Exhibit 4.09
PREFERRED WARRANT AGENCY AGREEMENT
AGREEMENT, dated as of __________, 1998 between KIDS STUFF,
INC., a Delaware corporation (the "Company"), and AMERICAN STOCK TRANSFER &
TRUST COMPANY, as Preferred Warrant Agent (the "Preferred Warrant Agent").
W I T N E S S E T H :
WHEREAS, the Company has filed an offering (the "Offering") with the
Securities and Exchange Commission (the "SEC") with respect to the sale of up to
460,000 Units, each Unit consisting of one share of Series 1 Preferred Stock and
two Series 1 Preferred Stock Purchase Warrants (the "Preferred Warrants"),
including 60,000 Units covered by an over-allotment option (the "Offering")
granted to Xxxxxxxxx Financial Group, Inc. ( the "Representative"); and
WHEREAS, the SEC declared the Registration Statement
on Form SB-2 (File No. 333-61463) effective on ________________, 1998 (the
"Effective Date"); and
WHEREAS, the Company desires to provide for the issuance of
certificates of Preferred Warrants and for the issuance of certificates of
Series 1 Preferred Stock if the holders of the Preferred Warrants elect to
exercise the Preferred Warrants into Series 1 Preferred Stock initially at the
exercise price as defined herein; and
WHEREAS, the parties have contemporaneously entered into a Preferred
Stock Agency Agreement with respect to the issuance of Series 1 Preferred Stock
and the conversion of same into Common Stock at the conversion ratio as defined
therein; and
WHEREAS, the Representative will receive a Warrant to purchase up to
40,000 Units upon the closing of the Offering (the "Representative's Warrant"),
it being understood that such Units are identical to the Units sold to the
public except that the exercise price of the Preferred Warrants included in the
Units shall be at 140% of the exercise price of publicly held Preferred
Warrants; and
WHEREAS, the Company desires the Preferred Warrant Agent to act on
behalf of the Company, and the Preferred Warrant Agent is willing to so act, in
connection with the issuance, registration, transfer and exchange of
certificates representing the Preferred Warrants and the possible exercise of
the Preferred Warrants into Series 1 Preferred Stock.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Preferred Warrants and the respective rights and obligations
thereunder of the Company,
the Representative, the holders of certificates representing the Preferred
Warrants and the Preferred Warrant Agent, the parties hereto agree as follows:
SECTION 1. Definitions. As used herein, the following terms shall have the
following meanings, unless the context shall otherwise require:
(a) "Common Stock" shall mean stock of the Company of any
class, whether now or hereafter authorized, which has the right to participate
in the voting and in the distribution of earnings and assets of the Company
without limit as to amount or percentage.
(b) "Corporate Office" shall mean the office of the Preferred
Warrant Agent (or its successor) at which at any particular time its principal
business shall be administered, which office is located on the date hereof at 00
Xxxx Xxxxxx, Xxx Xxxx, XX 00000.
(c) "Exercise Date" shall mean, subject to the provisions
contained herein, as to any Preferred Warrant, the date on which the Preferred
Warrant Agent shall have received both (i) the Preferred Warrant Certificate
representing such Preferred Warrant, with the exercise form thereon duly
executed by the Registered Holder hereof or his attorney duly authorized in
writing, and (ii) payment in cash or by check made payable to the Preferred
Warrant Agent for the account of the Company, of the amount in lawful money of
the United States of America equal to the applicable Purchase Price.
(d) "Initial Warrant Exercise Date" shall mean ___________,
2000.
(e) "Initial Warrant Redemption Date" shall mean _________,
2000.
(f) "Purchase Price" shall mean $6.00 per share for the
Preferred Warrants other than the Preferred Warrants issuable upon exercise of
the Representative's Warrants, whose Purchase Price shall be equal to the lesser
of 140% of the Purchase Price of the Preferred Warrants then in effect and
$8.40, subject in each case to modification and adjustment as provided in
Section 8.
(g) "Registered Holder" shall mean the person in whose name
any certificate representing the Preferred Warrants shall be registered on the
books maintained by the Preferred Warrant Agent pursuant to Section 6.
(h) "Series 1 Preferred Stock" shall mean Series 1 Preferred
Stock of the Company as described in a Certificate of Designation filed with the
Secretary of State of the State of Delaware and supplied to the Preferred Agent
together with any amendments thereto authorized by the Board of Directors of the
Company and ratified, adopted and approved, if at all, by the stockholders of
the Company.
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(i) "Subsidiary" or "Subsidiaries" shall mean any corporation
or corporations, as the case may be, of which stock having ordinary power to
elect a majority of the Board of Directors of such corporation (regardless of
whether or not at the time stock of any other class or classes of such
corporation shall have or may have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned by the Company or
by one or more Subsidiaries, or by the Company and one or more Subsidiaries.
(j) "Transfer Agent" shall mean American Stock Transfer &
Trust Company, 00 Xxxx Xxxxxx, Xxx Xxxx, XX 00000 or its authorized successor.
(k) "Underwriting Agreement" shall mean the underwriting
agreement dated ________, 1998 between the Company and the Representative,
relating to the purchase for resale to the public of the Units.
(l) "Warrant Certificate" shall mean a certificate
representing Preferred Warrants _______, ___ substantially in the form annexed
hereto as Exhibit A.
(m) "Warrant Expiration Date" shall mean, unless the Preferred
Warrants are redeemed as provided herein, 5:00 p.m. (New York City Time) on
_______, 2001, or if such date shall in the State of New York be a Saturday,
Sunday, holiday or a day on which banks are authorized to close, then 5:00 p.m.
(New York City Time) on the next following day which in the State of New York is
not a Saturday, Sunday, holiday or a day on which banks are authorized to close,
subject to the Company's right, prior to the Warrant Expiration Date, in its
sole discretion, to extend such Warrant Expiration Date on five business days
prior written notice to the Registered Holders.
SECTION 2. Preferred Warrants and Issuance of Warrant Certificates.
(a) Each Preferred Warrant shall initially entitle the
registered holder of a Preferred Warrant to purchase at the Purchase Price
therefor from the Initial Warrant Exercise Date until the Warrant Expiration
Date one share of Series 1 Preferred Stock upon the exercise thereof, subject to
modification and adjustment as provided in Section 8.
(b) Upon execution of this Agreement, Warrant Certificates
representing 800,000 Preferred Warrants to purchase up to an aggregate of
800,000 shares of Series 1 Preferred Stock (subject to modification and
adjustment as provided in Section 8) shall be executed by the Company and
delivered to the Preferred Warrant Agent. Upon exercise of the Representative's
Over-Allotment Option, up to an additional 120,000 shares or Series 1 Preferred
Stock (subject to adjustment and modification as provided in Section 8) shall be
executed by the Company and delivered to the Preferred Warrant Agent.
(c) Upon exercise of the Representative's Warrants as
provided therein, Warrant Certificates representing 80,000 Preferred Warrants to
purchase up to an aggregate of 80,000 shares of Series 1 Preferred Stock
(subject to modification and
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adjustment as provided in Section 8 hereof and in the Representative's Warrant),
shall be countersigned, issued and delivered by the Preferred Warrant Agent upon
written order of the Company signed by its Chairman of the Board, Chief
Executive Officer, or President and by its Treasurer or an Assistant Treasurer
or its Secretary or an Assistant Secretary.
(d) From time to time until the Warrant Expiration Date, the
Preferred Warrant Agent shall countersign and deliver Warrant Certificates in
required denominations of one or whole number multiples thereof to the person
entitled thereto in connection with any transfer or exchange permitted under
this Agreement. Except as provided in Section 7 hereof, no Warrant Certificates
shall be issued except (i) Warrant Certificates initially issued hereunder as
described above, (ii) Warrant Certificates issued upon any transfer or exchange
of Preferred Warrants, (iii) Warrant Certificates issued in replacement of lost,
stolen, destroyed or mutilated Warrant Certificates pursuant to Section 7, (iv)
Warrant Certificates issued pursuant to the Representative's Warrant and (v) at
the option of the Company, Warrant Certificates in such form as may be approved
by its Board of Directors, to reflect any adjustment or change in the Purchase
Price, the number of shares of Series 1 Preferred Stock purchasable upon
exercise of the Preferred Warrants or the Redemption Price therefor made
pursuant to Sections 8 and 9 hereof.
SECTION 3. Form and Execution of Warrant Certificates.
(a) The Warrant Certificates evidencing the Preferred Warrants
shall be substantially in the form annexed hereto as Exhibit A, the provisions
of which are hereby incorporated herein, and may have such letters, numbers or
other marks of identification or designation and such legends, summaries or
endorsements printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
the Preferred Warrants may be listed, or to conform to usage. The Warrant
Certificates shall be dated the date of issuance thereof whether upon initial
issuance, transfer, exchange or in lieu of mutilated, lost, stolen or destroyed
Warrant Certificates.
(b) Warrant Certificates shall be executed on behalf of the
Company by its Chairman of the Board, Chief Executive Officer, or President and
by its Treasurer or an Assistant Treasurer or its Secretary or an Assistant
Secretary, by manual signatures or by facsimile signatures printed thereon.
Warrant Certificates shall be manually countersigned by the Preferred Warrant
Agent and shall not be valid for any purpose unless so countersigned. In case
any officer of the Company who shall have signed any of the Warrant Certificates
shall cease to be such officer of the Company before the date of issuance of the
Warrant Certificates or before countersignature by the Preferred Warrant Agent
and issue and delivery thereof, such Warrant Certificates, nevertheless, may be
countersigned by the Preferred Warrant Agent, issued and delivered with the same
force
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and effect as though the person who signed such Warrant Certificates had not
ceased to be such officer of the Company.
SECTION 4. Exercise.
(a) Preferred Warrants in denominations of one or whole
number multiples thereof may be exercised commencing at any time on or after the
Initial Warrant Exercise Date, but not after the Warrant Expiration Date, upon
the terms and subject to the conditions set forth herein (including the
provisions set forth in Sections 5 and 9 hereof) and in the applicable Warrant
Certificate. A Preferred Warrant shall be deemed to have been exercised
immediately prior to the close of business on the Exercise Date, provided that
the Warrant Certificate representing such Warrant, with the exercise form
thereon duly executed by the Registered Holder thereof or his attorney duly
authorized in writing, together with payment in cash or by check made payable to
the Preferred Warrant Agent for the account of the Company, of an amount in
lawful money of the United States of America equal to the applicable Purchase
Price has been received in good funds by the Preferred Warrant Agent. The person
entitled to receive the securities deliverable upon such exercise shall be
treated for all purposes as the holder of such securities as of the close of
business on the Exercise Date. If Preferred Warrants in denominations other than
one or whole number multiples thereof shall be exercised at one time by the same
Registered Holder, the number of full shares of Series 1 Preferred Stock which
shall be issuable upon exercise thereof shall be computed on the basis of the
aggregate number of full shares of Series 1 Preferred Stock issuable upon such
exercise. As soon as practicable on or after the Exercise Date and in any event
within five business days after such date, if one or more Preferred Warrants
have been exercised, the Preferred Warrant Agent on behalf of the Company shall
cause to be issued to the person or persons entitled to receive the same, a
Series 1 Preferred Stock certificate or certificates for the shares of Series 1
Preferred Stock deliverable upon such exercise, and the Preferred Warrant Agent
shall deliver the same to the person or persons entitled thereto. Upon the
exercise of any one or more Preferred Warrants, the Preferred Warrant Agent
shall promptly notify the Company and the Representative in writing of such fact
and of the number of securities delivered upon such exercise and, subject to
subsection (b) below, shall cause all payments of an amount in cash or by check
made payable to the order of the Company, equal to the Purchase Price, to be
deposited promptly in the Company's bank account.
(b) The Company shall not be obligated to issue any fractional
share interests or fractional warrant interests upon the exercise of any
Preferred Warrants, nor shall it be obligated to issue scrip in lieu of
fractional interests. However, the Company shall pay the Registered Holder of
any fractional warrant interest an amount in cash based upon the average of the
high and low sales prices for the Series 1 Preferred Stock on the NASD
Electronic Bulletin Board (or if applicable The NASDAQ Stock Market or an
Exchange) during the ten day trading period immediately preceding the date of
exercise.
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SECTION 5. Reservation of Shares: Listing; Payment of Taxes; etc.
(a) The Company covenants that it will at all times reserve
and keep available out of its authorized Series 1 Preferred Stock, solely for
the purpose of issuance upon exercise of Preferred Warrants, such number of
shares of Series 1 Preferred Stock as shall then be issuable upon the exercise
of all outstanding Preferred Warrants. The Company covenants that all shares of
Series 1 Preferred Stock which shall be issuable upon exercise of the Preferred
Warrants shall, at the time of delivery thereof, be duly and validly issued and
fully paid and nonassessable and free from all preemptive or similar rights,
taxes, liens and charges with respect to the issue thereof, and that upon
issuance such shares shall be listed on each securities exchange, if any, on
which the other shares of outstanding Series 1 Preferred Stock of the Company
are then listed.
(b) The Company covenants that if any securities to be
reserved for the purpose of exercise of Preferred Warrants hereunder require
registration with, or approval of, any governmental authority under any federal
securities law before such securities may be validly issued or delivered upon
such exercise, then the Company will file a registration statement under the
federal securities laws or a post-effective amendment, use its best efforts to
cause the same to become effective, keep such registration statement current
while any of the Preferred Warrants are outstanding and deliver a prospectus
which complies with Section 10(a)(3) of the Securities Act of 1933, as amended,
to the Registered Holder exercising the Warrant. The Company will use its best
efforts to maintain appropriate approvals or registrations under state "blue
sky" securities laws in states where the Offering is sold. With respect to any
such securities, however, Preferred Warrants may not be exercised by, or shares
of Series 1 Preferred Stock issued to, any Registered Holder in any state in
which such exercise would be unlawful.
(c) The Company shall pay all documentary, stamp or similar
taxes and other governmental charges that may be imposed with respect to the
issuance of Preferred Warrants, or the issuance or delivery of any shares of
Series 1 Preferred Stock upon exercise of the Preferred Warrants; provided,
however, that if shares of Series 1 Preferred Stock are to be delivered in a
name other than the name of the Registered Holder of the Warrant Certificate
representing any Preferred W xxxxxx being exercised, then no such delivery shall
be made unless the person requesting the same has paid to the Preferred Warrant
Agent the amount of transfer taxes or charges incident thereto, if any.
(d) The Preferred Warrant Agent is hereby irrevocably
authorized as the Transfer Agent to requisition from time to time certificates
representing shares of Series 1 Preferred Stock or other securities required
upon exercise of the Preferred Warrants, and the Company will comply with all
such requisitions.
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SECTION 6. Exchange and Registration of Transfer.
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Preferred Warrants or may
be transferred in whole or in part. Warrant Certificates to be so exchanged
shall be surrendered to the Preferred Warrant Agent at its Corporate Office, and
the Company shall execute and the Preferred Warrant Agent shall countersign,
issue and deliver in exchange therefor, the Warrant Certificate or Certificates
which the Registered Holder making the exchange shall be entitled to receive.
(b) The Preferred Warrant Agent shall keep, at such office,
books in which, subject to such reasonable regulations as it may prescribe, it
shall register Warrant Certificates and the transfer thereof. Upon due
presentment for registration of transfer of any Warrant Certificate at such
office, the Company shall execute and the Preferred Warrant Agent shall issue
and deliver to the transferee or transferees a new Warrant Certificate or
Certificates representing an equal aggregate number of Preferred Warrants.
(c) With respect to any Warrant Certificates presented for
registration of transfer, or for exchange or exercise, the subscription of
exercise form, as the case may be, on the reverse thereof shall be duly endorsed
or be accompanied by a written instrument or instruments of transfer and
subscription, in form satisfactory to the Company and the Preferred Warrant
Agent, duly executed by the Registered Holder thereof or his attorney duly
authorized in writing.
(d) No service charge shall be made for any exchange or
registration of transfer of Warrant Certificates. However, the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.
(e) All Warrant Certificates surrendered for exercise or for
exchange shall be promptly canceled by the Preferred Warrant Agent.
(f) Prior to due presentment for registration or transfer
thereof, the Company and the Preferred Warrant Agent may deem and treat the
Registered Holder of any Warrant Certificate as the absolute owner thereof of
each Warrant represented thereby (notwithstanding any notations of ownership or
writing thereon made by anyone other than the Company or the Preferred Warrant
Agent) for all purposes and shall not be affected by any notice to the contrary.
SECTION 7. Loss or Mutilation.
Upon receipt by the Company and the Preferred Warrant Agent of evidence
satisfactory to them of the ownership of and the loss, theft, destruction or
mutilation of any Warrant Certificate and (in the case of loss, theft or
destruction) of indemnity satisfactory
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to them, and (in case of mutilation) upon surrender and cancellation thereof,
the Company shall execute and the Preferred Warrant Agent shall countersign and
deliver in lieu thereof a new Warrant Certificate representing an equal
aggregate number of Preferred Warrants. Applicants for a substitute Warrant
Certificate shall also comply with such other reasonable regulations and pay
such other reasonable charges as the Preferred Warrant Agent may prescribe.
SECTION 8. Adjustment of Purchase Price and Number of Shares of Series 1
Preferred Stock Deliverable.
(a) (i) Except as hereinafter provided, in the event the
Company shall, at any time or from time to time after the date hereof, issue any
shares of Series 1 Preferred Stock as a stock dividend to the holders of Series
1 Preferred Stock, or subdivide or combine the outstanding shares of Series 1
Preferred Stock into a greater or lesser number of shares (any such issuance,
subdivision or combination being herein called a "Change of Shares"), then, and
thereafter immediately before the date of such sale or the record date for each
Change of Shares, the Purchase Price for the Preferred Warrants (whether or not
the same shall be issued and outstanding) in effect immediately prior to such
Change of Shares shall be changed to a price (including any applicable fraction
of a cent to the nearest cent) determined by dividing (1) the product of (a) the
Purchase Price in effect immediately before such Change of Shares and (b) the
total number of shares of Series 1 Preferred Stock outstanding immediately prior
to such Change of Shares, by (2) the total number of shares of Series 1
Preferred Stock outstanding immediately after such Change of Shares.
(ii) Upon each adjustment of the Purchase Price pursuant
to this Section 8, the number of shares of Series 1 Preferred Stock purchasable
upon the exercise of each Preferred Warrant shall be the number derived by
multiplying the number of shares of Series 1 Preferred Stock purchasable
immediately prior to such adjustment by the Purchase Price in effect prior to
such adjustment and dividing the product so obtained by the applicable adjusted
Purchase Price.
(b) In case of any reclassification or change of outstanding
shares of Series 1 Preferred Stock issuable upon exercise of the Preferred
Warrants (other than a change in par value, or from par value to no par value,
or as a result of subdivision or combination), or in case of any consolidation
or merger of the Company with or into another corporation (other than a merger
with a subsidiary in which merger the Company is the continuing corporation and
which does not result in any reclassification or change of the then outstanding
shares of Series 1 Preferred Stock or other capital stock issuable upon exercise
of the Preferred Warrants) or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, then, as a condition of such reclassification, change, consolidation,
merger, sale or conveyance, the Company, or such successor or purchasing
corporation, as the case may be, shall make lawful and adequate provision
whereby the Registered Holder of each
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Preferred Warrant then outstanding shall have the right thereafter to receive on
exercise of such Preferred Warrant, the kind and amount of securities and
property receivable upon such reclassification, change, consolidation, merger,
sale or conveyance by a holder of the number of securities issuable upon
exercise of such Preferred Warrant immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance and shall forthwith file at
the Corporate Office of the Preferred Warrant Agent, a statement signed by its
Chairman, Chief Executive Officer or President and by its Treasurer or an
Assistant Treasurer or its Secretary or an Assistant Secretary evidencing such
provision. Such provisions shall include provision for adjustments which shall
be as nearly equivalent as may be practicable to the adjustments provided for in
Section 8(a). The above provisions of this Section 8(b) shall similarly apply to
successive reclassifications and changes of shares of Series 1 Preferred Stock
and to successive consolidations, mergers, sales or conveyances.
(c) Irrespective of any adjustments or changes in the Purchase
Price or the number of shares of Series 1 Preferred Stock purchasable upon
exercise of the Preferred Warrants, the Warrant Certificates theretofore and
thereafter issued shall, unless the Company shall exercise its option to issue
new Warrant Certificates pursuant to Section 2(d) hereof, continue to express
the Purchase Price per share and the number of shares purchasable thereunder as
the Purchase Price per share and the number of shares purchasable thereunder
were expressed in the Warrant Certificates when the same were originally issued.
(d) After each adjustment of the Purchase Price pursuant to
this Section 8, the Company will promptly prepare a certificate signed by the
Chairman, Chief Executive Officer or President, and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary, of the Company
setting forth: (i) the Purchase Price as so adjusted, (ii) the number of shares
of Series 1 Preferred Stock purchasable upon exercise of each Preferred Warrant,
after such adjustment, and (iii) a brief statement of the facts accounting for
such adjustment. The Company will promptly file such certificate with the
Preferred Warrant Agent and cause a brief summary thereof to be sent by ordinary
first class mail to each Registered Holder at his last address as it shall
appear on the registry books of the Preferred Warrant Agent. No failure to mail
such notice nor any defect therein or in the mailing thereof shall affect the
validity thereof. The affidavit of an officer of the Preferred Warrant Agent or
the Secretary or an Assistant Secretary of the Company that such notice has been
mailed shall, in the absence of fraud, be prima facie evidence of the facts
stated therein.
(e) No adjustment of the Purchase Price shall be made as a
result of or in connection with the issuance or sale of shares of Series 1
Preferred Stock if the amount of said adjustment shall be less than $.05 for one
share of Series 1 Preferred Stock; provided, however, that in such case, any
adjustment that would otherwise be required to be made shall be carried forward
and shall be made at the time of and together with the next subsequent
adjustment that shall amount, together with any adjustment so carried
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forward, to at least $.05 for one share of Series 1 Preferred Stock. In
addition, Registered Holders shall not be entitled to cash dividends paid by the
Company prior to the exercise of any Warrant or Preferred Warrants held by them.
SECTION 9. Redemption.
(a) In the event that the Company notifies the holders of
its Series 1 Preferred Stock of its intention to redeem the Series 1 Preferred
Stock, it shall contemporaneously redeem the Preferred Warrants at $1.20 per
Warrant, subject to the holders right to exercise the Preferred Warrants and
convert the underlying Series 1 Preferred Stock into Common Stock during such
notice period.
(b) In the event the Company exercises its right to redeem all
of the Series 1 Preferred Stock, it shall contemporaneously give or cause to be
given notice to the Registered Holders of the Preferred Warrants of its
intention to redeem all Preferred Warrants, by mailing to such Registered
Holders a notice of redemption, first class, postage prepaid, at least by the
thirtieth (30th) day but not later than the 60th day before the date fixed for
redemption, at their last address as shall appear on the records of the
Preferred Warrant Agent. Any notice mailed in the manner provided herein shall
be conclusively presumed to have been duly given whether or not the Registered
Holder receives such notice. At the time of the mailing to the Registered
Holders of the Preferred Warrants of the notice of redemption, the Company shall
deliver or cause to be delivered to the Representative a similar notice
telephonically and confirmed in writing together with a list of the Registered
Holders (including their respective addresses and number of Preferred Warrants
beneficially owned) to whom such notice of redemption has been or will be given.
(c) The notice of redemption, which may not be mailed until on
or after the Initial Warrant Redemption Date, shall specify (i) the redemption
price, (ii) the date fixed for redemption, (iii) the place where the Warrant
Certificate shall be delivered and the redemption price shall be paid, and (iv)
that the right to exercise the Preferred Warrant shall terminate a 5:00 p.m.
(New York City Time) on the business day immediately preceding the date fixed
for redemption. The date fixed for the redemption of the Preferred Warrants
shall be the Redemption Date. No failure to mail such notice nor any defect
therein or in the mailing thereof shall affect the validity of the proceedings
for such redemption except as to a Registered Holder (a) to whom notice was not
mailed or (b) whose notice was defective. An affidavit of the Preferred Warrant
Agent or the Secretary or Assistant Secretary of the Company that notice of
redemption has been mailed shall, in the absence of fraud, be prima facie
evidence of the facts stated therein.
(d) Any right to exercise a Preferred Warrant shall terminate
at 5:00 p.m. (New York City Time) on the business day immediately preceding the
Redemption Date. The redemption price payable to the Registered Holders shall be
mailed to such persons at their addresses of record.
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(e) The redemption price of $1.20 per Warrant shall not be
adjusted pursuant to Section 8 unless the Company elects to issue additional
warrants pursuant to Sections 2(d) and 8(c) hereof. In the event, additional
warrants are issued pursuant to Sections 2(d) and 8 hereof, the Board of
Directors shall make a good faith determination of whether or not a
proportionate adjustment shall be made to increase or decrease the redemption
price to put the holders of the Preferred Warrants in the same place as if the
redemption occurred prior to the event under Section 8 that gave rise to an
adjustment under Sections 2(d) and 8(c) herein.
SECTION 10. Concerning the Preferred Warrant Agent.
(a) The Preferred Warrant Agent acts hereunder as agent and in
a ministerial capacity for the Company and the Representative, and its duties
shall be determined solely by the provisions hereof. The Preferred Warrant Agent
shall not, by issuing and delivering Warrant Certificates or by any other act
hereunder, be deemed to make any representations as to the validity or value or
authorization of the Warrant Certificates or the Preferred Warrants represented
thereby or of any securities delivered upon exercise of any Preferred Warrant or
whether any stock issued upon exercise of any Preferred Warrant is fully paid
and nonassessable.
(b) The Preferred Warrant Agent shall not at any time be under
any duty or responsibility to any holder of Warrant Certificates to make or
cause to be made any adjustment of the Purchase Price provided in this
Agreement, or to determine whether any fact exists which may require any such
adjustment, or with respect to the nature or extent of any such adjustment, when
made, or with respect to the method employed in making the same. It shall not
(i) be liable for any recital or statement of fact contained herein or for any
action taken, suffered or omitted by it in reliance on any Warrant Certificate
or other document or instrument believed by it in good faith to be genuine and
to have been signed or presented by the proper party or parties, (ii) be
responsible for any failure on the part of the Company to comply with any of its
covenants and obligations contained in this Agreement or in any Warrant
Certificate, or (iii) be liable for any act or omission in connection with this
Agreement, except for its own gross negligence or willful misconduct.
(c) The Preferred Warrant Agent may at any time consult with
counsel satisfactory to it (who may be counsel for the Company) and shall incur
no liability or responsibility for any action taken, suffered or omitted by it
in good faith in accordance with the opinion or advice of such counsel.
(d) Any notice, statement, instruction, request, direction,
order or demand of the Company shall be sufficiently evidenced by an instrument
signed by the Chairman of the Board of Directors, Chief Executive Officer or
President (unless other evidence in respect thereof is herein specifically
prescribed). The Preferred Warrant Agent shall not be liable for any action
taken, suffered or omitted by it in accordance with such notice, statement,
instruction, request, direction, order or demand.
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(e) The Company agrees to pay the Preferred Warrant Agent
reasonable compensation for its services hereunder and to reimburse it for its
reasonable expenses hereunder; the Company further agrees to indemnify the
Preferred Warrant Agent and save it harmless against any and all losses,
expenses and liabilities, including judgments, costs and counsel fees, for
anything done or omitted by the Preferred Warrant Agent in the execution of its
duties and powers hereunder except losses, expenses and liabilities arising as a
result of the Preferred Warrant Agent's gross negligence or willful misconduct.
(f) The Preferred Warrant Agent may resign its duties and be
discharged from all further duties and liabilities hereunder (except liabilities
arising as a result of the Preferred Warrant Agent's own gross negligence or
willful misconduct), after giving 60 days prior written notice to the Company.
At least 30 days prior to the date such resignation is to become effective, the
Preferred Warrant Agent shall cause a copy of such notice of resignation to be
mailed to the Registered Holder of each Warrant Certificate at the Company's
expense. Upon such resignation the Company shall appoint in writing a new
Preferred Warrant Agent. If the Company shall fail to make such appointment
within a period of 60 days after it has been notified in writing of such
resignation by the resigning Preferred Warrant Agent, then the Registered Holder
of any Warrant Certificate may apply to any court of competent jurisdiction for
the appointment of a new Preferred Warrant Agent. Any new Preferred Warrant
Agent, whether appointed by the Company or by such a court, shall be a bank or
trust company having a capital and surplus, as shown by its last published
report to its stockholders, of not less than $10,000,000 or a stock transfer
company doing business in New York, New York. After acceptance in writing of
such appointment by the new Preferred Warrant Agent is received by the Company,
such new Preferred Warrant Agent shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named herein as the
Preferred Warrant Agent, without any further assurance, conveyance, act or deed;
but if for any reason it shall be necessary or expedient to execute and deliver
any further assurance, conveyance, act or deed, the same shall be done at the
expense of the Company and shall be legally and validly executed and delivered
by the resigning Preferred Warrant Agent. Not later than the effective date of
any such appointment the Company shall file notice thereof with the resigning
Preferred Warrant Agent and shall forthwith cause a copy of such notice to be
mailed to the Registered Holder of each Warrant Certificate.
(g) Any corporation into which the Preferred Warrant Agent or
any new Preferred Warrant Agent may be converted or merged, any corporation
resulting from any consolidation to which the Preferred Warrant Agent or any new
Preferred Warrant Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Preferred Warrant Agent or any new Preferred
Warrant Agent shall be a successor Preferred Warrant Agent under this Agreement
without any further act, provided that such corporation is eligible for
appointment as successor to the Preferred Warrant Agent under the provisions of
the preceding paragraph. Any such successor Preferred Warrant Agent shall
promptly cause notice of its succession as Preferred Warrant Agent to be mailed
to the Company and to the Registered Holders of each Warrant Certificate.
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(h) The Preferred Warrant Agent, its Subsidiaries and
affiliates, and any of its or their officers or directors, may buy and hold or
sell Preferred Warrants or other securities of the Company and otherwise deal
with the Company in the same manner and to the same extent and with like effect
as though it were not Preferred Warrant Agent. Nothing herein shall preclude the
Preferred Warrant Agent from acting in any other capacity for the Company or for
any other legal entity.
(i) The Preferred Warrant Agent shall retain for a period of
three years from the date of exercise any Warrant Certificate received by it
upon such exercise, marked to indicate its cancellation thereof in accordance
with Section 6(e) hereof.
SECTION 11. Modification of Agreement.
The Preferred Warrant Agent and the Company may by
supplemental agreement make any changes or corrections in this Agreement without
the approval of any holders of Preferred Warrants (i) that they shall deem
appropriate to cure any ambiguity or to correct any defective or inconsistent
provision or manifest mistake or error herein contained; (ii) that they may deem
necessary or desirable and which shall not adversely affect the interests of the
holders of Warrant Certificates; (iii) that they deem necessary or desirable to
decrease the Purchase Price as provided for in Section 1(f) hereof; or (iv)
which may be required by law; provided, however, that this Agreement shall not
otherwise be modified, supplemented or altered in any respect except with the
consent in writing of the Registered Holders representing not less than 50% of
the Preferred Warrants then outstanding; provided, further, that no change in
the number or nature of the securities purchasable upon the exercise of any
Preferred Warrant, or the Purchase Price (other than a decrease in the Purchase
Price as provided in Section l(f) thereof) therefor, shall be made without the
consent in writing of the Registered Holder of the Warrant Certificate, other
than such changes as are specifically permitted or prescribed by this Agreement
as originally executed. In addition, this Agreement may not be modified, amended
or supplemented without the prior written consent of the Representative, other
than (i) to cure any ambiguity or to correct any provision which is inconsistent
or which is a manifest mistake or error; (ii) to make any such change that is
necessary or desirable and which shall not adversely affect the interests of the
Representative; (iii) to decrease the Purchase Price as provided for in Section
1 (f) hereof; or (iv) except as may be required by law.
SECTION 12. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made when delivered or
mailed first-class postage prepaid, or delivered to a telegraph office for
transmission if to the Registered Holder of a Warrant Certificate, at the
address of such holder as shown on the registry books maintained by the
Preferred Warrant Agent; if to the Company at 0000 Xxxxxx Xxxxxxx Xxxxxx, X.X.,
Xxxxxx, Xxxx 00000, Attention: Xxxxxx Xxxxxx, or at such other address as may
have been furnished to the Preferred Warrant Agent in writing by the
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Company; and if to the Preferred Warrant Agent, at its Corporate Office. Copies
of any notice delivered pursuant to this Agreement shall be delivered to the
Representative at 00 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxxxx
Xxxxxx, President, or at such other addresses as may have been furnished to the
Company and the Preferred Warrant Agent in writing.
SECTION 13. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without giving effect to conflicts of laws.
SECTION 14. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
Company, the Preferred Warrant Agent and their respective successors and assigns
and the holders from time to time of Warrant Certificates or any of them. Except
as hereinafter stated, nothing in this Agreement is intended or shall be
construed to confer upon any other person any right, remedy or claim or to
impose upon any other person any duty, liability or obligation. The
Representative is, and shall at all times irrevocably be deemed to be,
third-party beneficiaries of this Agreement, with full power, authority and
standing to enforce the rights granted to it hereunder.
SECTION 15. Counterparts.
This Agreement may be executed in several counterparts, which
taken together shall constitute a single document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the first date first above written.
[SEAL]
KIDS STUFF, INC. AMERICAN STOCK TRANSFER
& TRUST COMPANY
By: _______________________________ By: _________________________________
Xxxxxx Xxxxxx, President (authorized officer)
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