THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT IN
COMPLIANCE WITH THIS AGREEMENT AND (i) PURSUANT TO A REGISTRATION STATEMENT
UNDER THE ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO THE
SECURITIES, OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER
THE ACT BUT ONLY UPON THE HOLDER HEREOF FIRST HAVING OBTAINED THE WRITTEN
OPINION OF COUNSEL TO THE COMPANY, OR OTHER COUNSEL ACCEPTABLE TO THE COMPANY,
THAT THE PROPOSED DISPOSITION IS CONSISTENT WITH ALL APPLICABLE PROVISIONS OF
THE ACT AS WELL AS ANY APPLICABLE "BLUE SKY" OR SIMILAR SECURITIES LAW.
October __, 1997
XXXXXXX CHAUS, INC.
For good and valuable consideration the receipt and sufficiency of
which is hereby acknowledged by Xxxxxxx Chaus, Inc., a New York corporation,
with its principal office at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Company"), BNY Financial Corporation (the "Holder" or "BNY"), of 0000 Xxxxxx
xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, subject to the terms and conditions
of this Warrant, is hereby granted the right to purchase, at the initial
Purchase Price of $1.0625 per share, at any one or more times from the date
hereof until 5:00 p.m. on December 31, 2002, in the aggregate, three hundred
seventy five thousand (375,000) shares of Common Stock of the Company, $.01 par
value (the "Shares").
1
This Warrant initially is exercisable at a price of $1.0625 (the
"Purchase Price") per Share payable in cash, by certified or official bank
check in New York Clearing House funds or other form of payment satisfactory to
the Company, subject to adjustment as provided in Section 5 hereof.
1. Exercise of Warrant. The purchase rights represented by this
Warrant are exercisable at the option of the Holder hereof, in whole or in
part, at one or more times during any period in which this Warrant may be
exercised as set forth above. The Holder shall not be deemed to have exercised
its purchase rights hereunder until the Company receives written notice of the
Holder's intent to exercise its purchase rights hereunder along with payment
for the purchased Shares. The written notice shall be in the form of a duly
executed Subscription Form a form of which is attached hereto and made a part
hereof. Less than all of the Shares may be purchased under this Warrant.
2. Issuance of Certificates. Upon the exercise of this Warrant, the
issuance of certificates for Shares underlying this Warrant which are purchased
shall be made forthwith (and in any event within ten (10) business days after
the Company's receipt of written notice and payment for the purchased Shares
specified in Section 1 above) and such certificates shall be issued in the name
of the Holder hereof.
3. Restriction on Transfer and Registration Rights. Neither this
Warrant nor any Shares issuable upon exercise hereof have been registered under
the Securities Act of 1933, as amended (the "Act"), and neither may be sold or
transferred in whole or in part unless the Holder shall have first given prior
written notice to the Company describing such sale or transfer and furnished to
the Company an opinion, satisfactory to counsel for the Company as determined
by such counsel in its sole discretion, to the effect that the proposed sale or
transfer may be made without registration under the Act; provided, however,
that the foregoing shall not apply if there is in effect a registration
2
statement with respect to this Warrant or the Shares issuable upon exercise
hereof, as the case may be, at the time of the proposed sale or transfer. Upon
exercise, in part or in whole, of this Warrant, each certificate issued
representing the Shares underlying this Warrant shall bear a legend to the
foregoing effect. The Holder shall have such rights to request the Company to
register all or any of the Shares issuable upon exercise of this Warrant as set
forth in Annex B hereto (the "Registration Rights") subject to the terms of
Annex B.
4. Price.
4.1. Initial and Adjusted Purchase Price. The initial
Purchase Price shall be $1.0625 per Share. The adjusted Purchase Price shall be
the price which shall result from time to time from any and all adjustments of
the initial Purchase Price in accordance with the provisions of Section 5
hereof.
4.2. Purchase Price. The term "Purchase Price" herein shall
mean the initial Purchase Price or the adjusted Purchase Price, as the case may
be.
5. Adjustments of Purchase Price and Number of Shares. The Shares
subject to this Warrant and the Purchase Price thereof shall be appropriately
adjusted by the Company in accordance with the Statement of Rights to Warrants
included in Annex A hereto.
6. Replacement of Warrant. Upon receipt by the Company of (i) evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and, in case of such loss, theft, destruction or mutilation, and
(ii) an indemnity or other security reasonably satisfactory to it in its sole
discretion, and upon reimbursement to the Company of all expenses incidental or
relating thereto, and in the event of mutilation upon surrender and
cancellation of this Warrant, the Company will make and deliver a new Warrant
of like tenor, in lieu of this Warrant.
3
7. Notices to Warrant Holder. Nothing contained in this Warrant shall
be construed as conferring upon the Holder hereof the right to vote or to
consent or to receive notice as a shareholder in respect of any meetings of
shareholders for the election of directors or any other matter, or as having
any rights whatsoever as a shareholder of the Company.
8. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to the registered Holder of this Warrant, 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 on the first
page of this Warrant or to such other address as the Company may
designate by notice to the Holder.
9. Successors. All the agreements contained in this Warrant shall bind
the parties hereto and their respective heirs, executors, administrators,
distributees, permitted successors and assigns. The Holder may assign this
Warrant without the Company's prior written consent provided that the Holder
complies with the provisions of this agreement and applicable securities laws.
Any attempted assignment in violation of the preceding sentence shall be void
and of no effect.
10. Headings. The headings in this Warrant are inserted for purposes
of convenience only and shall have no substantive effect.
11. Law Governing. This Warrant is delivered in the State of New York
and shall be construed and enforced in accordance with, and governed by, the
laws of the State of New York, without giving effect to conflicts of law
principles.
4
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
in its corporate name by, and such signature to be attested to by, a duly
authorized officer as of the date first above written.
XXXXXXX CHAUS, INC.
By: /s/ Xxxxxxxxx Xxxxx
------------------------------
Its: Chief Executive Officer
-----------------------------
Attest:
/s/ Xxxxxx Xxxxxxxx
------------------------------
5
ANNEX A
STATEMENT OF RIGHTS TO WARRANTS
AND
FORMS OF SUBSCRIPTION AND ASSIGNMENT
(a) Adjustment to Purchase Price and Number of Shares. In case, prior
to the expiration of this Warrant by exercise or by its terms, the Company
shall issue any shares of its Common Stock as a stock dividend or subdivide the
number of outstanding shares of its Common Stock into a greater number of
shares, then in either of such cases, the then applicable Purchase Price per
share of the Shares of Common Stock purchasable pursuant to this Warrant in
effect at the time of such action shall be proportionately reduced and the
number of shares at that time purchasable pursuant to this Warrant shall be
proportionately increased; and conversely, in the event the Company shall
contract the number of outstanding shares of Common Stock by combining such
shares into a smaller number of shares, then, in such case, the then applicable
Purchase Price per share of the shares of Common Stock purchasable pursuant to
this Warrant in effect at the time of such action shall be proportionately
increased and the number or shares of Common Stock purchasable pursuant to this
Warrant shall be proportionately decreased. If the Company shall, at any time
during the term of this Warrant, declare a dividend payable in cash on its
Common Stock and shall, at substantially the same time, offer to its
stockholders a right to purchase new Common Stock from the proceeds of such
dividend or for an amount substantially equal to the dividend, all Common Stock
so issued shall, for the purpose of this Warrant, be deemed to have been issued
as a stock dividend.
(b) Recapitalization. In case, prior to the expiration of this Warrant
by exercise or by its terms, the Company shall be recapitalized by
reclassifying its outstanding Common Stock, (other than a change in par value
to no par value), or the Company or a successor corporation shall consolidate
or merge with or convey all or substantially all of its or of any successor
corporation's property and assets to any other corporation or corporations (any
such other corporations being included within the meaning of the term
"successor corporation" hereinbefore used in the event of any consolidation or
merger of any such other corporation with, or the sale of all or substantially
all of the property of any such other corporation to, another corporation or
corporations), then, as a condition of such recapitalization, consolidation,
merger or conveyance, lawful and adequate provision shall be made whereby the
Holder of this Warrant shall thereafter have the right to purchase, upon the
basis and on the terms and conditions specified in this Warrant, in lieu of the
Shares of Common Stock of the Company theretofore purchasable upon the exercise
of this Warrant, such shares of stock, securities, property or assets of the
other corporation (including, without limitation, cash) as to which the Holder
of this Warrant would have been entitled had this Warrant been exercised
immediately prior to such recapitalization, consolidation, merger or
conveyance; and in any such event, the rights of the Warrant Holder to any
adjustment in the number of Shares of Common Stock purchasable upon the
exercise of this Warrant, as hereinbefore provided, shall continue and be
preserved in respect of any stock which the Warrant Holder becomes entitled to
purchase.
6
(c) Dissolution. In case the Company at any time, while this Warrant
shall remain both unexpired and unexercised, shall sell all or substantially
all of its property, other than as provided in subsection (b) above or
dissolve, liquidate or wind up its affairs, lawful provision shall be made as
part of the terms of any such sale, dissolution, liquidation or winding up, so
that the Holder of this Warrant may thereafter receive upon exercise hereof in
lieu of each Share of Common Stock of the Company which it would have been
entitled to receive, the same kind and amount of any securities or assets as
may be issuable, distributable or payable upon any such sale, dissolution,
liquidation or winding up with respect to each share of Common Stock of the
Company; provided, however, that in any case of any such sale or of
dissolution, liquidation or winding up, the right to exercise this Warrant
shall terminate on a date fixed by the Company. Such date so fixed shall be no
earlier than 3 P.M. New York City Time, on the forty-fifth (45th) day next
succeeding the date on which notice of such termination of the right to
exercise this Warrant has been given by mail to the registered Holder of this
Warrant at its address as it appears on the books of the Company.
(d) No Fractional Shares. Upon any exercise of this Warrant by the
Warrant Holder, the Company shall not be required to deliver fractions of one
Share, but adjustment in the Purchase Price payable by the Warrant Holder shall
be made in respect of any such fraction of one Share on the basis of the
Purchase Price per Share then applicable upon exercise of this Warrant.
(e) Notices. In the event that, prior to the expiration of this
Warrant by exercise or by its terms, the Company shall determine to take a
record of its stockholders for the purpose of determining stockholders entitled
to receive any dividend, stock dividend, distribution or other right that may
cause any change or adjustment in the number, amount, price or nature of the
securities or assets deliverable upon the exercise of this Warrant pursuant to
the foregoing provisions, the Company shall give at least ten (10) days' prior
written notice to the effect that it intends to take such record to the
registered Holder of this Warrant at its address as it appears on the books of
the Company, said notice to specify the date as of which such record is to be
taken, the purpose for which such record is to be taken, and the effect which
the action which may be taken will have upon this Warrant.
(f) Registered Owner. The Company may deem and treat the registered
Holder of the Warrant at any time as the absolute owner hereof for all
purposes, and shall not be affected by any notice to the contrary.
(g) Status. This Warrant shall not entitle any Holder hereof to any of
the rights of a stockholder, and shall not entitle any Holder hereof to any
dividend declared upon the Common Stock unless the Holder shall have exercised
the within Warrant and purchased the Shares of Common Stock prior to the record
date fixed by the Board of Directors for the determination of holders of Common
Stock entitled to exercise any such rights or receive said dividend.
(h) No Adjustment for Small Amounts. Anything in the Statement of
Rights to Warrants to the contrary notwithstanding, the Company shall not be
required to give effect to any adjustment in the Purchase Price unless and
until the net effect of one or more adjustments, determined as above
7
provided, shall have required a change of the Purchase Price by at least ten
cents, but when the cumulative net effect of more than one adjustment so
determined shall be to change the actual Purchase Price by at least ten cents,
such change in the Purchase Price shall thereupon be given effect.
8
ASSIGNMENT
(To Be Executed By the Registered Holder
to Effect a Transfer of the Within Warrant)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
-------------------------------------------------------------------------------
(Name)
-------------------------------------------------------------------------------
(Address)
the right to purchase Common Stock evidenced by the within Warrant, to the
extent ____ of shares of Common Stock, and does hereby irrevocably constitute
and appoint __________________________________________________________________
______________________________________________________________________________
to transfer the said right on the books of the Company, with full power of
substitution.
Dated: _____________________ ,19__.
-----------------------------
(Signature)
-------------------------------------------------------------------------------
NOTICE: The signature to this assignment must correspond with the name as
written upon the case of the within Warrant in every particular,
without alteration or enlargement, or any change whatsoever and must
be guaranteed by a bank, other than a savings bank or trust company,
having an office or correspondent in New York, or by a firm having
membership on a registered national securities exchange and an office
in New York, New York.
9
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To Xxxxxxx Chaus, Inc.
The undersigned, the Holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, ____(1) shares of Common Stock of Xxxxxxx Chaus, Inc. and
herewith makes payment of $____ therefor, and requests that the certificate or
certificates for such shares be issued in the name of and delivered to the
undersigned.
Dated:
------------------------------------------
(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrants)
------------------------------------------
(Address)
-------------
(1) Insert here the maximum number of shares or, in the case of a partial
exercise, the portion thereof as to which the Warrant is being
exercised.
10
ANNEX B
REGISTRATION RIGHTS
(a) If, at any time prior to December 31, 2002 the Company proposes to
register any of its securities for its own account under the Securities Act of
1933, as amended, (the "Securities Act") (other than securities to be issued
pursuant to a stock option or other employee benefit or similar plan and other
than in connection with a business combination transaction), the Company shall,
promptly give written notice (the "Registration Notice") to BNY of the
Company's intention to effect such registration. If, within 15 days after
receipt of such notice, BNY submits a written request to the Company specifying
the number of shares of Common Stock which it will receive upon exercise of the
Warrant and which it proposes to sell or otherwise dispose of, (the "Subject
Stock") the Company shall include the Subject Stock in such registration
statement. Notwithstanding anything herein to the contrary BNY shall not be
entitled to require the Company to include the Subject Stock in a registration
statement more frequently than twice during the term hereof. BNY when
requesting inclusion of the Subject Stock in any such registration statement,
may in its discretion delay exercise of the Warrant and notify the Company that
it will exercise its Warrant as to the Subject Stock immediately upon the
registration statement becoming effective or for delivery upon closing of a
related offering. The Company will use its reasonable best efforts in good
faith to effect promptly (but in no event later than one hundred and twenty
(120) days after the receipt from BNY of the request to register the Subject
Stock, provided, however, that such period shall be extended for up to sixty
(60) additional days in the event of a material development that shall hinder
the Company from effecting such registration) the registration of the Subject
Stock. The Company shall keep each registration statement covering any Subject
Stock in effect for a period of not less than 90 days following the
effectiveness of such registration statement (except for an underwritten
offering which is closed sooner) and maintain compliance with each applicable
federal and state law and regulation. Notwithstanding the foregoing, if the
offering of the Company's securities pursuant to such registration statement is
to be made by or through underwriters, the Company shall not be required to
include Subject Stock therein if and to the extent that the underwriter
managing the offering advises the Company in writing that such inclusion would
materially adversely affect such offering.
(b) In connection with any offering of shares of Subject Stock
registered pursuant to this Annex B the Company (i) shall furnish to BNY such
number of copies of each registration statement, each prospectus and each
preliminary prospectus, and of each amendment and supplement to any thereof as
BNY may reasonably request in order to effect the offering and sale of the
Subject Stock to be offered and sold, but only while the Company shall be
required under the provisions hereof to cause the registration statement to
remain current and (ii) take such action as shall be necessary to qualify the
shares covered by such registration statement under such blue sky or other
state securities laws for offer and sale as BNY shall request; provided,
however, that the Company shall not be obligated to qualify as a foreign
corporation to do business under the laws of any jurisdiction in which it shall
not then be qualified or to file any general consent to service of process in
any jurisdiction in which such a consent has not been previously filed or
subject itself to taxation
11
in any jurisdiction in which the Company is not already subject to taxation.
The Company shall enter into an underwriting agreement (the "Agreement") with a
managing underwriter or underwriters selected by it containing representations,
warranties, indemnities and agreements then customarily included by an issuer
in underwriting agreements with respect to secondary distributions and BNY
agrees as a condition to participation in such offering to make such
representations and warranties with respect to information as to it as selling
stockholder, and as to its holdings, which is furnished in writing to the
underwriter for use in the registration statement as are customary and
appropriate and to otherwise reasonably cooperate with the Company in
connection with any registration statement with respect to the Subject Stock.
In connection with any offering of Subject Stock registered pursuant to this
Annex B, the Company shall furnish to the underwriter, at the Company's
expense, unlegended certificates representing ownership of the Subject Stock
being sold in such denominations as requested and instruct any transfer agent
and registrar of the Subject Stock to release any stop transfer orders with
respect to such Subject Stock.
(c) Upon receipt of notice from the Company to suspend sales to permit
the Company to correct or update a registration statement or prospectus, BNY
will not (until a receipt of a notice to the contrary) effect sales of Subject
Stock included in any registration statement. The obligations of the Company
with respect to maintaining any registration statements current and effective
shall be extended by a period of days equal to the period that such suspension
is in effect.
(d) In connection with any registration pursuant to this Annex B all
expenses of registration shall be borne by the Company (unless contrary to the
federal securities laws or the laws of any state where the Subject Stock is to
be offered), provided, however, in connection with any such registration, BNY
shall be obligated to pay any and all underwriter's commissions and filing fees
incurred by the Company, to the extent that such fees and commissions would not
have been so incurred in the absence of the registration of such Subject Stock.
Under no circumstances shall the Company have any liability for any fees and
expenses of underwriters, counsel, accountants or other agents of BNY with
respect to any registration statement filed pursuant hereto, including but not
limited to the costs of any investigations by or on behalf of BNY of the
accuracy and completeness of such registration statement or related to the
furnishing of information by BNY in connection with such registration
statement.
(e) For a period of ninety (90) days from and after the effective date
of any registration statement filed pursuant hereto in which any of the Subject
Stock is included, the Company shall from time to time amend or supplement the
registration statement and the prospectus used in connection therewith as may
be necessary to permit such sale and disposition and to the extent necessary in
order to keep such registration statement effective and such prospectus current
under the Securities Act so that neither the registration statement nor the
prospectus contains any untrue statement as to any material fact, omits any
statements necessary to make the statements contained therein not misleading.
(f) In the case of any offering registered pursuant to this Annex B,
the Company agrees to indemnify and hold harmless BNY and each controlling
person of BNY within the meaning of
12
Section 15 of the Securities Act, and the directors and officers of BNY,
against any and all losses, claims, damages or liabilities to which they or any
of them may become subject under the Securities Act or any other statute or
common law or otherwise, and to reimburse them, from time to time upon request,
for any legal or other expenses reasonably incurred by them in connection with
investigating any claims and defending any actions, insofar as any such losses,
claims, damages, liabilities or actions shall arise out of or shall be based
upon (i) any untrue statement or alleged untrue statement contained in the
registration statement relating to the sale of such Subject Stock in any
preliminary prospectus or in any prospectus or in any supplement or amendment
to any of the foregoing of a material fact, or the omission or alleged omission
to state therein a material fact required to be stated or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading or (ii) any failure or omission on the part of the Company to
comply with any provision of the Act and the rules and regulations of the
Securities and Exchange Commission (or other Federal agency at the time charged
with administration of the Securities Act) applicable to such offering;
provided, however, that the indemnification agreement contained in this
paragraph (f) shall not apply to such losses, claims, damages, liabilities or
actions which shall arise from the sale of Subject Stock if such losses,
claims, damages, liabilities or actions shall arise out of or shall be based
upon any such untrue statement or alleged untrue statement, or any such
omission or alleged omission, if such statement or omission shall have been
made in reliance upon and in conformity with information furnished in writing
to the Company by BNY specifically for use in connection with the preparation
of the registration statement or any preliminary prospectus or prospectus
contained in the registration statement or any amendment thereof or supplement
thereto provided further, however, that the indemnification agreement contained
in this paragraph (f) shall not apply to such losses, claims, damages,
liabilities or actions to the extent that they arise out of or are based upon
any untrue statement or omission made in any preliminary prospectus if (i) BNY
failed to send or deliver a copy of the final prospectus with or prior to the
delivery of written confirmation of the sale by BNY to the person asserting the
claim from which such damages arise, and (ii) the final prospectus would have
corrected such untrue statement or such omission; provided further, that the
Company shall not be liable to BNY in any such case to the extent that any such
damages arise out of or are based upon any untrue statement or omission in any
prospectus if (x) such untrue statement or omission is corrected in an
amendment or supplement to such prospectus, and (y) having previously been
furnished by or on behalf of the Company with copies of such prospectus as so
amended or supplemented, BNY thereafter fails to deliver such prospectus as so
amended or supplemented prior to or concurrently with the sale of a Subject
Stock to the person asserting the claim from which such damages arise.
(g) In connection with any registration statement in which BNY is
participating, BNY will indemnify, to the extent permitted by law, the
underwriters, the Company and its directors and officers against any losses,
claims, damages, liabilities and expenses resulting solely by reason of any
untrue statement of a material fact or any omission of a material fact
necessary to make the statements therein not misleading, in the registration
statement or any prospectus or preliminary prospectus or any amendment or
supplement thereto, but only to the extent that such true statement is
contained in, or such omission is omitted from, information so furnished to the
Company by BNY in writing; provided, however, that BNY shall not be liable in
the aggregate for any amounts
13
exceeding the product of the sale price minus the Purchase Price per share of
Subject Stock of BNY sold in such registered offering and the number of shares
of Subject Stock sold pursuant to such registration statement or prospectus by
BNY.
(h) Each party indemnified under Paragraph (f) or (g) of this Annex B
shall, promptly after receipt of notice of the commencement of any action
against such indemnified party in respect of which indemnity may be sought
hereunder, notify the indemnifying party in writing of the commencement
thereof. The omission of any indemnified party to so notify an indemnifying
party of any such action shall not relieve the indemnifying party from any
liability in respect of such action which it may have to such indemnified party
on account of the indemnity agreement contained in Paragraph (f) or (g) of this
Annex B, unless the indemnifying party was prejudiced by such omission, and in
no event shall relieve the indemnifying party from any other liability which it
may have to such indemnified party. In case any such action shall be brought
against any indemnified party and it shall notify an indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it may desire to assume the defense thereof
through counsel satisfactory to the indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party under Paragraph (f) or (g) of this Annex B for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof, other than reasonable costs of investigation (unless
such indemnified party reasonably objects to such assumption on the grounds
that there may be defenses available to it which are different from or in
addition to such indemnifying party in which event the indemnified party shall
be reimbursed by the indemnifying party for the expenses incurred in connection
with retaining separate legal counsel).
(i) Nothing in Paragraph (f) or (g) of this Annex B shall prevent the
indemnified party from retaining counsel of its own choosing, at its own
expense, to defend or cooperate in the defense or investigation of any claim in
respect of which indemnification is available hereunder. No indemnifying party
will consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation.
14
