Jonathan Kagan
<PAGE> 48
47
(iii)(a) To the State Board: State Board of
Administration of Florida
c/o Corporate Advisors, L.P.
One Rockefeller Center
New York, New York 10020
Attention: Mr. Jonathan Kagan
- in each case
with a copy to: Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Timothy G. Massad
(h) Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
(i) Entire Agreement. This Agreement, including the Exhibits and
Schedules hereto, sets forth the entire understanding and agreement of the
parties hereto relating to the purchase and sale of the Shares and supersedes
any and all other understandings, negotiations or agreements between the
parties hereto relating to the sale and purchase of the Shares, including the
letter agreement dated February 14, 1994 between Corporate Advisors L.P. and
Allen & Company on behalf of the Company.
(j) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which together shall
constitute a single agreement.
(k) Severability. In the event that any one or more of the
immaterial provisions contained in this Agreement shall for any reason be held
to be invalid, illegal or unenforceable, the same shall not affect any other
provision of this Agreement, but this Agreement shall be construed in a manner
which, as nearly as possible, reflects the original intent of the parties.
(l) Words in Singular and Plural Form. Words used in the singular
form in this Agreement shall be deemed to import the plural, and vice versa, as
the sense may require.
<PAGE> 49
48
(m) Amendment and Modification. This Agreement may be amended or
modified only by written agreement executed by the Company and the holders of
the Shares (or of the securities issued upon the conversion or exchange of the
Shares) representing a majority of the voting rights of the Shares (or other
securities) outstanding, it being understood that the Shares (or any other
securities other than Common Stock) shall be deemed to have been converted into
Common Stock for such purpose.
(n) Waiver. Any agreement on the part of a party hereto to any
waiver of any provision hereof shall be valid against such party only if set
forth in an instrument in writing signed by such party but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not be deemed to be construed as a further or
continuing waiver of any such obligation, covenant agreement or condition or of
the breach of any other provision, term, covenant, representation or warranty
of this Agreement and shall not operate as a waiver of, or estoppel with
respect to, any subsequent or future failure.
(o) Sections, Exhibits, Schedules. References to a section are,
unless otherwise specified, to one of the sections of this Agreement and
references to an "Exhibit" or "Schedule" are, unless otherwise specified, to
one of the exhibits or schedules attached to this Agreement. References to
this Agreement include, unless otherwise specified, the exhibits or Schedules
attached hereto.
(p) Specific Enforcement. Purchasers, on the one hand, and the
Company, on the other, acknowledge and agree that irreparable damage would
occur in the event that any of the covenants contained in Sections 6(e), (i),
(j) or (k) of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, and that money damages are an
inadequate remedy for breach thereof because of the difficulty of ascertaining
and quantifying the amount of damage that will be suffered by the parties
hereto in the event that such covenants are not performed in accordance with
their terms or are otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of the covenants referred to in the immediately preceding sentence and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state thereof having jurisdiction, this being in addition to any
other
<PAGE> 50
49
rights and remedies to which they may be entitled at law or equity.
(q) Corporate Advisors to Act for the State Board. So long as the
Management Agreement remains in effect without amendment of the provisions
granting Corporate Advisors the authority to act on behalf of the State Board
in connection with the transactions contemplated by this Agreement and the
Registration Rights Agreement, any and all actions that are required or
permitted to be taken by the State Board pursuant to this Agreement or the
Registration Rights Agreement may be taken by Corporate Advisors on behalf of
the State Board and any and all notices required to be given by the Company to
the State Board pursuant to this Agreement or the Registration Rights Agreement
may be given to Corporate Advisors in lieu of giving such notice to the State
Board; provided, however, that the provisions of this sentence shall not
relieve the State Board of any of its obligations pursuant to this Agreement or
the Registration Rights Agreement. The Company shall be entitled to assume
that, and to act in reliance on the assumption that, the Management Agreement
remains in effect without amendment of any such provisions unless and until it
receives written notice from the State Board to the contrary.
(r) Confidentiality. The Purchasers and Corporate Advisors agree
that they shall not disclose any non-public information concerning the Company
which they receive from the Company to any partner or equity owner of any
Purchaser or any affiliate thereof that in any such case is directly or
indirectly engaged in the toy business, except such information which is
required to be disclosed by applicable law or in connection with any legal
proceeding or pursuant to their fiduciary obligation. The foregoing shall not
apply to information that shall be or hereinafter become publicly available
other than as a result of a disclosure by the Purchasers or Corporate Advisors.
(s) Submission to Jurisdiction. (i) The Company hereby irrevocably
submits, for itself and its property, to the jurisdiction of the Supreme Court
of the State of New York, County of New York, and the United States District
Court for the Southern District of New York over any suit, action or other
proceeding arising out of, or relating to, this Agreement or the transactions
contemplated hereunder, and the Company hereby irrevocably waives and agrees
not to assert, by way of motion, as a defense, or otherwise, in any
<PAGE> 51
50
such suit, action or proceeding, any claim that it is not subject to the
jurisdiction of any such court, any objection that it may now or hereafter have
to the laying of the venue of any such suit, action or proceeding brought in
any such court and any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum or that the venue
of such suit, action or proceeding is improper or that this Agreement may not
be enforced in or by such courts. The Company agrees, to the fullest extent it
may effectively do so under applicable law, that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(ii) The Company irrevocably appoints Prentice Hall, having offices
at the date hereof at 15 Columbus Circle, New York, N.Y. 10023, as its
authorized agent to accept and acknowledge on its behalf service of any and all
process which may be served in any suit, action or proceeding of the nature
referred to in subparagraph (ii) above in any court referred to therein, and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof by registered or certified mail, postage prepaid, return
receipt requested, to Prentice Hall at the aforementioned address or to the
Company at its address set forth or referred to in Section 11(g). The Company
agrees that such service (x) shall be deemed in every respect effective service
of process upon the Company in any such suit, action or proceeding and (y)
shall, to the fullest extent it may effectively do so under applicable law, be
taken and held to be valid personal service upon and personal delivery to the
Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date set forth above.
TYCO TOYS, INC.,
by: /s/ Harry J. Pearce
------------------------
Name: Harry J. Pearce
Title: Vice Chairman and
Chief Financial
Officer
<PAGE> 52
51
CORPORATE PARTNERS, L.P.,
by: Corporate Advisors, L.P.
General Partner
by: LFCP Corp.
General Partner
by: /s/ Jonathan Kagan
--------------------
Name: Jonathan Kagan
Title: President
CORPORATE OFFSHORE PARTNERS, L.P.,
by: Corporate Advisors, L.P.
General Partner
by: LFCP Corp.
General Partner
by: /s/ Jonathan Kagan
---------------------
Name: Jonathan Kagan
Title: President
THE STATE BOARD OF ADMINISTRATION
OF FLORIDA,
by: Corporate Advisors, L.P.
Attorney-in-Fact
by: LFCP Corp.
General Partner
by: /s/ Jonathan Kagan
---------------------
Name: Jonathan Kagan
Title: President
CORPORATE ADVISORS, L.P.,
by: LFCP Corp.
General Partner
by: /s/ Jonathan Kagan
---------------------
Name: Jonathan Kagan
Title: President
<PAGE> 1
EXHIBIT 3 - Irrevocable Proxy, dated as of
April 15, 1994, from the State
Board to Corporate Advisors
<PAGE> 2
CONFORMED COPY
IRREVOCABLE PROXY
Reference is made to the Stock Purchase Agreement, dated as of April
15, 1994 (the "Purchase Agreement"), by and among Corporate Partners, L.P., a
Delaware limited partnership ("Corporate Partners"), Corporate Offshore
Partners, L.P., a Bermuda limited partnership ("Corporate Offshore Partners"),
the State Board of Administration of Florida, a body corporate organized under
the constitution of the State of Florida ("Florida"; the Partnerships and
Florida being referred to collectively as the "Purchasers"), Corporate
Advisors, L.P., a Delaware limited partnership, and Tyco Toys, Inc., a Delaware
corporation (the "Company"). All capitalized terms used herein have the
respective meanings set forth in the Purchase Agreement.
The undersigned hereby irrevocably appoints Corporate Advisors, L.P.
as attorney and proxy of the undersigned, to attend any and all meetings, and
adjournments thereof, of the shareholders of the Company, called for any
purpose, to vote, and to express consent to any corporate action with respect
to, the shares of Series B Convertible Exchangeable Preferred Stock, par value
$.10 (the "Convertible Exchangeable Preferred Stock"), issued by the Company
pursuant to the Purchase Agreement; any and all securities issued by the
Company to the undersigned upon conversion or exchange of the shares of
Convertible Exchangeable Preferred Stock issued to the undersigned pursuant to
the Certificate of Designation; any and all securities issued by the Company to
the undersigned as a dividend on any securities for which this irrevocable
proxy has then been granted; and any and all securities issued by the Company
to the undersigned on conversion of or exchange for any securities for which
this irrevocable proxy has then been granted (collectively, the "Securities"),
of the Company owned of record by the undersigned, at any such meeting or
adjournment thereof at which such Securities are entitled to vote, and to
represent and otherwise to act for the undersigned in the same manner and with
the same effect as if such action were taken by the undersigned.
The undersigned hereby revokes any previous proxies with respect to
the Securities which are the subject of this irrevocable proxy. This proxy is
irrevocable, coupled with an interest and has been granted pursuant to the
Investment Management Agreement, dated as of June 17, 1988, between the
undersigned and Crossroads Advisors, L.P.,
<PAGE> 3
2
a Delaware limited partnership, now named Corporate Advisors, L.P., which
limited partnership is the general partner of the Partnerships.
Notwithstanding anything to the contrary in the foregoing, this proxy shall not
be applicable to (and shall be deemed revoked as to) Securities otherwise
covered by this proxy which are sold by the undersigned (other than Securities
sold subsequent to any record date for any meeting of shareholders of the
Company as to which the undersigned retains voting rights). This proxy shall
expire on April 15, 2004.
The undersigned authorizes the attorney and proxy appointed herein
to substitute any other person to act hereunder, to revoke any such
substitution and to file this proxy or any substitution or revocation with the
Secretary of the Company.
Dated: April 15, 1994 STATE BOARD OF ADMINISTRATION
OF FLORIDA
By: /s/ William O. Bell
--------------------------
for Ash Williams, Jr.
Executive Director
Approved as to legality:
/s/ Horce Schow II
-----------------------------
Horace Schow II
General Counsel
Fl Bar ID#0251471
<PAGE> 1
EXHIBIT 4 - Certificate of Designation
for the Preferred Stock
<PAGE> 2
CONFORMED COPY
Tyco Toys, Inc.
CERTIFICATE OF DESIGNATION OF SERIES B VOTING
CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
SETTING FORTH THE POWERS, PREFERENCES, RIGHTS,
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS OF SUCH SERIES
OF PREFERRED STOCK
Tyco Toys, Inc. (hereinafter referred to as the "Corporation"), a
corporation organized and existing under the General Corporation Law of the
State of Delaware, in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, as amended (the "Delaware
Code"), does HEREBY CERTIFY:
That, pursuant to authority conferred by Article V of the Restated
Certificate of Incorporation of the Corporation, the Board of Directors of the
Corporation has adopted a resolution providing for the issuance of a series of
Preferred Stock consisting initially of 47,619 shares, plus any additional
shares if and to the extent additional shares are to be issued in respect of
accrued dividends, designated "Series B Convertible Exchangeable Preferred
Stock", which resolution is as follows:
RESOLVED, that pursuant to the authority vested in the Board of
Directors (the "Board") of Tyco Toys, Inc., a Delaware corporation (the
"Corporation"), by Article V of the Restated Certificate of Incorporation
of the Corporation (the "Restated Certificate"), the Board does hereby
create, provide for and approve a series of Preferred Stock, par value
$.10 per share
<PAGE> 3
2
(herein called "Preferred Stock"), of the Corporation to be designated
"Series B Voting Convertible Exchangeable Preferred Stock" (such series
being herein called the "Convertible Exchangeable Preferred Stock"),
consisting of 47,619 shares (plus any additional shares if and to the
extent that additional shares are to be issued in respect of accrued
dividends) of the presently authorized but unissued shares of Preferred
Stock, and that in connection therewith, and pursuant to the authority
granted to the Board under Section 1 of Article VI of the Restated
Certificate, the maximum number of directors of the Corporation shall be
and hereby is increased to seventeen (17), and to the extent that the
designations, powers, preferences and relative, participating, optional
and other special rights, and the qualifications, limitations and
restrictions, of the Convertible Exchangeable Preferred Stock are not
stated and expressed in the Restated Certificate, does hereby fix and
herein state and express such designations, powers, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions thereof as follows (all terms
used herein which are defined in the Restated Certificate shall have the
meaning provided in said Restated Certificate):
Section 1. Dividends.
(a) The holders of shares of Convertible Exchangeable Preferred
Stock shall be entitled to receive, when, as and if declared by the Board
of Directors of the Corporation out of funds legally available therefor,
cumulative dividends on the shares of Convertible Exchangeable Preferred
Stock at the rate of 6% of the liquidation preference per share per year
(subject to increase during the continuance of a Restriction Event as
provided in Section 5 hereof),
<PAGE> 4
3
payable quarterly on the 15th day of each of January, April, July and
October, respectively (each, a "Quarterly Dividend Payment Date"),
commencing July 15, 1994 (except that if any such date is a Saturday,
Sunday or legal holiday, then such dividend shall be payable on the next
day that is not a Saturday, Sunday or legal holiday), in each year with
respect to the quarterly dividend period (or portion thereof) ending on
such Quarterly Dividend Payment Date. Such dividends shall be payable,
(i) at the option of the Corporation, on any Quarterly Dividend Payment
Date until and including the Quarterly Dividend Payment Date on April 15,
1996, in cash or in additional shares of Convertible Exchangeable
Preferred Stock and (ii) thereafter, in cash. Dividends payable in
additional shares of Convertible Exchangeable Preferred Stock shall be
paid at the rate of one share of Convertible Exchangeable Preferred Stock
(or fraction thereof) for each $1,050.00 of dividends not paid in cash
(and except that the Corporation may pay cash in lieu of any fractional
shares). The amount of dividends payable per share of Convertible
Exchangeable Preferred Stock for each quarterly dividend period shall be
computed by dividing the annual amount by
<PAGE> 5
4
four. The amount of dividends payable for the initial dividend period and
any period shorter than a full quarterly dividend period shall be computed
on a pro-rata basis, based on the number of days elapsed.
(b) On each Quarterly Dividend Payment Date all dividends which
shall have accrued on each share of Convertible Exchangeable Preferred
Stock outstanding on such date shall accumulate and shall be deemed to
have become due. Additional dividends shall be paid to reflect amounts
equivalent to interest on accrued but unpaid dividends at the rate of
6.00% per annum (subject to increase during the continuance of a
Restriction Event as provided in Section 5 hereof) from the Quarterly
Dividend Payment Date with respect to which such dividend was not paid
until the date such dividend is paid (whether in cash or, if permitted in
accordance with Section 1(a), in additional shares of Convertible
Exchangeable Preferred Stock).
(c) No dividends or other distributions, other than dividends
payable solely in shares of Common Stock or other capital stock of the
Corporation ranking junior as to dividends and as to any distribution of
assets other than by way of dividends to the Convertible Exchangeable
Preferred Stock, shall be
<PAGE> 6
5
paid, or declared and set apart for payment by the Corporation, and no
purchase, redemption or other acquisition shall be made by the Corporation
or any of its subsidiaries of, any shares of Common Stock or other capital
stock of the Corporation ranking junior as to dividends or as to any
distribution of assets other than by way of dividends to the Convertible
Exchangeable Preferred Stock (the "Junior Stock") unless and until all
accrued and unpaid dividends on the Convertible Exchangeable Preferred
Stock, including the full dividend for the then current dividend period,
shall have been paid or declared and set apart for payment. No full
dividends shall be paid or declared and set apart for payment on any class
or series of the Corporation's capital stock ranking, as to dividends, on
a parity with the Convertible Exchangeable Preferred Stock (the "Parity
Dividend Stock") for any period unless full cumulative dividends have
been, or contemporaneously are, paid or declared and set apart for payment
on the Convertible Exchangeable Preferred Stock for all dividend payment
periods terminating on or prior to the date of payment of such full
dividends. No full dividends shall be paid or declared and set apart for
payment on the Convertible Exchangeable
<PAGE> 7
6
Preferred Stock for any period unless full cumulative dividends have been,
or contemporaneously are, paid or declared and set apart for payment on
the Parity Dividend Stock for all dividend periods terminating on or prior
to the date of payment of such full dividends. When dividends are not
paid in full upon the Convertible Exchangeable Preferred Stock and the
Parity Dividend Stock, all dividends paid or declared and set aside for
payment upon shares of Convertible Exchangeable Preferred Stock and the
Parity Dividend Stock shall be paid or declared and set aside for payment
pro rata so that the amount of dividends paid or declared and set aside
for payment per share on the Convertible Exchangeable Preferred Stock and
the Parity Dividend Stock shall in all cases bear to each other the same
ratio that accrued and unpaid dividends per share on the shares of
Convertible Exchangeable Preferred Stock and the Parity Dividend Stock
bear to each other.
(d) The Corporation covenants that it will at all times reserve
and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued shares of Preferred Stock or its issued shares
of Preferred Stock held in its
<PAGE> 8
7
treasury, or both, for the purpose of paying accrued dividends in the form
of additional shares of Convertible Exchangeable Preferred Stock, the full
number of shares of Convertible Exchangeable Preferred Stock issuable if
all dividends from such time through and including the Quarterly Dividend
Payment Date on April 15, 1996, were paid in additional shares at the rate
that would apply if a Restriction Event had occurred and was continuing,
which number as of the date hereof is 7,090.
Section 2. Voting Rights.
In addition to any voting rights provided by law and the rights set
forth in Section 5, the holders of shares of Convertible Exchangeable Preferred
Stock shall have the following voting rights:
(a) So long as the Convertible Exchangeable Preferred Stock is
outstanding, each share of Convertible Exchangeable Preferred Stock shall
entitle the holder thereof to vote on all matters voted on by holders of
the capital stock of the Corporation into which such share of Convertible
Exchangeable Preferred Stock is convertible, voting together as a single
class with the other shares entitled to vote, at all meetings
<PAGE> 9
8
of the stockholders of the Corporation. With respect to any such vote,
each share of Convertible Exchangeable Preferred Stock shall entitle the
holder thereof to cast the number of votes equal to the number of votes
which could be cast in such vote by a holder of the number of shares of
capital stock of the Corporation into which such share of Convertible
Exchangeable Preferred Stock is convertible on the record date for such
vote.
(b) So long as any shares of Convertible Exchangeable Preferred
Stock are outstanding, subject to the provisions of Section 275(c) of the
Delaware Code, the Corporation shall not, without consent of the holders
of at least a majority of the number of shares of Convertible Exchangeable
Preferred Stock at the time outstanding, given in person or by proxy,
either in writing or by vote at a special meeting called for the purpose,
enter into any plan of complete liquidation or dissolution or otherwise
effect the voluntary liquidation, dissolution or winding up of the
Corporation unless, as a result of such liquidation, dissolution or
winding-up, the liquidation preference on the Convertible Exchangeable
Preferred Stock is satisfied in full pursuant to Section 6 herein.
<PAGE> 10
9
(c) Notwithstanding anything to the contrary in this Section 2,
until such time as the waiting period (including any extensions)
applicable to the acquisition of the Convertible Exchangeable Preferred
Stock by the initial holders thereof under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 shall have expired or terminated, the holders of
shares of Convertible Exchangeable Preferred Stock shall not have the
right to vote for the election of directors of the Company.
(d) Except as otherwise required by applicable law, the consent
of a majority of the number of shares of Convertible Exchangeable
Preferred Stock at the time outstanding, given in person or by proxy,
either in writing or by vote, at a special or annual meeting, shall be
necessary to amend or waive any provision of this Certificate of
Designation.
Section 3. Conversion.
At the option of the holder thereof and upon surrender thereof for
conversion to the Corporation at the office of the Transfer Agent of the
Corporation's Common Stock in the Borough of Manhattan, the City of New
York, each share of Convertible Exchangeable
<PAGE> 11
10
Preferred Stock shall be convertible at any time (or if such share is
called or surrendered for redemption, then in respect of such share to and
including, but not after, the close of business on the redemption date,
unless the Corporation shall default in the payment of the redemption
price, in which case such right shall not terminate at such time and date)
into that number of fully paid and nonassessable shares of Common Stock
(calculated as to each conversion to the nearest 1/100 of a share)
obtained by dividing $1,050.00 by the Conversion Price (as defined below)
in effect at such time. The "Conversion Price" shall mean and be $10.00,
subject to adjustment from time to time by the Corporation as follows:
(a) In case the Corporation shall, at any time or from time to
time while any of the shares of Convertible Exchangeable Preferred Stock
are outstanding, (i) pay a dividend or make a distribution on its Common
Stock in shares of its Common Stock, (ii) subdivide its outstanding shares
of Common Stock into a greater number of shares, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares or (iv)
issue by reclassification of its shares of Common Stock any shares of its
capital
<PAGE> 12
11
stock (each such transaction being called a "Stock Transaction"), then and
in each such case, the Conversion Price in effect immediately prior
thereto shall be adjusted so that the holder of a share of Convertible
Exchangeable Preferred Stock surrendered for conversion after the record
date fixing stockholders to be affected by such Stock Transaction shall be
entitled to receive upon conversion the number of such shares of Common
Stock or other capital stock of the Corporation that he would have owned
or been entitled to receive after the happening of such event had such
share of Convertible Exchangeable Preferred Stock been converted
immediately prior to such record date (or, if no record date, the
effective date). Such adjustment shall be made whenever any of such
events shall happen, but shall also be effective retroactively as to
shares of Convertible Exchangeable Preferred Stock converted between such
record date and the date of the happening of any such event.
(b)(i) In case the Corporation shall, at any time or from time
to time while any of the shares of Convertible Exchangeable Preferred
Stock are outstanding, issue, sell or exchange shares of Common Stock
(other than (x) pursuant to any right or warrant
<PAGE> 13
12
to purchase or acquire shares of Common Stock (including as such a right
or warrant any security convertible into or exchangeable for shares of
Common Stock), (y) pursuant to any employee or director incentive or
benefit plan or arrangement, including any employment, severance or
consulting agreement but excluding any employee stock ownership plan
within the meaning of Section 4975(e)(7) of the Internal Revenue Code of
1986, as amended (an "ESOP"), whether presently existing or to be
established in the future, of the Corporation or any subsidiary of the
Corporation heretofore or hereafter adopted, and (z) as provided in
paragraph (a) of this Section 3) for a consideration having a Fair Market
Value (as defined below) on the date of such issuance, sale or exchange
that is less than the Market Price (as defined below) of such shares on
the date of such issuance, sale or exchange, then and in each case, the
Conversion Price shall be adjusted by multiplying such Conversion Price by
a fraction (which shall not be greater than 1), the numerator of which
shall be the sum of (x) the Current Market Price per share of Common Stock
as of the trading day immediately preceding the date of the public
announcement of the actual terms (including the
<PAGE> 14
13
pricing terms) of such issuance, sale or exchange (or if there is no such
public announcement prior to the effective date of such issuance, sale or
exchange, such effective date) multiplied by the number of shares of
Common Stock outstanding immediately prior to such issuance, sale or
exchange plus (y) the aggregate Fair Market Value of the consideration
received by the Corporation in respect of such issuance, sale or exchange
of shares of Common Stock, and the denominator of which shall be the
product of (x) the Current Market Price per share of Common Stock referred
to in the immediately preceding clause (x) multiplied by (y) the sum of
the number of shares of Common Stock outstanding on such day plus the
number of shares of Common Stock so issued, sold or exchanged by the
Corporation. For purposes of the preceding sentence, the aggregate
consideration receivable by the Corporation in connection with the
issuance, sale or exchange of shares of Common Stock shall be deemed to be
equal to the sum of the aggregate offering price (before deduction of
reasonable underwriting discounts or commissions and expenses) of all such
shares.
(ii) In the event the Corporation shall, at any time or from time
to time while any shares of
<PAGE> 15
14
Convertible Exchangeable Preferred Stock are outstanding, issue, sell or
exchange any right or warrant to purchase or acquire shares of Common
Stock (including as such a right or warrant any security convertible into
or exchangeable for shares of Common Stock) (other than (x) any issuance,
sale or exchange to holders of shares of Common Stock as a dividend or
distribution (including by way of a reclassification of shares or a
recapitalization of the Corporation), and (y) pursuant to any employee or
director incentive or benefit plan or arrangement (excluding any ESOP), of
the Corporation or any subsidiary of the Corporation heretofore or
hereafter adopted), for a consideration having a Fair Market Value on the
date of such issuance, sale or exchange less than the Fair Market Value of
such rights or warrants on the date of such issuance, sale or exchange,
then and in each case, the Conversion Price shall be adjusted by
multiplying such Conversion Price by a fraction (which shall not be
greater than 1), the numerator of which shall be the sum of (a) the
Current Market Price per share of Common Stock as of the trading date
immediately preceding the date of the public announcement of the actual
terms (including the price terms) of such issuance, sale or
<PAGE> 16
15
exchange (or if there is no such public announcement prior to the
effective date of such issuance, sale or exchange, such effective date)
multiplied by the number of shares of Common Stock outstanding immediately
prior to such issuance, sale or exchange plus (b) the aggregate Fair
Market Value of the consideration received by the Corporation in respect
of such issuance, sale or exchange of such right or warrant, and the
denominator of which shall be the sum of (i) the Current Market Price per
share of Common Stock referred to in the preceding clause (a) multiplied
by the number of shares of Common Stock outstanding immediately prior to
such issuance, sale or exchange plus (ii) the aggregate Fair Market Value
of such rights or warrants at the time of such issuance. For the purposes
of the preceding sentence, the aggregate consideration receivable by the
Corporation in connection with the issuance, sale or exchange of any such
right or warrant shall be deemed to be equal to the sum of the aggregate
offering price (before deduction of reasonable underwriting discounts or
commissions and expenses) of all such rights or warrants.
<PAGE> 17
16
(c) In the event the Corporation or any of its subsidiaries
shall, at any time or from time to time while any shares of Convertible
Exchangeable Preferred Stock are outstanding, repurchase or redeem any of
the Corporation's outstanding capital stock at a premium over the average
Market Price per share on the trading day immediately preceding such
repurchase or redemption (a "Repurchase"), then and in the case of each
Repurchase the Conversion Price in effect immediately prior thereto shall
be adjusted by multiplying such Conversion Price by a fraction, the
numerator of which is (i) the product of (x) the number of shares of
Common Stock outstanding immediately before such repurchase or redemption
multiplied by (y) the average Market Price per share of Common Stock on
the five trading days immediately following the consummation of such
Repurchase minus (ii) the aggregate purchase price of the Repurchase and
the denominator of which shall be the product of (x) the number of shares
of Common Stock outstanding immediately before such Repurchase minus the
number of shares of Common Stock repurchased or redeemed by the
Corporation multiplied by (y) the average Market Price per share of Common
Stock on such five trading days
<PAGE> 18
17
referred to in the preceding clause (i)(y); provided, however, that the
conversion price shall not be so adjusted with respect to (i) any
Repurchase of the Convertible Exchangeable Preferred Stock pursuant to
Section 6 or 7 hereof.
(d) In the event the Corporation shall at any time or from time
to time while any shares of Convertible Exchangeable Preferred Stock are
outstanding, declare and pay or make a dividend or other distribution
(including, without limitation, any distribution of stock or other
securities or property or rights or warrants to subscribe for securities
of the Corporation or any of its subsidiaries by way of dividend or
distribution or evidences of indebtedness of the Corporation or any other
person) on its Common Stock, other than (A) regular quarterly dividends
payable in cash (it being understood that the failure to pay a regular
quarterly dividend for one or more quarters shall not affect the treatment
of any other dividend as a regular quarterly dividend), (B) shares of
Common Stock for which an adjustment is made under paragraph (a) of this
Section 3 or (C) any other dividend or distribution on the Corporation's
Common Stock if in conjunction with such other dividend or
<PAGE> 19
18
distribution the Corporation declares and makes (or pays) a dividend or
distribution on each share of Convertible Exchangeable Preferred Stock
which is the same as the dividend or distribution that would have been
made or paid with respect to such share of Convertible Exchangeable
Preferred Stock had such share been converted into shares of Common Stock
immediately prior to the record date for any such dividend or distribution
on the Corporation's Common Stock, then, and in each such case, an
appropriate adjustment to the Conversion Price shall be made by
multiplying the Conversion Price in effect immediately prior to the record
date fixed for the determination of stockholders entitled to receive such
dividend or distribution by a fraction, the numerator of which shall be
the Current Market Price per share of the Common Stock as of the fifth
business day preceding such record date less the Fair Market Value per
share of Common Stock of such dividend or distribution (as determined in
good faith by the Board of Directors of the Corporation, a certified
resolution with respect to which shall be mailed to each holder of shares
of Convertible Exchangeable Preferred Stock) and the denominator of which
shall be the Current Market Price per share of
<PAGE> 20
19
Common Stock as of the fifth business day preceding such record date;
provided, however, that in the event of a distribution of shares of
capital stock of a subsidiary of the Corporation (a "Spin-Off") made to
holders of shares of Common Stock, the numerator of such fraction shall be
the Current Market Price per share of Common Stock as of the 30th trading
day after the effective date of such Spin-Off and the denominator of which
shall be the sum of the Current Market Price per share of Common Stock as
of such 30th trading day and the Current Market Price of the number of
shares (or the fraction of a share) of capital stock of the subsidiary
which is distributed in such Spin-Off in respect of one share of Common
Stock as of such 30th trading day. Notwithstanding the foregoing, no
adjustment shall be made with respect to any distribution of rights or
warrants to purchase securities of the Corporation if the holder of shares
of Convertible Exchangeable Preferred Stock would otherwise be entitled to
receive such rights upon conversion at any time of shares of Convertible
Exchangeable Preferred Stock into Common Stock unless such rights are
subsequently redeemed by the Corporation, in which case such redemption
shall be
<PAGE> 21
20
treated for purposes of this Section as a dividend on Common Stock. An
adjustment made pursuant to this paragraph (d) shall be made upon the
opening of business on the next business day following the date on which
any such dividend or distribution is made and shall be effective
retroactively immediately after the close of business on the record date
fixed for the determination of stockholders entitled to receive such
dividend or distribution; provided, however, if the proviso to the second
preceding sentence applies, then such adjustment shall be made and be
effective as of such 30th trading day after the effective date of such
Spin-Off.
(e) For the purposes of any computation under paragraphs (a)
through (d) of this Section 3, the following definitions shall apply:
(i) "Closing Price" of publicly traded shares of Common Stock or
any other class of capital stock or other security of the
Corporation or any other issuer for a day shall mean the last
reported sales price, regular way, or, in case no sale takes place
on such day, the average of the reported closing bid and asked
prices, regular way, in either case as reported on the New York
<PAGE> 22
21
Stock Exchange--Composite Transactions Tape or, if such security is
not listed or admitted to trading on the New York Stock Exchange, on
the principal national securities exchange on which such security is
listed or admitted to trading or, if not listed or admitted to
trading on any national securities exchange, on the NASDAQ National
Market System or, if such security is not quoted on such National
Market System, the average of the closing bid and asked prices on
each such day in the over-the counter market as reported by NASDAQ
or, if bid and asked prices for such security on each such day shall
not have been reported through NASDAQ, the average of the bid and
asked prices of such day as furnished by any New York Stock Exchange
member firm regularly making a market in such security selected for
such purpose by the Board of Directors of the Corporation or a
committee thereof. If the Common Stock or other class of capital
stock or security in question is not publicly held, or so listed, or
publicly traded, "Closing Price" shall mean the Fair Market Value
thereof.
<PAGE> 23
22
(ii) "Current Market Price" per share of Common Stock as of any
date shall be deemed to be the average of the daily Closing Prices
per share for the 10 consecutive trading days ending on and
including the day in question.
(iii) "Fair Market Value" of any consideration other than cash
or of any securities shall mean the amount which a willing buyer
would pay to a willing seller in an arm's length transaction as
determined by an independent investment banking or appraisal firm
experienced in the valuation of such securities or property selected
in good faith by the Board of Directors of the Corporation or a
committee thereof.
(iv) "Market Price" per share at any date shall be the Closing
Price on the specified date; provided, that, in the case of the
issuance, sale or exchange of shares of Common Stock pursuant to
paragraph (b) of this Section 3 that are not registered under the
Securities Act of 1933 Market Price shall be reduced by an amount,
if any (as determined by an independent investment banking or
appraisal firm experienced in the valuation of such securities or
property selected in good
<PAGE> 24
23
faith by the Board of Directors of the Corporation or a committee
thereof), to compensate for the fact that such shares are not so
registered, and in making such determination any registration rights
granted by the Company shall be taken into account.
(f) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least
1% in such price; provided, however, that any adjustments which by reason
of this paragraph (f) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations
under this Section 3 shall be made to the nearest one-hundredth of a
share.
(g) No fractional shares or scrip representing fractional shares
of Common Stock shall be issued upon the conversion of any share of
Convertible Exchangeable Preferred Stock. If the conversion thereof
results in a fraction, an amount equal to such fraction multiplied by the
Current Market Price per share of Common Stock (as defined above) as of
the conversion date shall be paid to such holder in cash by the
Corporation.
<PAGE> 25
24
(h) In the event of any capital reorganization (other than a
capital reorganization covered by paragraph (d) of this Section 3) or
reclassification of outstanding shares of Common Stock (other than a
reclassification covered by paragraph (a) of this Section 3), or in case
of any merger, consolidation or other corporate combination of the
Corporation with or into another corporation, or in case of any sale or
conveyance to another corporation of the property of the Corporation as an
entirety or substantially as an entirety (each of the foregoing being
referred to as a "Transaction"), each share of Convertible Exchangeable
Preferred Stock shall continue to remain outstanding if the Corporation is
the Surviving Person (as defined below) of such Transaction, and shall be
subject to all the provisions of the Certificate of Designation of Series
B Convertible Exchangeable Preferred Stock which embodies this resolution,
as in effect prior to such Transaction (including, without limitation, the
provisions of Section 4 hereof if such Transaction also constitutes a
Change of Control (as hereinafter defined)), or if the Corporation is not
the Surviving Person in such Transaction, then each holder of shares of
Convertible
<PAGE> 26
25
Exchangeable Preferred Stock may elect (which election shall be made
within twenty days of the Transaction) to either (1) have Section 4 hereof
be applicable to such holder's shares of Convertible Exchangeable
Preferred Stock or (2) if the consideration to be received by stockholders
of the Corporation in the Transaction does not consist entirely of cash,
have each share of Convertible Exchangeable Preferred Stock be exchanged
for a new series of senior preferred stock of the Surviving Person, or in
the case of a Surviving Person other than a corporation, comparable
securities of such Surviving Person, in either case having economic terms
as nearly equivalent as possible to, and with the same voting and other
rights as, the Convertible Exchangeable Preferred Stock (including the
right to convert into Survivor Common Stock); provided, however that, at
the option of the holder of any shares of Convertible Exchangeable
Preferred Stock (which election shall be made within such twenty days),
each share of Convertible Exchangeable Preferred Stock then outstanding or
deemed to be outstanding, as the case may be, shall entitle the holder
thereof to receive, upon presentation of the certificate therefor to the
Surviving Person subsequent to the consummation of such
<PAGE> 27
26
Transaction the kind and amount of shares of stock and other securities
and property receivable (including cash) upon the consummation of such
Transaction by a holder of that number of shares of Common Stock into
which one share of Convertible Exchangeable Preferred Stock was
convertible immediately prior to such Transaction; provided, further, that
if in connection with the Transaction a tender or exchange offer shall
have been made and there shall have been acquired pursuant thereto more
than 50% of the outstanding shares of Common Stock, and if the holder of
shares of Convertible Exchangeable Preferred Stock so designates in the
notice given to the Corporation which specifies such holder's selection of
this alternative, such holder of such shares shall be entitled to receive
upon conversion thereof, the amount of securities or other property to
which such holder would actually have been entitled as a holder of shares
of Common Stock if such holder had converted such shares of Convertible
Exchangeable Preferred Stock prior to the expiration of such tender or
exchange offer and accepted such offer and had sold therein the percentage
of all the shares of Common Stock issuable upon conversion of its shares
of Convertible Exchangeable Preferred Stock equal to
<PAGE> 28
27
the percentage of shares of the then outstanding Common Stock so purchased
in the tender or exchange offer, with the remaining portion of its shares
of Convertible Exchangeable Preferred Stock thereafter being convertible
into the amount of securities or other property to which such holder would
actually have been entitled upon the consummation of the Transaction as a
holder of shares of Common Sock if such holder had converted such shares
of Convertible Exchangeable Preferred Stock immediately prior to such
Transaction (subject to adjustments from and after the consummation of the
Transaction as nearly equivalent as possible to the adjustments provided
for in this Section 3). In any such case, if necessary, appropriate
adjustment (as determined by the Board of Directors in good faith) shall
be made in the application of the provisions set forth in this Section 3
with respect to the rights and interests thereafter of the holders of
shares of Convertible Exchangeable Preferred Stock to the end that the
provisions set forth herein for the protection of the conversion rights of
the Convertible Exchangeable Preferred Stock shall thereafter be
applicable, as nearly as reasonably may be, to any such other shares of
stock and other securities and property
<PAGE> 29
28
deliverable upon conversion of the shares of Convertible Exchangeable
Preferred Stock remaining outstanding (with such adjustments in the
conversion price and number of shares issuable upon conversion and such
other adjustments in the provisions hereof as the Board of Directors in
good faith shall determine to be appropriate). In case securities or
property other than Common Stock shall be issuable or deliverable upon
conversion as aforesaid, then all references in this Section 3 shall be
deemed to apply, so far as appropriate and as nearly as may be, to such
other securities or property.
Notwithstanding anything contained herein to the contrary, the
Corporation will not effect any Transaction unless, prior to the
consummation thereof, (i) proper provision is made to ensure that the
holders of shares of Convertible Exchangeable Preferred Stock will be
entitled to receive the benefits afforded by this paragraph (h) of Section
3, and (ii) if, following the Transaction, one or more entities other than
the Corporation shall be required to deliver securities or other property
upon the conversion of the Convertible Exchangeable Preferred Stock, such
entity or entities shall assume, by written instrument delivered to each
<PAGE> 30
29
holder of shares of Convertible Exchangeable Preferred Stock, if such
shares are held by 10 or fewer holders or group of affiliated holders, or
to each Transfer Agent for the shares of Convertible Exchangeable
Preferred Stock, if such shares are held by a greater number of holders,
the obligation to deliver to such holder the amounts in cash to which, in
accordance with the foregoing provisions, such holder is entitled.
For purposes of this paragraph (h) of Section 3, the following terms
shall have the meanings as described to them below:
(i) "Surviving Person" shall mean the continuing or surviving
Person of a merger, consolidation or other corporate combination, the
Person receiving a transfer of all or a substantial part of the properties
and assets of the Corporation, or the Person consolidating with or merging
into the Corporation in a merger, consolidation or other corporate
combination in which the Corporation is the continuing or surviving
Person, but in connection with which the Convertible Exchangeable
Preferred Stock or Common Stock of the Corporation is exchanged, converted
or reclassified into the securities of any other Person or cash or any
other property.
<PAGE> 31
30
(ii) "Survivor Common Stock" with respect to any Person shall
mean shares of such Person of any class or series which has no preference
or priority in the payment of dividends or in the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person and which is not subject to redemption by such Person
provided, however; that if (x) the shares of such class or series are not
(or upon consummation of such Transaction will not be) listed on the New
York Stock Exchange or the American Stock Exchange or quoted by the NASDAQ
National Market System or any successor thereto or comparable system, and
(y) the Surviving Person is a direct or indirect subsidiary of a Qualified
Person, the Survivor Common Stock shall be the common stock (or equivalent
equity securities referred to in the definition of "Qualified Person") of
such Qualified Person.
(iii) "Qualified Person" shall mean any Person that,
immediately after giving effect to the applicable Transaction, is a
solvent corporation or other entity organized under the laws of any state
of the United States of America having its common stock or, in the case of
an entity other than a corporation,
<PAGE> 32
31
equivalent equity securities, listed on the New York Stock Exchange or the
American Stock Exchange or quoted by the NASDAQ National Market System or
any successor thereto or comparable system.
(iv) "Person" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger or otherwise) of
such entity.
(v) "Current Market Price" shall have the meaning set forth in
paragraph (e) of this Section 3.
(i) In case at any time or from time to time, the Corporation
shall pay any dividend or make any other distribution to the holders of
its Common Stock of, or shall offer for subscription pro rata to the
holders of its Common Stock, any additional shares of stock of any class
or any other right, or there shall be any capital reorganization or
reclassification of the Common Stock of the Corporation or merger,
consolidation or other corporate combination of the Corporation with or
into another corporation, or any sale or conveyance to another corporation
of the property of the Corporation as an entirety or substantially as an
entirety, or there shall be a voluntary or involuntary dissolution,
liquidation or winding up the Corporation, then, in any one or more of
<PAGE> 33
32
said cases the Corporation shall give written notice at the same time as,
or as soon as practicable after, such event is first communicated
(including by announcement of a record date in accordance with the rules
of any stock exchange on which the Common Stock is listed or admitted to
trading) to holders of Common Stock, but in any event at least 10 days
prior to the record date for such event specified below (the time of
mailing of such notice shall be deemed to be the time of delivery thereof)
to the registered holders of the Convertible Exchangeable Preferred Stock
at the addresses of each as shown on the books of the Corporation
maintained by the Transfer Agent thereof of the date on which (x) the
books of the Corporation shall close or a record shall be taken for such
stock dividend, distribution or subscription rights or (y) such
reorganization, reclassification, merger, consolidation, corporate
combination, sale or conveyance, dissolution, liquidation or winding up
shall take place, as the case may be. Such notice shall also specify the
date as of which the holders of the Common Stock of record shall
participate in said dividend, distribution, subscription rights or shall
be entitled to exchange their Common Stock for securities or other
property
<PAGE> 34
33
deliverable upon such reorganization, reclassification, merger,
consolidation, corporate combination, sale or conveyance or participate in
such dissolution, liquidation or winding up, as the case may be, as well
as the conversion price and the number of shares into which each share of
Convertible Exchangeable Preferred Stock may be converted at such time.
Failure to give such notice shall not invalidate any action so taken.
(j) The Corporation covenants that it will at all times reserve
and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued shares of Common Stock or its issued shares of
Common Stock held in its treasury, or both, for the purpose of effecting
conversions of shares of Convertible Exchangeable Preferred Stock, the
full number of shares of Common Stock deliverable upon the conversion of
all outstanding shares of Convertible Exchangeable Preferred Stock not
theretofore converted. For purposes of this Section 3(j), the number of
shares of Common Stock which shall be deliverable upon the conversion of
all outstanding shares of Convertible Exchangeable Preferred Stock shall
be computed as if at the time of computation all outstanding shares of
<PAGE> 35
34
Convertible Exchangeable Preferred Stock were held by a single holder.
Before taking any action which would cause an adjustment reducing
the Conversion Price below the then par value (if any) of the shares of
Common Stock deliverable upon conversion of the shares of Convertible
Exchangeable Preferred Stock, the Corporation will take any corporate
action which may, in the opinion of its counsel, be necessary in order
that the Corporation may validly and legally issue fully paid and
non-assessable shares of Common Stock at such adjusted Conversion Price.
(k) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or
delivery of shares of Common Stock upon conversions of shares of
Convertible Exchangeable Preferred Stock pursuant hereto.
(l) Upon any adjustment of the Conversion Price, then, and in
each such case, the Corporation shall promptly deliver to the transfer
agent of the Convertible Exchangeable Preferred Stock and the Common
Stock, a certificate signed by the President or a Vice President and by
the Treasurer or an Assistant
<PAGE> 36
35
Treasurer or the Secretary or an Assistant Secretary of the Corporation
setting forth in reasonable detail the event requiring the adjustment and
the method by which such adjustment was calculated and specifying the
Conversion Price then in effect following such adjustment. The
Corporation shall also promptly after the making of such adjustment give
written notice to the registered holders of the Convertible Exchangeable
Preferred Stock at the address of each holder as shown on the books of the
Corporation maintained by the transfer agent thereof, which notice shall
state the Conversion Price then in effect, as adjusted, and shall set
forth in reasonable detail the method of calculation of the same and a
brief statement of the facts requiring such adjustment. Where
appropriate, such notice to holders of the Convertible Exchangeable
Preferred Stock may be given in advance and included as part of the notice
required under the provisions of Section 3(i).
Section 4. Change of Control.
(a)(i) In the event that any Change of Control (as hereinafter
defined) shall occur at any time and from time to time while any shares of
Convertible Preferred Stock are outstanding, each holder of Convertible
Exchangeable
<PAGE> 37
36
Preferred Stock shall have the right to give notice that it is exercising a
Change of Control election (a "Change of Control Election"), with respect to
all or any number of such holder's shares of Convertible Exchangeable Preferred
Stock, during the period (the "Exercise Period") beginning on the 30th day and
ending on the 180th day after the date of such Change of Control. Upon any
such election, the Corporation shall either, at its option, (x) redeem each
such holder's shares for which such an election is made, out of funds lawfully
available therefor, at the redemption price set forth below or (y) adjust the
conversion price as provided herein; provided, however, that the Corporation
shall choose the same option for all holders giving a Change of Control
Election and the Corporation shall be entitled to choose the option set forth
in the preceding clause (y) only if the circumstances set forth in the first
sentence of Section 4(a)(ii) are then satisfied. If such holders' shares are
to be redeemed, the redemption price shall be a per share price equal to the
sum of (A) the applicable redemption price per share (expressed as a percentage
of the liquidation preference) set forth below, plus (B) an amount equal to all
accrued and unpaid dividends to the date of purchase of such holder's shares by
the Corporation together with any additional dividends pursuant to Section
1(b).
<PAGE> 38
37
<TABLE>
<CAPTION>
Redemption Period Redemption
----------------- ----------
Price
-----
<S> <C>
April 15, 1994, through April 14, 1995 106.00%
April 15, 1995, through April 14, 1996 105.40%
April 15, 1996, through April 14, 1997 104.80%
April 15, 1997, through April 14, 1998 104.20%
April 15, 1998, through April 14, 1999 103.60%
April 15, 1999, through April 14, 2000 103.00%
April 15, 2000, through April 14, 2001 102.40%
April 15, 2001, through April 14, 2002 101.80%
April 15, 2002, through April 14, 2003 101.20%
April 15, 2003, through April 14, 2004 100.60%
</TABLE>
(a)(ii) In the event that any Change of Control shall occur at any
time when any shares of Convertible Exchangeable Preferred Stock are
outstanding, the circumstances under which the Corporation may elect the option
set forth in Section 4(a)(i)(y) are that the redemption (or the obligation of
the Corporation to effect such redemption) of all or any such shares pursuant
to Section 4(a)(i)(x) would constitute a breach of the Company's obligations
under Section 4.09 of the Indenture dated as of August 15, 1992, between the
Company, certain of its subsidiaries and Bankers Trust, as Trustee, as
supplemented by a Supplemental Indenture dated October 17,
<PAGE> 39
38
1992, and a Second Supplemental Indenture dated June 8, 1993 (but without
giving effect to any other amendment thereto), and compliance therewith has not
been waived or the failure of the Corporation to be able to exercise such
option would cause the Shares not to be deemed to be Qualified Capital Stock as
defined therein. If the Company elects to adjust the Conversion Price as set
forth in Section (4)(a)(i)(y), then the Conversion Price in effect immediately
prior to the effective date of the Change of Control (the "Change of Control
Date") shall be decreased (but not increased) so as to equal the product of (1)
.70 and (2) the lowest Current Market Price as of any date during the period
(the "Initial Measurement Period") beginning on the date (which shall not be
earlier than six months prior to the Change of Control Date) on which the first
public announcement is made that a transaction constituting a Change of Control
has occurred or of the intention of any person to effect such a transaction
(the "Announcement Date") and ending on the date which is ten days after the
Change of Control Date. The Corporation shall make such election on or prior
to the end of the Initial Measurement Period, and such adjustment shall become
effective immediately after the end of the Initial Measurement Period;
provided, that further adjustments shall be made successively for six months
after the Change of
<PAGE> 40
39
Control Date in the event and at the time of any decrease in the Current Market
Price as of any date after the end of the Initial Measurement Period and
through the end of the six months following the Change of Control Date;
provided, however, that no such successive adjustment shall be made with
respect to the Conversion Price of any Convertible Exchangeable Preferred Stock
that have been converted or redeemed prior to the event giving rise to such
adjustment.
(b) As used herein, "Change of Control" shall mean:
(i) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934)
(the "Acquiring Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under such Act) of 50% or more of the combined voting power
of the then outstanding voting securities of the Corporation entitled to vote
generally in the election of directors, but excluding, for this purpose, any
such action by (x) the Corporation or any of its subsidiaries, (y) any
Purchaser (as defined in Section 5) or (z) any corporation or other entity with
respect to which, following such acquisition, more than 50% of the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election
<PAGE> 41
40
of directors (or if another entity, more than 50% of the equivalent controlling
interests) is then beneficially owned, directly or indirectly, by individuals
and entities who were the beneficial owners of voting securities of the
Corporation immediately prior to such acquisition in substantially the same
proportion as their ownership, immediately prior to such acquisition, of the
combined voting power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of directors; or
(ii) consummation of a reorganization, merger or consolidation
involving the Corporation, in each case, with respect to which the individuals
and entities who were the respective beneficial owners of at least 80% of the
voting securities of the Corporation immediately prior to such reorganization,
merger or consolidation do not or will not, following such reorganization,
merger or consolidation, beneficially own, directly or indirectly, more than
50% of the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the corporation
resulting from such reorganization, merger or consolidation; or
<PAGE> 42
41
(iii) the sale or other disposition of all or substantially all the
assets of the Corporation in one transaction or series of related transactions;
or
(iv) individuals who would constitute a majority of the members of
the Board of Directors elected at any meeting of stockholders or by written
consent (without regard to any members of the Board of Directors elected
pursuant to the terms of any series of Preferred Stock) shall be elected to the
Board of Directors and the election or the nomination for election by the
Corporation's stockholders of such directors was not approved by a vote of at
least a majority of the directors in office immediately prior to such election
or nomination.
(c) On or before the fourteenth day after a Change of Control, the
Corporation shall mail to all holders of record of the Convertible Exchangeable
Preferred Stock at their respective addresses as the same shall appear on the
books of the Corporation as of such date, a notice disclosing (i) the Change of
Control, (ii) if applicable, the redemption price per share of the Convertible
Exchangeable Preferred Stock applicable hereunder and (iii) if applicable, its
election to adjust the Conversion Price in lieu of redeeming the Convertible
Exchangeable Preferred Stock and the initial adjustment thereto and the
<PAGE> 43
42
procedure which the holder must follow to exercise the redemption right
provided above. The Corporation shall cause a copy of such notice to be
published in a newspaper of general circulation in the Borough of Manhattan,
New York. To exercise such redemption right, if applicable, a holder of the
Convertible Exchangeable Preferred Stock must deliver during the Exercise
Period written notice to the Corporation (or an agent designated by the
Corporation for such purpose) of the holder's exercise of such redemption
right, and, to be valid, any such notice of exercise must be accompanied by
each certificate evidencing shares of the Convertible Exchangeable Preferred
Stock with respect to which the redemption right is being exercised, duly
endorsed for transfer. On or prior to the fifth business day after receipt of
such written notice, the Corporation shall accept for payment all shares of
Convertible Exchangeable Preferred Stock properly surrendered to the
Corporation (or an agent designated by the Corporation for such purpose) during
the Exercise Period for redemption in connection with the valid exercise of
such redemption right and shall cause payment to be made in cash for such
shares of Convertible Exchangeable Preferred Stock.
(d) In the event of any Change of Control, proper provision shall
be made to ensure that the holders of shares
<PAGE> 44
43
of Convertible Exchangeable Preferred Stock will be entitled to receive the
benefits afforded by this Section 4; provided, however, that in the event of
any Change of Control effected with the Corporation's consent, such provision
to ensure the benefits of this Section 4 shall be made prior to such Change of
Control. If, following the Change of Control, one or more entities other than
the Corporation shall be required to deliver securities or other property upon
the conversion of the Convertible Exchangeable Preferred Stock, such entity or
entities shall assume, by written instrument delivered to each holder of shares
of Convertible Exchangeable Preferred Stock, if such shares are held by 10 or
fewer holders or group of affiliated holders, or to each Transfer Agent for the
shares of Convertible Exchangeable Preferred Stock, if such shares are held by
a greater number of holders, the obligation to deliver to such holder the
amounts in cash to which, in accordance with the foregoing provisions, such
holder is entitled.
Section 5. Certain Restrictions.
(a) In case of the happening of any of the following events
("Restriction Events"): (i) the Corporation breaches in any material respect
(x) any of its obligations under Section 6(j) or 6(k) of the Stock Purchase
Agreement dated as of April 15, 1994, among the Corporation
<PAGE> 45
44
and Corporate Partners, L.P., Corporate Offshore Partners, L.P. the State Board
of Administration of Florida (such three entities collectively, the
"Purchasers") and Corporate Advisors, L.P. (the "Stock Purchase Agreement"),
(y) any of its obligations under Section 6(d), 6(e), 6(f), 6(i), 6(l) or 6(m)
of the Stock Purchase Agreement and such breach shall have continued for ten
days after notice thereof by any holder or (z) any of its other obligations
under the Stock Purchase Agreement or any of its obligations under the
Registration Rights Agreement and such breach shall have continued for twenty
days after notice thereof by any holder; (ii) any quarterly dividend (or
additional dividends thereon, if any) payable on the Convertible Exchangeable
Preferred Stock as provided in this Certificate is not paid when due; or (iii)
the Corporation shall not have redeemed any shares of the Convertible
Exchangeable Preferred Stock when required pursuant to this Certificate, then,
until such breach is cured or until such dividends are paid or until such
redemption occurs: (x) the dividend rate payable pursuant to Section 1(a)
hereof shall be 7% per year of the liquidation preference of each share of
Convertible Exchangeable Preferred Stock per year and the equivalent interest
rate payable as additional dividends pursuant to Section 1(b) shall be
increased to 7.00% per annum; (y) the
<PAGE> 46
45
number of members of the Board of Directors of the Corporation shall be
increased by two, effective as of the time of election of such directors as
hereinafter provided, and the holders of the outstanding Convertible
Exchangeable Preferred Stock shall have the exclusive right, voting separately
and as a class, to elect two additional directors of the Corporation, and the
remaining directors of the Corporation shall be elected by the other class or
classes of stock entitled to vote therefor (including the Convertible
Exchangeable Preferred Stock in accordance with paragraphs (a) and (b) of
Section 2), also voting separately as a class, at each meeting of the
stockholders held for the purpose of electing directors, provided, that, if at
such time there are fewer than 2,381 shares of Convertible Exchangeable
Preferred Stock then outstanding this clause (y) shall not be applicable; and
(z) the Corporation shall not:
(1) declare or pay dividends on, or make any other distributions
of cash, properties or securities of the Corporation on or with respect to
any shares of capital stock ranking junior (either as to dividends or as
to any distribution of assets other than by way of dividends) to the
Convertible Exchangeable Preferred Stock;
<PAGE> 47
46
(2) redeem or purchase or otherwise acquire for consideration (or
make any sinking fund, purchase fund or other similar payments in respect
of) any shares of capital stock ranking (either as to dividends or as to
any distribution of assets other than by way of dividends) junior to, or
on parity with, the Convertible Exchangeable Preferred Stock, provided
that the Corporation may at any time redeem, purchase or otherwise acquire
shares of capital stock ranking on parity with the Convertible
Exchangeable Preferred Stock in exchange for shares of any capital stock
ranking junior to the Convertible Exchangeable Preferred Stock, or permit
any subsidiary of the Corporation to purchase or otherwise acquire for
consideration any shares of capital stock of the Corporation unless the
Corporation could, pursuant to this Section 5, purchase such shares at
such time and in such manner;
(3) make or permit to remain outstanding after such time when
pursuant to its terms such loan or advance would be due any loan or
advance (including any guarantee of a loan or advance by a third party) by
the Corporation or a subsidiary to any person who beneficially owns any
capital stock ranking junior
<PAGE> 48
47
(either as to dividends or as to any distribution of assets other than by
way of dividends) to the Convertible Exchangeable Preferred Stock, or any
affiliate or associate of such Person; or
(4) without the consent of the holders of at least a majority of
the number of shares of the Convertible Exchangeable Preferred Stock at
the time outstanding, given in person or by proxy, either in writing or by
vote at a special meeting called for the purpose, redeem or purchase or
otherwise acquire for consideration or offer to redeem, purchase or
acquire for consideration any shares of Convertible Exchangeable Preferred
Stock except as provided in Section 4 and Section 7;
provided, that if at such time there are fewer than 2,381 shares of Convertible
Exchangeable Preferred Stock outstanding, this clause (z) shall be applicable
only in the case of a Restriction Event described above in clause (ii) or (iii)
of this sentence.
(b) The foregoing right of the holders of the Convertible
Exchangeable Preferred Stock with respect to the election of two directors may
be exercised initially by written consent or at any special meeting of holders
of the Convertible Exchangeable Preferred Stock called as
<PAGE> 49
48
hereinafter provided, or at any annual meeting of stockholders held for the
purpose of electing directors, and thereafter at each such annual meeting until
such right terminates as provided herein. If the right to elect directors
shall have accrued to the holders of the Convertible Exchangeable Preferred
Stock more than 90 days preceding the date established for the next annual
meeting of stockholders, the President of the Corporation shall, within 20 days
after the delivery to the Corporation at its principal office of a written
request for a special meeting signed by the holders of at least ten percent
(10%) of the Convertible Exchangeable Preferred Stock then outstanding, call a
special meeting of the holders of the Convertible Exchangeable Preferred Stock
to be held within 60 days after the delivery of such request for the purpose of
electing such additional directors. At any such meeting, the presence in
person or by proxy of the holders of shares representing more than 50% in
voting power of the then outstanding shares of Convertible Exchangeable
Preferred Stock shall be required and shall be sufficient to constitute a
quorum of such class for the election of directors by such class. At such time
as all arrears in dividends on the Convertible Exchangeable Preferred Stock
shall have been paid and dividends thereon for the current
<PAGE> 50
49
dividend period shall have been paid or declared and set apart for payment, the
mandatory redemption obligation (if then due) shall have been satisfied in full
or all necessary funds for the satisfaction of such redemption obligation have
been set apart for payment, all breaches of the Stock Purchase Agreement shall
have been cured and no other Restriction Events shall be continuing, the right
of the Convertible Exchangeable Preferred Stock to vote for directors as
provided in this Section 5 (but not any voting rights set forth in Section 2)
shall terminate and the term of office of any director(s) then in office who
were elected by the Convertible Exchangeable Preferred Stock pursuant to this
Section 5 shall terminate.
In case any vacancy shall occur among the directors elected by
the holders of shares of Convertible Exchangeable Preferred Stock, such
vacancy may be filled for the unexpired portion of the term by vote of the
remaining director theretofore elected by such holders (if there is a
remaining director), or such director's successor in office. If any such
vacancy is not so filled within 20 days after the creation thereof or if
both directors so elected by the holders of Convertible Exchangeable
Preferred Stock shall cease to serve as directors before their terms
<PAGE> 51
50
shall expire, the holders of the Convertible Exchangeable Preferred Stock
then outstanding and entitled to vote for such directors may, by written
consent or at a special meeting of such holders called as provided herein,
elect successors to hold office for the unexpired terms of the directors
whose places shall be vacant.
Section 6. Liquidation Preference.
In the event of a liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of Convertible
Exchangeable Preferred Stock shall be entitled to receive out of the assets of
the Corporation, whether such assets are stated capital or surplus of any
nature, an amount equal to the dividends accrued and unpaid thereon to the date
of final distribution to such holders, whether or not declared, together with
any additional dividends pursuant to Section 1(b), and a sum equal to $1,050.00
per share, and no more. Such payments shall be made before any payment shall
be made or any assets distributed to the holders of Common Stock or any other
class or series of the Corporation's capital stock ranking junior as to
liquidation rights to the
<PAGE> 52
51
Convertible Exchangeable Preferred Stock (the "Junior Liquidation Stock"). The
entire assets of the Corporation available for distribution shall be
distributed ratably among the holders of the Convertible Exchange Preferred
Stock and any other class or series of the Corporation's capital stock now
existing or which may hereafter be created having parity as to liquidation
rights with the Convertible Exchangeable Preferred Stock in proportion to the
respective preferential amounts to which each is entitled (but only to an
extent of such preferential amounts). Neither a consolidation, merger or other
business combination of the Corporation's assets for cash, securities or other
property shall be considered a liquidation, dissolution or winding up of the
Corporation for purposes of this Section 6 (unless in connection therewith the
liquidation of the Corporation is specifically approved).
Section 7. Optional and Mandatory Redemption.
(a) Except as provided in Section 9, the Corporation may not redeem
the Convertible Exchangeable Preferred Stock prior to April 15, 1997.
(b) The Corporation, at its option, may at any time on and after
April 15, 1997, and prior to April 15,
<PAGE> 53
52
1998, redeem the Convertible Exchangeable Preferred Stock in whole or in part,
at a cash redemption price per share equal to 105.25% of the liquidation
preference, (provided that the Corporation simultaneously declares and pays all
dividends on the Convertible Exchangeable Preferred Stock accrued and unpaid
thereon pro rata to the date fixed for redemption, together with any additional
dividends pursuant to Section 1(b)) if the daily Closing Price (as defined in
Section 3(c)) per share of the Common Stock for any 20 consecutive trading day
period that ends at any time during the period commencing on or after April 15,
1997, and ending prior to April 15, 1998, is greater than or equal to 175% of
the then current Conversion Price.
(c) The Corporation, at its option, may at any time on and after
April 15, 1998, and prior to April 15, 1999, redeem the Convertible
Exchangeable Preferred Stock in whole or in part, at a cash redemption price
per share equal to 104.50% of the liquidation preference, provided that the
Corporation simultaneously declares and pays in cash all dividends on the
Convertible Exchangeable Preferred Stock accrued and unpaid thereon, pro rata
to the date fixed for redemption, together with any additional dividends
pursuant to Section 1(b), if the daily Closing Price per share of the Common
Stock for any 20 consecutive trading day period that
<PAGE> 54
53
ends at any time during the period commencing on or after April 15, 1998, and
ending prior to April 15, 1999, is greater than or equal to 150% of the then
current Conversion Price.
(d) The Corporation, at its option, may at any time on and after
April 15, 1999, redeem the Convertible Exchangeable Preferred Stock in whole or
in part at the applicable cash redemption prices per share (expressed as a
percentage of the liquidation preference) set forth below:
<TABLE>
<CAPTION>
Redemption Period Redemption Price
----------------- ----------------
<S> <C>
April 15, 1999, through April 14, 2000 103.75%
April 15, 2000, through April 14, 2001 103.00%
April 15, 2001, through April 14, 2002 102.25%
April 15, 2002, through April 14, 2003 101.50%
April 15, 2003, through April 14, 2004 100.75%
</TABLE>
provided that the Corporation simultaneously declares and pays in cash all
dividends on the Convertible Exchangeable Preferred Stock accrued and unpaid
thereon, pro rata to the date fixed for redemption together with any additional
dividends pursuant to Section 1(b).
(e) On April 15, 2004, the Corporation shall redeem all outstanding
shares of Convertible Exchangeable
<PAGE> 55
54
Preferred Stock at a redemption price equal to the liquidation preference per
share, provided that the Corporation simultaneously declares and pays all
accrued and unpaid dividends to and including the date of redemption, together
with any additional dividends pursuant to Section 1(b). The redemption price
shall be paid, at the Corporation's option, in cash or in shares of Common
Stock. If the redemption price is paid in shares of Common Stock, each share
of Common Stock shall be valued at the product of (1) .95 and (2) the average
of the daily Closing Prices per share of the Common Stock for the 20
consecutive trading days immediately preceding the redemption date.
(f) Not more than 30 nor less than 15 days prior to the redemption
date, notice by first class mail, postage prepaid, shall be given to each
holder of record of the Convertible Exchangeable Preferred Stock to be
redeemed, at such holder's address as it shall appear upon the stock transfer
books of the Corporation. Each such notice of redemption shall be irrevocable
and shall specify the date fixed for redemption, the Redemption Price (or the
method by which such price will be determined), whether such redemption price
shall be paid in cash or in shares of Common Stock, the identification of the
shares to be redeemed (if fewer than all the outstanding shares are to be
<PAGE> 56
55
redeemed), the place or places of payment, that payment will be made upon
presentation and surrender of the certificate(s) evidencing the shares of
Convertible Exchangeable Preferred Stock to be redeemed, that on and after the
redemption date, dividends will cease to accrue on such shares, the then
effective Conversion Price pursuant to Section 3 and that the right of holders
to convert shares called for redemption shall terminate at the close of
business on the redemption date (unless the Corporation defaults in the payment
of the Redemption Price).
(g) Any notice that is mailed as herein provided shall be
conclusively presumed to have been duly given, whether or not the holder of the
Convertible Exchangeable Preferred Stock receives such notice; and failure to
give such notice by mail, or any defect in such notice, to the holders of any
shares designated for redemption shall not affect the validity of the
proceedings for the redemption of any other shares of Convertible Exchangeable
Preferred Stock. On or after the date fixed for redemption as stated in such
notice, each holder of the shares called for redemption shall surrender the
certificate evidencing such shares to the Corporation at the place designated
in such notice and shall thereupon be entitled to receive payment of the
Redemption Price in the manner set forth in the notice.
<PAGE> 57
56
If fewer than all the shares represented by any such surrendered certificate
are redeemed, a new certificate shall be issued representing the unredeemed
shares. If, on the date fixed for redemption, funds (or shares of Common
Stock) necessary for the redemption shall be available therefor and shall have
been irrevocably deposited or set aside, then, notwithstanding that the
certificates evidencing any shares so called for redemption shall not have been
surrendered the dividends with respect to the shares so called shall cease to
accrue after the date fixed for redemption, the shares shall no longer be
deemed outstanding, the holders thereof shall cease to be stockholders, and all
rights whatsoever with respect to the shares so called for redemption (except
the right of the holders to receive the Redemption Price without interest upon
surrender of their certificates therefor) shall terminate.
(h) In the event that any shares of Convertible Exchangeable
Preferred Stock shall be converted into Common Stock pursuant to Section 3,
then (i) the Corporation shall not have the right to redeem such shares and
(ii) any funds which shall have been deposited for the payment of the
Redemption Price for such shares shall be returned to the Corporation
immediately after such conversion (subject to
<PAGE> 58
57
declared dividends payable to holders of shares of Convertible Exchangeable
Preferred Stock on the record date for such dividends being so payable, to the
extent set forth in Section 3 hereof, regardless of whether such shares are
converted subsequent to such record date and prior to the related dividend
payment date).
(i) If fewer than all the shares outstanding are to be redeemed, the
Corporation shall select the shares to be redeemed pro rata.
Section 8. Rank.
All shares of Convertible Exchangeable Preferred Stock shall rank,
both as to payment of dividends and as to distribution of assets upon
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, prior to or pari passu with all classes and series of the
Corporation's Preferred Stock, par value $.10 per share, and prior to all of
the Corporation's now or hereafter issued Common Stock. The term "Common
Stock" shall mean the Common Stock, $.01 par value per share, of the
Corporation as the same exists at the date hereof or as such stock may be
constituted from time to time, except that for the purpose of Section 3, the
term "Common Stock" shall
<PAGE> 59
58
also mean and include stock of the Corporation of any class, whether now or
hereafter authorized, which shall have the right to participate in the
distribution of either dividends or assets of the Corporation upon liquidation,
dissolution or winding up, without limit as to the amount or percentage.
Section 9. Redemption by Exchange for Notes.
(a) The shares of Convertible Exchangeable Preferred Stock are
redeemable at the option of the Corporation, in whole but not in part, on any
date, by exchanging such shares for the 6% Convertible Subordinated Notes due
2004 (the "Notes") of the Corporation, which shall be in substantially the form
filed as an exhibit to the Stock Purchase Agreement dated April 15, 1994, among
the Corporation and Corporate Partners, L.P., Corporate Offshore Partners,
L.P., and the State Board of Administration of Florida, completed as set forth
therein and with such changes as may be required by law. Holders of the
outstanding shares of Convertible Exchangeable Preferred Stock will be entitled
to receive a principal amount of the Notes equal to the liquidation preference
of each share of Convertible Exchangeable Preferred Stock held by them at the
time of exchange, and the Corporation shall simultaneously
<PAGE> 60
59
declare and pay in cash all dividends on the Convertible Exchangeable Preferred
Stock accrued and unpaid to the date of such exchange.
(b) Notwithstanding the foregoing, no such redemption by exchange
of shares of Convertible Exchangeable Preferred Stock for Notes shall be made
unless (a)(i) the Corporation shall not be in arrears with respect to the
payment of any dividends (including cumulative dividends, if applicable) on
Convertible Exchangeable Preferred Stock or on any shares of preferred stock of
the Corporation ranking, as to dividends, prior to or on a parity with the
Convertible Exchangeable Preferred Stock, and (ii) such exchange shall on such
date not be prohibited by applicable law, and (b) on or prior to the date on
which such exchange is to be made (i) the Notes shall have been executed and
delivered by the Corporation and (ii) the holders of Convertible Exchangeable
Preferred Stock shall have received an opinion of counsel to the Corporation
dated such date, substantially to the following effect:
(1) the Corporation has duly authorized the exercise of its right to
redeem the Convertible Exchangeable Preferred Stock in exchange for the
Notes and has exercised such option; (2) the Corporation has full
corporate power and authority to issue and deliver
<PAGE> 61
60
the Notes; (3) the Notes constitute legal, valid and binding obligations
of the Corporation enforceable against the Corporation in accordance with
their terms (subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting
creditors' rights generally from time to time in effect and to general
equitable principles); (4) no consent, approval, authorization or order of
any court or governmental agency or body is required to be obtained by the
Corporation in connection with the issuance of the Notes and the exchange
of the Shares for the Notes, except such approvals (specified in such
opinion) as have been obtained; and (5) the issuance of the Notes and the
performance by the Corporation of its obligations thereunder and the
exchange of the Shares for the Notes will not be in conflict with or
constitute a breach of or a default (with the passage of time or
otherwise) under (w) the Restated Certificate of Incorporation or Bylaws
of the Corporation in effect at the date of such opinion, (x) the
certificate of incorporation or bylaws of any subsidiary of the
Corporation, which conflict, breach or default is material to the
Corporation and its subsidiaries taken as a whole, in effect at the
<PAGE> 62
61
date of such opinion, (y) any agreement or instrument, known to such
counsel, to which the Corporation or any of its subsidiaries is a party or
by which it or any of its subsidiaries is bound or (z) any statute, law or
regulation known to such counsel and in effect at the date of such opinion
to which the Corporation or any of its subsidiaries or any of their
respective properties may be subject or any judgment, decree or order,
known to such counsel, of any court or governmental agency or authority
then in effect and applicable to the Corporation or any of its
subsidiaries (which conflict, breach or default is, in the case of clauses
(y) or (z), individually or in the aggregate, material to the Corporation
and its subsidiaries taken as a whole).
Upon such exchange, the rights of the holders of the Convertible
Exchangeable Preferred Stock as stockholders of the Corporation shall cease
(except the right to receive on the date of exchange an amount in cash equal to
the amount of accrued and unpaid dividends on the Convertible Exchangeable
Preferred Stock to the date of exchange, together with any additional dividends
pursuant to Section 1(b), and the Notes), and the person or persons entitled to
receive the Notes issuable upon such redemption
<PAGE> 63
62
and exchange shall be treated for all purposes as the registered holder or
holders of such Notes.
(d) The Corporation will mail to each holder of record of
Convertible Exchangeable Preferred Stock, at such holder's last address as it
shall appear upon the stock transfer books of the Corporation, written notice
of its intention to redeem the shares of Convertible Exchangeable Preferred
Stock by exchanging such Shares for the Notes not less than 15 nor more than 30
days prior to the exchange date. Such notice shall be irrevocable and shall
state: (i) the exchange date; (ii) the place or places where certificates for
such shares are to be surrendered for exchange for Notes; and (iii) that
dividends on the shares to be exchanged will cease to accrue on such exchange
date. Upon surrender in accordance with said notice of the certificates for
any shares to be exchanged (properly endorsed or assigned for transfer, if the
Corporation shall so require and the notice shall so state), the Corporation
will cause the Notes to be authenticated and issued in exchange for such shares
of Convertible Exchangeable Preferred Stock and to be mailed to the holder of
the shares of Convertible Exchangeable Preferred Stock at such holder's address
of record or such other address as the holder shall specify upon such surrender
of such certificates.
<PAGE> 64
63
(e) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect to the issue or delivery of
Notes upon exchange of shares of Convertible Exchangeable Preferred Stock.
Section 10. Exchange of Convertible Exchangeable Preferred Stock
for Common Stock.
(a) Subject to and upon compliance with the provisions of this
Section 10, each share of Convertible Exchangeable Preferred Stock shall, at
the option of the holder thereof, be exchangeable (but only if notice of such
exchange is given by such holder during an Exchange Period (as defined below))
into that number of fully paid and nonassessable shares of Common Stock
(calculated as to each exchange to the nearest 1/100 of a share) obtained by
dividing $1,050.00 by the Exchange Price (as defined below) applicable to such
exchange, provided that the Corporation simultaneously declares and pays all
dividends accrued and unpaid on the Convertible Exchangeable Preferred Stock.
In order to exercise the exchange privilege, the holder of one or more shares
of Convertible Exchangeable Preferred Stock to be exchanged shall deliver an
Exchange Notice to the Corporation stating its intent to effect such exchange,
which Exchange Notice must be received by the Corporation during an Exchange
Period and must specify an Exchange Date
<PAGE> 65
64
not more than 30 nor less than 10 business days after the date such notice is
delivered, upon which Exchange Date such holder shall surrender such shares to
the office maintained for such purpose by the Corporation.
(b) For purposes of this Section 10;
(i) "Exchange Date" shall mean the date (which shall not be a Saturday,
Sunday or legal holiday) specified in an Exchange Notice delivered to the
Corporation upon which the conversion shall be effected, which date shall not
be less than 10 and not more than 30 business days after the date such Exchange
Notice is delivered to the Corporation.
(ii) "Exchange Notice" shall mean a written notice delivered by a holder
of Convertible Exchangeable Preferred Stock to the Corporation during an
Exchange Period stating that such holder has elected to exchange the number of
shares specified therein for shares of Common Stock and specifying the Exchange
Date for such exchange. Such notice shall also state the name or names,
together with the address or addresses, in which the certificates for shares of
Common Stock which shall be issuable in such conversion shall be issued.
<PAGE> 66
65
(iii) "Exchange Period" shall mean
April 15 through April 29, 1999
April 15 through April 29, 2000
April 15 through April 29, 2001
April 15 through April 29, 2002
April 15 through April 29, 2003
(iv) "Exchange Price" per share of Common Stock with respect to any
exchange shall be deemed to be the average of the daily Closing Prices per
share for the 20 consecutive trading days ending on the trading day immediately
preceding the Exchange Date; provided, however, that the Exchange Price shall
not be less than $5.00 per share (the "Minimum Exchange Price"); provided
further, however, that if any of the events described in Section 3 hereof shall
occur, then and in each such case, the Minimum Exchange Price in effect
immediately prior thereto shall be appropriately adjusted in the same manner as
the Conversion Price would be adjusted with respect to such event. Such
adjustment shall be made whenever any of such events shall happen, but shall
also be effective retroactively as to shares of Convertible Exchangeable
Preferred Stock exchanged between such record date and the date of the
happening of any such event.
(c) Each exchange shall be deemed to have been effected immediately
prior to the close of business on the
<PAGE> 67
66
Exchange Date, and the person or persons in whose name or names any certificate
or certificates for shares of Common Stock shall be issuable upon such exchange
shall be deemed to have become the holder or holders of record of the shares
represented thereby at such time on such date, and such exchange shall be at
the Exchange Price in effect at such time on such date, unless the stock
transfer books of the Corporation shall be closed on that date, in which event
such person or persons shall be deemed to have become such holder or holders of
record at the close of business on the next succeeding day on which such stock
transfer books are open, but such conversion shall be at the Exchange Price in
effect on the Exchange Date.
(d) No fractional shares or scrip representing fractions of shares
of Common Stock shall be issued upon exchange of Preferred Stock. If more than
one share of Convertible Exchangeable Preferred Stock shall be surrendered for
exchange at one time by the same holder the number of full shares of Common
Stock issuable upon conversion thereof shall be computed on the basis of the
aggregate of $1,050.00 for each such share so surrendered. Instead of any
fractional interest in a share of Common Stock which would otherwise be
delivered upon the exchange of any shares of Convertible Exchangeable Preferred
Stock,
<PAGE> 68
67
the Corporation shall pay to the holder of such shares an amount in cash
(computed to the nearest cent) equal to the Exchange Price multiplied by the
fractional interest (expressed as a percentage) that otherwise would have been
deliverable upon conversion of such share.
(e) If a holder of shares of Convertible Exchangeable Preferred
Stock shall have delivered an Exchange Notice with respect to some or all of
such holder's shares, the Corporation may, at its option, in lieu of issuing
shares of Common Stock to such holder on the applicable Exchange Rate, redeem
all but not less than all of the shares of Convertible Exchangeable Preferred
Stock to be exchanged at a cash redemption price per share of Convertible
Exchangeable Preferred Stock equal to the liquidation preference, provided that
the Corporation simultaneously declares and pays in cash all dividends on the
Convertible Exchangeable Preferred Stock accrued and unpaid thereon.
(f) If the Corporation elects to redeem shares of Convertible
Exchangeable Preferred Stock with respect to which an Exchange Notice shall
have been herein delivered, the Corporation shall give notice to such holder by
first class mail, postage prepaid, not less than 5 business days prior to the
Exchange Date, at such holder's address as it
<PAGE> 69
68
shall appear upon the stock transfer books of the Corporation. Each such
notice of redemption shall specify the date fixed for redemption (which shall
be the Exchange Date), the redemption price, the place or places or payment,
that payment will be made upon presentation and surrender of the certificate(s)
evidencing the shares of Convertible Exchangeable Preferred Stock to be
redeemed and that on and after the redemption date, dividends will cease to
accrue on such shares.
(g) Any notice that is mailed as herein provided shall be
conclusively presumed to have been duly given, whether or not the holder of the
Convertible Exchangeable Preferred Stock receives such notice; and failure to
give such notice by mail, or any defect in such notice, to the holders of any
shares designated for redemption shall not affect the validity of the
proceedings for the redemption of any other shares of Convertible Exchangeable
Preferred Stock. On or after the date fixed for redemption as stated in such
notice, each holder of the shares called for redemption shall surrender the
certificate evidencing such shares to the Corporation at the place designated
in such notice and shall thereupon be entitled to receive payment of the
redemption price. If fewer than all the shares represented by any such
surrendered certificate are
<PAGE> 70
69
redeemed, a new certificate shall be issued representing the unredeemed shares.
If, on the date fixed for redemption, funds necessary for the redemption shall
be available therefor and shall have been irrevocably deposited or set aside,
then, notwithstanding that the certificates evidencing any shares so called for
redemption shall not have been surrendered, the dividends with respect to the
shares so called shall cease to accrue after the date fixed for redemption, the
shares shall no longer be deemed outstanding, the holders thereof shall cease
to be stockholders, and all rights whatsoever with respect to the shares so
called for redemption (except the right of the holders to receive the
redemption price without interest upon surrender of their certificates
therefor) shall terminate.
Section 11. Notice. All notices hereunder shall be in writing.
IN WITNESS WHEREOF, Tyco Toys, Inc. has caused this Certificate to
be signed and acknowledged by its Vice
<PAGE> 71
70
Chairman and its corporate seal to be hereunto affixed and attested by the
Secretary, this the 15th day of April, 1994.
TYCO TOYS, INC.
By /s/ Harry J. Pearce
-----------------------
Name: Harry J. Pearce
Title: Vice Chairman
Attest: /s/ R. Michael Kennedy, Jr.
---------------------------
Name: R. Michael Kennedy, Jr.
Title: Secretary
<PAGE> 1
EXHIBIT 5 - Registration Rights Agreement,
dated as of April 15, 1994,
among the Purchasers and the
Company
<PAGE> 2
CONFORMED COPY
REGISTRATION RIGHTS AGREEMENT dated as of
April 15, 1994 by and among TYCO TOYS, INC., a
Delaware corporation (the "Company"), CORPORATE
PARTNERS, L.P., a Delaware limited partnership
("Corporate Partners"), CORPORATE OFFSHORE PARTNERS,
L.P., a Bermuda limited partnership ("Offshore
Partners", and collectively with Corporate Partners,
the "Partnerships"), and THE STATE BOARD OF
ADMINISTRATION OF FLORIDA, a body corporate organized
under the constitution of the State of Florida (the
"State Board", and collectively with the
Partnerships, the "Purchasers").
This Agreement is made pursuant to the Stock Purchase
Agreement (the "Purchase Agreement"), dated as of April 15, 1994, by and among
the Company and the Purchasers, whereby the Company has agreed, among other
things, to issue 47,619 shares (which number may be increased if and to the
extent additional shares are issued in respect of accrued dividends) of its
Series B Voting Convertible Exchangeable Preferred Stock, par value $0.10 per
share (the "Preferred Stock") to the Purchasers. The Preferred Stock is
convertible into shares of the Company's common stock, par
<PAGE> 3
2
value $.10 per share (the "Common Stock") at $10.50 per share, as such price
may be adjusted pursuant to the Purchase Agreement. The Preferred Stock is
also exchangeable in certain circumstances into Common Stock, and is
exchangeable in certain circumstances into the Company's 6% Convertible
Subordinated Notes Due 2004 (the "Notes"), which shall be in substantially the
form filed as an exhibit to the Purchase Agreement.
In order to induce the Purchasers to enter into the Purchase
Agreement, the Company has agreed to provide the registration rights set forth
in this Agreement. This Agreement shall become effective upon the issuance of
the initial shares of Preferred Stock to the Purchasers pursuant to the
Purchase Agreement.
In consideration of the foregoing and the respective covenants
and agreements herein contained, the parties hereto, intending to be legally
bound hereby, agree as follows:
<PAGE> 4
3
SECTION 1. Definitions. Capitalized terms used and not
defined herein have the meanings assigned to such terms in the Purchase
Agreement. As used herein, unless the context otherwise requires, the
following terms have the following respective meanings:
"Blue Sky Filing" is defined in Section 2.07 of this Agreement.
"Commission" means the Securities and Exchange Commission or
any other Federal agency at the time administering the Securities Act.
"Common Stock" is defined in the introduction to this
Agreement.
"Company" is defined in the introduction to this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
Reference to a particular section therein shall include a reference to the
comparable section, if any, of any such successor Federal statute.
"Preferred Stock" is defined in the introduction to this
Agreement.
<PAGE> 5
4
"Person" means a corporation, an association, a partnership,
an organization, a business, an individual, a governmental or political
subdivision thereof or a governmental agency.
"Purchase Agreement" is defined in the introduction to this
Agreement.
"Purchasers" is defined in the introduction to this Agreement.
"Registrable Securities" means any (i) shares of Preferred
Stock, (ii) Notes, (iii) shares of Common Stock issued upon the conversion or
exchange of the Preferred Stock or the Notes and (iv) securities issued or
issuable with respect to any shares of Preferred Stock, the Notes or Common
Stock by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Registrable Securities, once
issued such securities shall cease to be Registrable Securities when (a) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (b) they shall have
been sold to the public pursuant to Rule 144 (or any successor provision) under
the Securities Act, (c) they
<PAGE> 6
5
shall have been otherwise transferred, new certificates for them not bearing a
legend restricting further transfer shall have been delivered by the Company
and in the opinion of counsel reasonably satisfactory to the Company subsequent
public distribution of them shall not require registration or qualification of
them under the Securities Act or any similar state law then in force, or (d)
they shall have ceased to be outstanding.
"Registration Expenses" is defined in Section 2.09(a) of this
Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
or any successor Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
References to a particular section therein shall include a reference to the
comparable section, if any, of any such similar Federal statute.
SECTION 2. Registration under Securities Act.
SECTION 2.01. Demand Registration. (a) Request. At any time after
the date hereof, upon the written request of the Partnerships and Corporate
Advisors, L.P., a Delaware limited partnership acting on behalf of the State
Board ("Corporate Advisors"), that the Company effect the registration under
the Securities Act of all or part
<PAGE> 7
6
(subject to Section 2.01(f)) of the Purchasers' Registrable Securities and
specifying the types of Registrable Securities to be registered and the
intended method of disposition thereof, the Company will give prompt written
notice of such request to all registered holders of Registrable Securities, and
thereupon the Company will use its best efforts to effect the registration
under the Securities Act of:
(i) the Registrable Securities which the Company has been
requested to register by the Purchasers, and
(ii) all other Registrable Securities which the Company has
been requested to register by written request of the holders thereof
given to the Company within 30 days after the giving of the aforesaid
written notice by the Company (specifying the intended method of
disposition of such Registrable Securities), all to the extent
requisite to permit the intended disposition of the Registrable
Securities to be so registered.
(b) Registration of Other Securities. Whenever the Company
shall effect a registration pursuant to this Section 2.01 in connection with an
underwritten offering by one or more holders of Registrable Securities, no
securities other than Registrable Securities shall be included among
<PAGE> 8
7
the securities covered by such registration unless (i) the managing underwriter
of such offering shall have advised the Purchasers in writing that the
inclusion of such other securities would not adversely affect such offering or
(ii) the Purchasers shall have consented in writing to the inclusion of such
other securities.
(c) Registration Statement Form. Registrations under this
Section 2.01 shall be on such appropriate registration form of the Commission
(i) as shall be selected by the Company and (ii) as shall permit the
disposition of such Registrable Securities in accordance with the intended
method or methods of disposition specified in their request for such
registration; provided, however, that if at the time of such registration the
Company satisfies the eligibility requirements for use of a registration
statement on Form S-3 under the Securities Act, the Purchasers may request a
registration on Form S-3 for an offering to be made on a continuous basis
pursuant to Rule 415 under the Securities Act (a "Shelf Registration") and the
Company shall use all reasonable efforts to cause the registration to be made
on such form. The Company agrees to include in any such registration statement
all information which, in the opinion of counsel to the Purchasers or counsel
to the Company, is required to be included.
<PAGE> 9
8
(d) Effective Registration Statement. A registration
requested pursuant to this Section 2.01 shall not be deemed to have been
effected and will not be considered one of the three demand registrations which
may be requested pursuant to this Agreement (i) if the registration statement
with respect thereto does not become effective, (ii) if after it has become
effective, it does not remain effective for a period of at least 180 days or,
in the case of a Shelf Registration, one year (or in each case such shorter
period during which all the Registrable Securities registered thereunder are
sold or disposed of) or such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other
governmental agency or court for any reason and has not thereafter become
effective, or (iii) if the conditions to closing specified in the underwriting
agreement entered into in connection with such registration are not satisfied
or waived other than by reason of the failure or refusal of a holder of
Registrable Securities to satisfy or perform a condition to such closing or a
default by an underwriter. If a demand is made pursuant to Section 2.01 and
the Company files a registration statement and causes (or is in the process of
causing) such registration statement to become effective and the holders
requesting registration decide not
<PAGE> 10
9
to proceed with such registration for reasons other than a breach by the
Company of its obligations hereunder or the Company's inability or failure to
obtain the effectiveness of such registration statement, such request shall
nevertheless count as one demand under Section 2.01.
(e) Priority in Demand Registrations. If a demand
registration pursuant to this Section 2.01 involves an underwritten offering,
and the managing underwriter shall advise the Company in writing (with a copy
sent to each holder of the Registrable Securities requesting registration) that
the number of securities requested to be included in such registration exceeds
the number which can be sold in such offering within a price range acceptable
to the Purchasers or such other person entitled to make a demand registration
pursuant to Section 8 hereof, such registration will include only that number
of Registrable Securities which the Company is so advised can be sold in such
offering, drawn pro rata from the holders of the Registrable Securities
requesting such registration on the basis of the percentage of Registrable
Securities held by the holders of Registrable Securities which have requested
that such securities be included. In connection with any such registration, no
securities other than Registrable Securities shall be covered by such
registration.
<PAGE> 11
10
(f) Limitations on Registration; Expenses. The Company will
not be required to effect, in the aggregate, more than three demand
registrations pursuant to this Section 2.01 (or any other provision of this
Agreement), of which, subject to Section 1.02(b), the Company shall pay all
Registration Expenses in connection with two of the three demand registrations,
and the selling holders of Registrable Securities shall pay the Registration
Expenses incurred in connection with the remaining demand registration except
as set forth in Section 2.09(b). The Purchasers shall specify in the notice
pursuant to Section 2.1(a) whether any demand registration shall be at the
Company's expense. The Company shall not be required to effectuate any
registration pursuant to this Section 2.01 within less than six months after
the end of the effectiveness period of any other registration pursuant to
Section 2.01. Notwithstanding the foregoing, no demand may be made in respect
of a number (or principal amount) of Registrable Securities by all holders
demanding registration which is less than the lesser of (x) 25% of the total
Registrable Securities originally issued (or the equivalent thereof in the case
of securities issued upon the exchange or conversion thereof) or (y) the number
(or principal amount) of Registrable Securities having a
<PAGE> 12
11
market value (as reasonably estimated in good faith by the holders requesting
registration) of at least $20,000,000.
SECTION 2.02. Incidental Registration. (a) Right to Include
the Registrable Securities. If the Company at any time proposes to register
any of its securities under the Securities Act by registration on Forms S-1,
S-2 or S-3 or any successor or similar form(s), whether or not for sale for its
own account, it will each such time give prompt written notice to the
Purchasers and all other holders of Registrable Securities of its intention to
do so and of such holders' rights under this Section 2.02. Upon the written
request of any such holder, or by Corporate Advisors acting on behalf of the
State Board as a holder (specifying the Registrable Securities intended to be
disposed of by such holder and the intended method of disposition thereof),
made within 30 days after the receipt of any such notice (10 days if the
Company gives telephonic notice to all holders of Registrable Securities, with
written confirmation to follow promptly thereafter, stating that (i) such
registration will be on Form S-3 and (ii) such shorter period of time is
required because of a planned filing date) (which request shall specify the
Registrable Securities to be disposed of by such holder), the Company will,
subject to the next sentence, use its best efforts to
<PAGE> 13
12
effect the registration under the Securities Act of all Registrable Securities
which the Company has been so requested to register by the holders thereof, to
the extent requisite to permit the disposition of such Registrable Securities
to be so registered. If the Company thereafter determines for any reason not
to register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to each holder of
Registrable Securities and, thereupon, (i) in the case of a determination not
to register, shall be relieved of the obligation to register such Registrable
Securities in connection with such registration (but not from any obligation of
the Company to pay the Registration Expenses in connection therewith), without
prejudice, however, to the rights (if any) of the Purchasers or an assignee to
request that such registration be effected as a registration under Section
2.01, and (ii) in the case of a determination to delay registration, shall be
permitted to delay registering any Registrable Securities, for the same period
as the delay in registration of such other securities. All obligations of the
Company with respect to any registration described in this Section 2.02(a)
shall be subject to the rights of the Company set forth in the immediately
preceding sentence. No registration effected under this Section 2.02 shall
relieve
<PAGE> 14
13
the Company of its obligation to effect any registration upon request under
Section 2.01. The Company will pay all Registration Expenses in connection
with registration of Registrable Securities requested pursuant to this Section
2.02. If such offering is to be underwritten, the holders seeking to sell such
Registrable Securities agree to join in such underwritten offering.
(b) Priority in Incidental Registrations. In a registration
pursuant to this Section 2.02 involving an underwritten offering of the
securities so being registered, whether or not for sale for the account of the
Company by or through one or more underwriters of recognized standing, if the
managing underwriter of such underwritten offering shall inform the Company and
the holders of Registrable Securities requesting registration in such offering
by letter of its belief that the number or type of securities to be included in
such registration would materially adversely affect its ability to effect such
offering, then the Company will be required to include in such registration
only that number and type of Registrable Securities which it is so advised can
be sold in such offering, drawn pro rata from the holders of Registrable
Securities requesting such registration on the basis of the percentage of
Registrable Securities held by the holders of Registrable Securities
<PAGE> 15
14
which have requested that such securities be included (it being understood that
this provision shall not limit the number of securities that the Company or any
holder of securities exercising a demand registration right shall be entitled
to register for sale for their own respective accounts).
SECTION 2.03. Registration Procedures. In connection with
the Company's obligations pursuant to Sections 2.01 and 2.02 hereof, the
Company will use its best efforts to effect such registrations to permit the
sale of Registrable Securities in accordance with the intended method or
methods of disposition thereof, and pursuant thereto the Company will as
expeditiously as possible:
(a) prepare (as soon as possible and in any event within 45
days after the end of the period within which requests for
registration may be given to the Company), and file with the
Commission (but not earlier than 90 days after the end of the
Company's fiscal year or 45 days after the end of the last fiscal
quarter), a registration statement or registration statements on the
appropriate form under the Securities Act, which form shall be
available for the sale of the Registrable Securities by the holders
thereof in accordance with the intended method or methods of
distribution thereof,
<PAGE> 16
15
and use its best efforts to cause such registration statement to
become effective and to remain continuously effective for a period of
180 days following the date on which such registration statement is
declared effective (or, in the case of a Shelf Registration, for a
period of one year following such date); provided that the Company
shall have no obligation to maintain the effectiveness of such
registration statement after the sale of all Registrable Securities
registered thereunder or for a period longer than that specified in
this paragraph (a);
(b) prepare and file with the Commission such amendments and
post-effective amendments to a registration statement as may be
necessary to keep such registration statement effective for the
applicable period; cause the related prospectus to be supplemented by
any required prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Securities Act; and comply with the
provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement during the
applicable period in accordance with the intended methods of
disposition by the sellers thereof
<PAGE> 17
16
set forth in such registration statement or supplement to such
prospectus;
(c) notify the selling holders of Registrable Securities, and
the managing underwriters, if any, promptly, and (if requested by any
such Person) confirm such advice in writing, (i) when a prospectus or
any prospectus supplement or post-effective amendment has been filed,
and, with respect to a registration statement or any post-effective
amendment, when the same has become effective, (ii) of any request by
the Commission for amendments or supplements to a registration
statement or related prospectus or for additional information, (iii)
of the issuance by the Commission of any stop order suspending the
effectiveness of a registration statement or the initiation of any
proceedings for that purpose, (iv) if at any time the representations
and warranties of the Company made as contemplated by paragraph (1)
below cease to be true and correct in any material respect, (v) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of any of the Registrable Securities
for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (vi) of the happening of
<PAGE> 18
17
any event which requires the making of any changes in a registration
statement or related prospectus so that such documents will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading and (vii) if the Company reasonably
determines that a post-effective amendment to a registration statement
would be appropriate;
(d) use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending
the qualification (or exemption from qualification) of any Registrable
Securities for sale in any jurisdiction and, if any such order is
issued, to obtain the withdrawal of any such order at the earliest
possible moment.
(e) if requested by the managing underwriters or any holder of
Registrable Securities being sold in connection with an underwritten
offering, immediately incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriters
and such holder agree should be included
<PAGE> 19
18
therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to
the number of Registrable Securities being sold to such underwriters,
the purchase price being paid therefor by such underwriters and with
respect to any other terms of the underwritten (or best efforts
underwritten) offering of the Registrable Securities to be sold in
such offering; make all required filings of such prospectus supplement
or post-effective amendment as soon as notified of the matters to be
incorporated in such prospectus supplement or post-effective
amendment; and supplement or make amendments to any registration
statement if requested by any holder of Registrable Securities covered
by such registration statement or any underwriter of such Registrable
Securities;
(f) furnish to each selling holder of Registrable Securities
and each managing underwriter, without charge, at least one signed
copy of the registration statement or statements and any
post-effective amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference and all
exhibits (including those incorporated by reference);
<PAGE> 20
19
(g) deliver to each holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the prospectus
or prospectuses (including each preliminary Prospectus) and any
amendment or supplement thereto as such Persons may reasonably
request; the Company consents to the use of such prospectus or any
amendment or supplement thereto by each of the selling holders of
Registrable Securities and the underwriters, if any, in connection
with the offering and sale of the Registrable Securities covered by
such Prospectus or any amendment or supplement thereto;
(h) prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the
selling holders of Registrable Securities, the underwriters, if any,
and their respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions as any selling
holder or underwriter reasonably requests in writing; keep each such
registration or qualification effective during the period such
registration statement is required to be kept effective and do any and
all other acts or things
<PAGE> 21
20
necessary or advisable to enable the disposition in such jurisdictions
of the Registrable Securities covered by the applicable registration
statement; provided that the Company will not be required to qualify
generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general
service of process in any such jurisdiction where it is not then so
subject;
(i) cooperate with the selling holders of Registrable
Securities and the managing underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive
legends unless required by applicable law; and enable such Registrable
Securities to be in such denominations and registered in such names as
the managing underwriters may request at least two business days prior
to any sale of Registrable Securities to the underwriters;
(j) use its best efforts to cause the Registrable Securities
covered by the applicable registration statement to be registered with
or approved by such other governmental agencies or authorities as may
be necessary to enable the seller or sellers thereof or
<PAGE> 22
21
the underwriters, if any, to consummate the disposition of such
Registrable Securities;
(k) upon the occurrence of any event contemplated by paragraph
(c)(vi) above, prepare a supplement or post-effective amendment to the
applicable registration statement or related prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the
Registrable Securities being sold thereunder, such prospectus will not
contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;
(l) enter into such agreements (including an underwriting
agreement) and take all such other actions in connection therewith in
order to expedite or facilitate the disposition of such Registrable
Securities and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an
underwritten registration, (i) make such representations and
warranties to the holders of such Registrable Securities with respect
to the registration statement, prospectus and documents incorporated
by reference, if any, in form, substance
<PAGE> 23
22
and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when requested;
(ii) obtain the opinions of counsel to the Company and updates thereof
with respect to the registration statement and the prospectus in the
form, scope and substance which are customarily made in underwritten
offerings; (iii) in the case of an underwritten offering, enter into
an underwriting agreement in form, scope and substance as is customary
in underwritten offerings and obtain opinions of counsel to the
Company and updates thereof addressed to the underwriters covering the
matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by
such holders and underwriters; (iv) furnish to each seller of
Registrable Securities a signed counterpart, addressed to such seller
(and the underwriters, if any) of (x) an opinion of counsel for the
Company, which may be the general counsel of the Company, dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, dated the date
of the closing under the underwriting agreement), in form, scope and
substance reasonably satisfactory to, and addressed to, the
<PAGE> 24
23
managing underwriters, and (y) a "comfort" letter, dated the effective
date of such registration statement (and, if such registration
includes an underwritten public offering, dated the date of the
closing under the underwriting agreement), signed by the independent
public accountants who have certified the Company's financial
statements in form, scope and substance reasonably satisfactory to,
and addressed to, the managing underwriters, and included in such
registration statement, in form, scope and substance satisfactory to
the managing underwriters, and covering substantially the same matters
with respect to such registration statement (and the prospectus
included therein) and, in the case of the accountants' letter, with
respect to events subsequent to the date of such financial statements,
as are customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to the underwriters in underwritten
public offerings of securities and, in the case of the accountants'
letter, such other financial matters, and, in the case of the legal
opinion, such other legal matters, as such seller or such holder (or
the underwriters, if any) may reasonably request; (v) if an
underwriting agreement is entered into, the same shall
<PAGE> 25
24
set forth in full the indemnification provisions and procedures of
Section 2.07 hereof with respect to all parties to be indemnified
pursuant to said section, with such other indemnification provisions
as are customary and acceptable to the underwriters, the Purchasers
and the Company; and (vi) the Company shall deliver such documents and
certificates as may be requested by the holders of a majority of the
Registrable Securities sold and the managing underwriters, if any, to
evidence compliance with this clause (1) and with any customary
conditions contained in the underwriting agreement or other agreement
entered into by the Company. The above shall be done at each closing
under such underwriting or similar agreement or as and to the extent
required thereunder;
(m) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and make generally
available to its security holders earnings statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
(n) permit any holder of Registrable Securities, which holder,
in the judgment of its counsel, might be deemed to be a "control
person" of the Company (within
<PAGE> 26
25
the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), to participate in the preparation of such registration
statement and include therein material, furnished to the Company in
writing which, in the reasonable judgment of such holder and its
counsel, is required to be included therein;
(o) if any registration statement refers to any holder of
Registrable Securities by name or otherwise as the holder of any
securities of the Company, and if such holder reasonably believes it
is or may be deemed to be a control person in relation to, or an
Affiliate of, the Company, then such holder shall have the right to
require (i) the insertion in such registration statement of language,
in form and substance satisfactory to such holder, to the effect that
the ownership by such holder of such securities is not to be construed
as and is not intended to be a recommendation by such holder of the
investment quality of, or the relative merits and risks attendant to
the purchase of, the Company's securities covered thereby, and that
such ownership does not imply that such holder will assist in meeting
any future financial or operating requirements of the Company, or (ii)
in the case where the reference to such holder by name or
<PAGE> 27
26
otherwise is not required by the Securities Act or any similar federal
or state statute then in effect, the deletion of the reference to such
holder;
(p) use its best efforts to cause all such Registrable
Securities to be listed on each securities exchange, if any, on which
Registrable Securities of the type then being registered are listed;
and
(q) provide and cause to be maintained a transfer agent and
registrar (if applicable) for all Registrable Securities covered by
such registration statement from and after a date not later than the
effective date of such registration statement.
The Company may require each holder of Registrable Securities
as to which any registration is being effected to furnish to the Company such
information regarding such holder and the distribution of such Registrable
Securities as the Company may from time to time reasonably request in writing
in order to comply with the Securities Act. Each holder of Registrable
Securities as to which any registration is being effected agrees to notify the
Company, as promptly as practicable of any inaccuracy or change in information
previously furnished by such holder to the Company or of the happening of any
event in either case as a result of which any prospectus relating to such
registration
<PAGE> 28
27
contains an untrue statement of a material fact regarding such holder or the
distribution of such Registrable Securities or omits to state any material fact
regarding such holder or the distribution of such Registrable Securities or
omits to state any material fact regarding such holder or the distribution of
such Registrable Securities required to be stated therein or necessary to make
the statement therein not misleading in light of the circumstances then
existing, and to promptly furnish to the Company any additional information
required to correct and update any previously furnished information or required
such that such prospectus shall not contain, with respect to such holder or the
distribution of such Registrable Securities, an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing.
Each holder of Registrable Securities agrees that, upon
receipt of any notice from the Company of the happening of any event of the
kind described in Section 2.03(c)(ii), (iii), (v), (vi) or (vii) hereof, such
holder will forthwith discontinue disposition of such Registrable Securities
covered by such registration statement or prospectus until such holder's
receipt of the copies of the supplemented or
<PAGE> 29
28
amended prospectus relating to such registration statement or prospectus, or
until it is advised in writing by the Company that the use of the applicable
prospectus may be resumed, and has received copies of any additional or
supplemental filings which are incorporated by reference in such Prospectus,
and, if so directed by the Company, such holder will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in
such holder's possession, of the prospectus covering the Registrable Securities
current at the time of receipt of such notice.
SECTION 2.04. Underwritten Offerings. (a) Demand
Underwritten Offerings. In any offering by holders of Registrable Securities
pursuant to a registration requested under Section 2.01, sales shall be made
through a nationally recognized investment banking firm (or syndicate managed
by such a firm) selected by the holders of at least a majority in aggregate
principal amount of the Registrable Securities to be included in such offering
and approved by the Company (which approval shall not be unreasonably withheld)
and the Company shall enter into an underwriting agreement which shall be
reasonably satisfactory in form and substance to each holder and the
underwriters and which shall contain representations, warranties and agreements
<PAGE> 30
29
(including indemnification agreements to the effect and to the extent provided
in Section 2.07) as are customarily included by an issuer in underwriting
agreements with respect to primary distributions. The holders of Registrable
Securities to be distributed by such underwriters shall be parties to such
underwriting agreement and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all
of the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Any such holder of Registrable Securities
shall not be required to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such holder, such holder's Registrable
Securities and such holder's intended method of distribution and any other
representation required by law.
(b) Incidental Underwritten Offerings. If the Company at any
time proposes to register any of its securities under the Securities Act as
contemplated by
<PAGE> 31
30
Section 2.02 and such securities are to be distributed by or through one or
more underwriters, the Company will, if requested by any holder of Registrable
Securities as provided in Section 2.02 and subject to the provisions of Section
2.02(b), use its best efforts to arrange for such underwriters to include all
the Registrable Securities to be offered and sold by such holder among the
securities to be distributed by such underwriters. The holders of Registrable
Securities to be distributed by such underwriters shall be parties to the
underwriting agreement between the Company and such underwriters. Any such
holder of Registrable Securities shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding
such holder, such holder's Registrable Securities and such holder's intended
method of distribution and any other representation required by law.
SECTION 2.05. Preparation; Reasonable Investigation. In
connection with the preparation and filing of each registration statement under
the Securities Act pursuant to this Agreement, the Company will give the
holders of Registrable Securities to be registered under such registration
statement, their underwriters, and their respective counsel and accountants the
opportunity to
<PAGE> 32
31
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers and the independent public accountants who have certified its
financial statements as shall be necessary, in the opinion of such holders' and
such underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
SECTION 2.06. Limitations, Conditions and Qualifications to
Obligations Under Registration Covenants. The obligations of the Company to
use its reasonable efforts to cause the Registrable Securities to be registered
under the Securities Act are subject to each of the following limitations,
conditions and qualifications:
(a) The Company shall not be obligated to file or keep
effective any registration statement pursuant to Section 2.01 hereof at any
time if the Company would be required to include financial statements audited
as of any date other than the end of its fiscal year.
(b) The Company shall be entitled to postpone for a
reasonable period of time (but not exceeding 60 days and not more than once in
any six-month period) the filing or
<PAGE> 33
32
effectiveness of any registration statement otherwise required to be prepared
and filed by it pursuant to Section 2.01 if the Company determines, in its
reasonable judgment, that (i) the Company is in possession of material
information that has not been disclosed to the public and the Company
reasonably determines that it would be detrimental to the Company and its
stockholders to disclose such information at such time in a registration
statement or (ii) such registration and offering would interfere with any
financing, acquisition, corporate reorganization or other material transaction
involving the Company or any of its Affiliates (as defined in the rules and
regulations adopted under the Exchange Act) and, in any such case, the Company
promptly gives the requesting holders of Registrable Securities written notice
of such determination, containing a general statement of the reasons for such
postponement and an approximation of the anticipated delay. If the Company
shall so postpone the filing of a registration statement, the requesting
holders of Registrable Securities shall have the right to withdraw the request
for registration by giving written notice to the Company within 30 days after
receipt of the notice of postponement and, in the event of such withdrawal,
such request shall not be counted for purposes of the requests for registration
to which the Purchasers and
<PAGE> 34
33
their assignees are entitled pursuant to Section 2.01 hereof.
(c) No holder of Registrable Securities may participate in
any underwritten offering hereunder unless such holder (i) agrees to sell such
holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
SECTION 2.07. Indemnification. (a) Indemnification by the
Company. In the event of any registration of any Registrable Securities under
the Securities Act, the Company will, and hereby does, indemnify and hold
harmless, to the fullest extent permitted by law, the holder of any Registrable
Securities whose Registrable Securities are covered by such registration
statement, its directors and officers, each other Person who participates as an
underwriter in the offering or sale of such securities and each other Person,
if any, who controls such seller or any such underwriter within the meaning of
the Securities Act, against any and all losses, claims, damages, liabilities
and expenses, joint or several, (or actions or proceedings,
<PAGE> 35
34
whether commenced or threatened, in respect thereof) to which they or any of
them may become subject under the Securities Act or any other statute or common
law, including any amount paid in settlement of any litigation, commenced or
threatened, and to reimburse them for any legal or other expenses incurred by
them in connection with investigating any claims and defending any actions,
insofar as any such losses, claims, damages, liabilities, expenses or actions
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in the registration statement or
prospectus relating to the sale of such securities or any post-effective
amendment thereto or in any filing made in connection with the qualification of
the offering under Blue Sky or other securities laws of jurisdictions in which
the Registrable Securities are offered ("Blue Sky Filing"), or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading or (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, if used prior to the effective date of such
registration statement (unless such statement is corrected in the final
prospectus and the Company has
<PAGE> 36
35
previously furnished copies thereof to any holder of Registrable Securities
seeking such indemnification and the underwriters), or contained in the final
prospectus (as amended or supplemented if the Company shall have filed with the
Commission any amendment thereof or supplement thereto) if used within the
period during which the Company is required to keep the registration statement
to which such prospectus relates current, or the omission or alleged omission
to state therein (if so used) a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the indemnification agreement contained
herein shall not (i) apply to such losses, claims, damages, liabilities,
expenses or actions arising out of, or based upon, any such untrue statement or
alleged untrue statement, or any such omission or alleged omission, if such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Company by such seller or such underwriter
specifically stating that it is for use in connection with preparation of the
registration statement, any preliminary prospectus or final prospectus
contained in the registration statement, any such amendment or supplement
thereto or any Blue Sky Filing or (ii) inure to the benefit of any underwriter
or
<PAGE> 37
36
any person controlling such underwriter, to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of such person's failure to send or give a copy of the final
prospectus, as the same may be then supplemented or amended, to the person
asserting an untrue statement or alleged untrue statement or omission or
alleged omission at or prior to the written confirmation of the sale of
Registrable Securities to such person if such statement or omission was
corrected in such final prospectus.
Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such seller or any such
director, officer or controlling person and shall survive the transfer of such
securities by such seller.
(b) Indemnification by the Sellers. The Company may require,
as a condition to including any Registrable Securities in any registration
statement filed pursuant to Section 2.01 or 2.02, that the Company shall have
received an undertaking satisfactory to it from the prospective seller of such
securities, to indemnify and hold harmless (in the same manner and to the same
extent as set forth in subdivision (a) of this Section 2.07) the Company, each
director of the Company, each officer of the Company and
<PAGE> 38
37
each other person, if any, who controls the Company within the meaning of the
Securities Act, with respect to any untrue statement or alleged untrue
statement in, or omission or alleged omission from, such registration
statement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, if such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such seller specifically stating
that it is for use in such registration statement, preliminary prospectus,
final prospectus, amendment or supplement. Such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling person and shall survive
the transfer of such securities by such seller. In no event shall any
indemnity paid by any seller to the Company pursuant to this Section 2.07(b),
or otherwise, exceed the proceeds received by such seller in such offering. In
the case of an underwritten offering of Registrable Securities, each holder of
registrable Securities shall agree to indemnify such underwriters, their
officers and directors, if any, and each person, if any, who controls such
underwriters within the meaning of Section 15 of the Securities Act and Section
20
<PAGE> 39
38
of the Exchange Act, with respect to information furnished by them for use in
the registration statement or prospectus to the extent customary in the
circumstances for a selling stockholder in an underwritten public offering.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subdivisions of this Section
2.07, such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the latter within five
days of the commencement of such action; provided that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 2.07, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, the indemnifying party shall be entitled to
participate in and, unless in such indemnified party's reasonable good faith
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, to assume the defense thereof,
jointly with any other indemnifying party similarly notified to the extent that
it
<PAGE> 40
39
may wish, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. In the event that the indemnifying party
advises an indemnified party that it will contest a claim for indemnification
hereunder, or fails, within thirty (30) days of receipt of any indemnification
notice to notify, in writing, such person of its election to defend, settle or
compromise, at its sole cost and expense, any action, proceeding or claim (or
discontinues its defense at any time after it commences such defense), then the
indemnified party may, at its option, defend, settle or otherwise compromise or
pay such action or claim. In any event, unless and until the indemnifying
party elects in writing to assume and does so assume the defense of any such
claim, proceeding or action, the indemnified party's reasonable out-of-pocket
costs and expenses arising out of the defense, settlement or compromise of any
such action, claim or proceeding shall be losses subject to indemnification
hereunder. The indemnified party shall
<PAGE> 41
40
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
indemnified party which relates to such action or claim. The indemnifying
party shall keep the indemnified party fully appraised at all times as to the
status of the defense or any settlement negotiations with respect thereto. If
the indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense. If the indemnifying party does not
assume such defense, the indemnified party shall keep the indemnifying party
appraised at all times as to the status of the defense; provided, however, that
the failure to keep the indemnifying party so informed shall not affect the
obligations of the indemnifying party hereunder. No indemnifying party shall
be liable for any settlement of any action, claim or proceeding effected
without its written consent; provided, however, that the indemnifying party
shall not unreasonably withhold, delay or condition its consent. No
indemnifying party shall, without the consent of the indemnified party (which
consent shall not be unreasonably withheld, delayed or conditioned), consent to
<PAGE> 42
41
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
(d) Contribution. (i) If the indemnification from the
indemnifying party as provided in this Section 2.7 is unavailable or is
otherwise insufficient to hold harmless an indemnified party in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then the
indemnifying party shall, to the fullest extent permitted by law, contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party shall
be determined by reference to, among other things, whether any action in
question, including any untrue (or alleged untrue) statement of a material fact
or omission (or alleged omission) to state a material fact, has been made, or
related to information
<PAGE> 43
42
supplied by such indemnifying party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 2.7(c), any legal or
other fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
(ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 2.7 were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. If however, indemnification is available under this Section
2.7, the indemnifying parties shall indemnify each indemnified party to the
fullest extent provided in Section 2.7(a) and (b) hereof without regard to the
relative fault of said indemnifying party or indemnified
<PAGE> 44
43
party or any other equitable consideration provided for in this Section 2.7(d).
(e) Indemnification Payments. The indemnification and
contribution required by this Section 2.07 shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred.
(e) Other Rights, Liabilities. The indemnity agreements
contained herein shall be in addition to (i) any cause of action or similar
right of the indemnified party against the indemnifying party or others, and
(ii) any liabilities the indemnifying party may be subject to pursuant to the
law.
SECTION 2.08. Adjustments Affecting Registrable Securities.
(a) During any period commencing on either (i) the date a
request for a demand registration has been made pursuant to Section 2.01(a)
hereof or (ii) the date on which any holder of Registrable Securities, or
Corporate Advisors on behalf of the State Board as a holder, makes written
request in accordance with the terms of Section 2.02(a) hereof to have its
Registrable Shares registered, and in either event, terminating on the date
which is the earlier
<PAGE> 45
44
of (i) 180 days after the date on which the registration statement registering
such Registrable Securities becomes effective and (ii) the date on which all
Registrable Securities registered under such registration statement are sold,
transferred or disposed of, the Company will not, without the consent of the
Purchasers, effect, permit to occur or announce any future intent to effect or
permit to occur, any combination or subdivision of shares which would
materially adversely affect the ability of the holders of Registrable
Securities to include Registrable Securities in any registration of securities
contemplated by this Section 2 or the marketability of Registrable Securities
under any such registration.
(b) Prior to any registration of Preferred Shares, the
Company will, if so requested by the Purchasers, use its best efforts, subject
to all required stockholder approvals pursuant to the Restated Certificate, the
Certificate of Designation and the General Corporation Law of the State of
Delaware, to effect a stock-split or other division in respect of such
Registrable Securities (other than the common stock of the Corporation) in such
proportion as is desirable, in the opinion of the Purchasers, to enhance the
marketability of such Registrable Securities; provided that the Corporation
shall not be required to
<PAGE> 46
45
obtain the approval of its holders of Common Stock to increase the authorized
number of shares of Preferred Stock pursuant hereto as long as there are at
least 550,000 authorized, unissued and unreserved shares of preferred stock
available to effectuate such a split, or division. In the event of any such
stock split, appropriate adjustments shall be made to the provisions of the
Certificate of Designation, including without limitation of the voting rights,
dividend, conversion and redemption provisions.
SECTION 2.09. Registration Expenses. (a) Except as provided
in Section 2.09(b), all expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation (i) any allocation
of salaries and expenses of Company personnel or other general overhead
expenses of the Company, or other expenses for the preparation of historical
and pro forma financial statements or other data normally prepared by the
Company in the ordinary course of business or customarily prepared by the
issuer in a public offering; (ii) all registration, application, filing,
listing, transfer and registrar fees; (iii) all National Association of
Securities Dealers fees and fees and expenses of registration or qualification
of Registrable Securities under state securities or blue sky laws; (iv) all
word processing, duplicating and printing
<PAGE> 47
46
expenses, messenger and delivery expenses; (v) the fees and disbursements of
counsel for the Company and of its independent public accountants, including
the expenses of customary "cold comfort" letters required by or incident to
such performance and compliance; and (vi) any fees and disbursements of
underwriters and broker-dealers customarily paid by issuers or sellers of
securities; (all such expenses being herein called "Registration Expenses")
will be borne or caused to be borne by the Company whether or not any of the
Registration Statements becomes effective provided, however, that in all cases
in which the Company is required to pay Registration Expenses hereunder,
Registration Expenses shall exclude, and the sellers of the Registrable
Securities being registered shall pay, the fees and disbursements of their
counsel, their accountants and their other advisors, and underwriting discounts
and commissions and transfer taxes in respect of the Registrable Securities
under state securities or blue sky laws.
(b) In the case of any demand registration pursuant to
Section 2.1 which is not at the Company's expense as provided in Section
2.01(f), the selling holders of Registrable Securities shall pay all
Registration Expenses other than those in clause (i) of Section 2.09(a), the
fees and expenses of counsel to the Company and any
<PAGE> 48
47
other expenses referred to in clause (iv) of Section 2.09(a) which constitute
overhead expenses of the Company, all of which expenses shall be paid by the
Company.
SECTION 2.10 Other Sales. (a) The Company hereby agrees not
to effect, except pursuant to employee benefit plans, any public sale or
distribution of any securities of the same class as (or otherwise similar to)
the Registrable Securities, or any securities which, with notice, lapse of time
and/or payment of monies, are exchangeable or exercisable for or convertible
into any such securities, or to enter into any agreement to make, file a
registration statement for, or announce any sale or distribution of, any such
securities, during the 15-day period prior to, and during the 90-day period
commencing on, the effective date of a registration statement filed with the
Commission in connection with an underwritten offering effected pursuant to
Section 2.1 of this Agreement without the prior written consent of the managing
underwriters of such offering.
(b) The Purchasers agree, during the 10-day period prior to,
and during the 90-day period commencing on, the effective date of a
registration statement filed with the Commission (other than on Form S-8) in
connection with an underwritten offering of securities of the same class as
<PAGE> 49
48
the then outstanding Registrable Securities (or any securities issuable upon
conversion or exchange thereof), not to make any sales of Registrable
Securities (or such other securities) pursuant to Rule 144, provided that they
were given the opportunity to include in such registration statement all such
Registrable Securities as they may have requested.
SECTION 3. Rule 144. The Company shall take all actions
reasonably necessary to enable holders of Registrable Securities to sell such
securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the Commission including, without limiting the generality
of the foregoing, filing on a timely basis all reports required to be filed by
the Exchange Act. Upon the request of any holder of Registrable Securities,
the Company will deliver to such holder a written statement as to whether it
has complied with such requirements. Notwithstanding anything herein to the
contrary, no holder may exercise any right to require the registration of a
number (or principal amount) of Registrable Securities which he is at such time
able to sell pursuant to Rule 144
<PAGE> 50
49
(without being limited by any volume restriction therein with respect to
Registrable Securities desired to be sold immediately by such holder).
SECTION 4. Entire Agreement; Amendments and Waivers. This
Agreement, together with the Purchase Agreement and the agreements, schedules,
exhibits and annexes referred to therein, represents the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof and supersedes any and all prior oral and written agreements,
arrangements and understandings among the parties hereto with respect to such
subject matters. This Agreement may be amended, waived or modified only by a
written instrument signed by the Company and the holder or holders of a
majority of the shares of Registrable Securities.
SECTION 5. Other Registration Rights. The Company hereby
covenants and agrees not to hereafter enter into any agreement, arrangement or
understanding with respect to its securities which is inconsistent or otherwise
interferes with the rights granted to the holders of Registrable Securities
under this Agreement.
SECTION 6. Nominees for Beneficial Owners. In the event that
any Registrable Securities are held by a nominee for the beneficial owner
thereof, the beneficial
<PAGE> 51
50
owner thereof may, at its election, be treated as the holder of such securities
for purposes of any request or other action by any holder or holders of
securities pursuant to this Agreement or any determination of any number or
percentage of shares of securities held by any holder or holders of securities
contemplated by this Agreement. If the beneficial owner of any Registrable
Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
SECTION 7. Notices. Any notice, demand, request, waiver, or
other communication under this Agreement shall be in writing and shall be
deemed to have been duly given (i) on the date of service if personally served
or transmitted via telecopy, (ii) on the next business day after delivery to an
overnight carrier or (iii) on the third day after mailing if mailed to the
party to whom notice is to be given, by first class mail, registered, return
receipt requested, postage prepaid and (a) if addressed to the Purchasers,
addressed to such party in the manner set forth in the Purchase Agreement, or
at such other address as such party shall have furnished to the Company in
writing, or (b) if addressed to any other holder of Registrable Securities, at
the address that such holder shall have
<PAGE> 52
51
furnished to the Company in writing, or, until any such other holder so
furnishes to the Company an address, then to and at the address of the last
holder of such securities who has furnished an address to the Company, or (c)
if addressed to the Company, at 6000 Midlantic Drive, Mount Laurel, New Jersey
08054 attention of the General Counsel or at such other address, or to the
attention of such other officer, as the Company shall have furnished to each
holder of Registrable Securities at the time outstanding.
SECTION 8. Assignment. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the parties hereto and their
respective successors by merger, consolidation or amalgamation and permitted
assigns. The Company may not assign any of its rights and obligations
hereunder without the consent of the holders of all the Registrable Securities
then outstanding. Any Purchaser may assign its rights hereunder without the
consent of the Company to any Purchaser Affiliate (as defined in the Purchase
Agreement) or successor or to any Person who purchases or otherwise duly
receives title to 10% or more of the Registrable Securities then outstanding;
provided that such assignee agrees in writing to be bound by the terms of this
Agreement. This Agreement shall not inure to the
<PAGE> 53
52
benefit of any person who is not a party hereto or a successor to or permitted
assignee of a party hereto.
SECTION 9. Descriptive Headings. The descriptive headings of
the several sections and paragraphs of this Agreement are inserted for
reference only and shall not limit or otherwise affect the meaning hereof.
SECTION 10. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, APPLICABLE TO CONTRACTS TO BE MADE, EXECUTED, DELIVERED AND PERFORMED
WHOLLY WITHIN SUCH STATE AND, IN ANY CASE, WITHOUT REGARD TO THE CONFLICTS OF
LAW PRINCIPLES OF SUCH STATE.
SECTION 11. Severability. If at any time subsequent to the
date hereof, any provision of this Agreement shall be held by any court of
competent jurisdiction to be illegal, void or unenforceable, such provision
shall be of no force and effect, but the illegality or unenforceability of such
provision shall have no effect upon and shall not impair the enforceability of
any other provision of this Agreement.
SECTION 12. Equitable Remedies. The parties hereto agree
that irreparable harm would occur in the event that any of the agreements and
provisions of this Agreement were not performed fully by the parties hereto in
accordance
<PAGE> 54
53
with their specific terms or conditions or were otherwise breached, and that
money damages are an inadequate remedy for breach of this Agreement because of
the difficulty of ascertaining and quantifying the amount of damage that will
be suffered by the parties hereto in the event that this Agreement is not
performed in accordance with its terms or conditions or is otherwise breached.
It is accordingly hereby agreed that the parties hereto shall be entitled to an
injunction or injunctions to restrain, enjoin and prevent breaches of this
Agreement by the other parties and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, such remedy being in addition to and not in lieu of, any other
rights and remedies to which the other parties are entitled to at law or in
equity
SECTION 13. No Waiver. The failure of any party at any time
or times to require performance of any provision hereof (within the time
limitations contained herein) shall not affect the right at a later time to
enforce the same. No waiver by any party of any condition, and no breach of
any provision, term, covenant, representation or warranty contained in this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be construed as a further or continuing waiver of any such
<PAGE> 55
54
condition or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement.
SECTION 14. Submission to Jurisdiction. (a) The Company
hereby irrevocably submits, for itself and its property, to the jurisdiction of
the Supreme Court of the State of New York, County of New York, and the United
States District Court for the Southern District of New York over any suit,
action or other proceeding arising out of, or relating to, this Agreement or
the transactions contemplated hereunder, and the Company hereby irrevocably
waives and agrees not to assert, by way of motion, as a defense, or otherwise,
in any such suit, action or proceeding, any claim that it is not subject to the
jurisdiction of any such court, any objection that it may now or hereafter have
to the laying of the venue of any such suit, action or proceeding brought in
any such court and any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum or that the venue
of such suit, action or proceeding is improper or that this Agreement may not
be enforced in or by such courts. The Company agrees, to the fullest extent it
may effectively do so under applicable law, that a final judgment in any such
action or proceeding shall be conclusive and may be enforced
<PAGE> 56
55
in other jurisdictions by suit on the judgment or in any other manner provided
by law.
(b) The Company irrevocably appoints Prentice Hall, having
offices at the date hereof at 15 Columbus Circle, New York, N.Y. 10023, as its
authorized agent to accept and acknowledge on its behalf service of any and all
process which may be served in any suit, action or proceeding of the nature
referred to in subparagraph (a) above in any court referred to therein, and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof by registered or certified mail, postage prepaid, return
receipt requested, to Prentice Hall at the aforementioned address or to the
Company at its address set forth or referred to in Section 11(g). The Company
agrees that such service (i) shall be deemed in every respect effective service
of process upon the Company in any such suit, action or proceeding and (ii)
shall, to the fullest extent permitted by law, be taken and held to be valid
personal service upon and personal delivery to the Company.
SECTION 15. Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original, but all such
<PAGE> 57
56
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
TYCO TOYS, INC.
by
/s/ Harry J. Pearce
------------------------
Name:Harry J. Pearce
Title: Vice Chairman and
Chief Financial
Officer
CORPORATE PARTNERS, L.P.,
by Corporate Advisors, L.P.
General Partner,
by
/s/ Jonathan Kagan
---------------------
Name: Jonathan Kagan
Title: President
CORPORATE OFFSHORE PARTNERS, L.P.,
by Corporate Advisors, L.P.
General Partner,
by
/s/ Jonathan Kagan
---------------------
Name: Jonathan Kagan
Title: President
<PAGE> 58
57
THE STATE BOARD OF ADMINISTRATION OF FLORIDA,
by Corporate Advisors, L.P.
Attorney-in-Fact,
by
/s/ Jonathan Kagan
---------------------
Name: Jonathan Kagan
Title: President
<PAGE> 1
EXHIBIT 6 - Power of Attorney from the
State Board to Corporate
Advisors
<PAGE> 2
Exhibit 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the State Board of
Administration of Florida, a body corporate organized under the constitution of
the State of Florida ("Florida"), hereby irrevocably constitutes and appoints
Corporate Advisors, L.P., a Delaware limited partnership ("Corporate
Advisors"), its true and lawful attorney-in-fact and agent, with full power and
authority in its name, place and stead, in any and all capacities, and with
full power of substitution, to execute, acknowledge, deliver, swear to, file
and record at the appropriate public offices such agreements, documents and
instruments as may be necessary or appropriate to carry out the provisions of
the Investment Management Agreement, dated as of June 17, 1988, between Florida
and Crossroads Advisors, L.P. (the "Agreement"), including, without limitation,
contract providing for the purchase of, and governing the terms, disposition
and voting of, securities in a manner consistent with the provisions of the
Agreement, and schedules (including, without limitation, Schedules 13D filed
with the Securities and Exchange Commission (the "Commission") in accordance
with the Securities Exchange Act of 1934 and the rules of the Commission
promulgated thereunder), registration statements, and any other documents filed
in connection with the registration of securities. It is expressly intended
that the foregoing power of attorney is irrevocable and coupled with an
interest and shall survive and not be affected by the incapacity, disability,
death or dissolution of any person hereby giving such power.
IN WITNESS WHEREOF, the State Board of Administration of
Florida has caused this power of attorney to be executed and
<PAGE> 3
attested by its Executive Director and General counsel thereunto duly
authorized as of this 17th day of June, 1988.
STATE BOARD OF ADMINISTRATION
OF FLORIDA
/s/ Lan Janecek
-------------------------
Lan Janecek, designee for: Cliff Hinkle
Executive Director
Approved as to legality:
/s/ Horace Schow II
-------------------------
Horace Schow II
General Counsel
FL BAR ID #0251471
2
