WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of ___________, between Lamonts Apparel, Inc.
(the "Company"), and Gordian Group, L.P. ("Gordian") with respect to the
Company's issuance of warrants (the "Warrants") to purchase shares (the
"Warrant Shares") of the Company's common stock (the "Common Stock"). This
Warrant Agreement is adopted pursuant to the "Debtor's Amended Plan of
Reorganization under Chapter 11 of the Bankruptcy Code" (the "Reorganization
Plan") which was filed by the Company and confirmed by order of the United
States Bankruptcy Court for the Western District of Washington at Seattle on
________________, 1997, and shall be effective as of the "Effective Date" as
defined in the Reorganization Plan.
Section 1. CERTAIN DEFINITIONS. For the purposes of this Agreement,
(a) "CLOSING PRICE" means (i) the closing sales price per share on the
national securities exchange on which the common stock is principally traded,
or (ii) if the shares are then traded in an over-the-counter market, the
average of the closing bid and asked prices on such market, or (iii) if the
shares are not then traded on the national securities exchange or in an
over-the-counter market, then such value as Lamont's Board of Directors shall
in good faith reasonably determine; if Gordian disagrees with such
determination, then an investment banking firm shall be mutually agreed upon,
engaged and compensated by Lamonts for a definitive valuation of the
Normalized Share Price (as hereinafter defined).
(b) "COMMON STOCK" means (i) the class of stock designated as the common
stock of the Company on the date hereof or (ii) any other class of stock
resulting from successive changes or reclassifications of such shares
consisting solely of changes in par value, or from par value to no par value,
or from no par value to par value. Unless the context requires otherwise,
all references to Common Stock and Warrant Shares in this Agreement and in
the Warrant Certificates (as defined herein) shall, in the event of an
adjustment pursuant to Section 8 hereof, be deemed to refer also to any other
securities or property then issuable upon exercise of the Warrants as a
result of such adjustment.
(c) "EXERCISE PERIOD" means the period during which the Warrants may be
exercised.
Section 2. FORM OF WARRANT CERTIFICATE; PURCHASE PRICE.
2.1 The certificate(s) evidencing the Warrants (the "Warrant
Certificates") (and the forms of election to purchase Warrant Shares and of
assignment of Warrants to be printed on the reverse thereof) shall be
substantially in the form attached hereto as Exhibit A, 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.
2.2 Each Warrant shall entitle the holder thereof to purchase one
Warrant Share upon the exercise thereof at the applicable Exercise Price (as
defined in Section 3 hereof) subject to adjustment as provided in Section 8
hereof during the time period specified in Section 3 hereof; PROVIDED,
HOWEVER, that the Warrants are exercisable only for whole shares; cash will
be paid in lieu of fractional shares in accordance with Section 3.3. The
Warrant Certificate shall be executed on behalf of the Company by the manual
or facsimile signature of the present or any future President or any Vice
President of the Company, attested by the manual or facsimile signature of
the present or future Secretary or Assistant Secretary of the Company.
Warrants shall be dated as of the date of their initial issuance.
Section 3. DURATION AND EXERCISE OF WARRANTS.
3.1 (a) The Warrants may be exercised at any time on or after the date
of their issuance and, subject to earlier expiration pursuant to Section 10,
will expire at 5:00 p.m., New York time, on the fifth anniversary of the date
hereof (the "Expiration Date"). Upon the Expiration Date, all rights
evidenced by the Warrants shall terminate and the Warrants shall become void.
(b) Subject to the provisions of this Agreement, the registered holder
of each Warrant shall have the right to purchase from the Company (and the
Company shall issue and sell to such registered holder) one fully paid and
nonassessable Warrant Share (or such number of Warrant Shares as may result
from adjustments made from time to time as provided in this Agreement), at
the exercise price per Warrant Share in lawful money of the United States of
America (such exercise price per Warrant Share, as adjusted from time to time
as provided herein, being referred to herein as the "Exercise Price"), upon
(i) surrender of the Warrant Certificates to the Company, and (ii) payment,
in lawful money of the United States of America, of the Exercise Price for
the Warrant Share or Warrant Shares in respect of which such Warrant is then
exercised. The Warrants may be exercised for all or some of the Warrant
Shares. The number of shares for which the warrants will be exercisable in
the aggregate will be equal to $200,000 divided by the "Normalized Share
Price" defined below. The Exercise Price will be initially set equal to the
Normalized Share Price. The Normalized Share Price will be set equal to the
average closing price of the common stock for the 45 trading days commencing
45 calendar days following the Effective Date of the Reorganization Plan.
The Exercise Price payable upon exercise of Warrants may at the option of the
holder be paid in cash, certified check or money order payable to the order
of the Company. Except as provided in Section 8 hereof, no adjustment shall
be made for any dividends on any share of Common Stock issuable upon exercise
of a Warrant. Upon surrender of a Warrant Certificate, and payment of the
Exercise Price, the Company shall issue and cause to be delivered with all
reasonable dispatch to or upon the written order of the registered holder of
such Warrant and in such name or names and in such per share amounts as such
registered holder may reasonably designate, a certificate or certificates for
the number of Warrant Shares so purchased upon the exercise of such Warrant,
together with cash in respect of any fraction of a Warrant Share issuable
upon such surrender.
(c) Each person in whose name any certificate for Warrant Shares is
issued upon the exercise of Warrants shall for all purposes be deemed to have
become the holder of record of the Warrant Shares represented thereby, and
such certificate shall be dated the date upon which the Warrant Certificate
evidencing such Warrants was duly surrendered and payment of the Exercise
Price (and any applicable transfer taxes pursuant to Section 4 hereof) was
made; PROVIDED, HOWEVER, that if the date of such surrender and payment is a
date upon which the Common Stock transfer books of the Company are closed,
such person shall be deemed to have become the record holder of such Warrant
Shares on, and such certificate shall be dated, the next succeeding business
day on which the Common Stock transfer books of the Company are open.
3.2 The Warrants evidenced by a Warrant Certificate shall be
exercisable, at the election of the registered holder thereof, either as an
entirety or from time to time for only part of the number of Warrants
specified in the Warrant Certificate. In the event that less than all of the
Warrants represented by a Warrant Certificate are exercised before 5:00 p.m.,
New York time, on the Expiration Date, a new Warrant Certificate, duly
executed by the company, will be issued for the remaining number of Warrants
exercisable pursuant to the Warrant Certificate so surrendered.
3.3 No fractional shares of Common Stock shall be issued to any holder
in connection with the exercise of a Warrant. Instead of any fractional
shares of Common Stock that would otherwise be issuable to such holder, the
Company will pay to such holder a cash adjustment in respect of such
fractional interest in an amount equal to that fractional interest of the
then current Closing Price per share of Common Stock.
3.4 The number of Warrant Shares to be received upon the exercise of a
Warrant and the price to be paid for a Warrant Share are subject to
adjustment from time to time as hereinafter set forth.
Section 4. PAYMENT OF TAXES. The Company will pay all documentary
stamp taxes attributable to the original issuance of the Warrants and of the
shares of Common Stock issuable upon the exercise of Warrants; PROVIDED,
HOWEVER, that the Company shall not be required to (a) pay any tax which may
be payable in respect to any transfer involved in the transfer and delivery
of Warrant Certificates or the issuance or delivery of certificates for
Warrant Shares in a name other than that of the registered holder of the
Warrant Certificate surrendered upon the exercise of a Warrant, or (b) issue
or deliver any certificate for Warrant Shares upon the exercise of any
Warrants until any such tax required to be paid under clause (a) shall have
been paid, all such tax being payable by the holder of such Warrant at the
time of surrender.
Section 5. MUTILATED OR MISSING WARRANTS. In case any of the Warrants
shall be mutilated, lost, stolen or destroyed, the Company may in its
discretion issue, or in lieu of and substitution for the lost, stolen or
destroyed Warrant Certificate, a new Warrant Certificate of like tenor and
evidencing the number of Warrant Shares purchasable upon exercise of the
Warrant Certificate so mutilated, lost, stolen or destroyed, but only upon
receipt of evidence satisfactory to the Company of such loss, theft or
destruction of such Warrant Certificate and indemnity, if requested, also
satisfactory to it. Applicants for such substitute Warrant Certificate shall
also
comply with such other reasonable regulations and pay such other reasonable
charges as the Company may prescribe. Any such new Warrant Certificate shall
constitute an original contractual obligation of the Company, whether or not
the allegedly lost, stolen, mutilated or destroyed Warrant Certificate shall
be at any time enforceable by anyone.
Section 6. RESERVATION OF WARRANT SHARES; STOCK CERTIFICATES. The
Company shall at all times reserve for issuance and delivery upon exercise of
the Warrants, such number of Warrant Shares or other shares of capital stock
of the Company from time to time issuable upon exercise of the Warrants. All
such shares shall be duly authorized and, when issued upon such exercise,
shall be validly issued, fully paid and nonassessable, free and clear of all
liens, security interests, charges and other encumbrances or restrictions on
sale (other than restrictions on transfer imposed under federal or state
securities laws) and free and clear of all preemptive rights. The Company is
hereby irrevocably authorized to requisition from time to time from the
Company's transfer agent stock certificates issuable upon exercise of
outstanding Warrants. All Warrants surrendered upon exercise shall be
canceled by the Company and shall thereafter be delivered to the Company or
otherwise disposed of in a manner satisfactory to the Company. The Company
shall keep a copy of this Agreement on file with its transfer agent and with
every transfer agent for any shares of Common Stock.
Section 7. RIGHTS OF WARRANT CERTIFICATE HOLDER. The holder of any
Warrant Certificate or Warrant shall not, by virtue thereof, be entitled to
any rights of a stockholder of the Company, either at law or in equity, and
the rights of the holder are limited to those expressed in this Agreement.
Section 8. ANTIDILUTION PROVISIONS. The Exercise Price and the
number of Warrant Shares that may be purchased upon the exercise of a Warrant
will be subject to change or adjustment as follows:
(a) STOCK DIVIDENDS AND STOCK SPLITS. If at any time after the date of
the issuance of the Warrants and before 5:00 p.m., New York time, on the
Expiration Date, (i) the Company shall fix a record date for the issuance of
any stock dividend payable in shares of Common Stock or (ii) the number of
shares of Common Stock shall have been increased by a subdivision or split-up
of shares of Common Stock, then, on the record date fixed for the
determination of holders of Common Stock entitled to receive such dividend or
immediately after the effective date of such subdivision or split-up, as the
case may be, the number of shares to be delivered upon exercise of any
Warrant will be appropriately increased so that each holder thereafter will
be entitled to receive the number of shares of Common Stock that such holder
would have owned immediately following such action had the warrant been
exercised immediately prior thereto, and the Exercise Price will be
appropriately adjusted.
(b) COMBINATION OF STOCK. If the number of shares of Common Stock
outstanding at any time after the date of the issuance of the Warrants and
before 5:00 p.m., New York time, on the Expiration Date shall have been
decreased by a combination of the outstanding shares of Common Stock, then,
immediately after the effective date of such combination, the number of
shares of Common Stock to be delivered upon exercise of any Warrant will be
appropriately
decreased so that each holder thereafter will be entitled to receive the
number of shares of Common Stock that such holder would have owned
immediately following such action had the Warrant been exercised immediately
prior thereto, and the Exercise Price will be appropriately adjusted.
(c) SPECIAL DIVIDENDS. If (other than in a dissolution or liquidation)
securities of the Company (other than shares of Common Stock) or assets
(other than cash dividends payable out of retained earnings or out of any
amounts legally available for dividends under the laws of the State of
Delaware) are issued by way of a dividend on outstanding shares of Common
Stock, then the Exercise Price shall be adjusted so that it shall equal the
price determined by multiplying the Exercise Price in effect immediately
prior to the close of business on the record date for the determination of
the stockholders entitled to receive such dividend by a fraction, the
numerator of which shall be the Closing Price on such record date less the
then fair market value as determined by the Board of Directors of the
Company, whose determination shall be conclusive, of the portion of the
securities or assets distributed applicable to one share of Common Stock, and
the denominator of which shall be such Closing Price. Such adjustment shall
become effective immediately prior to the opening of business on the day
following such record date.
(d) RIGHTS OFFERING. If the Company at any time after the date of
issuance of the Warrants and before 5:00 p.m., New York time, on the
Expiration Date shall issue or sell or fix a record date for the issuance of
rights, options, warrants or convertible or exchangeable securities to all
holders of Common Stock entitling the holders thereof to subscribe for or
purchase Common Stock (or securities convertible into Common Stock), in any
such case, at a price per share (or having a conversion price per share)
that, together with the value (if for consideration other than cash, as
determined in good faith by the Board of Directors of the Company) of any
consideration paid for any such rights, options, warrants or convertible or
exchangeable securities, is less than the Closing Price on the date of such
issuance or sale or on such record date, then, immediately after the date of
such issuance or sale or on such record date, as the case may be, the number
of shares to be delivered upon exercise of the Warrants shall be
appropriately increased so that each holder thereafter, during the Exercise
Period, will be entitled to receive the number of shares of Common Stock
determined by multiplying the number of shares such holder would have been
entitled to receive immediately before the date of such issuance or sale or
such record date by a fraction, the numerator of which will be the number of
shares of Common Stock outstanding on such date plus the number of additional
shares of Common Stock offered for subscription or purchase (or into which
the convertible securities so offered are initially convertible) and the
denominator of which will be the number of shares of Common Stock outstanding
on such date plus the number of shares of Common Stock that the aggregate
offering price of the total number of shares so offered for subscription or
purchase (or the aggregate initial conversion price of the convertible
securities so offered) would purchase at such Closing Price.
(e) NO ADJUSTMENTS TO EXERCISE PRICE. No adjustment in the Exercise Price
in accordance with the provisions of paragraph (a) or (b) of this Section 8 need
be made if such adjustment would amount to a change in such Exercise Price of
less than $.01; PROVIDED, HOWEVER, that the amount by which any adjustment is
not made by reason of the provisions of
this Section shall be carried forward and taken into account at the time of
any subsequent adjustment in the Exercise Price.
(f) READJUSTMENTS, ETC. If an adjustment is made under paragraph (a),
(b), (c) or (d) of this Section 8, and the event to which the adjustment
relates does not occur, then any adjustments in the Exercise Price or Warrant
Shares that were made in accordance with such paragraphs shall be adjusted
back to the Exercise Price and the number of Warrant Shares that were in
effect immediately prior to the record date for such event.
(g) Neither the issuance not the exercise of options under the Company's
1996 Stock Option Plan or the Class A Warrants or the Class B Warrants, in
each case adopted pursuant to the Reorganization Plan, shall result in an
adjustment to the exercise price or the number of shares issuable upon the
exercise of the Warrants issued hereunder.
Section 9. OFFICER'S CERTIFICATE. Whenever the number of Warrant
Shares that may be purchased upon exercise of the Warrants or the Exercise
Price is adjusted as required by the provisions of this Agreement, the
Company will forthwith file in the custody of its Secretary or an Assistant
Secretary at its principal office an officer's certificate showing the
adjusted number of Warrant Shares that may be purchased upon exercise of the
Warrants and the adjusted Exercise Price, determined as herein provided,
setting forth in reasonable detail the facts requiring such adjustment and
the manner of computing such adjustment. Each such officer's certificate
shall be made available at all reasonable times for inspection by the holder
of any Warrant. The Company shall, forthwith after each such adjustment,
cause a copy of such certificate to be mailed to the holder of any Warrant.
Section 10. NOTICE OF CERTAIN EVENTS. At any time before the last day
of the Exercise Period, in the event:
(a) the Company authorizes the issuance to all holders of the Common
Stock of rights, options or warrants to subscribe for or purchase shares or
of convertible or exchangeable securities; or
(b) the Company authorizes the distribution to all holders of the Common
Stock of evidences of its indebtedness or assets (other than cash dividends
payable out of retained earnings or out of amounts legally available for
distribution under the laws of the State of Delaware); or
(c) of any capital reorganization or reclassification of the Common
Stock (other than a subdivision or combination of the outstanding Common
Stock and other than a change in par value of the Common Stock) or any other
consolidation or merger to which the Company is a party (other than a
consolidation or merger in which the Company is the continuing corporation
and that does not result in any reclassification or change in the outstanding
Common Stock) or of the sale, lease or other transfer of all or substantially
all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution or winding-up of the
Company;
then the Company will cause to be mailed to the registered holder of any
Warrant, at least 10 days before the applicable record or effective date, as
the case may be, a notice stating (A) the date as of which the holders of
Common Stock of record entitled to receive any such rights, warrants or
distributions are to be determined or (B) the date on which any such capital
reorganization or reclassification of Common Stock, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding-up is expected to
become effective, such that the holders of Common Stock of record will be
entitled to exchange their shares of Common Stock for securities or other
property, if any, deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding-up (the "Entitlement Date").
Section 11. SUCCESSORS. All covenants and provisions of this
Agreement by or for the benefit of the Company or the holders of the Warrants
shall bind and inure to the benefit of their respective successors, assigns,
heirs and personal representatives.
Section 12. TERMINATION. This Agreement shall terminate at 5:00 p.m.,
New York time, on the Expiration Date or on such earlier date upon which all
Warrants have been exercised.
Section 13. 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 all such counterparts shall together
constitute but one and the same agreement.
Section 14. HEADINGS. The headings of sections of this Agreement have
been inserted for convenience of reference only, are not to be considered a
part hereof and shall in no way modify or restrict any of the terms or
provisions hereof.
Section 15. SUPPLEMENTS AND AMENDMENTS. The Company may from time to
time supplement or amend this Agreement without the approval of any holders
of any Warrants in order to cure any ambiguity or to correct or supplement
any provisions contained herein which may be defective or inconsistent with
any provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company may deem necessary or desirable
and which do not adversely affect the interests of the holders of Warrants.
Any other supplement or amendment to this Agreement may be made with the
written consent of the Company and the affirmative vote or the written
consent of holders holding not less than two-thirds in interest of the then
outstanding Warrants; PROVIDED, HOWEVER, that, except as expressly provided
herein, this Agreement may not be amended to change (a) the Exercise Price,
(b) the Exercise Period, (c) the number or type of securities to be issued
upon the exercise of the Warrants, or (d) the provisions of this Section 15,
without the consent of each holder of the Warrants.
Section 16. NOTICES. Any notice pursuant to this Agreement to be
given by the registered holder of any Warrant to the Company shall be
sufficiently given if sent by first-class mail, postage pre-paid, as follows:
Lamonts Apparel, Inc.
00000 Xxxxxxx Xxxx X.X.
Xxxxxxxx, XX 00000
Attn: ____________________________
Section 17. 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 holders of the Warrant Certificates, any legal or
equitable right, remedy or claim under this Agreement, but this Agreement
shall be for the sole and exclusive benefit of the Company and the registered
holders of the Warrants.
Section 18. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
Section 19. EXEMPTION FROM REGISTRATION OF WARRANTS AND WARRANT
SHARES. The Reorganization Plan will provide that the Warrants and the
Warrant Shares will be issued in accordance with the securities law exemption
of section 1145 of the Bankruptcy Code of 1978, as amended.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the first date written above.
LAMONTS APPAREL, INC.
By: ________________________________
Name:_______________________________
Title: _____________________________
Attest:
By: ________________________________
Name:_______________________________
Title: _____________________________
GORDIAN GROUP, L.P.
By: ________________________________
Name:_______________________________
Title: _____________________________
Attest:
By: ________________________________
Name:_______________________________
Title: _____________________________
