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WARRANT AGREEMENT
BETWEEN
LAMONTS APPAREL, INC.
AND
_________________________,
as Warrant Agent
Dated as of ____________, 199_
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TABLE OF CONTENTS
ARTICLE I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
ISSUANCE, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES . . . . . . . . . . . . . .4
Section 2.1 Form of Warrant Certificates. . . . . . . . . . . . . . . . . . . .4
Section 2.2 Execution of Warrant Certificates . . . . . . . . . . . . . . . . .4
Section 2.3 Issuance of Warrant Certificates. . . . . . . . . . . . . . . . . .5
Section 2.4 Transfer and Exchange of Warrant Certificates . . . . . . . . . . .5
Section 2.5 Lost, Stolen, Mutilated or Destroyed Warrant Certificates . . . . .6
ARTICLE III. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
EXERCISE PRICE AND EXERCISE OF WARRANTS. . . . . . . . . . . . . . . . . . . . . . .6
Section 3.1 Exercise Price. . . . . . . . . . . . . . . . . . . . . . . . . . .6
Section 3.2 Registration of Warrant Shares. . . . . . . . . . . . . . . . . . .6
Section 3.3 Exercise of Warrants. . . . . . . . . . . . . . . . . . . . . . . .7
Section 3.4 Issuance of Warrant Shares. . . . . . . . . . . . . . . . . . . . .8
Section 3.5 Certificates for Unexercised Warrants . . . . . . . . . . . . . . .8
Section 3.6 Reservation of Warrant Shares . . . . . . . . . . . . . . . . . . .9
Section 3.7 No Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 3.8 Disposition of Proceeds . . . . . . . . . . . . . . . . . . . . . .9
Section 3.9 Payment of Taxes and Charges. . . . . . . . . . . . . . . . . . . .9
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
ADJUSTMENTS, NOTICE PROVISIONS AND ISSUANCE OF ADDITIONAL SECURITIES . . . . . . . 10
Section 4.1 Adjustment of Exercise Price. . . . . . . . . . . . . . . . . . . 10
Section 4.2 Sales of Certain Securities . . . . . . . . . . . . . . . . . . . 11
Section 4.3 No Adjustments to Exercise Price. . . . . . . . . . . . . . . . . 13
Section 4.4 Adjustment of Number of Shares. . . . . . . . . . . . . . . . . . 13
Section 4.5 Reorganizations . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.6 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.7 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.8 Notice of Certain Actions . . . . . . . . . . . . . . . . . . . . 14
Section 4.9 Certificate of Adjustments. . . . . . . . . . . . . . . . . . . . 14
(ii)
Section 4.10 Warrant Certificate Amendments . . . . . . . . . . . . . . . . . 15
Section 4.11 Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SPLIT UP, COMBINATION, EXCHANGE, TRANSFER AND CANCELLATION OF WARRANT CERTIFICATES 15
Section 5.1 Split Up, Combination, Exchange and Transfer of Warrant
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.2 Cancellation of Warrant Certificates. . . . . . . . . . . . . . . . . 16
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
PROVISIONS CONCERNING THE WARRANT AGENT. . . . . . . . . . . . . . . . . . . . . . 16
Section 6.1 Resignation or Removal of Warrant Agent . . . . . . . . . . . . . 16
Section 6.2 Notice of Appointment . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.3 Merger of Warrant Agent . . . . . . . . . . . . . . . . . . . . . 17
Section 6.4 Company Responsibilities. . . . . . . . . . . . . . . . . . . . . 17
Section 6.5 Certification for the Benefit of Warrant Agent. . . . . . . . . . 17
Section 6.6 Liability of Warrant Agent. . . . . . . . . . . . . . . . . . . . 18
Section 6.7 Use of Attorneys, Agents and Employees. . . . . . . . . . . . . . 18
Section 6.8 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.9 Acceptance of Agency. . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.10 Conflict of Interest. . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.1 Changes to Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.2 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.3 Successor to Company. . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 7.5 Defects in Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.7 Standing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.8 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.9 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.10 Availability of the Agreement . . . . . . . . . . . . . . . . . . . . 21
Section 7.11 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.12 Rights of Warrant Holders . . . . . . . . . . . . . . . . . . . . . . 22
(iii)
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (the "Agreement") is made as of ________________,
199_ between LAMONTS APPAREL, INC., a Delaware corporation (as reorganized
pursuant to Chapter 11, Title 11 of the United States Code) (the "Company"),
and the Warrant Agent (as defined herein).
WITNESSETH THAT:
WHEREAS, pursuant to a Plan of Reorganization of the Company (the
"Plan"), and a confirmation order confirming the Plan issued by the United
States Bankruptcy Court for the Western District of Washington, the Company
proposes to issue and deliver Warrant Certificates evidencing Warrants (each,
as defined herein) to acquire up to an aggregate of 3,003,557 shares, subject
to adjustment, of Common Stock (as defined herein);
WHEREAS, the Company desires the Warrant Agent to act, and the Warrant
Agent is willing to act, on behalf of the Company in connection with the
issuance, exchange, transfer, substitution and exercise of Warrants; and
WHEREAS, the Company desires to enter into this Agreement to set forth
the terms and conditions of the Warrants and the rights of the holders
thereof.
NOW THEREFORE in consideration of the mutual agreements herein contained,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. DEFINITIONS. As used in this Agreement, the following
terms shall have the following respective meanings (all terms defined herein
in the singular are to have the correlative meanings when used in the plural
and vice versa):
"AFFILIATE" means, with respect to any corporation, any Person that,
directly or indirectly, owns or controls 10% or more of the outstanding
voting securities of such corporation or is a Person in which such
corporation has a 10% or greater direct or indirect equity interest. In
addition, the term "Affiliate," when used with reference to any Person, shall
also mean any other Person that, directly or indirectly, controls or is
controlled by or is under common control with such Person. As used in the
preceding sentence, (A) the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of the entity referred to, whether through ownership of voting
securities, by contract or otherwise and (B) the terms "controlling" and
"controls" shall have meanings correlative to the foregoing.
"AGGREGATE EQUITY TRADING VALUE" means, as of any date, the product of
(a) either (i) if the Common Stock is listed on any national securities
exchange or quoted on a national quotation system, the average of the daily
Closing Prices of the Common Stock for the five (5) Trading Days immediately
preceding such date, or (ii) if the Common Stock is not so listed or quoted,
the fair market value per share of the Common Stock determined in good faith
by the Company's Board of Directors as of a date within 30 days of such date,
multiplied by (b) the total number of issued and outstanding shares of Common
Stock as of such date (assuming for purposes of determining such number of
shares the exercise in full of all in-the-money options outstanding on such
date to purchase shares of Common Stock and, for purposes of determining
whether the Class B Initial Exercise Date has occurred, the exercise of all
Class B Warrants which are exercisable as of such date).
"CLASS A INITIAL EXERCISE DATE" means the first date on which the
Aggregate Equity Trading Value equals or exceeds Twenty Million Dollars
($20,000,000.00).
"CLASS B INITIAL EXERCISE DATE" means the first date on which the
Aggregate Equity Trading Value equals or exceeds Twenty-Five Million Dollars
($25,000,000.00).
"CLASS A WARRANTS" means the Class A Warrants exercisable for shares of
Common Stock issued pursuant to this Agreement and the Plan.
"CLASS B WARRANTS" means the Class B Warrants exercisable for shares of
Common Stock issued pursuant to this Agreement and the Plan.
"CLOSING PRICE" means, for any date, the last sale price reported in the
WALL STREET JOURNAL or other trade publication regular way or, in case no
such reported sale takes place on such date, the average of the last reported
bid and asked prices regular way, in either case on the principal national
securities exchange on which the Common Stock is listed if that is the
principal market for the Common Stock or, if not listed on any national
securities exchange or if such national securities exchange is not the
principal market for the Common Stock, the average of the closing high bid
and low asked prices as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or its successor, if any, or if the
Common Stock is not so reported, as furnished by the National Quotation
Bureau, Inc., or if such firm is not then engaged in the business of
reporting such prices, as furnished by any similar firm then engaged in such
business and selected by the Company or, if there is no such firm, as
furnished by any NASD member selected by the Company.
"COMMON STOCK" means the Class A Common Stock of the Company, par value
$.01 per share.
"COMPANY ORDER" means a written order from the Company executed by an
officer of the Company regarding the issuance and delivery of Warrant
Certificates.
2
"DATE OF EXERCISE" means, with respect to any Warrant, the date on which
such Warrant is exercised.
"EXPIRATION DATE" means __________, 200_ [10 years following the Effective
Date].
"OFFICERS' CERTIFICATE" means a certificate signed by any two of the
Chairman of the Board, the President, any Vice President, the Chief Financial
Officer, the Treasurer, the Secretary, an Assistant Secretary or the
Controller of the Company.
"PERSON" means any natural person, corporation, partnership, trust, joint
venture, limited liability company, or any other entity or organization.
"RESTRICTED SECURITIES" means the Warrants issued to any Affiliate of the
Company on the date hereof and any Warrant Shares which have been issued or
are issuable upon the exercise of such Warrants until such time as any such
Restricted Securities (i) have been sold pursuant to an effective
registration statement under the Securities Act or, (ii) are distributed
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act and if it has so requested, the Company has received an
opinion of counsel (either its own counsel or, if the Company so requests,
counsel to the holders of such Restricted Securities) reasonably acceptable
to the Company that such Restricted Securities may be so transferred without
registration or pursuant to an exemption under the Securities Act, and in
each such instance the Warrant Agent has delivered new Warrant Certificates
not bearing the legend prescribed by Section 2.4 hereof.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time, or any successor statute, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder.
"TRADING DAYS" means, with respect to the Common Stock (i) if the Common
Stock is quoted on the National Market System of the National Association of
Securities Dealers, Inc. or any similar system of automated dissemination of
quotations of securities prices, days on which trades may be made on such
system or (ii) if the Common Stock is listed or admitted for trading on any
national securities exchange, days on which such national securities exchange
is open for business.
"WARRANT AGENT" means ____________________ or any successor Warrant Agent
appointed pursuant to Section 6.2 hereof.
"WARRANT AGENT'S OFFICE" means, for so long as ______________ shall be
the Warrant Agent, the principal business address of __________________________
as specified in Section 7.4 and, thereafter, the office or agency maintained by
the successor Warrant Agent in the Borough of Manhattan, New York, New York or
the principal office of the successor Warrant Agent.
3
"WARRANT CERTIFICATES" means the certificates representing the Warrants.
"WARRANT SHARES" means the shares of Common Stock issuable upon the
exercise of any Warrant.
"WARRANTS" means, collectively, the Class A Warrants and Class B Warrants.
ARTICLE II
ISSUANCE, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES
Section 2.1 FORM OF WARRANT CERTIFICATES. The Warrant Certificates
shall be issued in registered form only and shall be substantially in the
form of EXHIBIT A attached hereto. In addition, the Warrant Certificates may
have such letters, numbers or other marks of identification or designation
and such legends, summaries, or endorsements stamped, printed, lithographed
or engraved thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as, in any particular
case, may be required to comply with any law or with any rule or regulation
of any regulatory authority or agency, or to conform to customary usage,
provided, however, that no such change shall be made which affects the duties
or obligations of the Warrant Agent without the consent of the Warrant Agent
or the Company without the consent of the Company. Each Warrant shall
evidence the right, subject to the provisions of this Agreement and of the
Warrant Certificate, to purchase one share of Common Stock at the Exercise
Price (as defined in Section 3.1), subject to adjustment pursuant to the
provisions of Article IV hereof.
Section 2.2 EXECUTION OF WARRANT CERTIFICATES. The Warrant Certificates
shall be executed on behalf of the Company by its Chairman or President or
any Vice President and attested to by its Secretary or Assistant Secretary,
either manually or by facsimile signature printed thereon. The Warrant
Certificates shall be manually countersigned and dated the date of
countersignature by the Warrant Agent and shall not be valid for any purpose
unless so countersigned and dated. In case any authorized officer of the
Company who shall have signed any of the Warrant Certificates shall cease to
be such officer of the Company either before or after delivery thereof by the
Company to the Warrant Agent, the signature of such person on such Warrant
Certificates shall be valid nevertheless and such Warrant Certificate may be
countersigned by the Warrant Agent, and issued and delivered to the person
entitled to receive the Warrant represented thereby with the same force and
effect as though the person who signed such Warrant Certificates had not
ceased to be such officer of the Company.
Section 2.3 ISSUANCE OF WARRANT CERTIFICATES. Upon receipt of a written
Company Order, the Warrant Agent shall within five (5) business days complete
and countersign Warrant Certificates representing the total number of
Warrants to be issued and shall thereafter deliver such Warrant Certificates
in accordance with such Company Order. The Warrant
4
Agent shall maintain books (the "Warrant Register") for the registration of
Warrant Certificates and the registration of transfers of Warrant
Certificates.
Section 2.4 TRANSFER AND EXCHANGE OF WARRANT CERTIFICATES.
(a) Warrant Certificates evidencing Restricted Securities and only
such Warrant Certificates will bear a legend in substantially the following
form:
NEITHER THE ISSUANCE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE ISSUANCE OF ANY SECURITIES ISSUABLE UPON EXERCISE HEREOF HAS
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE, AND
SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO (i)
A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH SECURITIES
UNDER THE SECURITIES ACT AND THE RULES AND REGULATIONS THEREUNDER OR
(ii) AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
(b) Following the transfer or exchange of a Restricted Security or
Securities (other than pursuant to an effective registration statement under
the Securities Act) the transferor of such Restricted Security or Securities
shall, upon request of the Company, deliver to the Company an opinion of
counsel, in substance reasonably satisfactory to the Company, to the effect
that such Restricted Security to be issued upon such transfer or exchange may
be so issued without the foregoing legend.
(c) Subject to paragraph (a) above, the Warrant Agent shall
register the transfer of all or any whole number of Warrants covered by any
outstanding Warrant Certificate in the Warrant Register upon surrender at the
Warrant Agent's Office of Warrant Certificates accompanied by a written
instrument or instruments of transfer, in form satisfactory to the Company
and the Warrant Agent, duly executed by the registered Warrant holder or his
attorney duly authorized in writing. Upon any such registration of transfer
a new Warrant Certificate shall be countersigned by the Warrant Agent and
issued to the transferee and the surrendered Warrant Certificate shall
promptly be canceled by the Warrant Agent. Warrant Certificates may be
exchanged at the option of the holder thereof, upon surrender, properly
endorsed by the registered holders, at the Warrant Agent's Office, with
written instructions, for other Warrant Certificates countersigned by the
Warrant Agent representing in the aggregate a like number of Warrants. The
Company or the Warrant Agent may require the payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with
any such exchange or transfer.
5
Section 2.5 LOST, STOLEN, MUTILATED OR DESTROYED WARRANT CERTIFICATES.
If any Warrant Certificate shall be mutilated, lost, stolen or destroyed, the
Company in its discretion may direct the Warrant Agent to execute and
deliver, in exchange and substitution for and upon cancellation of a
mutilated Warrant Certificate, or in lieu of or in substitution for a lost,
stolen or destroyed Warrant Certificate, a substitute Warrant Certificate,
but only upon receipt of evidence of such loss, theft or destruction of such
Warrant Certificate, and of the ownership thereof, and indemnity, if
requested by either the Company or the Warrant Agent, all satisfactory to the
Company and the Warrant Agent. Applicants for such substitute Warrant
Certificates shall also comply with such other reasonable regulations and pay
such other reasonable charges incidental thereto as the Company or Warrant
Agent 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.
ARTICLE III
EXERCISE PRICE AND EXERCISE OF WARRANTS
Section 3.1 EXERCISE PRICE. Each Warrant Certificate shall, when signed
by the Chairman or President or any Vice President and attested to by the
Secretary or Assistant Secretary of the Company and countersigned by the
Warrant Agent, entitle the registered holder thereof subject to the
provisions thereof and of this Agreement, to purchase from the Company at any
time after (a) in the case of the Class A Warrants, the opening of business
on the Class A Initial Exercise Date and (b) in the case of the Class B
Warrants, the opening of business on the Class B Initial Exercise Date, and
in each case before 5:00 p.m., New York time, on the Expiration Date, one
share of Common Stock for each of the Warrants specified therein, at a
purchase price of $0.01 per share (the "Exercise Price") or such adjusted
number of shares at such adjusted exercise price as may be established from
time to time pursuant to the provisions of Article IV hereof, payable in full
in accordance with Section 3.3 hereof, at the time of exercise of the
Warrant. Except as the context otherwise requires, the term "Exercise Price"
as used in this Agreement shall mean the purchase price of one Warrant Share
pursuant to the Warrant Certificates reflecting all appropriate adjustments
made in accordance with the provisions of Article IV hereof.
Section 3.2 REGISTRATION OF WARRANT SHARES. The Company shall secure
the effective registration of the Warrants and the Warrant Shares under the
Securities Act and applicable state laws and maintain such registration or
qualification in effect, all in accordance with and to the extent required by
the Registration Rights Grant adopted pursuant to the Plan. Promptly after a
registration statement under the Securities Act covering the Warrants has
become effective, the Company shall cause notice thereof together with a copy
of the prospectus covering the Warrants to be mailed to the Warrant Agent.
6
Section 3.3 EXERCISE OF WARRANTS.
(a) Commencing (i) in the case of the Class A Warrants, at the
opening of business on the Class A Initial Exercise Date and (ii) in the case
of the Class B Warrants, at the opening of business on the Class B Initial
Exercise Date, Warrants may be exercised by surrendering the Warrant
Certificate evidencing such Warrants at the Warrant Agent's Office with the
Election to Purchase form set forth on the reverse of the Warrant Certificate
duly completed and executed by the registered holder thereof or his attorney
duly authorized in writing, accompanied by payment in full, as set forth
below, to the Warrant Agent for the account of the Company the Exercise Price
for each share of Common Stock as to which Warrants are exercised and any
taxes that the registered holder is required to pay as set forth in Section
3.9. Such Exercise Price shall be paid in full by (i) cash or a certified
check or a wire transfer in same day funds in an amount equal to the then
applicable Exercise Price multiplied by the number of Warrant Shares then
being purchased, (ii) delivery to the Company of that number of shares of
Common Stock, duly endorsed, having an aggregate Fair Market Value (as
defined in Section 4.1(d)) equal to the then applicable Exercise Price
multiplied by the number of Warrant Shares then being purchased or (iii) by
any combination of (i) and (ii). In the alternative, the holder of a Warrant
Certificate may exercise its right to purchase some or all of the Warrant
Shares subject to such Warrant Certificate, on a net basis, such that,
without the exchange of any funds, such holder receives that number of
Warrant Shares subscribed to pursuant to such Warrant Certificate less that
number of shares of Common Stock having an aggregate Fair Market Value at the
Date of Exercise equal to the aggregate Exercise Price that would otherwise
have been paid by such holder for the number of Warrant Shares subscribed to
pursuant to such Warrant Certificate. A registered Warrant holder may
exercise all or any number of whole Warrants represented by a Warrant
Certificate.
(b) Upon receiving notice that any Warrants are to be exercised,
the Warrant Agent will promptly provide a notice of exercise to the Company
(the "Exercise Notice"). The Exercise Notice shall set forth the name of the
registered holder, the number of Warrants to be exercised, the number of
shares to be issued, the Date of Exercise, the method of payment and the
Warrant Certificate number. Promptly following the receipt by the Company of
an Exercise Notice, the Company shall provide to the Warrant Agent, in the
event that shares of Common Stock are surrendered in payment of the Exercise
Price, with the aggregate Fair Market Value with respect to such shares of
Common Stock. If, upon exercise of any Warrants, shares of Common Stock are
surrendered to the Warrant Agent, the Warrant Agent shall promptly deliver
such shares of Common Stock to the Company. If, upon exercise of any
Warrants, shares of Common Stock are surrendered in an amount in excess of
the amount to be applied to the Exercise Price of Warrants exercised, then
the Warrant Agent shall so notify the Company and the Company shall deliver
the amount of such excess in the form of shares of Common Stock to the
holder.
7
(c) A Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of the due surrender for exercise
of the Warrant Certificate and payment to the Warrant Agent for the account
of the Company of the Exercise Price and any applicable taxes that the
registered holder is required to pay as set forth in Section 3.9. Each
Person in whose name any such certificate for shares of Common Stock is
issued shall for all purposes be deemed to have become the holder of record
of such shares at the close of business on the date on which the Warrant
Certificate was duly surrendered to the Warrant Agent and payment of the
Exercise Price and any such applicable taxes was made to the Warrant Agent
for the account of the Company, irrespective of the date of delivery of such
share certificate, except that, if the date of such surrender and payment is
a date when the stock transfer books of the Company are closed, such person
shall be deemed to have become the holder of such shares at the close of
business on the next succeeding date on which the stock transfer books are
open (whether before or after the Expiration Date).
(d) The Warrant Agent may deem and treat the person named as the
registered holder on the face of any Warrant as the true and lawful owner
thereof for all purposes. If the Warrant Agent is instructed to deliver
shares upon the exercise of Warrants or to deliver a Warrant Certificate
representing unexercised Warrants, in either case registered in a name or
names other than the name or names in which a Warrant Certificate tendered in
connection with such exercise is registered, the Warrant Agent may require
such documents, and such evidence of payment of applicable transfer taxes, as
it may deem necessary to enable it to carry out the instructions of the
bearer.
Section 3.4 ISSUANCE OF WARRANT SHARES. As soon as practicable and no
later than ten (10) business days after the Date of Exercise of any Warrants,
the Company shall issue, or cause its transfer agent to issue a certificate
or certificates for the number of full Warrant Shares to which the holder is
entitled, registered in accordance with the instructions set forth in the
Election to Purchase, together with cash, as provided in Section 4.11 hereof,
in respect of any fractional share. All Warrant Shares issued upon the
exercise of any Warrants shall be validly authorized and issued, fully paid
and non-assessable, free of preemptive rights and free from all taxes, liens,
security interests and charges created by the Company in respect of the
issuance thereof.
Section 3.5 CERTIFICATES FOR UNEXERCISED WARRANTS. In the event that
fewer than all of the Warrants represented by a Warrant Certificate are
exercised, the Warrant Agent shall execute and mail, by first-class mail,
within ten (10) Business days of the Date of Exercise, to the registered
holder of such Warrant Certificate, or such other Person as shall be
designated in the Election to Purchase, a new Warrant Certificate
representing the number of Warrants not exercised.
Section 3.6 RESERVATION OF WARRANT SHARES. The Company shall at all
times reserve and keep available for issuance upon the exercise of Warrants a
number of its authorized but
8
unissued shares or treasury shares, or both, of Common Stock that will be
sufficient to permit the exercise in full of all outstanding Warrants.
Section 3.7 NO IMPAIRMENT. The Company shall not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, stock split, stock dividend or any
other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of the Warrants, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of all such
actions as may be reasonably necessary or appropriate to protect the rights
of the Warrant holders against impairment in accordance herewith. Without
limiting the generality of the foregoing, the Company will (a) not increase
the par value of any Warrant Shares receivable upon the exercise of the
Warrants above the amount payable therefor upon such exercise immediately
prior to such increase in par value, (b) from time to time take all such
action as may be reasonably necessary to assure that the par value of the
Common Stock is at all times equal to or less than the Exercise Price
(including without limitation approving and submitting to the stockholders of
the Company for approval an amendment to the Company's Restated Certificate
of Incorporation to reduce such par value), (c) take all such action as may
be necessary in order that the Company may validly and legally issue fully
paid and non-assessable Warrant Shares upon the exercise of any Warrant, and
(d) use its reasonable best efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its obligations
under the Warrants.
Section 3.8 DISPOSITION OF PROCEEDS. The Warrant Agent shall account
promptly to the Company with respect to Warrants exercised and shall
concurrently deliver to the Company all funds (after payment of the Warrant
Agent's fees and expenses as provided herein) and deliver to the Company for
cancellation all shares of Common Stock applied to the purchase of Warrant
Shares upon exercise of Warrants.
Section 3.9 PAYMENT OF TAXES AND CHARGES. The Company will from time to
time promptly pay to the Warrant Agent, or make provisions satisfactory to
the Warrant Agent for the payment of, all taxes and charges that may be
imposed by the United States or any state upon the Company or the Warrant
Agent in connection with the issuance or delivery of Warrant Shares upon the
exercise of any Warrants, provided, however, any additional transfer taxes in
connection with the issuance of Warrant Certificates or Certificates for
Warrant Shares in any name other than that of the registered holder of the
Warrant Certificate surrendered shall be paid by such registered holder; and,
in such case, the Company shall not issue or deliver any Warrant Certificate
or Certificates for Warrant Shares and the Warrant Agent shall not be
required to deliver any Warrant Certificates or Warrant Shares until such
taxes shall have been paid or it has been established to the Company's and
the Warrant Agent's satisfaction that no tax is due. The Warrant Agent shall
have no duty to determine if any tax is due.
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ARTICLE IV
ADJUSTMENTS, NOTICE PROVISIONS AND ISSUANCE
OF ADDITIONAL SECURITIES
Section 4.1 ADJUSTMENT OF EXERCISE PRICE. Subject to the provisions of
this Article IV, the Exercise Price in effect from time to time shall be
subject to adjustment, as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on the outstanding shares of Common Stock in shares of Common
Stock or any class thereof, (ii) subdivide or reclassify the outstanding
shares of Common Stock or any class thereof into a greater number of shares,
or (iii) combine or reclassify the outstanding shares of its Common Stock
into a smaller number of shares, the Exercise Price in effect immediately
after the record date for such dividend or distribution or the effective date
of such subdivision, combination or reclassification shall be adjusted so
that it shall equal the price determined by multiplying the Exercise Price in
effect immediately prior thereto by a fraction, of which the numerator shall
be the number of shares of Common Stock outstanding immediately before such
dividend, distribution, subdivision, combination or reclassification, and of
which the denominator shall be the number of shares of Common Stock
outstanding immediately after such dividend, distribution, subdivision,
combination or reclassification. Such adjustment shall be made successively
whenever any event specified above shall occur.
(b) In case the Company shall fix a record date for the issuance of
rights, options, warrants or convertible or exchangeable securities to all
holders of its Common Stock entitling them (for a period expiring within
forty-five (45) days after such record date) to subscribe for or purchase
shares of its Common Stock at a price per share less than the Fair Market
Value on such record date the Exercise Price shall be adjusted immediately
thereafter so that it shall equal the price determined by multiplying the
Exercise Price in effect immediately prior thereto by a fraction, of which
the numerator shall be the number of shares of Common Stock outstanding on
such record date plus the number of shares of Common Stock which the
aggregate offering price of the total number of shares of Common Stock so
offered would purchase at the Fair Market Value per share, and of which the
denominator shall be the number of shares of Common Stock outstanding on such
record date plus the number of additional shares of Common Stock offered for
subscription or purchase. Such adjustment shall be made successively
whenever such a record date is fixed. To the extent that any such rights,
options, warrants or convertible or exchangeable securities are not so issued
or expire unexercised, the Exercise Price then in effect shall be readjusted
to the Exercise Price which would then be in effect if such unissued or
unexercised rights, options, warrants or convertible or exchangeable
securities had not been issuable.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of shares of Common Stock (i) of shares of any
class other than Common Stock or (ii) of evidences of its indebtedness or
(iii) of assets (excluding cash
10
dividends or distributions (other than extraordinary cash dividends or
distributions), and dividends or distributions referred to in Subsection
4.1(a) hereof) or (iv) of rights, options, warrants or convertible or
exchangeable securities (excluding those rights, options, warrants or
convertible or exchangeable securities referred to in Subsection 4.1(b)
hereof), then in each such case the Exercise Price in effect immediately
thereafter shall be determined by multiplying the Exercise Price in effect
immediately prior thereto by a fraction, of which the numerator shall be the
total number of shares of Common Stock outstanding on such record date
multiplied by the Fair Market Value per share on such record date, less the
aggregate fair market value as determined in good faith by the Board of
Directors of the Company of said shares or evidences of indebtedness or
assets or rights, options, warrants or convertible or exchangeable securities
so distributed, and of which the denominator shall be the total number of
shares of Common Stock outstanding on such record date multiplied by such
Fair Market Value per share. Such adjustment shall be made successively
whenever such a record date is fixed. In the event that such distribution is
not so made, the Exercise Price then in effect shall be readjusted to the
Exercise Price which would then be in effect if such record date had not been
fixed.
(d) For the purpose of any computation under Section 4.1(b) or
4.1(c) hereof, the "Fair Market Value" per share at any date (the
"Computation Date") shall be as follows: (i) if the Common Stock is listed on
a national securities exchange or quoted on a national quotation system, the
Current Market Price, which shall be deemed to be the average of the Closing
Prices of the Common Stock for the five (5) Trading Days immediately
preceding the Computation Date; PROVIDED, HOWEVER, that if there shall have
occurred prior to the Computation Date any event described in Section 4.1(a),
4.1(b) or 4.1(c) which shall have become effective with respect to market
transactions at any time (the "Market-Effect Date") on or after the beginning
of such 5-day period, the Closing Price for each Trading Day preceding the
Market-Effect Date shall be adjusted, for purposes of calculating such
average, by multiplying such Closing Price by a fraction the numerator of
which is the Exercise Price as in effect immediately prior to the Computation
Date and the denominator of which is the Exercise Price as in effect
immediately prior to the Market-Effect Date, it being understood that the
purpose of this proviso is to ensure that the effect of such event on the
market price of the Common Stock shall, as nearly as possible, be eliminated
in order that the distortion in the calculation of the Fair Market Value may
be minimized or (ii) if there is no public market for Common Stock, the fair
market value per share of Common Stock as determined in good faith by the
Company's Board of Directors.
Section 4.2 SALES OF CERTAIN SECURITIES.
(a) In case the Company shall on or after the date hereof issue
Common Stock or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase shares of Common
Stock (excluding Excluded Securities, as defined in Subsection 4.2(b) below)
to any Affiliate, officer, director or employee of the Company at a price per
share less than the Closing Price of a share of Common Stock on the
11
date of such issuance, then the Exercise Price shall be adjusted immediately
thereafter so that it shall equal the price determined by multiplying the
Exercise Price in effect immediately prior thereto by a fraction, of which
the numerator shall be the number of shares of Common Stock outstanding
immediately prior to such issuance plus the number of additional shares of
Common Stock the Aggregate Consideration Receivable (as defined in Subsection
4.2(d) below) would purchase at the Closing Price per share on such date, and
of which the denominator shall be the number of shares of Common Stock
outstanding immediately prior to such issuance plus the number of additional
shares of Common Stock sold or offered for subscription or purchase. Such
adjustment shall be made successively whenever such issuance shall occur. To
the extent that any such rights, options, warrants or convertible or
exchangeable securities are not so issued or expire unexercised, the Exercise
Price then in effect shall be readjusted to the Exercise Price which would
then be in effect if such unissued or unexercised rights, options, warrants
or convertible or exchangeable securities had not been issuable.
(b) "Excluded Securities" means (i) rights, options, warrants, or
convertible or exchangeable securities issued in any of the transactions
described in Section 4.1(b), 4.1(c) and 4.5 hereof, (ii) shares of Common
Stock issuable upon exercise of the Warrants; (iii) shares of Common Stock
issuable upon exercise of rights, options or warrants or conversion or
exchange of convertible or exchangeable securities issued or sold under
circumstances causing an adjustment pursuant to this Section 4.2, (iv)
options to purchase up to 1,333,729 shares of Common Stock that are issued to
employees and directors of the Company and its subsidiaries pursuant to the
Lamonts Apparel, Inc. [1997]Stock Option Plan and any shares of Common Stock
issuable or issued upon the exercise thereof (including, following any
adjustments required under the terms of such stock option plan, any
additional options or shares of Common Stock issuable or issued upon the
exercise thereof), (v) the New Class C Warrants (as defined in the Plan) and
any shares of Common Stock issuable or issued upon the exercise thereof
(including, following any adjustments required under the terms of such
warrants, any additional New Class C Warrants or shares of Common Stock
issuable or issued upon the exercise thereof) and (vi) the Gordian Warrants
(as defined in the Plan) and any shares of Common Stock issuable or issued
upon the exercise thereof (including, following any adjustments required
under the terms of such warrants, any additional Gordian Warrants or shares
of Common Stock issuable or issued upon the exercise thereof).
(c) The price per share of Common Stock referred to in Subsection
4.2(a) above shall be determined by dividing (i) the Aggregate Consideration
Receivable in respect of the Common Stock, rights, options, warrants or
convertible or exchangeable securities issued, by (ii) the total number of
shares of Common Stock issued or covered by such rights, options, warrants or
convertible or exchangeable securities.
(d) "Aggregate Consideration Receivable" means the aggregate amount
paid to the Company for the Common Stock, rights, options, warrants or
convertible or exchangeable securities, plus the aggregate consideration or
premiums stated in such rights,
12
options, warrants or convertible or exchangeable securities to be payable for
the shares of Common Stock covered thereby.
(e) In case the Company shall sell and issue Common Stock or
rights, options, warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase shares of Common Stock, for
a consideration consisting, in whole or in part, of property (other than
cash) or services or its equivalent, then in determining the "price per share
of Common Stock" referred to in Sections 4.2(a) and 4.2(c) above and the
"Aggregate Consideration Receivable" referred to in Sections 4.2(a), 4.2(b),
4.2(c) and 4.2(d) above, the Board of Directors of the Company shall
determine, in good faith and on a reasonable basis, the fair value of said
property.
Section 4.3 NO ADJUSTMENTS TO EXERCISE PRICE. No adjustment in the
Exercise Price in accordance with the provisions of Section 4.1(a), 4.1(b) or
4.1(c) or Section 4.2(a) hereof need be made unless such adjustment would
amount to a change of at least .5% in such Exercise Price of the Warrant
Certificates; PROVIDED, HOWEVER, that the amount by which any adjustment is
not made by reason of the provisions of this Section 4.3 shall be carried
forward and taken into account at the time of any subsequent adjustment in
the Exercise Price.
Section 4.4 ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment of the
Exercise Price pursuant to Subsection 4.1(a), (b) or (c) or Subsection 4.2(a)
hereof, each Warrant shall thereupon evidence the right to purchase that
number of Warrant Shares (calculated to the nearest hundredth of a share)
obtained by multiplying the number of Warrant Shares purchasable immediately
prior to such adjustment upon exercise of the Warrant by the Exercise Price
in effect immediately prior to such adjustment and dividing the product so
obtained by the Exercise Price in effect immediately after such adjustment.
Section 4.5 REORGANIZATIONS. In case of any capital reorganization,
other than in the cases referred to in Section 4.1 hereof, or the
consolidation or merger of the Company with or into another corporation
(other than a merger or consolidation in which the Company is the continuing
corporation and which does not result in any reclassification of the
outstanding shares of Common Stock or the conversion of such outstanding
shares of Common Stock into shares of other stock or other securities or
property), or the sale or conveyance of the property of the Company as an
entirety or substantially as an entirety (collectively such actions being
hereinafter referred to as "Reorganizations"), there shall thereafter be
deliverable upon exercise of any Warrant (in lieu of the number of Warrant
Shares theretofore deliverable) the number of shares of stock or other
securities or property to which a holder of the number of Warrant Shares
which would otherwise have been deliverable upon the exercise of such Warrant
would have been entitled upon such Reorganization if such Warrant was fully
exercisable and had been exercised in full immediately prior to such
Reorganization. In case of any Reorganization, appropriate adjustment, as
determined in good faith by the Board of Directors of the Company, shall be
made in the application of the provisions herein set forth with respect to
the rights and interests of Warrant holders so that the provisions set forth
13
herein shall thereafter be applicable, as nearly as possible, in relation to
any shares or other property thereafter deliverable upon exercise of
Warrants. Any such adjustment shall be made by and set forth in a
supplemental agreement prepared by the Company or any successor thereto,
between the Company, or any successor thereto, and the Warrant Agent and
shall for all purposes hereof conclusively be deemed to be an appropriate
adjustment. The Company shall not effect any such Reorganization, unless
upon or prior to the consummation thereof the successor corporation, or if
the Company shall be the surviving corporation in any such Reorganization and
is not the issuer of the shares of stock or other securities or property to
be delivered to holders of shares of the Common Stock outstanding at the
effective time thereof, then such issuer, shall assume by written instrument
the obligation to deliver to the registered holder of any Warrant Certificate
such shares of stock, securities, cash or other property as such holder shall
be entitled to purchase in accordance with the foregoing provisions.
Section 4.6 INTENTIONALLY OMITTED.
Section 4.7 INTENTIONALLY OMITTED.
Section 4.8 NOTICE OF CERTAIN ACTIONS. In the event the Company shall:
(a) declare any dividend payable in stock to the holders of the
Common Stock or make any other distribution in property other than cash to
the holders of the Common Stock;
(b) offer to the holders of the Common Stock rights to subscribe
for or purchase any shares of any class of stock or any other rights or
options; or
(c) effect any reclassification of the Common Stock (other than a
reclassification involving merely the subdivision or combination of
outstanding shares of Common Stock) or any capital reorganization or any
consolidation or merger (other than a merger in which no distribution of
securities or other property is made to holders of Common Stock), or any
sale, transfer or other disposition of its property, assets and business
substantially as an entirety, or the liquidation, dissolution or winding up
of the Company;
then, in each such case, the Company shall mail notice of such proposed
action to the Warrant Agent at least thirty (30) days prior to such action
and shall cause the Warrant Agent to mail such notice to each registered
holder of a Warrant Certificate. Such notice shall specify the date on which
the books of the Company shall close, or a record be taken, for determining
holders of Common Stock entitled to receive such stock dividend or other
distribution or such rights or options, or the date on which such
reclassification, reorganization, consolidation, merger, sale, transfer,
other disposition, liquidation, dissolution, winding up or exchange shall
take place or commence, as the case may be, and the date as of which it is
expected that holders of record of Common Stock shall be entitled to receive
securities or other property
14
deliverable upon such action, if any such date has been fixed. Such notice
to the Warrant Agent shall be mailed in the case of any action covered by
paragraph (a) or (b) of this Section 4.8, at least fifteen (15) days prior to
the record date for determining holders of the Common Stock for purposes of
receiving such payment or offer, and in the case of any action covered by
paragraph (c) of this Section 4.8, at least fifteen (15) days prior to the
earlier of the date upon which such action is to take place or any record
date to determine holders of Common Stock entitled to receive such securities
or other property.
Section 4.9 CERTIFICATE OF ADJUSTMENTS. Whenever any adjustment is to
be made pursuant to this Article IV, the Company shall prepare an Officers'
Certificate setting forth such adjustment to be mailed to the Warrant Agent,
to each other transfer agent for the Common Stock and to each registered
holder of a Warrant Certificate at least fifteen (15) days prior thereto,
such notice to include in reasonable detail (i) the events precipitating the
adjustment, (ii) the computation of any adjustments, and (iii) the Exercise
Price and the number of Warrant Shares or the securities or other property
purchasable upon exercise of each Warrant after giving effect to such
adjustment. With respect to adjustments made pursuant to Section 4.2(a)
hereof, such notice shall be made as soon as practicable thereafter. The
Warrant Agent shall be fully protected in relying on any such Officers'
Certificate and on any adjustment therein contained, and shall not be deemed
to have knowledge of any such adjustment unless and until it shall have
received such an Officers' Certificate.
Section 4.10 WARRANT CERTIFICATE AMENDMENTS. Irrespective of any
adjustments pursuant to this Article IV, Warrant Certificates theretofore or
thereafter issued need not be amended or replaced, but certificates
thereafter issued shall bear an appropriate legend or other notice of any
adjustments; provided the Company may, at its option, issue new Warrant
Certificates evidencing Warrants in such form as may be approved by its Board
of Directors to reflect any adjustment in the Exercise Price and number of
Warrant Shares purchasable under the Warrant Certificates and deliver the
same to the Warrant Agent in substitution for existing Warrant Certificates.
Section 4.11 FRACTIONAL SHARES. The Company shall not be required upon
the exercise of any Warrant to issue fractional Warrant Shares which may
result from adjustments in accordance with this Article IV to the Exercise
Price or number of Warrant Shares purchasable under each Warrant or
otherwise. If more than one Warrant is exercised at one time by the same
registered holder, the number of full Warrant Shares which shall be
deliverable shall be computed based on the number of shares deliverable in
exchange for the aggregate number of Warrants exercised. With respect to any
final fraction of a Warrant Share called for upon the exercise of any Warrant
or Warrants, the Company shall pay a cash adjustment to the registered
holders of the Warrants in respect of such final fraction in an amount equal
to the same fraction of the Closing Price of a Warrant Share, as determined
by the Company on the basis of the Closing Price per share of Common Stock on
the business day next preceding the date of such exercise. The registered
holder of each Warrant Certificate, by his acceptance of the Warrant
Certificate, shall expressly waive any right to receive any fractional
Warrant
15
Share upon exercise of the Warrants. All calculations under this Section
4.11 shall be made to the nearest hundredth of a share.
ARTICLE V
SPLIT UP, COMBINATION, EXCHANGE, TRANSFER AND
CANCELLATION OF WARRANT CERTIFICATES
Section 5.1 SPLIT UP, COMBINATION, EXCHANGE AND TRANSFER OF WARRANT
CERTIFICATES. Warrant Certificates, subject to the provisions of Section
5.2, may be split up, combined or exchanged for other Warrant Certificates of
the same type representing a like aggregate number of Warrants or may be
transferred in whole or in part. Any holder desiring to split up, combine or
exchange a Warrant Certificate or Warrant Certificates shall make such
request in writing delivered to the Warrant Agent at the Warrant Agent's
Office and shall surrender the Warrant Certificate or Warrant Certificates so
to be split up, combined or exchanged at said office. Subject to any
applicable laws, rules or regulations restricting transferability, any
restriction on transferability that may appear on a Warrant Certificate in
accordance with the terms hereof, or any "stop-transfer" instructions the
Company may give to the Warrant Agent to implement any such restrictions
(which instructions the Company is expressly authorized to give), transfers
of outstanding Warrant Certificates may be effected by the Warrant Agent from
time to time upon the books of the Company to be maintained by the Warrant
Agent for that purpose, upon a surrender of the Warrant Certificate to the
Warrant Agent at the Warrant Agent's Office with the form of Assignment
thereon duly executed. Upon any such surrender for split up, combination,
exchange or transfer, the Warrant Agent shall execute and deliver to the
person entitled thereto a Warrant Certificate or Certificates, as the case
may be, as so requested. The Warrant Agent may require the holder to pay a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any split up, combination, exchange or transfer of Warrant
Certificates prior to the issuance of any new Warrant Certificate.
Section 5.2 CANCELLATION OF WARRANT CERTIFICATES. Any Warrant
Certificate surrendered upon the exercise of Warrants or for split up,
combination, exchange or transfer, or purchased or otherwise acquired by the
Company, shall be canceled and shall not be reissued by the Company; and,
except as provided in Section 3.5 hereof in case of the exercise of less than
all of the Warrants evidenced by a Warrant Certificate or in Section 5.1 in
case of a split up, combination, exchange or transfer, no Warrant Certificate
shall be issued hereunder in lieu of such cancelled Warrant Certificate. Any
Warrant Certificate so cancelled shall be destroyed by the Warrant Agent
unless otherwise directed by the Company.
ARTICLE VI
16
PROVISIONS CONCERNING THE WARRANT AGENT
Section 6.1 RESIGNATION OR REMOVAL OF WARRANT AGENT. The Warrant Agent
may resign its duties and be discharged from all further duties and
liabilities hereunder after giving at least thirty (30) days prior notice in
writing to the Company, except that such shorter notice may be given as the
Company shall, in writing, accept as sufficient. Upon comparable notice to
the Warrant Agent, the Company may remove the Warrant Agent. If the office
of Warrant Agent becomes vacant by resignation or incapacity to act or
otherwise, the Company shall appoint in writing a new Warrant Agent. If the
Company shall fail to make such appointment within a period of thirty (30)
days after it has been notified in writing of such resignation or incapacity
by the resigning or incapacitated Warrant Agent or by the registered holder
of any Warrant Certificate, then the registered holder of any Warrant
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Warrant Agent. Any new Warrant Agent appointed
hereunder shall execute, acknowledge and deliver to the Company, an
instrument accepting such appointment under substantially the same terms and
conditions as are contained herein. If for any reason it becomes necessary
or expedient to have the former Warrant Agent execute and deliver any further
assurance, conveyance, act or deed, the same shall be done at the expense of
the Company and shall be legally and validly executed and delivered by the
former Warrant Agent.
Section 6.2 NOTICE OF APPOINTMENT. Not later than five (5) business
days prior to the effective date of the appointment of a new Warrant Agent,
the Company shall cause notice thereof to be mailed to the former Warrant
Agent and the transfer agent for the Common Stock, and shall forthwith cause
a copy of such notice to be mailed to each registered holder of a Warrant
Certificate. Failure to mail such notice, or any defect contained therein,
shall not affect the legality or validity of the appointment of the successor
Warrant Agent.
Section 6.3 MERGER OF WARRANT AGENT. Any company into which the Warrant
Agent may be merged or with which it may be consolidated or any company
resulting from any merger or consolidation to which the Warrant Agent shall
be a party, shall be the successor Warrant Agent under this Agreement without
further act. Any such successor Warrant Agent may adopt the prior
countersignature of any predecessor Warrant Agent and distribute Warrant
Certificates countersigned but not distributed by such predecessor Warrant
Agent, or may countersign the Warrant Certificate in its own name.
Section 6.4 COMPANY RESPONSIBILITIES. The Company agrees that it shall
(i) pay the Warrant Agent reasonable remuneration for its services as Warrant
Agent hereunder and will reimburse the Warrant Agent upon demand for all
reasonable expenses, advances, and expenditures that the Warrant Agent may
reasonably incur in the execution of its duties hereunder (including
reasonable fees and expenses of its counsel); (ii) provide the Warrant Agent,
upon request, with sufficient funds to pay any cash or taxes due pursuant to
this Agreement; and (iii) perform, execute, acknowledge and deliver or cause
to be performed,
17
executed, acknowledged and delivered all further and other acts, instruments
and assurances as may reasonably be required by the Warrant Agent for the
carrying out or performing by the Warrant Agent of the provisions of this
Agreement. In no case shall the Warrant Agent be required to advance its own
funds for any purpose under this Agreement.
Section 6.5 CERTIFICATION FOR THE BENEFIT OF WARRANT AGENT. Whenever in
the performance of its duties under this Agreement the Warrant Agent shall
deem it necessary or desirable that any matter be proved or established or
that any instructions with respect to the performance of its duties hereunder
be given by the Company prior to taking or suffering any action hereunder,
such matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established, or such
instructions may be given, by a certificate or instrument signed by the
Chairman, the President, a Vice President, the Secretary, Assistant Secretary
or the Treasurer of the Company and delivered to the Warrant Agent. Such
certificate or instrument may be conclusively relied upon by the Warrant
Agent for any action or refusal to act taken or suffered in good faith by it
under the provisions of this Agreement, without further investigation; but in
its discretion the Warrant Agent may in lieu thereof accept other evidence of
such matter or may require such further or additional evidence as it may deem
reasonable including, without limitation, an opinion of counsel to the
Company. In addition, the Warrant Agent may consult with counsel of its
choice, and any opinion of such counsel shall be full and complete
authorization to the Warrant Agent in respect of any action taken or omitted
to be taken in good faith, in reliance on such opinion.
Section 6.6 LIABILITY OF WARRANT AGENT. The Warrant Agent shall be
liable hereunder solely for direct damages resulting from its own gross
negligence, bad faith or wilful misconduct provided, further, that the
Warrant Agent shall not be liable for any special or consequential damages in
connection with any liability hereunder. The Warrant Agent shall act
hereunder solely as an agent for the Company and its duties shall be
determined solely by the provisions hereof. The Warrant Agent shall not be
liable for or by reason of any of the statements of fact or recitals
contained in this Agreement or in the Warrant Certificates (except its
countersignature thereof) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the
Company only. The Warrant Agent will not incur any liability or
responsibility to the Company or to any holder of any Warrant Certificate for
any action taken, or any failure to take action, in reliance on any notice,
resolution, waiver, consent, order, certificate, or other paper, document or
instrument reasonably believed by the Warrant Agent to be genuine and to have
been signed, sent or presented by the proper party or parties. The Warrant
Agent shall not be under any responsibility in respect of the validity of
this Agreement or the execution and delivery thereof by the Company or in
respect of the validity or execution of any Warrant Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Warrant Certificate; nor shall it be responsible for the making of any
adjustment required under the provisions of Article IV hereof or responsible
for the manner, method or amount of any such adjustment or the facts
18
that would require any such adjustment; nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Warrant Shares or other securities to be issued pursuant
to this Agreement or any Warrant Certificate or as to whether any Warrant
Shares or other securities will when issued be validly authorized and issued
and fully paid and non-assessable.
Section 6.7 USE OF ATTORNEYS, AGENTS AND EMPLOYEES. The Warrant Agent
may execute and exercise any of the rights or powers hereby vested in it or
perform any duty hereunder either itself or by or through its attorneys,
agents or employees.
Section 6.8 INDEMNIFICATION. Each party hereto hereby irrevocably
indemnifies the other and saves it harmless against any and all reasonable
out of pocket losses, expenses or liabilities, including judgments, costs and
reasonable counsel fees and expenses arising out of or in connection with
this Agreement, except as a direct result of the gross negligence, bad faith
or willful misconduct of such party.
Section 6.9 ACCEPTANCE OF AGENCY. The Warrant Agent hereby accepts the
agency established by this Agreement and agrees to perform the same upon the
terms and conditions herein set forth.
Section 6.10 CONFLICT OF INTEREST. The Warrant Agent and any
stockholder, director, officer or employee of the Warrant Agent may buy, sell
or deal in any of the Warrant Certificates or other securities of the Company
or have a pecuniary interest in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though the Warrant Agent were not Warrant Agent under
this Agreement. Nothing herein shall preclude the Warrant Agent from acting
in any other capacity for the Company.
ARTICLE VII
MISCELLANEOUS
Section 7.1 CHANGES TO AGREEMENT. The Company, when authorized by its
Board of Directors, and the Warrant Agent, together, with the written consent
of the registered holder or holders of at least 50% of the outstanding
Warrants may amend or supplement this Agreement. The Warrant Agent may,
without the consent or concurrence of any registered holder of a Warrant
Certificate, by supplemental agreement or otherwise, join with the Company in
making any changes or corrections in this Agreement that the Company shall
have been advised by counsel (i) are required to cure any ambiguity or to
correct any defective or inconsistent provision or clerical omission or
mistake or manifest error herein contained, (ii) add to the covenants and
agreements of the Company or the Warrant Agent in this Agreement such further
covenants and agreements thereafter to be observed, or (iii) result in
19
the surrender of any right or power reserved to or conferred upon the Company
or the Warrant Agent in this Agreement, but which changes or corrections do
not or will not adversely affect, alter or change the rights, privileges or
immunities of the registered holders of Warrant Certificates. The Warrant
Agent may conclusively rely on a certificate of the Company regarding any
such changes.
Section 7.2 ASSIGNMENT. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall
bind and inure to the benefit of their respective successors and assigns.
Section 7.3 SUCCESSOR TO COMPANY. The Company will not merge or
consolidate with or into any other corporation or sell or otherwise transfer
its property, assets and business substantially as an entirety to a successor
corporation, unless the corporation resulting from such merger,
consolidation, sale or transfer (if not the Company) shall expressly assume,
by supplemental agreement satisfactory in form and substance to the Warrant
Agent and delivered to the Warrant Agent, the due and punctual performance
and observance of each and every covenant and condition of this Agreement to
be performed and observed by the Company.
Section 7.4 NOTICES. Any notice or demand required by this Agreement to
be given or made by the Warrant Agent or by the registered holder of any
Warrant Certificate to or on the Company shall be sufficiently given or made
if sent by first-class or registered mail, postage prepaid, addressed (until
another address is filed in writing by the Company with the Warrant Agent) as
follows:
Lamonts Apparel, Inc.
00000 Xxxxxxx Xxxx X.X.
Xxxxxxxx, XX 00000
Attention: Xx. Xxxxxx Xxxxxxxxx
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Any notice or demand required by this Agreement to be given or made by the
registered holder of any Warrant Certificate or by the Company to or on the
Warrant Agent shall be sufficiently given or made if sent by first-class or
registered mail, postage prepaid, addressed (until another address is filed
in writing with the Company by the Warrant Agent), as follows:
------------------
20
------------------
------------------
With a copy to:
------------------
------------------
------------------
Any notice or demand required by this Agreement to be given or made by the
Company or the Warrant Agent to or on the registered holder of any Warrant
Certificate shall be sufficiently given or made, whether or not such holder
receives the notice, three (3) days after mailing if sent by first-class or
registered mail, postage prepaid, addressed to such registered holder at his
last address as shown on the books of the Company maintained by the Warrant
Agent. Otherwise, such notice or demand shall be deemed given when received
by the party entitled thereto.
Section 7.5 DEFECTS IN NOTICE. Failure to file any certificate or
notice or to mail any notice, or any defect in any certificate or notice
pursuant to this Agreement shall not affect in any way the rights of any
registered holder of a Warrant Certificate or the legality or validity of any
adjustment made pursuant to Section 4.1 or Section 4.2 hereof, or any
transaction giving rise to any such adjustment, or the legality or validity
of any action taken or to be taken by the Company.
Section 7.6 GOVERNING LAW. This Agreement and each Warrant Certificate
issued hereunder shall be governed by the laws of the State of New York
without regard to principles of conflicts of laws thereof.
Section 7.7 STANDING. Nothing in this Agreement expressed and nothing
that may be implied from any of the provisions hereof is intended, or shall
be construed, to confer upon, or give to, any person or corporation other
than the Company, the Warrant Agent, and the registered holders of the
Warrant Certificates any right, remedy or claim under or by reason of this
Agreement or of any covenant, condition, stipulation, promise or agreement
contained herein; and all covenants, conditions, stipulations, promises and
agreements contained in this Agreement shall be for the sole and exclusive
benefit of the Company and the Warrant Agent and their successors, and the
registered holders of the Warrant Certificates.
Section 7.8 HEADINGS. The descriptive headings of the articles and
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
21
Section 7.9 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original;
but such counterparts shall together constitute but one and the same
instrument.
Section 7.10 AVAILABILITY OF THE AGREEMENT. The Company shall keep
copies of this Agreement available for inspection by holders of Warrants
during normal business hours. Copies of this Agreement may be obtained upon
written request addressed to the Company at the address set forth in Section
7.4 hereof.
Section 7.11 ENTIRE AGREEMENT. This Agreement, including the Exhibits
referred to herein and the other writings specifically identified herein or
contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous
written or oral negotiations, commitments and writings.
Section 7.12 RIGHTS OF WARRANT HOLDERS. No Warrant Certificate shall
entitle the registered holder thereof to any of the rights of a stockholder
of the Company, including, without limitation, the right to vote, to receive
dividends and other distributions, to receive any notice of, or to attend,
meetings of stockholders or any other proceedings of the Company.
[Remainder of page intentionally left blank]
22
WARRANT AGREEMENT COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto under their respective corporate seals as of the day and year first
above written.
LAMONTS APPAREL, INC.
By:
--------------------------------
Name:
Title:
--------------------------------- ,
as Warrant Agent
By: -------------------------------
Name:
Title:
23
EXHIBIT A
FORM OF
CLASS [A] [B] WARRANT CERTIFICATE
NEITHER THE ISSUANCE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
THE ISSUANCE OF ANY SECURITIES ISSUABLE UPON EXERCISE HEREOF HAS BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE, AND SUCH SECURITIES MAY
NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO (i) A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO SUCH SECURITIES UNDER THE
SECURITIES ACT AND THE RULES AND REGULATIONS THEREUNDER OR (ii) AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
NO. W [A][B]-_____
CERTIFICATE FOR____________CLASS [A][B] WARRANTS
NOT EXERCISABLE AFTER 5:00 P.M.,
NEW YORK CITY TIME, ON ______, 200_ [10 YEARS FOLLOWING EFFECTIVE DATE]
LAMONTS APPAREL, INC.
COMMON STOCK PURCHASE WARRANT CERTIFICATE
THIS CERTIFIES that ________________ or its registered assigns is the
registered holder (the "Registered Holder") of ___________ Class [A][B]
Warrants, each of which represents the right to purchase one fully paid and
non-assessable share of Common Stock, par value $.01 per share (the "Common
Stock"), of Lamonts Apparel, Inc., a Delaware corporation (the "Company"), at
an initial exercise price (the "Exercise Price") equal to $.01 per share, at
the times provided in the Warrant Agreement (as hereinafter defined), by
surrendering this Warrant Certificate, with the ELECTION TO PURCHASE on the
reverse hereof duly executed, at the principal office of _____________ or its
successor as warrant agent (any such warrant agent being herein called the
"Warrant Agent"), at ______________________, and by paying in full the
Exercise Price, plus transfer taxes, if any. Payment of the Exercise Price
may be made at the option of the holder hereof by (i) cash, certified check
or a wire transfer in same day funds in an amount equal to the then
applicable Exercise Price multiplied by the number of Warrant Shares then
being purchased, (ii) delivery to the Company of that number of shares of
Common Stock having an aggregate Fair Market Value equal to the then
applicable Exercise Price multiplied by the number of Warrant Shares then
being purchased or (iii) by any combination of (i) and (ii). In the
alternative, the Registered Holder may exercise its right to purchase some or
all of the Warrant Shares subject to Warrant Certificate, on a net basis,
such that, without the exchange of any funds, the Registered Holder receives
that number of Warrant Shares subscribed to pursuant to this Warrant
Certificate less that number of shares of Common Stock having an aggregate
Fair Market Value at the time of exercise equal to the aggregate Exercise
Price that would otherwise have been paid by such holder for the number of
Warrant Shares subscribed to pursuant to this Warrant Certificate.
No Warrant may be exercised after 5:00 P.M., New York City time, on
_________, 200_ (the "Expiration Date"). All Warrants evidenced hereby shall
thereafter become void, subject to the terms of the Warrant Agreement.
Prior to the Expiration Date, subject to any applicable laws, rules or
regulations restricting transferability and to any restriction on
transferability that may appear on this Warrant Certificate and in accordance
with the
terms of the Warrant Agreement, the Registered Holder shall be entitled
to transfer this Warrant Certificate, in whole or in part, upon surrender of
this Warrant Certificate at the Warrant Agent's Office with the ASSIGNMENT on
the reverse hereof. Upon any such transfer, a new Warrant Certificate or
Warrant Certificates representing the same aggregate number of Warrants will be
issued in accordance with instructions in the form of assignment.
Upon the exercise of less than all of the Warrants evidenced by this
Warrant Certificate, there shall be issued to the Registered Holder a new
Warrant Certificate in respect of the Warrants not exercised.
Prior to the Expiration Date, the Registered Holder shall be entitled to
exchange this Warrant Certificate, with or without other Warrant Certificates,
for another Warrant Certificate or Warrant Certificates for the same aggregate
number of Warrants, upon surrender of this Warrant Certificate at the Warrant
Agent's Office as set forth in the Warrant Agreement. Upon certain events
provided for in the Warrant Agreement, the Exercise Price and the number of
shares of Common Stock issuable upon the exercise of each Warrant are required
to be adjusted. No fractional shares will be issued upon the exercise of
Warrants. As to any final fraction of a share which the Registered Holder of
one or more Warrant Certificates, the rights under which are exercised in the
same transaction, would otherwise be entitled to purchase upon such exercise,
the Company shall pay the cash value thereof determined as provided in the
Warrant Agreement.
This Warrant Certificate is issued under and in accordance with the Warrant
Agreement dated as of ______, 199_ between the Company and the Warrant Agent
(the "Warrant Agreement") and is subject to the terms and provisions contained
in said Warrant Agreement, to all of which terms and provisions the Registered
Holder consents by acceptance hereof. All capitalized terms not defined herein
shall have the meaning set forth in the Warrant Agreement.
This Warrant Certificate shall not entitle the Registered Holder to any of
the rights of a stockholder of the Company, including, without limitation, the
right to vote, to receive dividends and other distributions, or to attend or
receive any notice of meetings of stockholders or any other proceedings of the
Company.
This Warrant Certificate shall not be valid for any purpose until it shall
have been countersigned by the Warrant Agent.
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IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its facsimile Corporate Seal.
LAMONTS APPAREL, INC.
By:
----------------------------
Name:
Title:
Seal Attest:
-------------------------------
Assistant Secretary
Countersigned: -------------------------------,
as Warrant Agent
Dated: By:
----------------------------
Authorized Signature
3
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise ________________
of the Warrants represented by this Warrant Certificate and to purchase the
shares of Common Stock issuable upon the exercise of said Warrants, and requests
that Certificates for such shares be issued and delivered as follows:
ISSUE TO:_________________________________________________________________
(NAME)
__________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
__________________________________________________________________________
(SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)
DELIVER TO:_______________________________________________________________
(NAME)
at________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
If the number of Warrants hereby exercised is less than all the Warrants
represented by this Warrant Certificate, the undersigned requests that a new
Warrant Certificate representing the number of full Warrants not exercised be
issued and delivered as set forth above.
In full payment of the exercise price with respect to the Warrants
exercised and transfer taxes, if any, the undersigned hereby tenders payment of
$ by (i) $______ in cash, certified check or wire transfer in same day
funds, (ii) surrender to the Warrant Agent of certificate no(s) ____________
representing ______ shares of Common Stock duly endorsed to the Warrant Agent,
(iii) a combination of (i) an (ii) or (iv) exercising the Warrants exercised on
a net basis such that the number of shares of Common Stock otherwise receivable
by the Registered Holder pursuant to the Warrants exercised shall be reduced by
the number of shares of Common Stock having an aggregate Fair Market Value equal
to the exercise price with respect to the Warrants exercised.
Date: ______________, 19__ _____________________________________
Signature
(Signature must conform in all
respects to name of holder
as specified on the face of
the Warrant Certificate.)
4
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby irrevocably sells, assigns and
transfers unto the Assignee named below all of the rights of the undersigned
represented by the within Warrant Certificate, with respect to the number of
Warrants set forth below:
NAME OF ASSIGNEE ADDRESS NO. OF WARRANTS
---------------- ------- ---------------
and does hereby irrevocably constitute and appoint_____________________________,
Attorney, to make such transfer on the books of Lamonts Apparel, Inc. maintained
for that purpose, with full power of substitution in the premises.
Date: ______________, 19__ ___________________________________________
Signature
(Signature must conform in all
respects to name of holder
as specified on the face of
the Warrant Certificate.)
5
