JUST TOYS, INC.
AND
XXXXXX XXXXXX XXXXXXXX & CO., INC.
--------
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of August 31, 1998 between JUST
TOYS, INC. (the "Company"), and XXXXXX XXXXXX XXXXXXXX & CO., INC.("Xxxxxx
Xxxxxx").
W I T N E S S E T H:
WHEREAS, pursuant to a letter agreement dated concurrently
herewith (the "Retention Agreement"), the Company has retained Xxxxxx Xxxxxx, on
an exclusive basis, as its investment advisor for the purpose of identifying and
assisting it with the structure, evaluation, negotiation and financing of
Acquisition Transactions, as that term is defined in the Retention Agreement,
("Acquisition Transactions"); and
WHEREAS, as full consideration for Xxxxxx Xxxxxx'x services to
the Company, the Company has agreed to issue to Xxxxxx Xxxxxx and Xxxxxx Xxxxxx
has agreed to accept warrants to purchase 500,000 shares of the Company's common
stock, par value $.01 per share ("Common Stock").
NOW, THEREFORE, in consideration of the premises, the
agreements herein set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Grant. Xxxxxx Xxxxxx is hereby granted the right to purchase, from
August 31, 1998 until 5:00 P.M., New York time, on August 31, 2003 (the
"Exercise Period"), up to an aggregate of 500,000 shares of Common Stock (the
"Shares") at an initial exercise price (subject to adjustment as provided in
Section 9 hereof) of $1.00 per share of Common Stock subject to the terms and
conditions of this Agreement (the "Warrants").
2. Exercisability.
2.1 The Warrants will be exercisable with respect to 100,000
Shares upon execution of this Agreement.
2.2 The Warrants will become exercisable with respect to the
remaining 400,000 Shares upon consummation of Acquisition Transactions according
to the following schedule:
2.2.1 when aggregate Achieved Net Sales (as defined
below) from Acquisition Transactions ("Achieved Net Sales") equal any amount up
to $10,000,000, the Warrants shall become exercisable with respect to such
number of Shares as equals 200,000 multiplied by a fraction, the numerator of
which is Achieved Net Sales and the denominator of which is $10,000,000; and
2.2.2 when aggregate Achieved Net Sales exceed
$10,000,000 and equal any amount up to $25,000,000, the Warrants shall become
exercisable with respect to such number of additional Shares as equals 100,000
multiplied by a fraction, the numerator of which is Achieved Net Sales minus
$10,000,000 and the denominator of which is $15,000,000; and
2.2.3 when aggregate Achieved Net Sales exceed
$25,000,000, the Warrants shall become exercisable with respect to such number
of additional Shares (not exceeding 100,000 Shares), as equals 100,000
multiplied by a fraction, the numerator of which is Achieved Net Sales minus
$25,000,000 and the denominator of which is $10,000,000.
As used herein, "Achieved Net Sales" means the gross sales (less customary trade
and cash discounts) of the product line, company, division or subsidiary which
is the subject of an Acquisition Transactions for the 12 month period
immediately preceding the closing date of such Acquisition Transactions as
reflected on the books and records of the selling entity of the product line or
of the Company, division or subsidiary being acquired computed in accordance
with generally acceptable accounting principles.
2.3 The Warrants shall become fully exercisable upon the
occurrence of either of following events:
2.3.1 if, during the Exercise Period, gross sales
(less customary trade and cash discounts) of toy lines acquired in Acquisition
Transactions shall exceed $50,000,000; or
2.3.2 if prior to termination of the Retention
Agreement, a Change in Control, as that term is defined in the Retention
Agreement ("Change in Control"), shall have occurred.
2.4 If the Retention Agreement is terminated pursuant to
Section 2 of the Retention Agreement, all Warrants which have not theretofore
become exercisable shall forthwith terminate and be of no further force or
effect, except that the Warrants shall remain exercisable after termination of
the Retention Agreement in accordance with the provisions of Section 2.3.1 above
and during the 18 month period following termination of the Retention Agreement
for Acquisition Transactions effected during that period in accordance with
Section 1 of the Retention Agreement.
3. Warrant Certificates. The warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this agreement shall be
in the form set forth in Exhibit A, attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
4. Exercise of Warrants. The Warrants are exercisable at an initial
exercise price (subject to adjustment as provided in Section 9 hereof) per share
of Common Stock set forth in Section 7 hereof payable to the Company by
certified or official bank check in New York Clearing House funds, subject to
adjustment as provided in Section 9 hereof. Upon surrender of a Warrant
Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price (as hereinafter defined) for the
shares of Common Stock purchased at the Company's principal offices in New York
(presently located at 00 Xxxxxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxx Xxxx 10522) the
registered holder of a Warrant Certificate ("Holder" or "Holders") shall be
entitled to receive a certificate or certificates for the shares of Common Stock
so purchased. The
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purchase rights represented by each Warrant Certificate are exercisable at the
option of the Holder thereof, in whole or in part (but not as to fractional
shares of the Common Stock underlying the Warrants). In the case of the purchase
of less than all the shares of Common Stock purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the shares of Common stock purchasable thereunder.
5. Issuance of Certificates. Upon the exercise of the Warrants, the
issuance of certificates for shares of Common Stock underlying the Warrants,
shall be made forthwith (and in any event within ten business days thereafter)
without charge to the Holder thereof including, without limitation, any tax
which may be payable in respect of the issuance thereof, and such certificates
shall (subject to the provisions of Section 6 and Section 8 hereof) be issued in
the name of, or in such names as may be directed by, the Holder thereof;
provided, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificates in a name other than that of the Holder and the Company
shall not be required to issue or deliver such certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
The Warrant Certificates and the certificates representing the
Shares issuable upon the exercise of the Warrants shall be executed on behalf of
the Company by the manual or facsimile signature of the then present Chairman or
Vice Chairman of the Board of Directors or President or Vice President of the
Company under its corporate seal reproduced thereon, attested to by the manual
or facsimile signature of the then present Secretary or Assistant Secretary of
the Company. Warrant Certificates shall be dated the date of execution by the
Company upon initial issuance, division, exchange, substitution or transfer.
6. Restriction On Transfer of Warrants. The Holder of a Warrant
Certificate, by its acceptance thereof, covenants and agrees that the Warrant is
being acquired as an investment and not with a view to the distribution thereof;
that the Warrants may not be sold, transferred, assigned, hypothecated or
otherwise disposed of, in whole or in part, except to officers, directors or
employees of Xxxxxx Xxxxxx.
7. Exercise Price.
7.1 Initial and Adjusted Exercise Price. Except as otherwise
provided in Section 9 hereof, the initial exercise price of the Warrants shall
be $1.00 per share of Common Stock. The adjusted exercise price shall be the
price which shall result from time to time from any and all adjustments of the
initial exercise price in accordance with the provisions of Section 9 hereof;
provided, however, that the adjusted exercise price shall never be reduced below
the par value of the Common Stock.
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7.2 Exercise Price. The term "Exercise Price" herein shall
mean the initial exercise price or other adjusted exercise price, depending upon
the context.
8. Registration Rights.
8.1 Registration Under the Securities Act of 1933. The
Warrants and the Shares issuable upon exercise of the Warrants have not been
registered under the Securities Act of 1933, as amended (the "Act"). Upon
exercise, in part or in whole, of the Warrants, certificates representing the
Shares underlying the Warrants (the "Warrant Shares") shall bear the following
legend:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended ("Act"), and may not be
offered or sold except pursuant to (i) an effective registration
statement under the Act, (ii) to the extent applicable, Rule 144 under
the Act (or any similar rule under such Act relating to the disposition
of securities), or (iii) an opinion of counsel, if such opinion shall
be reasonably satisfactory to counsel to the issuer, that an exemption
from registration under such Act is available.
8.2 Piggyback Registration. If, at any time commencing after
the date hereof and expiring seven years thereafter, the Company proposes to
register any of its securities under the Act (other than in connection with a
merger or pursuant to Form S-8 or a successor form) it will give written notice
by registered mail, at least 30 days prior to the filing of each such
registration statement, to all of the Holders of the Warrants and/or the Warrant
Shares (the "Registrable Securities") of its intention to do so. If the Holders
of the Warrants and/or Warrant Shares notify the Company within 20 days after
receipt of any such notice of its or their desire to include any such securities
in such proposed registration statement, the Company shall afford each of the
Holders of the Warrants and/or Warrant Shares the opportunity to have any such
Warrant Shares registered under such registration statement.
Notwithstanding the foregoing, if, in the case of an
underwritten offering by the Company, the managing underwriter of such offering
shall advise the Company in writing that, in its opinion, the distribution of
the Warrant Shares requested to be included in the registration concurrently
with the securities being registered by the Company would adversely affect the
distribution of such securities by the Company, then the offering and sale of
such Warrant Shares shall be delayed for such period, not to exceed 90 days, as
the managing underwriter shall request. In the event of a delay as provided in
the preceding sentence, the Company shall file such supplements and post
effective amendments, and take any such other steps as may be necessary, to
permit the proposed offering and sale of such Shares for a period of 90 days
immediately following the end of such period of delay.
Notwithstanding the provisions of this Section 8.2, the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 8.2 (irrespective of whether a written request
for inclusion of any such securities shall have been made) to elect not to
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file any such proposed registration statement, or to withdraw the same after the
filing but prior to the effective date thereof.
8.3 Demand Registration.
(a) At any time commencing after the date hereof and
expiring five years thereafter, the Holders of the Warrants and/or Warrant
Shares representing a "Majority" (as hereinafter defined) of such securities
(assuming the exercise of all of the Warrants) shall have the right (which right
is in addition to the registration rights under Section 8.2 hereof), exercisable
by written notice to the Company, to have the Company prepare and file with the
Commission on two occasions, a registration statement and such other documents,
including a prospectus, as may be necessary in the opinion of both counsel for
the Company and counsel for the Underwriters and Holders, in order to comply
with the provisions of the Act, so as to permit a public offering and sale of
their respective Warrant Shares for nine consecutive months by such Holders and
any other Holders of the Warrants and/or Warrant Shares who notify the Company
within ten days after receiving notice from the Company of such request.
(b) The Company covenants and agrees to give written
notice of any registration request under this Section 8.3 by any Holder or
Holders to all other registered Holders of the Warrants and the Warrant Shares
within ten days from the date of the receipt of any such registration request.
(c) In addition to the registration rights under
Section 8.2 and subsection (a) of this Section 8.3, at any time commencing after
the date hereof and expiring five years thereafter, any Holder of the Warrants
and/or Warrant Shares shall have the right, exercisable by written request to
the Company, to have the Company prepare and file, on one occasion, with the
Commission a registration statement so as to permit a public offering and sale
for nine consecutive months by any such Holder of its Warrant Shares provided,
however, that all costs incident thereto shall be at the expense of the Holder
or Holders making such request.
8.4 Covenants of the Company With Respect to Registration. In
connection with any registration under Section 8.2 or Section 8.3 hereof, the
Company covenants and agrees as follows:
(a) The Company shall use its best efforts to file a
registration statement within 30 days of receipt of any demand therefor, shall
use its best efforts to have any registration statements declared effective at
the earliest possible time, and shall furnish each Holder desiring to sell
Warrant Shares such number of prospectuses as shall reasonably be requested.
Notwithstanding the foregoing, the Company shall be entitled
to postpone, for a period of not more than 120 days after receipt of a request
to effect a registration, the filing of any registration statement otherwise
required to be prepared and filed by it pursuant to Section 8.3 hereof if, at
the time it receives a request for registration, the Board of Directors of the
Company determines
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in its reasonable business judgment that such registration and offering would
interfere with any material financing, acquisition, corporate reorganization or
other material transaction or development involving the Company and promptly
gives the Holders demanding registration written notice of such determination;
provided that (i) upon such postponement by the Company, the Company shall be
required to file such registration statement as soon as practicable after the
Board of Directors of the Company shall determine, in its reasonable business
judgment, that such registration and offering will not interfere with the
aforesaid material financing, acquisition, corporate reorganization or other
material transaction or development involving the Company, (ii) the Company may
not utilize this right more than once, (iii) the Holders who made such written
request to effect such registration, may, at any time in writing, withdraw such
request for such registration and therefore preserve the rights provided in
Section 8.3 hereof for such Holders to again request such registration, and (iv)
the Exercise Period shall automatically be extended by an additional 180 days.
(b) The Company shall pay all costs (excluding fees
and expenses of Holder(s)' counsel and any underwriting or selling commissions),
fees and expenses in connection with all registration statements filed pursuant
to Sections 8.2 and 8.3(a) hereof including, without limitation, the Company's
legal and accounting fees, printing expenses, blue sky fees and expenses. The
Holder(s) will pay all costs, fees and expenses in connection with any
registration statement filed pursuant to Section 8.3(c). If the Company shall
fail to comply with the provisions of Section 8.4(a), the Company shall, in
addition to any other equitable or other relief available to the Holder(s),
extend the Exercise Period by such number of days as shall equal the delay
caused by the Company's failure, and be liable for any or all damages as the
Holder(s) may be entitled to as a matter of law.
(c) The Company will take all necessary action which
may be required in qualifying or registering the Warrant Shares included in a
registration statement for offering and sale under the securities or blue sky
laws of such states as reasonably are requested by the Holder(s), provided that
the Company shall not be obligated to execute or file any general consent to
service of process or to qualify as a foreign corporation to do business under
the laws of any such jurisdiction.
(d) The Company agrees to indemnify and hold harmless
each Holder of the Warrant Shares to be sold pursuant to any registration
statement ("Registration Statement") and each person, if any, who controls any
such Holder within the meaning of Section 15 of the Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and each of
them, from and against any and all loss, liability, claim, damage, expense or
action, joint or several (including, but not limited to, any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever and any amount
paid in settlement of any litigation, commenced or threatened, or of any claim
whatsoever, if such settlement is effected with the written consent of the
Company, which consent shall not be unreasonably withheld), to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, liability, claim, damage, expense or action arises out of (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or
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any amendment thereto), or the omission or alleged omission therefrom of 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, (ii) any untrue statement or alleged untrue statement of a
material fact contained in a preliminary prospectus or prospectus (or any
amendment or supplement thereto), or any omission or alleged omission therefrom
of a material fact required to be stated therein or necessary in order to make
the statement therein, in light of the circumstances under which they were made,
not misleading, or (iii) any untrue statement or alleged untrue statement of a
material fact contained in any application or other document executed by the
Company or based upon written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify all or any of the Warrant
Shares under the securities laws thereof or filed with the Securities and
Exchange Commission ("SEC"), the National Association of Securities Dealers,
Inc. ("NASD") or any securities exchange, or any omission or alleged omission
therefrom of 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; provided, however, that the Company shall not be
liable in any such case to the extent that such untrue statement or omission or
such alleged untrue statement or omission was made in reliance upon and in
conformity with information furnished in writing by or on behalf of any Holder
to the Company expressly for use in the Registration Statement (or any amendment
thereto), any such preliminary prospectus or the prospectus (or any amendment or
supplement thereto) or any such application or document. The indemnity contained
in this Section 8.4(d) is in addition to any liability which the Company may
otherwise have to any Holder or any controlling person of a Holder.
(e) Each Holder severally agrees that it will
indemnify and hold harmless the Company, each of its officers who signs the
Registration Statement, each of its directors, and each person who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any and all loss, liability, claim, damage, expense or
action, joint or several to the same extent as the foregoing indemnity from the
Company to the Holders, but only with respect to statements or omissions made in
the Registration Statement (or any amendment thereto) or a preliminary
prospectus or the prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with information furnished in writing by such
Holder to the Company expressly for use in the Registration Statement (or any
amendment thereto). The indemnity contained in this Section 8.4(e) is in
addition to any liability which any Holder may otherwise have to the Company or
any of its directors, officers or controlling persons.
(f) Promptly after receipt by an indemnified party
under this Section 8.4 of notice of any claim, threatened claim or the
commencement of any action, the indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8.4,
notify the indemnifying party in writing of the claim, threatened claim or the
commencement of that action; provided, however, that the failure to notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have to an indemnified party otherwise than under this Section 8.4.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein, and to the extent that it wishes, jointly with
any other similarly notified indemnified party,
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to assume the defense thereof with its counsel, who shall be reasonably
satisfactory to the indemnified party. After notice from the indemnifying party
to the indemnified party of its election to assume the defense of such claim,
threatened claim or action, the indemnifying party shall not be liable to the
indemnified party under this Section 8.4 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation provided, however, that any
indemnified party shall have the right to employ counsel to represent it and its
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by such indemnified party against the
Company under this Section 8.4 if, in the reasonable judgment of such
indemnified party, it is necessary for it to be represented by separate counsel
in order to avoid an actual or potential conflict of interest or if it shall
have reasonably concluded that there may be defenses available to it, and its
controlling persons different from or in addition to those available to the
Company, and in either such event the reasonable fees and expenses of such
separate counsel shall be paid by the Company. An indemnifying party shall not
be liable for any settlement of any action or claims effected without its
written consent (which consent shall not unreasonably be withheld).
(g) Nothing contained in this Agreement shall be
construed as requiring the Holder(s) to exercise their Warrants prior to the
initial filing of any registration statement or the effectiveness thereof.
(h) The Company shall not permit the inclusion of any
securities other than the Warrant Shares to be included in any registration
statement filed pursuant to Section 8.3 hereof, or file any other registration
statement subsequent to the receipt of any notice pursuant to Section 8.3 hereof
and until 90 days after the effectiveness of a registration statement filed
pursuant to Section 8.3 hereof, without the prior written consent of the Holders
of the Warrants and Warrant Shares representing a Majority of such securities.
(i) In connection with any registration statement
filed pursuant to Section 8.2 hereof, the Company shall furnish to each Holder
participating in any offering a signed counterpart, addressed to such Holder an
opinion of counsel to the Company, dated the effective date of such registration
statement (and, if such registration includes an underwritten public offering,
an opinion dated the date of the closing under the underwriting agreement), and
a "cold comfort" letter dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, a letter
dated the date of the closing under the underwriting agreement) signed by the
independent public accountants who have issued a report on the Company's
financial statements included in such registration statement, in each case
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, and are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to underwriters in underwritten
public offerings of securities.
(j) The Company shall as soon as practicable after
the effective date of the registration statement, and in any event within 15
months thereafter, make "generally available
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to its security holders" (within the meaning of Rule 158 under the Act) an
earnings statement (which need not be audited) complying with Section 11(a) of
the Act and covering a period of at least 12 consecutive months beginning after
the effective date of the registration statement.
(k) The Company shall deliver promptly to each Holder
participating in the offering requesting the correspondence and memoranda
described below, copies of all correspondence between the Commission and the
Company, its counsel or auditors and all memoranda relating to discussions with
the Commission or its staff with respect to the registration statement and
permit each Holder and underwriters to do such investigation upon reasonable
advance notice, with respect to information contained in or omitted from the
registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the NASD. Such investigation shall
include access to books, records and properties and opportunities to discuss the
business of the Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as any such Holder
shall reasonably request.
(l) The Company shall enter into an underwriting
agreement with the managing underwriters selected for such underwriting by
Holders holding a Majority of the Warrant Shares requested to be included in
such underwriting. Such agreement shall be satisfactory in form and substance to
the Company, each Holder and such managing underwriters, and shall contain such
representations, warranties and covenants by the Company and such other terms as
are customarily contained in agreements of that type used by the managing
underwriter. The Holders shall be parties to any underwriting agreement relating
to an underwritten sale of their Warrant Shares and may, at their option,
require that any or all the representations, warranties and covenants of the
Company to or for the benefit of such underwriters shall also be made to and for
the benefit of such Holders. Such Holders shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters except as they may relate to such Holders and their intended
methods of distribution.
(m) For purposes of this Agreement, the term
"Majority" in reference to the Holders of the Warrants or Warrant Shares, shall
mean in excess of fifty percent (50%) of the then outstanding Warrants or
Warrant Shares that are not held by the Company, an affiliate, officer,
creditor, employee or agent thereof or any of their respective affiliates,
members of their family, persons acting as nominees or in conjunction therewith
or have not been resold to the public pursuant to a registration statement filed
with the SEC under the Act.
9. Adjustments to Exercise Price and Number of Shares.
9.1 Subdivision and Combination. In case the Company shall at
any time subdivide or combine the outstanding shares of Common Stock, the
Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
9.2 Adjustment in Number of Shares. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Section 9, the number of
Shares issuable upon the exercise of each
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Warrant shall be adjusted to the nearest full amount by multiplying a number
equal to the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares issuable upon exercise of the Warrants immediately
prior to such adjustment and dividing the product so obtained by the adjusted
Exercise Price.
9.3 Definition of Common Stock. For the purpose of this
Agreement, the term "Common Stock" shall mean the class of stock designated as
Common Stock in the Certificate of Incorporation of the Company as may be
amended as of the date hereof, or any other class of stock resulting from
successive change or reclassifications of such Common Stock consisting solely of
changes in par value, or from par value to no par value, or from no par value to
par value. In the event that the Company shall after the date hereof issue
securities with greater or superior voting rights than the shares of Common
Stock outstanding as of the date hereof, the Holder, at its option, may receive
upon exercise of the Warrants either shares of Common Stock or a like number of
such securities with greater or superior voting rights.
9.4 Merger or Consolidation. In case of any consolidation of
the Company with, or merger of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger which does not result
in any reclassification or change of the outstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental warrant agreement providing that the holder of the
Warrants then outstanding or to be outstanding shall have the right thereafter
(until the expiration of the Warrants) to receive, upon exercise of such
warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation or merger, by a holder of the number
of shares of Common Stock of the Company for which such warrant might have been
exercised immediately prior to such consolidation, merger, sale or transfer.
Such supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in this Section 9. The above provision of
this subsection shall similarly apply to successive consolidations or mergers.
9.5 Notice of Adjustment in Exercise Price. Upon any
adjustment of the Exercise Price pursuant to this Section 9, the Company shall
promptly thereafter cause to be given to each holder by first-class mail,
postage prepaid, written notice setting forth the Exercise Price after such
adjustment and setting forth in reasonable detail the method of calculation and
the facts upon which such calculations are based and setting forth the number of
Warrant Shares of the Warrants and payment of the adjusted Exercise Price.
10. Exchange and Replacement of Warrant Certificates. Each Warrant
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Shares in such denominations as
shall be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably
satisfactory to it or the loss, theft, destruction or mutilation of any Warrant
Certificate, and, in case of loss, theft or destruction,
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of indemnity or security reasonably satisfactory to it, and reimbursement to the
Company of all reasonable expenses incidental thereto, and upon surrender and
cancellation of the Warrants, if mutilated, the Company will make and deliver a
new Warrant Certificate of like tenor, in lieu thereof.
11. Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of the Warrants, nor shall it be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock or other securities,
properties or rights.
12. Reservation and Listing of Securities. The Company shall at all
times reserve and keep available out of its authorized shares of Common Stock,
solely for the purpose of issuance upon the exercise of the Warrants, such
number of shares of Common Stock or other securities, properties or rights as
shall be issuable upon the exercise thereof. The Company covenants and agrees
that, upon exercise of the Warrants and payment of the Exercise Price therefor,
all shares of Common Stock and other securities issuable upon such exercise
shall be duly and validly issued, fully paid, non-assessable and not subject to
the preemptive rights of any stockholder. As long as the Warrants shall be
outstanding, the Company shall use its best efforts to cause all shares of
Common Stock issuable upon the exercise of the Warrants to be listed (subject to
official notice of issuance) on all securities exchanges on which the Common
Stock issued to the public in connection herewith may then be listed and/or
quoted on the Nasdaq Stock Market.
13. Notice to Warrant Holders. Nothing contained in this Agreement
shall be construed as conferring upon the Holders the right to vote or to
consent or to receive notice as a stockholder in respect of any meetings of
stockholders for the election of directors or any other matter, or as having any
rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the following
events shall occur:
(a) the Company shall take a record of the holders of
its shares of Common Stock for the purpose of entitling them
to receive a dividend or distribution payable; or
(b) the Company shall offer to all the holders of its
Common Stock any additional shares of capital stock of the
Company or securities convertible into or exchangeable for
shares of capital stock of the Company, or any option, right
or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or
merger) or a sale of all or substantially all of its property,
assets and business as a entirety shall be proposed;
11
then, in any one or more of said events, the Company shall give written notice
of such event at least 15 days prior to the date fixed as a record date or the
date of closing the transfer books for the determination of the stockholders
entitled to such dividend, distribution, convertible or exchangeable securities
or subscription rights, or entitled to vote on such proposed dissolution,
liquidation, winding up or sale. Such notice shall specify such record date or
the date of closing the transfer books, as the case may be. Failure to give such
notice or any defect therein shall not affect the validity of any action taken
in connection with the declaration or payment of any such dividend, or the
issuance of any convertible or exchangeable securities, or subscription rights,
option or warrants, or any proposed dissolution, liquidation, winding up or
sale.
14. Notices.
All notices, request, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made and
sent when delivered, or mailed by registered or certified mail, return receipt
requested:
(a) If to the registered Holder of the Warrants, to
the address of such Holder as shown on the books of the
Company; or
(b) If to the Company, to the address set forth in
Section 4 hereof or to such other address as the Company may
designate by notice to the Holders.
15. Successors. All the covenants and provisions of this Agreement
shall be binding upon and inure to the benefit of the Company, the Holders and
their respective successors and assigns hereunder.
16. Termination. This Agreement shall terminate at the close of
business on July __, 2003.
17. Governing Law; Submission to Jurisdiction. This Agreement and each
Warrant Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws.
The parties will arbitrate any dispute, claim or controversy
relating to or arising out of this agreement in New York City in accordance with
the rules of the American Arbitration Association in effect at the time
arbitration is commenced. The arbitrator's decision and award will be final and
binding on the parties and may be entered and confirmed in any court of
competent jurisdiction and enforced to the full extent permitted by law. The
arbitrator may grant any legal and/or equitable relief to which a party may be
entitled under the law or legal theory under which the party seeks relief. Each
party to such arbitration shall bear its own costs of the proceeding. The
12
compensation of the arbitrator and any other costs of the proceeding shall be
shared equally by the parties.
18. Entire Agreement; Modification. This Agreement contains the entire
understanding between the parties hereto with respect to the subject matter
hereof and may not be modified or amended except by a writing duly signed by the
party against whom enforcement of the modification or amendment is sought.
19. Severability. If any provisions of this Agreement shall be held to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Agreement.
20. Captions. The caption headings of the Sections of this Agreement
are for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
21. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
registered Holder(s) of the Warrant Certificates or Warrant Shares any legal or
equitable right, remedy or claim under this Agreement.
22. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
JUST TOYS, INC.
By: /s/ Xxxxx Xxxxxxx
----------------------------------------------
Xxxxx Xxxxxxx, Chief Executive Officer
Attest:
/s/ Xxxxxxx Xxxxxxxxx
----------------------
Secretary
XXXXXX XXXXXX XXXXXXXX & CO.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Sr. Managing Director
14
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES, OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK TIME, AUGUST 31, 2003
No. WG-1 500,000 Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that Xxxxxx Xxxxxx Xxxxxxxx
& Co., Inc., or registered assigns, is the registered holder of Warrants to
purchase, from August 31, 1998 until 5:00 p.m. New York time on August 31, 2003
("Expiration Date"), up to an aggregate of 500,000 fully-paid and non-assessable
shares of common stock, $.01 par value ("Common Stock") of JUST TOYS, INC., a
Delaware corporation (the "Company"), at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $1.00 per share of
Common Stock upon surrender of this Warrant Certificate and payment of the
Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the warrant agreement dated as of August 31,
1998 among the Company and Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc. (the "Warrant
Agreement"). Payment of the Exercise price shall be made by certified or
official bank check in New York Clearing House funds payable to the order of the
Company.
The Warrants will be exercisable in accordance with Section 2
of the Warrant Agreement.
A-1
No Warrant may be exercised after 5:00 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, hereby shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants issued pursuant to the Warrant Agreement,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the type and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter, or otherwise impair, the rights
of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Warrant Agreement, without any charge except for any tax or
other governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced
by this Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such numbered unexercised Warrants.
The company may deem and treat the registered holder(s) hereof
as the absolute owner(s) of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and for
all other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined
in the Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
A-2
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.
Dated as of August 31, 1998
JUST TOYS, INC.
[SEAL] By: ______________________________________
Xxxxx Xxxxxxx, Chief Executive Officer
Attest:
______________________________
Secretary
A-3
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to purchase __________ shares of
Common Stock and herewith tenders in payment for such securities a certified or
official bank check payable in New York Clearing House Funds to the order of
Just Toys, Inc. in the amount of $__________, all in accordance with the terms
hereof. The undersigned requests that a certificate for such securities be
registered in the name of __________ whose address is __________ and that such
Certificate be delivered to __________ whose address is __________.
Dated: _________________
Signature______________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate.)
________________________________________
(Insert Social Security or Other
Identifying Number of Holder)
A-4
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED _____________________ hereby sells, assigns and
transfers unto _______________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________ Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated: _________________
Signature______________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate.)
________________________________________
(Insert Social Security or Other
Identifying Number of Holder)
A-5
