EXHIBIT 4.3
IRREVOCABLE CUSTODY AGREEMENT AND POWER OF ATTORNEY
FOR
SALE OF SHARES OF COMMON STOCK
OF
CREATIVE MASTER INTERNATIONAL, INC.
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇
as Attorney-in-Fact
(the "Attorney-in-Fact")
and as Custodian (the
"Custodian")
Dear Sir:
The undersigned stockholder of Creative Master International, Inc., a
Delaware corporation (the "Company"), understands that it is contemplated that
the undersigned (the undersigned is referred to herein as the "Selling
Stockholder") and the Company will sell certain shares of the Company's common
stock (the "Common Stock"), to certain underwriters to be named in the
underwriting agreement referred to below (the "Underwriters"), represented by
Cruttenden ▇▇▇▇ Incorporated, as representative of the Underwriters (the
"Representative"), who propose to offer such shares to the public in an
underwritten public offering (the "Offering"). The undersigned also understands
that, in connection with the Offering, the Company has filed a Registration
Statement on Form SB-2 (No. 333-________) (the "Registration Statement") with
the Securities and Exchange Commission (the "Commission") to register the shares
of Common Stock to be offered under the Securities Act of 1933, as amended (the
"Act"). All share amounts are reflected on a post-split basis, i.e., after
----
giving effect to the approximately _______ stock split effected by the Company
in September of 1998.
Appointment of Power of Attorney-in-Fact.
----------------------------------------
In connection with the foregoing, and intending to be legally bound, the
undersigned hereby appoints ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇ the Attorney-in-Fact and agent of
the undersigned, with full power and authority in the name of, and for and on
behalf of the undersigned to take any and all of the following actions:
(a) to negotiate, execute and deliver an underwriting agreement (the
"Underwriting Agreement"), to be entered into among the Company, the Selling
Stockholder and the Underwriters, containing such terms, conditions and
provisions as agreed to by the Company, the Attorney-in-Fact on behalf of the
Selling Stockholders and the Representative on behalf of the Underwriters. The
Underwriting Agreement to which the undersigned will become a
1.
party will contain, among other things, provisions substantially to the
following effect: (i) representations and warranties from each Selling
Stockholder relating to certain matters regarding the Company and to the effect
that such Selling Stockholder has full authority to sell the shares, to be sold
by such Selling Stockholder to the Underwriters, free and clear of any adverse
claim or defect in title and without the necessity of any approvals or consents
from any person, entity or governmental authority (other than those that have
been obtained prior to such Selling Stockholder's execution hereof), (ii) an
agreement by each Selling Stockholder to indemnify the Underwriters against
liabilities and related expenses arising out of the Offering, and (iii)
covenants requiring the Selling Stockholder, under circumstances where the
foregoing indemnity agreement is applicable but held to be unenforceable, to
make an equitable contribution to the aggregate liability and expense which
would have been covered by such indemnity agreement. The Attorney-in-Fact is
authorized to agree with the Representative as to the initial public offering
price of the shares of Common Stock to be sold by the undersigned and the
underwriting discount applicable thereto. The Attorney-in-Fact is also
authorized to complete such Underwriting Agreement and to make such changes
therein and additions or amendments thereto as the Attorney-in-Fact acting in
his sole discretion shall approve (the execution thereof by the Attorney-in-Fact
to be conclusive evidence of the approval by the Attorney-in-Fact of the
Underwriting Agreement and any changes, additions or amendments thereto);
(b) to do all things necessary to sell to the Underwriters, pursuant to the
Underwriting Agreement, up to the "Maximum Number of Shares" of Common Stock
held by the undersigned (as set forth on the signature page hereof), and which
number may be fewer than the Maximum Number of Shares, at a purchase price per
share to be determined in accordance with the Underwriting Agreement, and, in
connection therewith, the Attorney-in-Fact is authorized to grant to the
Underwriters an over-allotment option on a portion of such "Maximum Number of
Shares" for a period not to exceed 30 days from the initial closing under the
Underwriting Agreement at the same price and underwriting discounts and
commissions applicable to such initial closing;
(c) to execute stock powers and give such orders and instruc tions to the
Custodian or any other person as the Attorney-in-Fact in his sole discretion may
determine, including, without limitation, orders and instructions for the
following: (i) the transfer of the shares on the books of the Company and its
transfer agent in order to effect such sale (including the names in which new
certificates for such shares are to be issued and the denominations thereof),
(ii) the delivery to or for the account of the Underwriters of the certificates
for the shares to be sold against receipt by the Custodian of the purchase price
to be paid therefor, (iii) the receipt of, giving of receipts for, and the
2.
remittance to the undersigned of the proceeds from any sale of such shares, less
the undersigned's share of any fees, expenses or transfer taxes which the
Attorney-in-Fact shall determine to be properly payable by the Selling
Stockholder, and (iv) the return to the undersigned of one or more new
certificates representing the number of shares of Common Stock, if any,
represented by certificates deposited with the Custodian, which are in excess of
the number of shares sold by the undersigned to the Underwriters;
(d) to take such actions as may be necessary or appropriate to file
amendments or supplements to the Registration Statement if the Company should
decide to file such amendments or supplements and to join with the Company in
withdrawing the Registration Statement if the Company should decide to withdraw
such registration;
(e) to retain legal counsel to represent the undersigned in connection with
any and all matters referred to herein;
(f) to incur any necessary or appropriate expense in connection with the
sale of the shares and to agree upon the allocation among the Selling
Stockholder of the expenses of the Offering to be borne by the Selling
Stockholder, including the undersigned; and
(g) to make, execute, acknowledge and deliver all such other contracts,
orders, receipts, notices, requests, instructions, certificates, letters and
other writings, including without limitation (i) communications to the
Commission (including but not limited to a request or requests for acceleration
of the effective date of the Registration Statement and representations to the
Commission concerning the reasons for the sale of the shares by the undersigned
and familiarity of the undersigned with the Registration Statement and any
amendments or supplements thereto and the absence of material adverse
information concerning the Company), (ii) communications to state commissions or
officers administering state securities laws and others (including consents to
service of process), and (iii) certificates and other documents required to be
delivered by or on behalf of the undersigned pursuant to the Underwriting
Agreement or necessary or convenient to the consummation of the transactions
contemplated thereby, including amendments to the Underwriting Agreement, and in
general to do or cause to be done all things and to take all action, which the
Attorney-in-Fact in his sole discretion may consider necessary or proper in
connection with or to carry out and comply with all terms and conditions of the
Underwriting Agreement and the sale of shares to the Underwriters contemplated
thereby, but not inconsistent herewith or with the Underwriting Agreement, as
fully as could the undersigned if personally present and acting.
The undersigned acknowledges that ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇ is
3.
Chairman of the Board, President and Chief Executive Officer of the Company.
The certificates deposited herewith, this Irrevocable Custody Agreement and
Power of Attorney and all power and authority conferred hereby are granted and
conferred subject to the interests of the Underwriters and the Company; in
consideration of those interests, and for the purpose of completing the
transactions contemplated by the Underwriting Agreement and this Irrevocable
Custody Agreement and Power of Attorney, this Irrevocable Custody Agreement and
Power of Attorney is coupled with an interest and all power and authority
conferred hereby is irrevocable and is not subject to termination by the
undersigned or by operation of law, whether by the death, disability or
incapacity of any individual Selling Stockholder, by the termination of any
trust or estate (if the undersigned is executing this Irrevocable Custody
Agreement and Power of Attorney in his (or her) or its capacity as a trustee or
an executor), or, in the case of a corporation or partnership, by the
dissolution of such corporation or partnership, or by the occurrence of any
other event or events, except as expressly stated herein, and the obligations of
the undersigned under the Underwriting Agreement are similarly not subject to
termination. If the undersigned should die or become disabled or incapacitated,
or if any such estate or trust should be terminated, or if any such corporation
or partnership should be dissolved, or if any other event should occur, before
the delivery of the shares to be sold by the undersigned under the Underwriting
Agreement, certificates for such shares and any funds to the extent required
shall be delivered by or on behalf of the undersigned in accordance with the
terms and conditions of the Underwriting Agreement and this instrument; and
actions taken by the Attorney-in-Fact and Custodian pursuant to this Irrevocable
Custody Agreement and Power of Attorney, shall be as valid as if such death,
disability, incapacity, termination, dissolution or other event had not
occurred, regardless of whether or not the Custodian and Attorney-in-Fact shall
have received notice of such death, incapacity, termination, dissolution or
other event.
The Attorney-in-Fact for the undersigned shall have full power to make and
substitute any attorney-in-fact in his place and stead, and the undersigned
hereby ratifies and confirms all that the Attorney-in-Fact or substitute or
substitutes shall do by virtue of these presents. All actions hereunder may be
taken by any one of said Attorney-in-Fact, or his substitute or substitutes.
4.
Custody Agreement
-----------------
The undersigned hereby appoints ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇ as Custodian. The
Custodian shall have the full power to make and substitute any custodian in his
place and stead. All actions hereunder may be taken by the Custodian, or his
substitute or substitutes. The Company shall pay all fees and expenses of the
Custodian.
For the purposes hereof, the undersigned hereby delivers to the Custodian
certificates (the "Certificates") in negotiable and properly deliverable form,
endorsed or with stock powers attached and with signatures guaranteed by a
national bank or trust company or by a member firm of the New York Stock
Exchange, Inc., representing shares of Common Stock. The Certificates are to be
held by the Custodian for the account of the undersigned and are to be disposed
of by the Custodian in accordance with this instrument. If the undersigned is a
trust, it has also delivered herewith duly certified extracts of any applicable
provisions of the trust agreement authorizing it to enter into this Irrevocable
Custody Agreement and Power of Attorney and authorizing a trustee or other valid
representative of trust to execute the assignment(s) or stock power(s).
The Custodian is hereby authorized and directed to hold the Certificates
deposited herewith in custody and, at the time of consummation of any sale of
shares to the Underwriters under the Underwriting Agreement, the Custodian is
(i) to take all necessary action to cause the transfer agent for the Company's
stock (a) to cancel the Certificates delivered herewith (b) to prepare one or
more new certificates for the shares to be sold to the Underwriters under the
Underwriting Agreement in such denominations and registered in such name or
names as the Representatives may request and to record such transfer on the
books of the Company and (c) to prepare a new certificate for the balances, if
any, of the shares which are to be returned to the undersigned; (ii) to deliver
the shares to be sold to the Underwriters to the Representatives for the
accounts of the Underwriters against payment for such shares; (iii) to give
receipt for such payment and to deposit the same to his account as Custodian;
(iv) to draw upon such account to pay (a) such costs and expenses as the
Custodian deems appropriate, and (b) all required stock transfer taxes required
to be paid in respect of shares sold as herein provided; and (v) to remit to the
undersigned as soon as practicable the balance, after deducting the amounts set
forth in clauses (iv)(a) and (iv)(b) above, of the amount received by the
Custodian as payment for the shares sold to the Underwriters.
The total number of shares of Common Stock to be sold pursuant to the
Underwriting Agreement shall be determined solely by the Company and the
Representative. The exact number of shares of
5.
Common Stock to be sold by the undersigned shall be determined, subject to the
maximum number specified herein, solely by the Attorney-in-Fact, in his
discretion.
At such time as the shares deposited herewith are no longer subject to sale
to the Underwriters under the Underwriting Agreement, the Custodian shall
promptly return to the undersigned, at the undersigned's address set forth
below, upon written request to do so by the undersigned, certificates
representing the number of shares of Common Stock, if any, represented by the
Certificates deposited, which are in excess of the number of shares sold by the
undersigned to the Underwriters.
Until payment of the purchase price for the shares to be sold by the
undersigned to the Underwriters has been made to the Custodian by or on behalf
of the Underwriters, the undersigned shall remain the owner of such shares and
shall have the right to vote such shares and all other shares of Common Stock,
if any, represented by the Certificates deposited, and to receive all dividends
and distributions, if any, thereon.
It is understood that the Custodian assumes no responsibility or liability
to any person other than to deal with the Certificates deposited herewith and
the proceeds from the sale of the shares in accordance with the provisions of
this agreement, and the undersigned agrees to indemnify and hold the Custodian
harmless from any and all loss, claim, damage, liability or expense (including,
without limitation, all fees and expenses of counsel) with respect to anything
done by the Custodian in good faith in accordance with the foregoing
instructions.
The undersigned understands that (1) ▇▇▇▇ & ▇▇▇▇▇ Professional Corporation
("T&G") has acted as counsel to the Company in connection with the public
offering contemplated by the Registration Statement and that T&G may continue to
represent the Company on an ongoing basis in connection with other matters and
(2) T&G may also be retained by the Attorney-in-Fact to act as special counsel
to the undersigned. The undersigned acknowledges and agrees that the
undersigned has had adequate opportunity to consult counsel of its choice with
respect to the advisability of the representation by T&G of the Company. By
execution hereof, the undersigned confirms its consent to such representation by
T&G of the Company and of the undersigned.
All notices to the undersigned relating to the proposed Offering shall be
duly made if given in writing and mailed first-
6.
class, postage prepaid, to the Attorney-in-Fact at:
Creative Master International, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇
The undersigned hereby represents and warrants that (i) all authorizations,
approvals and consents necessary for the execution and delivery of this
Irrevocable Custody Agreement and Power of Attorney and the Underwriting
Agreement and the sale and delivery of the shares of Common Stock to be sold by
the undersigned pursuant to the Underwriting Agreement have been obtained and
are in full force and effect, (ii) the undersigned has the full right, power and
authority to enter into, execute and deliver this Irrevocable Custody Agreement
and Power of Attorney and the Underwriting Agreement to sell and to transfer and
deliver the shares of Common Stock to be sold by the undersigned pursuant to the
Underwriting Agreement, and all authorizations, approvals and consents necessary
to carry out the foregoing (other than effectiveness of the Registration
Statement and state securities laws approvals) have been obtained by the
undersigned and are in full force and effect, and each constitutes or will
constitute a valid and binding agreement of the undersigned and is enforceable
against the undersigned in accordance with the terms hereof and thereof, (iii)
good and valid title to such shares, free and clear of all claims, equities,
security interests, liens, encumbrances and community property rights, will be
delivered to the Underwriters, (iv) the execution and delivery of the
Underwriting Agreement and the sale and delivery of shares by the undersigned
thereunder will not result in a breach or default by the undersigned under any
agreement or instrument to which the undersigned is a party or by which it is
bound, (v) on the Closing Date (as defined in the Underwriting Agreement), all
stock transfer or other taxes (other than income taxes), if any, that are
required to be paid in connection with the sale and transfer of the shares to be
sold by the undersigned to the several Underwriters under the Underwriting
Agreement will have been fully paid or provided for by the undersigned and all
laws imposing such taxes will have been fully complied with, (vi) all
information with respect to the undersigned provided in writing to the Company
by or on behalf of the undersigned expressly for use in the Registration
Statement and the Prospectus (as those terms are defined in the Underwriting
Agreement) (a) complied and will comply with all applicable provisions of the
Act and the rules and regulations thereunder, (b) contains and will contain all
statements required to be stated therein in accordance with the Act and the
rules and regulations thereunder, and (c) does not and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading, (vii) other than as permitted by
7.
the Act and the rules and regulations thereunder, the undersigned has not
distributed and will not distribute any preliminary prospectus, the Prospectus
or any other offering material in connection with the offering and sale of the
shares. The undersigned has not taken and will not take, directly or
indirectly, any action designed, or which might reasonably be expected, to cause
or result in, under the Act or otherwise, or which has caused or resulted in,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the shares, and (viii) none of the proceeds
received by the undersigned from the sale of the shares will be paid to a member
of the National Association of Securities Dealers, Inc. or any affiliate of such
member. The undersigned agrees that the Attorney-in-Fact and T&G or such other
law firm as the Attorney-in-Fact may choose to represent the Selling Stockholder
are entitled to rely on the representations made herein by the undersigned
together with any other certificates, documents, agreements or letters delivered
by the undersigned in connection with the transactions contemplated by the
Underwriting Agreement and the undersigned undertakes and agrees to advise T&G,
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq. at (▇▇▇) ▇▇▇-▇▇▇▇) or such other law firm
representing the Selling Stockholder immediately by telephone, subsequently to
be confirmed in writing, if at any time prior to the closing or closings of the
transactions contemplated by the Underwriting Agreement, the foregoing
statements are for any reason no longer true and correct.
The attention of the undersigned is directed to the rules of the Commission
which prohibit Selling Stockholder from bidding for or purchasing any shares of
the Common Stock, or attempting to induce anyone else to purchase any such
shares, or taking any other action which might tend to stabilize or raise the
price of the shares of Common Stock, until the distribution of Common Stock
pursuant to the Registration Statement has been completed.
If the Underwriting Agreement has not been executed on or prior to
September __, 1998, then the Custodian shall return to the undersigned all
Certificates delivered herewith, at the undersigned's address set forth below,
and this Irrevocable Custody Agreement and Power of Attorney shall immediately
terminate by the undersigned giving written notice of such termination to the
Attorney-in-Fact, subject, however, to all lawful action done or performed by
the Attorney-in-Fact pursuant to this Irrevocable Custody Agreement and Power of
Attorney.
This Irrevocable Custody Agreement and Power of Attorney may be executed in
any number of counterparts each of which shall be deemed to be an original and
all of which together shall be deemed to be one and the same instrument.
8.
Receipt by the Attorney-in-Fact of executed counterparts of this
Irrevocable Custody Agreement and Power of Attorney, or any stock certificate
deposited hereunder, shall constitute acceptance by the Attorney-in-Fact of the
authorizations herein conferred and evidence the agreement of the Attorney-in-
Fact to carry out and to perform this Irrevocable Custody Agreement and Power of
Attorney in accordance with the provisions hereof.
The validity, enforceability, interpretation and construction of this
Irrevocable Custody Agreement and Power of Attorney shall be determined in
accordance with the laws of the State of California and shall inure to the
benefit of, and this Irrevocable Custody Agreement and Power of Attorney shall
be binding upon, the undersigned and the undersigned's heirs, executors,
administrators, successors and assigns, as the case may be.
If any word, phrase, clause, portion or provision of this Irrevocable
Custody Agreement and Power of Attorney shall be held or deemed to be, or shall
in fact be, inoperative or unenforceable as applied in any particular case or
circumstance in any applicable jurisdiction or jurisdictions because it
conflicts with any other provision hereof, or any constitution, statute or rule
of public policy, or for any other reason, such eventuality shall not render any
of the aforesaid inoperative or unenforceable in any other case or circumstance,
or render any one or more or combination of any words, phrases, clauses,
portions or provisions herein inoperative, or unenforceable to any extent
whatsoever.
The undersigned hereby ratifies and confirms all that the Attorney-in-Fact
and Custodian shall do by virtue hereof.
9.
IN WITNESS WHEREOF, the undersigned has executed this Agreement on this ___
day of ____________, 1998.
* (NOTE: The Stockholder's signature must be guaranteed by a bank or trust
company or by a member firm of the New York Stock Exchange.)
Signature:
________________________________
________________________________
Please sign exactly as your name appears on your
stock certificate.
Name and address to which notices and funds shall
be sent (please print or type)
_______________________________
(Name)
_______________________________
(Street)
_______________________________
(City) (State) (Zip)
Number of Shares of Common Maximum Number of Shares of Common
Stock Represented by Stock to be sold to the Underwriters
Certificates Deposited: ____________ Shares
_______________ Shares
Accepted and agreed to as
of the date first written above:
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇, as Custodian
_________________________
10.
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇ hereby accepts the appointment as Attorney-in-Fact
pursuant to the foregoing Irrevocable Custody Agreement and Power of Attorney,
and agrees to abide by and act in accordance with the terms of said Agreement.
Dated: _______________, 1998
________________________________
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇
11.
