EXHIBIT 1.03
WARRANT EXERCISE FEE AGREEMENT
AGREEMENT dated as of the ____ day of _________, 1997, by and among VTC
Capital, Inc. ("VTR"), Kids Stuff, Inc. (the "Company") and American Stock
Transfer & Trust Co. (the "Warrant Agent").
W I T N E S S E T H:
WHEREAS, in connection with a public offering of 250,000 Units, (a
maximum of 287,500 Units including the over-allotment option), each Unit
consisting of two shares of the Company's Common Stock ("Common Stock"), and one
Class A Common Stock Purchase Warrant (the "Warrants"), the Company proposes to
issue, in accordance with an agreement dated as of __________, 1997 by and
between the Company and the Warrant Agent (the "Warrant Agreement"), Warrants to
purchase shares of Common Stock; and
WHEREAS, the Company also will be issuing an additional 1,500,000 Class
A Warrants to certain Selling Securityholders; and
WHEREAS, the parties hereto wish to provide VTR, a member of the
National Association of Securities Dealers, Inc. ("NASD") with certain rights on
an exclusive basis in connection with the exercise of the Warrants.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
Section 1. DESCRIPTION OF THE WARRANTS. The Company's Warrants may be
exercised on or after ___________, 1998 and expire at 5:00 p.m. New York time on
__________, 2002 (the "Expiration Date"), subject to (i) the Company's right to
extend the Expiration Date, at which time all rights evidenced by the Warrants
shall cease and the Warrants shall become void and (ii) certain redemption
rights commencing on or after ____________, 1998. In accordance with the
provisions of the Warrant Agreement, the holder of each Warrant shall have the
right to purchase from the Company, and the Company shall issue and sell to such
holders of Warrants, one fully paid and non-assessable share of the Company's
Common Stock for every Warrant exercised at an Exercise Price of $5.00 per
share, subject to adjustment as provided in the Warrant Agreement.
Section 2. NOTIFICATION OF EXERCISE. Within five (5) days of the last
day of each month commencing __________, 1998 (one year from the date of the
Company's Prospectus), the Warrant Agent or the Company will notify VTR of each
Warrant certificate which has been properly completed and delivered for exercise
by holders of Warrants during each such month, the determination of the proper
completion to be in the sole and absolute reasonable discretion of the Company
and the Warrant Agent. The Company or the Warrant
Agent will provide VTR with such information, in connection with the exercise
of each Warrant, as VTR shall reasonably request.
Section 3. PAYMENT TO VTR. The Company hereby agrees to pay to VTR an
amount equal to four (4%) percent of the exercise price (i.e. $.20 per share
based on the initial exercise price of the Warrants which is $5.00 per share)
for each Warrant exercised, except for those Warrants exercised by VTR (the
"Exercise Fee") a portion of which may be allowed by VTR to the dealer who
solicited the exercise (which may also be VTR) provided that:
(a) such Warrant is exercised on or after __________, 1998, which
represents one year from the effective date of the Company's Registration
Statement;
(b) at the time of exercise, the market price of the Company's Common
Stock is higher than the applicable Exercise Price of the Warrant being
exercised;
(c) the holders of Warrants being exercised have indicated in writing,
either in the Form of Election contained on the specimen Warrant Certificate
attached hereto as Exhibit A, or by written documents signed and dated by the
holders and specifically stating that the exercise of such Warrants were
solicited by VTR or another member of the NASD; and
(d) VTR, and/or the member of the NASD which solicited the exercise of
Warrants delivers a certificate to the Company within five (5) business days of
receipt of information relating to such exercised Warrants from the Company or
the Warrant Agent in the form attached hereto as Exhibit B, stating that:
(1) the Warrants exercised were not held in a discretionary
account;
(2) VTR or the member of the NASD which solicited the
exercise of Warrants did not, (unless granted an exemption by the Securities and
Exchange Commission from the provisions thereof), within the applicable number
of business days under Regulation M immediately preceding the date of exercise
of the Warrant bid for or purchase the Common Stock of the Company or any
securities of the Company immediately convertible into or exchangeable for the
Common Stock (including the Warrants) or otherwise engage in any activity that
would be prohibited by Regulation M under the Securities Exchange Act of 1934,
as amended, with one engaged in a distribution of the Company's securities; and
(3) in connection with the solicitation, it disclosed the
compensation it would receive upon exercise of the Warrant.
Section 4. PAYMENT OF THE EXERCISE FEE. The Company hereby agrees to pay
over to VTR within two (2) business days after receipt by the Company of the
certificate described in Section 3(d) above, the Exercise Fee out of the
proceeds it received from the
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applicable Exercise Price paid for the Warrants to which the certificate
relates.
Section 5. INSPECTION OF RECORDS. VTR may at any time during business
hours, at its expense, examine the records of the Company and the Warrant Agent
which relate to the exercise of the Warrants.
Section 6. TERMINATION. VTR shall be entitled to terminate this
Agreement prior to the exercise of all Warrants at any time upon five (5)
business days' prior notice to the Company and the Warrant Agent.
Notwithstanding any such termination notice, VTR shall be entitled to receive an
Exercise Fee for the exercise of any Warrant for which it has already delivered
to the Company prior to any such termination the certificate required by Section
3(d) of this Agreement.
Section 7. NOTICES. Any notice or other communication required or
permitted to be given pursuant to this Agreement shall be in writing and shall
be deemed sufficiently given if sent by first class certified mail, return
receipt requested, postage prepaid, addressed as follows: if to the Company at
0000 Xxxxxx Xxxxxxx Xxxxxx, X.X., Xxxxx 000, Xxxxxx, XX 00000, copy to Xxxxxxx
X. Xxxxx, Esq., Hornsby, Sacher, Zelman, Stanton, Xxxx & Xxxxxx, P.A., 0000
Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxx, XX 00000; if to VTR at 00 Xxxx Xxxxxx, Xxx
Xxxx, XX 00000; and if to the Warrant Agent at American Transfer & Trust
Company, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or such other address as such
party shall have given notice to other parties hereto in accordance with this
Section. All such notices or other communications shall be deemed given three
(3) business days after mailing, as aforesaid.
Section 8. SUPPLEMENTS AND AMENDMENTS. The Company, the Warrant Agent
and VTR may from time-to-time supplement or amend this Agreement by a written
instrument signed by the party to be charged, without the approval of any
holders of Warrants in order to cure any ambiguity or to correct or supplement
any provisions contained herein or to make any other provisions in regard to
matters or questions arising hereunder which the Company, the Warrant Agent and
VTR may deem necessary or desirable and which do not adversely affect the
interests of the holders of Warrants.
Section 9. ASSIGNMENT. This Agreement may not be assigned by any party
without the express written approval of all other parties, except that VTR may
assign this Agreement to its successors.
Section 10. GOVERNING LAW. This Agreement will be deemed made under the
laws of the State of New York with respect to matters of contract law and for
all purposes shall be governed by and construed in accordance with the internal
laws of said State, without regard to the conflicts of laws provisions thereof.
Section 11. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give any person or corporation
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other than the Company, the Warrant Agent and VTR any legal or equitable right,
remedy or claim under this Agreement; and this Agreement shall be for the sole
and exclusive benefit of, and be binding upon, the Company, the Warrant Agent
and VTR and their respective successors and permitted assigns.
Section 12. DESCRIPTIVE HEADINGS. The descriptive headings of the
sections of this Agreement are inserted for convenience only and shall not
control or affect the meanings or construction of any of the provisions hereof.
Section 13. SUPERSEDING AGREEMENT. This Agreement supersedes any and all
prior agreements between the parties with respect to the subject matter hereof.
Section 14. EXCLUSIVE AGREEMENT. It is understood that this agreement is
on an exclusive basis to solicit the exercise of the Warrants and that the
Company may not engage other broker-dealers to solicit the exercise of Warrants
without the consent of VTR.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
KIDS STUFF, INC.
By:_______________________________________
VTR CAPITAL, INC.
By:_______________________________________
AMERICAN STOCK TRANSFER & TRUST CO.
By:_______________________________________
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CERTIFICATE
The undersigned, being the ________________ of VTR Capital, Inc. ("VTR")
pursuant to Section 3(d) of the Warrant Exercise Fee Agreement relating to the
exercise of Warrants dated ____________, 1997 between Kids Stuff, Inc. (the
"Company") and American Stock Transfer & Trust Co. (the "Warrant Agent") hereby
certifies that:
1. The Company or the Warrant Agent has notified VTR that ______________
Warrants (as defined in the Agreement) have been exercised during _____________,
199___.
2. The exercise of ______________ of such Warrants was solicited by
VTR.
3. Such Warrants were not held in a discretionary account.
4. ______________ did not, within _____ business days immediately
preceding _______________ 199___, bid for or purchase the Common Stock of the
Company or any securities of the Company immediately convertible into or
exchangeable for the Common Stock (including Warrants) or otherwise engage in
any activity that would be prohibited by Regulation M under the Securities
Exchange Act of 1934, as amended, to one engaged in a distribution of the
Company's securities.
5. In connection with the solicitation of the exercise of the
Warrants, _____________ disclosed the compensation it will receive to holders
of the Warrants.
DATED: __________________, 199___
VTR CAPITAL, INC.
By:_______________________________________
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