Registration Rights Agreement

REGISTRATION RIGHTS AGREEMENT


THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of November 10, 1999, by and among OVERSEAS TOYS, L.P., a Delaware limited partnership (the "Investor") and CYRK, INC., a Delaware corporation (the "Company").


WHEREAS, the Investor and the Company are parties to that certain Securities Purchase Agreement dated September 1, 1999 (the "Securities Purchase Agreement"), whereby, among other things, the Company will issue to the Investor an aggregate of 25,000 shares of Series A Senior Cumulative Participating Convertible Preferred Stock of the Company (the "Series A Preferred Stock"), and a warrant to purchase an additional 15,000 shares of Series A Preferred Stock (the "Warrant"), pursuant to the terms and conditions set forth in the Securities Purchase Agreement;


WHEREAS, pursuant to the covenants of the Company contained in the Securities Purchase Agreement, and as a condition to the Investor's obligation to consummate the closing of the transactions contemplated thereby, the Company is entering into this registration rights agreement (this "Agreement") with the Investor with respect to the Warrant and the shares of Company common stock, $.01 par value per share ("Common Stock"), underlying all of the shares of Series A Preferred Stock and the Warrant that are being acquired by the Investor pursuant to the Securities Purchase Agreement;


NOW, THEREFORE, upon the premises and the mutual promises contained herein and in the Securities Purchase Agreement, and for good and valuable consideration, the receipt and adequacy of which are acknowledged, the parties hereto agree as follows:


1. CERTAIN DEFINITIONS. As used in this Agreement, the following initially capitalized terms shall have the following meanings:


(a) "Affiliate" means, with respect to any person, any other person who, directly or indirectly, is in control of, is controlled by or is under common control with the former person.


(b) "Best Efforts" means the commercially reasonable efforts that a prudent Person desirous of achieving a result would use in good faith in similar circumstances to ensure that such result is achieved as expeditiously as can reasonably be expected.


(c) "Holders" means the Investor or any Affiliate of the Investor or any trustee for the account of the Investor and any "transferee" (as such term is defined in Section 10(a) hereof) which is the record holder of Registrable Securities.


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(d) "Registrable Securities" means the Warrant and the shares of Common Stock underlying all of the shares of Series A Preferred Stock and the Warrant that are being acquired by the Investor pursuant to the Securities Purchase Agreement (collectively, the "Acquired Securities"), any stock or other securities into which or for which such Acquired Securities may hereafter be changed, converted or exchanged, and any other securities issued to the Holders of such Acquired Securities (or such securities into which or for which such Acquired Securities are so changed, converted or exchanged) upon any reclassification, share combination, share subdivision, share dividend, merger, consolidation or similar transactions or events, provided that any such securities shall cease to be Registrable Securities if (i) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act (as defined below) and such securities shall have been disposed of in accordance with the plan of distribution set forth in such registration statement, (ii) such securities shall have been transferred pursuant to Rule 144, or (iii) such securities are held by a Holder other than the Investor, unless such Holder shall furnish the Company an opinion of counsel, which opinion shall be reasonably satisfactory to the Company, to the effect that all of such securities are not permitted to be distributed by such Holder in one transaction pursuant to Rule 144.


(e) "Registration Expenses" means all reasonable expenses in connection with any registration of securities pursuant to this Agreement including, without limitation, the following: (i) SEC filing fees; (ii) the fees, disbursements and expenses of the Company's counsel(s) and accountants in connection with the registration of the Registrable Securities to be disposed of under the Securities Act; (iii) all expenses in connection with the preparation, printing and filing of the registration statement, any preliminary prospectus or final prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to any Holders, underwriters and dealers and all expenses incidental to delivery of the Registrable Securities; (iv) the cost of producing blue sky or legal investment memoranda; (v) all expenses in connection with the qualification of the Registrable Securities to be disposed of for offering and sale under state securities laws, including the fees and disbursements of counsel for the underwriters or Holders (provided that only the fees and disbursements of a single counsel or firm for the Holders shall be included) in connection with such qualification and in connection with any blue sky and legal investments surveys; (vi) the filing fees incident to securing any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the Registrable Securities to be disposed of; (vii) transfer agents', depositories' and registrars' fees and the fees of any other agent appointed in connection with such offering; (viii) all security engraving and security printing expenses; (ix) all fees and expenses payable in connection with the listing of the Registrable Securities on each securities exchange or inter-dealer quotation system on which a class of common equity securities of the Company is then listed; (x) all reasonable out-of-pocket expenses of the Company incurred in connection with road show presentations; (xi) courier, overnight delivery, word processing, duplication, telephone and facsimile expenses of the Company; and (xii) any one-time payment for directors and officers insurance directly related to such offering, provided the insurer provides a separate statement for such payment;


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provided that any underwriting discounts and commissions with respect to the registration of any Registrable Securities shall not be included.


(f) "Rule 144" means Rule 144 promulgated under the Securities Act, or any similar rule hereafter adopted.


(g) "SEC" means the United States Securities and Exchange Commission.


(h) "Securities Act" means the Securities Act of 1933, as amended, or any successor statute.


2. DEMAND REGISTRATION.


(a) At any time, upon written notice from a Holder requesting that the Company effect the registration under the Securities Act of any or all of the Registrable Securities held by such Holder, which notice (a "Demand Registration Notice") shall specify the intended method or methods of disposition of such Registrable Securities, the Company shall use its Best Efforts to effect, in the manner set forth in Section 5, the registration under the Securities Act of such Registrable Securities for disposition in accordance with the intended method or methods of disposition stated in such request, provided that:


(i) if prior to receipt of a Demand Registration
Notice, the Company had commenced a financing plan and if such
financing plan is an underwritten offering, and, in the good-faith
business judgment of the Company's underwriter, a registration at the
time and on the terms requested would materially and adversely affect
or interfere with such financing plan of the Company or its
subsidiaries (a "Transaction Blackout"), the Company shall not be
required to effect a registration pursuant to this Section 2(a) until
the earliest of (A) the abandonment of such offering, (B) 90 days after
the termination of such offering, (C) the termination of any "hold
back" period obtained by the underwriter(s) of such offering from any
person in connection therewith or (D) 180 days after receipt by the
Holder requesting registration of the written notice from the Company
referred to above in this subsection (i);


(ii) if, while a registration request is pending
pursuant to this Section 2(a), the Company, with the prior approval of
a majority of the Company's Board of Directors, may delay commencing to
effect such registration until ninety (90) days after receipt of notice
of such request if the disinterested members of the Board of Directors
determine, in good faith, that the filing of a registration statement
at the time of such request would be materially detrimental to the
Company, provided that the Company shall not


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be permitted to delay a requested registration in reliance on this
clause (ii) more than once in any 12-month period; and


(iii) the Company shall not be obligated to file a
registration statement relating to a registration request pursuant to
this Section 2(a): (A) within a period of six months after the
effective date of any other registration statement of the Company
demanded pursuant to this Section 2(a); or (B) if such registration
request is for a number of Registrable Securities that represent in the
aggregate (on an as converted basis) less than the lesser of: (x) one
million (1,000,000) shares of Common Stock and (y) the remaining number
of shares of Common Stock owned by the Investor and its Affiliates.


(b) Notwithstanding any other provision of this Agreement to the contrary, a registration requested by a Holder pursuant to this Section 2 shall not be deemed to have been effected (and, therefore, not requested for purposes of Section 2(a)): (i) if it is withdrawn based upon material adverse information relating to the Company; or (ii) if after it has become effective such registration is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court for any reason other than a misrepresentation or an omission by such Holder and, as a result thereof, less than 90% of the Registrable Securities requested to be registered can be completely distributed in accordance with the plan of distribution set forth in the related registration statement.


(c) In the event that any registration pursuant to this Section 2 shall involve, in whole or in part, an underwritten offering, the Holder initiating the demand pursuant to Section 2(a) shall have the right to designate an underwriter as the sole lead managing underwriters of such underwritten offering, subject to the Company's consent which shall not be unreasonably withheld.


(d) Holders other than the Holder initiating the demand pursuant to Section 2(a) shall have the right to include their shares of Registrable Securities in any registration pursuant to Section 2(a); provided that the Investor may exclude participation by other Holders in connection with registrations pursuant to two demands (no two of which can be in consecutive years). In connection with those registrations in which multiple Holders participate, in the event such registration involves an underwritten offering and the Holder initiating demand pursuant to Section 2(a) is advised in writing (with a copy to the Company) by the lead managing underwriter designated by such Holder pursuant to Section 2(c) that, in such firm's good-faith opinion, marketing factors require a limitation on the number of shares to be underwritten, the number of shares to be included in the underwriting and registration shall be allocated pro rata among the Holders on the basis of the shares of Registrable Securities held by each such Holder.


(e) The Company shall have the right to cause the registration of additional securities for sale for the account of any person (including the Company) in any


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registration of Registrable Securities requested by a Holder pursuant to Section 2(a); provided that the Company shall not have the right to cause the registration of such additional securities if such Holder is advised in writing (with a copy to the Company) by the lead managing underwriter designated by the Holder pursuant to Section 2(c) that, in such firm's good-faith opinion, registration of such additional securities would materially and adversely affect the offering and sale of the Registrable Securities then contemplated by such Holder.


(f) In the event that any Demand Registration Notice includes a request for registration of the Warrant (or any portion thereof), the Company may elect, by written notice (the "Election Notice") to the Investor given within five (5) business days of the Company's receipt of such Demand Registration Notice, to purchase the Warrant (or such portion thereof) in lieu of proceeding with the registration of the Warrant pursuant to this Section 2. On the third (3rd) business day following the Company's delivery to such Holder of the Election Notice, the Company shall pay to the Holder by wire transfer of immediately available funds an amount equal to (i) the average of the Closing Prices (as defined in the Warrant) of the Common Stock for the twenty (20) consecutive Trading Days (as defined in the Certificate of Designation of the Series A Preferred Stock) preceding the date of delivery of the Demand Registration Notice, multiplied by (ii) the total number of shares of Common Stock that would be issuable upon conversion of the shares of Series A Preferred Stock represented by the Warrant (or such portion thereof) less the number of shares of Common Stock with an aggregate Trading Price (as defined in the Warrant) as of the date of the Demand Registration Notice equal to the Warrant Price (as defined in the Warrant) for the Warrant (or such portion thereof).


3. PIGGYBACK REGISTRATION. At any time if the Company proposes to register any of its Common Stock or any other of its common equity securities (collectively, "Other Securities") under the Securities Act (other than a registration on Form S-4 or S-8 or any successor form thereto), whether or not for sale for its own account, in a manner which would permit registration of Registrable Securities for sale for cash to the public under the Securities Act, it will each such time give prompt written notice to each Holder of its intention to do so as soon as practicable but in any event at least ten (10) business days prior to the anticipated filing date of the registration statement relating to such registration. Such notice shall offer each such Holder the opportunity to include in such registration statement such number of Registrable Securities as each such Holder may request. Upon the written request (a "Piggyback Registration Request") of any such Holder made within five (5) business days after the receipt of the Company's notice (which request shall specify the number of Registrable Securities intended to be disposed of and the intended method of disposition thereof), the Company shall effect, in the manner set forth in Section 5, in connection with the registration of the Other Securities, the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register, to the extent required to permit the disposition (in accordance with such intended methods thereof) of the Registrable Securities so requested to be registered, provided that:


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(a) if, at any time after giving such written notice of its intention to register any of its securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register such securities, the Company may, at its election, give written notice of such determination to each holder of Registrable Securities and thereupon shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the Registration Expenses in connection therewith as provided in Section 4), without prejudice, however, to the rights of Stockholders to request that such registration be effected as a registration under Section 2;


(b) (i) if the registration referred to in the first sentence of this Section 3 is to be an underwritten primary registration on behalf of the Company, and the managing underwriter advises the Company in writing that, in such firm's opinion, such offering would be materially and adversely affected by the inclusion therein of the Registrable Securities requested to be included therein, the Company shall include in such registration: (1) first, all securities the Company proposes to sell for its own account (the "Company Securities") and (2) second, up to the full amount of securities (including Registrable Securities) in excess of the number or dollar amount of the Company Securities, which, in the good-faith opinion of such managing underwriter, can be so sold without materially and adversely affecting such offering (and, if less than the full number of such securities, allocated pro rata among the Holders and Other Holders (as defined below) of such securities on the basis of the number of securities (including Registrable Securities) requested to be included therein by each such Holder and Other Holder) and (ii) if the registration referred to in the first sentence of this Section 3 is to be an underwritten secondary registration on behalf of holders of securities (other than Registrable Securities) of the Company (the "Other Holders"), and the managing underwriter advises the Company in writing that in their good-faith opinion such offering would be materially and adversely affected by the inclusion therein of the Registrable Securities requested to be included therein, the Company shall include in such registration: (1) first, all securities that the Other Holder who made the initial demand for such registration proposes to sell and (2) second, up to the full amount of securities (including Registrable Securities) in excess of the number or dollar amount of the securities set forth in the preceding clause (1), which, in the good ...